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Research Tree provides access to ongoing research coverage, media content and regulatory news on HUSQVARNA AB-B SHS. We currently have 7 research reports from 1 professional analysts.
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HUSQVARNA AB-B SHS
HUSQVARNA AB-B SHS
Consumer Brands at break-even in 2016
10 Feb 17
Q4 is traditionally a weak and loss-making quarter. Q4 16 was satisfactory as the operating loss was reduced to SEK-108m or SEK-133m restated from a positive pension-related income (vs SEK-212m excluding restructuring charges in Q4 15). It included a positive currency effect (SEK10m). Q4 16 figures: Net sales reached SEK5,768m (+2%). Organic sales decreased by 3% due to all divisions (Husqvarna and Consumer Brands: -5%, Gardena: -1%) except for the Construction activity (+5%). The reduction in the operating loss to SEK-108m (vs SEK-365m reported and SEK-212m restated in Q4 15) was mainly attributable to the Consumer Brands division (SEK-128m vs SEK-195m reported and SEK-168m restated in Q4 15) and the Construction division (SEK145m vs SEK17m reported and SEK87m restated in Q4 15). Restated from a positive pension-related item, the operating income increased by 38% in the Construction division. Group net loss was SEK-121m (vs SEK-239m in Q4 15) after a higher net financial cost (+25% to SEK-84m). FY2016 figures: Net sales reached SEK35,982m (-1%). Organic sales were flat due to the Consumer Brands division (-10%) which was focused on value instead of volume growth. Gardena was the best performer with high single-digit organic growth (+8%) followed by the Construction business (+4%) and Husqvarna (+2%). The operating income increased to SEK3,218m (+14%, +7% restated from non-recurring items). The operating margin improved to 8.9% of sales (+1.1pt, +0.7pt restated from the non-recurring items), in line with expectations, despite the significant negative currency effects (SEK-430m). Group net profit was SEK2,104m (+11%) after an increase in net financial cost (+23% to SEK-422m) and a higher income tax rate (+0.8pt to 24.7%). The operating cash flow increased to SEK3,555m (+14%) after a favourable change in trade receivables and payables. Free cash flow decreased to SEK1,666m (-4%) due to higher capex (+36% to SEK1,830m) and was above the dividend paid to shareholders (SEK944m). At year-end 2016, financial net debt amounted to SEK5,106m (+3%), representing 36% of shareholders’ equity (vs 38% in 2015). The proposed dividend/share was SEK1.95/share (+18%).
Higher operating margin despite Gardena
21 Oct 16
Husqvarna had a slightly disappointing Q3 16 below our expectations. This is tempered by the challenging basis of comparison last year at Gardena and the Construction business to a lesser extent. Q3 16 figures: Sales reached SEK7,349m (+1%). Organic sales were down 1% (vs flat on Q3 15) due to Gardena, -6% (vs +19% in Q3 15) and the Consumer Brands division, -10% (vs -18% in Q3 15). Conversely, Husqvarna performed well, +5% (vs +3% in Q3 15) and the Construction division grew slowly, +1% (vs +7% in Q3 15). The operating income increased to SEK431m, +6% and +2% at constant currency, and the operating margin improved to 5.9% of sales (+0.4pt). The currency effects were negative by SEK-60m (vs SEK-60m in Q3 15). The increase in group operating income was attributable to the Husqvarna division (SEK368m, +14%), the Construction division (SEK155m, +8%) and the Consumer Brands division which reduced its operating losses (SEK-80m vs SEK-119m in Q3 15). Conversely, the Gardena division had lower operating income, or SEK50m (vs SEK113m in Q3 15), due to the lower sales of the highly-profitable watering products. Group net profit was SEK206m (+5%) after a surge in net financial costs (+49% to SEK-124m including a negative currency effect) and a lower income tax rate (33.2%, -5.9pts) considering that there was a one-off tax item in Q3 15. On 9m 2016, the operating cash flow increased to SEK3.1bn (+22%) after a decrease in the change of WCR. FCF reached SEK2.1bn after net capex of SEK996m (+5%). On 30 September 2016, financial net debt (excluding the provision for pensions) was reduced to SEK3.8bn (-12%) and represented 27% of total equity (vs 32% on 30 September 2015).
Good operating performance despite lower sales
15 Jul 16
Q2 16 figures Sales reached SEK11,504m (-6%). Organic sales were down 4% due to the drop of the organic activity in the Consumer brands division (-24%). Conversely, the other divisions showed positive organic sales growth, respectively +3% for Husqvarna, an impressive +13% for Gardena, +4% for the Construction business. The gross margin surged to 34.2% of sales (+3.2pts), reflecting stable prices, a favourable product mix, lower material costs and efficiency improvements. The group’s operating income increased to SEK1,729m (+3% and +5% excluding the negative currency effect), representing an operating margin of 15% of sales (+1.3pts). This included a negative currency impact of SEK-170m split as follows: SEK-100m in the Husqvarna division, SEK-30m in the Gardena division, SEK-65m in the Consumer brands division, and SEK+25m in the Construction division. The improvement in the operating result was mainly attributable to the Gardena division, SEK449m (+13% and +14% at constant currency) and the Husqvarna division, SEK1,031m (+3% and +4% at constant currency) which more than offset the lower contribution of the Consumer brands division, SEK147m (-17% and -12% at constant currency). In the Construction division, the increase in the operating income, SEK179m (+12% and +15% at constant currency) was due to the positive currency effect principally. Group net profit was SEK1,255m (+10%) after lower net financial charges (SEK-72m vs SEK-139m in Q1 15) mainly due to currency effects, and a lower income tax rate (-1.6pts to 24%). Key items in H1 16 Sales reached SEK22.9bn (-1% and +1% organically), the operating income improved to SEK2,895m (+4% and +5% organically) taking into account a negative currency impact of SEK-380m (vs a positive impact of SEK200m in H1 15) and the group net profit was SEK2,014m (+5%). The cash flow from operations increased to SEK1,339m (vs SEK734m in H1 15) thanks to lower inventories reflecting the lower demand in North America and a decrease in the change of trade receivables. Capital expenditure increased to SEK632m (+4%). Free cash flow surged to SEK707m (vs SEK126m in H1 15). Finally, the financial net debt reached SEK5bn (vs SEK5.8bn in H1 15) and represented 36% of shareholders’ equity.
Negative currency effects offset at Group level
22 Apr 16
Q1 16 earnings Sales reached SEK11,361m (+4%). Excluding currency effects, sales increased by 5% (vs -3% in Q1 15) thanks to organic growth in all divisions (Husqvarna: +4%, Gardena: +17%, Consumer Brands: +2%, Construction: +6%). The gross margin improved to 27.8% of sales (+0.6pts). The operating income was SEK1,166m (+5%, +6% excluding currency effects) and corresponded to a margin rate of 10.3% of sales (+0.1pt) despite hugely negative currency effects as expected (SEK-215m vs SEK+107m in Q1 15). The increase in operating income was attributable to the Gardena division (SEK226m, +11%, margin rate of 14.9% of sales, -0.6pt), the Consumer Brands division (SEK64m vs SEK-11m in Q1 15, margin rate of 1.9% of sales, +2.2pts) and the Construction division (SEK89m, +20%, margin rate of 9.2% of sales, +1.2pt). The Husqvarna division was the only division to report lower operating income (SEK844m, -6%, margin rate of 15.5%, -1.3pt) and was the most affected by the negative currency effects (SEK-135m). The Group net profit was SEK759m (-3%) after higher net financial expenses (SEK-142m vs SEK-55m in Q1 15) and a fairly similar income tax rate (25.7%, +0.2pt). Husqvarna traditionally has negative operating cash flow in Q1 due to inventory build-up. The negative operating cash flow was reduced to SEK-1,426m (vs -2,167m in Q1 15) due to a lower increase in the change of inventories. Capital expenditure increased to SEK311m (+28%). Finally, the financial net debt reached SEK6.7bn (vs SEK8.2bn in Q1 15) and represented 49% of shareholders’ equity.
Satisfactory Q4 15, challenging Q1 16 in perspective
08 Feb 16
+Q4 15 figures+ Sales reached SEK5,672m (+7%, +2% organically). Organic sales growth was driven by all divisions (Husqvarna, Gardena, Construction: all +6%) except for the Consumer Brands division (-10%). The operating loss was SEK365m (vs SEK-1,032m including a goodwill impairment loss of SEK767m in Q4 14). It included additional restructuring charges of SEK153m and a negative currency impact of SEK45m. Excluding the restructuring costs, the operating loss was reduced to SEK212m (vs SEK-265m restated in Q4 14). The Husqvarna and Construction divisions had a positive contribution (respectively SEK65m and SEK87m) while the Gardena and Consumer Brands divisions were loss-making but had opposite trends (Gardena: SEK-123m vs SEK-186m in Q4 14, Consumer Brands: SEK-168m vs SEK-158m in Q4 14). Group net loss was SEK238m (vs SEK-961m) after higher net financial expenses (SEK-67m vs SEK-49m in Q4 14) and income tax of SEK193m. +FY2015 figures+ Husqvarna posted sales of SEK36,170m (+10%, -1% organically). The decline in organic sales was attributable to the Consumer Brands division (-16%) while the Husqvarna, Gardena and Construction divisions performed very well (respectively +6%, +8% and +6%). The reported operating income surged by 79% to SEK2,827m. Restated from the restructuring charges (SEK153m in 2015) and non-recurring items (impairment loss of SEK767m in 2014), operating income increased by 27% to SEK2,980m and included a positive currency impact of SEK110m (o/w SEK200m in H1 15 and SEK-90m in H2 15). Group net profit was SEK1,883m (vs SEK820m in 2014) after net financial expenses of SEK-344m (+6%) and lower income tax rate (24% vs 34% in 2014 due to the impairment loss which was non-deductible). In 2015, operating cash flow increased to SEK3.0bn (+9%) and FCF pre-dividend increased to SEK1,731m (+24%) taking into account lower net capex of SEK1,325m (-6%). The dividend paid to shareholders amounted to SEK945m. At year-end 2015, the financial net debt was reduced to SEK4,980m (-8%).
Exceptional performance at Gardena
21 Oct 15
Husqvarna had quite a good Q3 15, characterised by an exceptional performance of the Gardena division, the continuing weakness of the Consumer Brands division and adverse currency effects at the group operating level. Q3 15 results: Sales reached SEK7.3bn (+8%, flat organically compared to +3% last year). Organic sales grew for Husqvarna (+3%), Gardena (+19%) and the Construction activity (+7%). The Consumer Brands division was the only one to have lower organic sales (-18%). The operating income increased to SEK405m (+22%) and the margin rate improved to 5.5% of sales (+0.6pt). This improvement was attributable to the Gardena division (SEK113m vs SEK-7m restated in Q3 14) and the construction business (SEK144m, +35%), both having benefited from higher volume and a favourable product-mix. The operating loss was slightly reduced in the Consumer Brands division (SEK-119m vs SEK-138m restated in Q3 14) while the Husqvarna division was the only one to have a lower contribution (SEK321m, -26%) due to lower production volumes and an unfavourable product-mix (earlier selling of winter products such as snow-blowers). As expected, the currency effects turned negative at the operating level (SEK-60m). Group net profit was SEK197m (-1%) after an increase in the net financial costs (+19% to SEK-83m) due to a higher average interest rate on borrowings (3.9% vs 3.5%) and a surge in the income tax rate (c.39% vs 24% in Q3 14) due to higher income in countries with higher tax rates and a one-time tax item. On 30 September 2015, the financial net debt (excluding the provisions for pensions) amounted to SEK4.3bn (-12%) and represented 32% of total equity (vs 38% on 30 September 2014). The operating cash flow declined to SEK2.3bn (-10%) due to an increase in the change of trade receivables. It was used to fund significant capex (SEK947m, +5%). The cash out-flows do not include the second part of the dividend that will be paid on 28 October 2015 (SEK1.10/share following SEK0.55/share paid in April 2015).
M&A coming to a company near you?
16 Mar 17
Markets have retained their relative strength over the last fortnight. We have seen a mixed reaction to the Budget last week, the passing of the Brexit Bill earlier in the week and the first interest rate hike by the Federal Reserve in the US yesterday. Against this backdrop, we have seen some notable M&A activity across a range of sectors which may move down the market capitalisation scale. We now face an extended period of heightened speculation but “no running commentary” regarding Brexit in the UK after Article 50 is triggered at the end of the month.
Panmure Morning Note 20-03-2017
20 Mar 17
Today’s strong H1FY17 trading statement is encouraging on multiple levels; (1) H1FY17’s revenue growth of c.+23% to £32m indicates revenue growth running well above our forecast assumption of +15% for FY17 (August 2017); (2) the revenue growth continues to be broad-based across the two main brand groups (Focusrite and Novation) and all of TUNE’s global regions (USA, Europe, and RoW); (3) H1FY17’s constant currency revenue growth of c.+12% is a sequential acceleration from the c.+9.5% of H2FY16 and c.+5.5% of H1FY16; and (4) H1FY17’s net cash of £9.4m is well ahead of our forecast of £7.7m by August 2017, reflecting strong revenue/profit conversion combined with much improved w/c control. In short, we think there is excellent scope for our FY17 forecasts to be raised at the time of the H1FY17 results on May 3. We maintain our BUY.
20 Mar 17
Focusrite has positioned itself in a way that makes its shares a particularly attractive investment: leadership in a niche product area protected from general consumer swings; an international market structure that makes it relatively currency agnostic; a habit of profit over delivery; a strong and further strengthening balance sheet; and an undemanding valuation. This first half trading statement confirms every one of those points.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.