Husqvarna AB (HSQVY) Q2 2025 Earnings Call Highlights: Strong Growth in Robotics and Debt Reduction
Operating Income: Increased by 7% to SEK2,041 million, with a 1% point margin improvement.
Direct Operating Cash Flow: SEK2.4 billion in the second quarter.
Net Debt Reduction: Reduced by SEK3.3 billion compared to the same period last year.
Robotics and Battery Sales: 22% of group sales, up from 20% on a 12-month rolling basis.
Husqvarna Forest and Garden Division: 5% organic sales growth and 13.3% operating margin.
Gardena Division: 7% organic sales growth and 17.5% operating margin.
Construction Division: 4% organic sales decline, but improved operating margin to 12.7%.
Inventory Reduction: Reduced by close to SEK3 billion compared with last year.
Net Debt/EBITDA Ratio: Improved to 2.3% from 2.5% at the start of the year.
Currency and Tariff Impact: Negative currency impact of SEK125 million and tariff impact of SEK65 million in the quarter.
Warning! GuruFocus has detected 9 Warning Signs with HSQVY.
Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Husqvarna AB (HSQVY) reported a 5% organic growth in net sales for the second quarter of 2025, driven by strong performance in the Forest and Garden and Gardena divisions.
The company achieved a 7% increase in group operating income, with an improved EBIT margin across all three divisions.
Robotic mowers and watering products showed strong performance, contributing significantly to the company's growth.
Husqvarna AB (HSQVY) successfully reduced its net debt by SEK3.3 billion compared to the same period last year.
The company made significant progress on its sustainability agenda, achieving two out of three sustainable targets, including a 55% reduction in CO2 emissions.
Negative Points
The macroeconomic environment remains uncertain, with ongoing trade tariffs, geopolitical instability, and currency fluctuations impacting the company.
North America continues to be a challenging market, with lower sales and operating income across all three divisions.
The company faced a negative currency effect of SEK125 million and a negative price impact of SEK160 million in the quarter.
The Construction division experienced a 4% decline in organic sales, primarily due to weak market conditions in North America.
Despite strong growth in the robotic segment, the company faced intense competition and aggressive pricing, particularly in the entry-level segment.
Q & A Highlights
Q: Can you confirm whether the market for robotic mowers grew faster than Husqvarna's 14% growth, and was there a pipeline fill impacting this growth? A: The market has grown, particularly in the pro segment where Husqvarna maintains market leadership. In the mid-market and entry segments, the market grew larger than Husqvarna's growth. The retail pilot is still marginal and not significantly impacting sales figures.
Q: Given the price adjustments in the lower end of the robotic mower category, will Husqvarna continue to invest in this segment despite price headwinds? A: Husqvarna remains committed to the entry-level segment as a premium brand, ensuring brand value and reliability. The company leverages synergies across its product range and has no intention of exiting the entry-level segment, which complements the Gardena watering range.
Q: Are dealers in Europe increasingly multi-sourcing robotic mowers, and how does Husqvarna plan to address competition from Asian manufacturers? A: While competition is increasing, Husqvarna's core dealer network remains loyal, and the company continues to focus on R&D and innovation. Some dealers carrying other brands may introduce new entrants, but Husqvarna's sales growth indicates strong dealer trust.
Q: What is the current share of boundary wire-free robotics within residential sales? A: The share of boundary wire-free robotics in residential sales has increased to 75% in value, indicating strong consumer preference for these products.
Q: Has there been any pre-buying in the US due to tariffs, and what is the expected impact of tariffs in the second half of the year? A: There has been no significant pre-buying due to tariffs. Husqvarna expects a net negative impact of SEK100 million from tariffs in the second half of the year, despite mitigation efforts such as price increases and supply chain adjustments.
Q: What factors contributed to the 4% sales decline in the construction division, and how did different regions perform? A: The sales decline in the construction division was primarily due to weak performance in North America, partially offset by stable growth in Europe and other regions.
Q: At what point does it make sense to start producing robotic mowers locally in North America? A: While Husqvarna is pleased with the growth of its robotics business in North America, significant volume increases would be needed before considering local production. Current production in Europe is beneficial due to tariff considerations.
Q: How does Husqvarna view the profitability of its robotics segment, particularly in the entry-level category? A: The robotics segment is margin accretive in the mid, premium, and professional categories but faces profitability challenges in the entry-level segment due to aggressive pricing competition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Barcelona teenage sensation has asked to leave this summer
According to Mundo Deportivo, it has come to light that young forward Jan Virgili has informed Barcelona of his desire to leave the club. The 19-year-old believes that continuing in the fourth tier with Barça Atletic does not align with his personal ambitions. This decision has reportedly surprised the club, who still see Virgili as an important part of their B team project. Despite this unexpected request, Barcelona will not stand in his way, provided that an interested club meets their financial demands. The Catalan giants are asking for a €4 million transfer fee along with a 50% sell-on clause for any future move. Mallorca have already shown interest in the player and are monitoring the situation closely. Player seeks more competitive football Virgili's stance is clear that he no longer feels challenged by playing in Spain's fourth division and wants to take a step up in his career. Jan Virgili wants to leave Barcelona. (Photo by) From his point of view, staying with Barça Atlètic doesn't reflect his potential or help his progression. On the other hand, Barcelona believe that he is still in a developmental stage and would benefit from regular game time in the reserves. They see the B team as a direct pathway to the first team. Barça have stressed that, while they are disappointed with Virgili's decision, they will remain firm. The message to him and any other youngster considering a similar move is to bring a suitable offer, or continue developing within the structure. So far, no other young player has voiced such dissatisfaction with the club's development path. Barça continue to believe in their academy and the value of Barça Atletic, despite their relegation. The club is committed to giving its best talents a chance, but only within a framework that benefits both the player and the institution.
Yahoo
23 minutes ago
- Yahoo
Euro zone consumers cut near-term inflation expectations, ECB survey shows
FRANKFURT (Reuters) -Euro zone consumers reduced their inflation expectations for the next year in June, supporting indications that the most recent episode of runaway price growth is over, a survey from the European Central Bank showed on Tuesday. The ECB halved interest rates to 2% from 4% over the past 13 months but kept borrowing costs steady this month, on the premise that inflation is now back at it 2% target and would remain there over the medium term. Consumers' median expectation for inflation over the next 12 months fell to 2.6% in June from 2.8% a month earlier, while expectations for three years ahead were steady at 2.4% and five years out were unchanged at 2.1%, the ECB's survey of 19,000 adults showed. Although consumer bets are not always the best gauge of actual price trends, the ECB places great emphasis on expectations and closely watches an array of indicators, since they could impact wage setting, which then influences prices. Consumers' expectations for nominal income growth over the next 12 months was steady at 1.0% last month, with higher income individuals lowering their expectations and lower income groups raising them, the ECB said.
Yahoo
23 minutes ago
- Yahoo
Jeep owner Stellantis says has turned corner
Jeep owner Stellantis said Tuesday it sees sales revenue and profitability rebounding in the second half of the year despite taking a 1.5-billion-euro ($1.7-billion) hit from US tariffs. The 15-brand group that also includes Peugeot, Citroen and Fiat, confirmed the preliminary announcement it made last week of a 2.3-billion-euro net loss in the first half of the year, as sales in North America continued to slump on an annual comparison. But Stellantis's new chief executive, Antonio Filosa, said the automaker is beginning to see "gradual improvement" in sales volumes and revenues on a sequential basis "despite intensifying external headwinds". Like some of its rivals, Stellantis had suspended financial guidance due to the uncertainty surrounding US tariffs and regulatory changes, but it said it now sees an increase in revenues in the second half of the year as well as operating profit margin in the low single digits. Under former chief executive Carlos Tavares the company had long targeted a double-digit margin, but it fell to just 0.7 percent. Stellantis also put a figure on the impact of the 25 percent US tariffs on auto imports: 1.5 billion euros for 2025 overall, of which 300 million euros was incurred in the first half of the year. Part of the turnaround was taking a 3.3-billion-euro charge, which Stellantis announced last week, which took into account the costs to adapting to new US regulations. Trump's massive tax and spending legislation, approved earlier this month, removed the penalties for not respecting the so-called CAFE fuel economy targets, meaning automakers can produce and sell more higher polluting cars in the United States. This is allowing Stellantis to bring back a number of models, including pickup trucks and muscle cars, that had been phased out because of their internal combustion engines to meet fuel efficiency targets and pollution limits. Stellantis said this and a "product wave" of 10 new models this year would support future performance. Company veteran Filosa took over as chief executive in June, half a year after Tavares left, in large part to haemorrhaging sales in North America. Filosa has shook up the company's management team and moved swiftly to jettison two billion euros of programmes considered as having poor prospects to quickly turn a profit, such as hydrogen fuel cell vehicles. Stellantis shares slumped 3.7 percent in trading on the Paris stock exchange, which was up 0.5 percent overall. Stellantis shares have lost around 37 percent since the start of the year and 70 percent from their peak early last year. tsz/rl/yad Sign in to access your portfolio
