Husqvarna Issues Second Profit Warning

Husqvarna has issued its second consecutive profit warning on Tuesday, causing shares to drop over 6% as the company faces tough market conditions and reduced consumer spending.

The Swedish manufacturer now expects a 5% fall in organic growth for the fourth quarter, which is slightly worse than the anticipated 4.6% decline according to analysts surveyed by FactSet.

The company is also forecasting a drop in operating income, with estimates predicting a loss of SEK 700 million to SEK 800 million, significantly steeper than the SEK 326 million loss expected by market consensus.

Factors Impacting Business

This grim outlook is attributed to several factors affecting Husqvarna's business:
– Margins are squeezed by heightened promotional activity.
– Factory capacity is underutilized.
– An unfavorable product mix.

Affected Segments

The affected segments include:
– Gardena brand in Europe.
– Husqvarna's Forest and Garden and Construction divisions in North America.

These areas usually more profitable are now contributing to a less favorable overall product mix, impacting the company's performance, with more than half of its product range affected by the market slowdown.

Future Outlook

Despite these challenges, Husqvarna remains cautiously optimistic about a recovery in 2025. Analysts at Jefferies highlight that the company has a robust product launch pipeline, including the introduction of 13 new robotic lawn mower models, which could help stimulate demand and offset the current slump.

Cost-Saving Measures

Alongside these efforts, Husqvarna continues to pursue cost-saving measures. The company announced a new program in the third quarter aiming to reduce fixed costs by SEK 500 million, with total expected savings of SEK 1.7 billion, nearly SEK 1 billion of which has already been realized.