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Disappointing Q3 17, good growth on a rolling 12m period

Q3 17 was below expectations. The main disappointment was sales with total growth of +1% and +4% excluding the currency effects and including a scope effect in the Construction division. Restated to before the change in perimeter, organic growth is estimated at c.+2%, below our expectation (+5%E). Q3 17 figures: - Sales reached SEK7,449m (+1%, +4% at constant currency). Restated to before the change in perimeter (Pullman Ermator and HTC in the Construction division), organic sales are estimated at 2%. Organic sales growth at Husqvarna (+2%), Gardena (+3%) and the Construction activity (+5%) were all below expectations. Organic sales decreased in Consumer Brands (-5%). - Operating income was flat at SEK433m (+0.5%) due to restructuring costs of SEK50m in the Construction division related to the integration of the acquired companies. This was not a surprise as restructuring costs (SEK65m estimated) were announced in August 2017. Conversely, the currency effect was positive at the operating level (SEK+40m). The reported operating margin was rather stable (5.8% of sales, -0.1pt) and would have been higher excluding the restructuring costs (6.5% of sales). - Group net profit was SEK210m (+2.4%) after lower net financial expenses (-16%) and higher income tax rate (+3pts to 36.2%). 9 months 2017: - Sales reached SEK33,264m (+10%, +7% at constant currency and including a positive scope effect). Operating income was up to SEK3,860m (+16%), corresponding to a margin rate of 11.6% of sales (+0.6pts). Group net profit was SEK2,593m (+16.8%) after higher net financial expenses (+8%) and a rather stable income tax rate (+0.1pt to 25.6%). - The operating cash flow surged by 23% to SEK3,776m after a favourable change in inventories while capex increased by 9% to SEK1,147m. Investments in shares were significant (SEK1,628m) and corresponded to the acquisitions in the Construction division. - On 30 September 2017, total net debt (net financial debt and pension liabilities) amounted to SEK6,440m, close to the level in Q3 16.

  • 20 Oct 17
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