Husqvarna AB (publ)

Good morning, everyone, and welcome to the presentation of the first quarter results 2026 for Husqvarna Group. My name is Emelie Alm, and I'm joined here today by our CEO, Glen Instone; and our CFO, Terry Burke.

So Glen and Terry will walk you through the presentation, and then we will have a Q&A session. [Operator Instructions] So with that, I would like to hand over to you, Glen.

Thank you, Emelie, and a warm welcome from my side. So let's jump straight into the presentation.

Q1, to summarize, off to a very solid start despite, of course, the continued uncertain market sentiment that we see out there, particularly around geopolitical tensions. We've seen a strong growth in our core portfolio, our key strategic growth areas.

We're very pleased that our EBIT has expanded with some 10% given the strong product mix, but also a very good start to our savings program. From a strategic execution perspective, we've got a very good 2026 ahead of us in terms of product launches, and Q1 has started very well when it comes to our product launches ahead of the season.

We made a very good start around the strategic portfolio management that we launched back in December, and we'll come back to that later in the presentation. So all in all, 2% organic sales growth, EBIT expansion to just over SEK 1.7 billion and a 12.3% operating margin.

So to highlight some of the strategic areas during the quarter. Innovation.

We're very, very proud, and I'm really happy to really talk about our innovation that we're bringing to the market in season '26. All 3 divisions are contributing here.

Very happy to see the strong range of residential robotic lawnmowers that are coming for the small and midsized gardens, our 300 Series range, really moving the needle towards boundary wire-free AI vision technology. We also have an enhanced range of 400 Series product under the NERA brand, NERA range that also continues to expand and enhance our vision offering.

Likewise, in the Gardena division, a strong range of watering products that really enhanced the first quarter result with the simply classic range of nozzles and sprayers as well as a strong range of watering controls. In Construction, we've actually brought a good new range of floor saw blades to the market that really enhances our sawing and drilling business portfolio unit.

So that's just a flavor of what we brought during the first quarter. So a strong innovation pipeline already coming through in the first quarter.

From a portfolio management perspective, when we launched this in December, we continue to enhance our operating model. This is where we will look much more strategically at our portfolio, grow in certain areas and, where we are not performing as well as we should be, we clearly need to turn it around or, in some cases, exit that portfolio.

What I am pleased to see is we already see early signs of this coming through, and we see that in the results. We've enhanced a lot of our leaders.

We've changed some leaders during the first quarter of this year to really drive those business portfolio units. So the operating model starts to get traction.

Operational excellence. I'm really pleased that we got off to a good start when it comes to our savings program.

We launched a SEK 4 billion cost-out program, and we've made a good start with some SEK 245 million in the first quarter, really coming through from some savings we found in sourcing and actually simplifying design, really, really supported by a strong complexity reduction already during the first quarter. So all in all, off to a good start.

If we look at the sales development. Then as reported, our sales was minus 5%.

That is actually including a currency headwind of minus 7%. So organically, we grew with 2%.

We've seen organic growth in the Husqvarna Forest & Garden division with 3%, growth in the Construction division with 1% and a 1% organic sales decline in Gardena. As mentioned, very strong growth in our key portfolio areas, particularly around robotics, watering and handheld products.

What I am pleased to say is actually we've seen a growth in all of our regions so far in quarter 1. So we're very pleased to see that.

It's been some time since we've reported a strong growth or growth across all of the regions. Just to remind you what we launched back in December around the business portfolio units.

We'll come back to this time and time again. We have clear segments that we're operating in what we call profitable growth.

You see there are 5 key business portfolio units. Really pleased to actually say 4 of the 5 have shown growth actually during the first quarter of 2026.

In the middle of the page, we have 3 which we are in increased profitability, where we really expect to grow in line with the market. In the profitable growth segment, we expect we can grow actually beyond the market.

On the left-hand side is the turnaround segments where actually we've seen a continued challenge during the first quarter in all 3 of those areas. We'll come back -- and I'm very pleased actually with the plans we have in place around all of the areas, but particularly around the turnaround business portfolio units.

And we'll come back to you in due course and report on them. From an earnings perspective, Terry will take us through the bridge later in the presentation.

But as mentioned, we managed to expand the operating income to just over SEK 1.7 billion from SEK 1.56 billion in the prior year, resulting in a 12.3% operating margin corresponding to 10.6% last year. And really, this is a volume increase, a price increase, improved product mix, but also the result of strong cost savings.

We did, however, have a currency headwind as well as a tariff headwind that culminated to some SEK 115 million and, again, Terry will take us through more of the details later in the presentation. Going into the divisional performance.

If we look at Husqvarna Forest & Garden first. We saw a 3% organic sales growth, growth in all regions, which we're very pleased to see and growth in our key segments: key segments of robotic lawnmowers and key segments of handhelds.

Both residential robotic lawnmowers grew as well as the professional robotic lawnmowers. So very pleased to see.

So from an earnings perspective, of course, we got an improvement from the volume and improvement from the mix, but also, of course, a contribution from the cost-out program. There was a slight positive tailwind from FX impacting the Forest & Garden division, which, of course, also improved the margin.

From a Gardena perspective, the top line organically declined with 1%. However, I would say it is fairly polarized.

And by that, I mean we saw a strong growth in the strategically important watering business portfolio unit and a continued decline in the Powered Garden area. So strong, strong growth in watering, as I said, and we're very pleased to see that.

However, the challenge remains around the Powered Garden business portfolio unit, and we'll continue to define and refine that turnaround plan, and we'll come back in due course. But I'm very pleased with the plans that the team have in place to turn around this BPU.

So despite the tough top line, actually, the division managed to improve the earnings, which we're very pleased to see. So we actually saw a 10% expansion in the EBIT, really driven by strong product mix because of the watering growth and a continued strong development around the savings program, negative impact from lower volumes, negative impact from tariffs and also a slight negative impact from FX of some SEK 13 million.

Moving over to Husqvarna Construction division. We actually saw a growth of 1% organically.

Actually, we saw a growth in the North America region and a softer European situation. However, strong growth when it comes to sawing and drilling, one of the profitable growth areas within the portfolio, and also growth when it comes to surface preparation as well as a strong aftermarket development in the quarter.

However, a continued negative when it comes to the Compaction Placement and Demolition part of the portfolio, again, in the left-hand side of that previous page I showed you. Construction is actually more exposed to FX, and we saw a negative headwind of some SEK 43 million because of the heavy presence in North America but also actually a negative headwind by way of tariffs and raw materials.

So despite those headwinds, we still managed SEK 110 million in operating income in the quarter for Construction. So all in all, we're very pleased with the divisional performance.

At that, Terry, I pass over to you.

Thank you, Glen, and good morning from my side to everybody. The Q1 EBIT bridge: 2% organic sales growth and a 10% EBIT growth moving to a 12.3% margin.

If I walk you through the bridge, starting from the left going over to the right. We had a positive volume impact in the quarter.

As we talked about, we had organic sales growth and we also had favorable mix. The favorable mix was really coming from robotics growth, handheld growth and watering growth.

Those were the main drivers for the positive mix. However, this was partly offset by inflationary cost pressures that we've incurred during the first quarter.

Moving on to the next bucket, cost savings. We've delivered SEK 245 million of cost savings during Q1, and we feel very pleased about that.

We have guided roughly SEK 800 million for the year. We still hold to that SEK 800 million.

We were able to take, let's call it, perhaps some of the lower-hanging fruit early in the year. So that feels good that we're able to address that, and we continue to drive our cost saving program.

As Glen mentioned earlier, cost savings predominantly coming through from sourcing and design to value. Moving on to price.

We had a small positive price. This is a net price improvement in the quarter.

We did have price decline in the robotics. And of course, the other categories had a positive price development, ending up with a small net positive in price.

Transformational initiatives is something, of course, we want to continue to invest in. These are our strategic areas.

And we invested some SEK 50 million during quarter 1. Currency, we had quite a significant currency headwind last year.

This has now slowed down. We only have a negative SEK 30 million in quarter 1.

So that was good to see that, that's starting to play out. Just to give you some feel for how we see currency for the rest of the year, we expect another negative quarter in quarter 2 and then a slightly positive in the second half of the year.

So for the full year, we expect a negative currency of some SEK 60 million to SEK 100 million negative, depending, of course, how it plays out. Tariffs in quarter 1 was a gross negative SEK 85 million.

Our previous predictions, previous tariff rates, we talked about some SEK 200 million to SEK 250 million gross headwind for this year. We now see that being around a negative SEK 150 million, so a slightly improved situation from the tariffs.

So negative SEK 85 million, and the rest of that SEK 150 million negative direction will come during Q2. So with that, we landed just above SEK 1.7 billion of EBIT, 12.3% margin.

Cash flow. Maybe the first thing to point out is we have changed the way we report cash flow, just to make people aware that now, going forward, we will talk about free operating cash flow.

Previously, we reported on direct operating cash flow. What you can see in the quarter was a negative SEK 1.1 billion.

And really, this is impacted by timing, and the real movement was the change in net working capital. There's two elements to that.

One is we currently stand with higher accounts receivable at the end of Q1, and that was really driven by a stronger sales development in the second half of Q1, which meant we ended the quarter with higher accounts receivable. The second one was we had lower trade payables.

And I would say we are more normalized on our trade payables levels now. Last year was slightly inflated.

So a more normalized situation there. But there are timing issues for both of them, and worth pointing out, quarter 1 is traditionally a negative cash flow quarter.

Return on capital employed, one of our new financial targets and metrics that we launched in the Capital Markets Day in December. We've improved our return on capital employed to 7.6% from a 6.5% same time last year.

So it's good to see how we've started to see an improved situation here. That's really driven by a couple of factors.

First of all, we have an improved operating income. And secondly, we are seeing lower capital employed, which you can see on the chart in front of you, around SEK 3.5 billion on average lower capital employed over the last 12 months.

And that's really driven by we've lowered our borrowings. We've had a couple of good years of cash flow, we've been able to lower our borrowings, and that has had a positive effect.

So good development on the return on capital employed. Balance sheet.

We continue with a solid balance sheet and a good financial position. Maybe a couple of things to call out here.

Inventory, we are some SEK 900 million higher. If you adjust for currency, it's actually just above SEK 1 billion higher inventory.

And we would say we are ready for the season to start. Quarter 1 is a sell-in season.

Quarter 2 is really, we talk about, where the music plays and the sellout when the season starts. So we have good season readiness.

We have good inventory around us. So we're ready to go for the season.

Trade payables, I did already cover that in the cash flow part. But just again to highlight, we have higher trade receivables.

It's a timing effect due to the stronger sales development in the second half of Q1. Borrowings, we've lowered by some SEK 1.5 billion compared to March '25, as you can see.

And trade payables, as I mentioned earlier, some SEK 1 billion lower, and that's really again a normalized situation this year compared to slightly above normal last year timing effects. So moving on to our debt position.

Our net debt/EBITDA ratio is now at 2.0 compared to 2.5 this time last year. So again, we're driving this in the right way.

We lower our borrowings. Our net debt position is SEK 13.8 billion, which is pretty flat to previous year, which was around SEK 13.7 billion at that time.

So a good progress on our net debt/EBITDA. Our debt maturity profile, I would say, is healthy, as you can see in the bottom chart here.

And we also successfully refinanced a new 5-year bond of some SEK 1.1 billion during February 2026. We remain investment grade, BBB- with a stable outlook.

With that, Glen, I pass back to you.

Thank you, Terry. And just to wrap up the quarter 1 presentation.

So as said, a solid start to the season despite the uncertainty we see in the world. Organic sales growth of some 2%, growth in 2 divisions and a slight decline in one.

A good expansion of our operating income, some 10% expansion driven from volume improvement, a stronger mix and a good start to the savings program. From a strategic perspective, just zooming out, good product launches, a great innovation pipeline.

We're making good progress with the strategic portfolio management. So I'm very, very pleased with the start of the year.

Good savings, good innovation and operating model starts to get momentum. So with that, Emelie, I think I'll pass back to you.

Super. Thank you, Glen, and thank you, Terry.

So with that, we would like to open up the Q&A session. And I will actually start with one question from the webcast, and it's from Adela Dashian from Jefferies.

And I mean, we updated the tariff guidance already so you have this scenario in there already. But how do you see the April change to the Section 232 impacting our tariffs?

Yes. And that is all included in the communication that I gave you.

We think we see a roughly exposure of SEK 150 million gross tariff impact for the year. As I said, SEK 85 million is already taken in Q1.

So there's a little bit more to come. But I think the important thing is, of course, mostly mitigated through price increases.

Thank you. And operator, do we have any questions on the conference call?

Maybe first question on demand. We've seen consumer confidence coming down quite significantly, at least in some countries.

Can you say anything about how consumers have reacted initially? I know it's early in the season, but any signs from that in terms of consumer behavior?

Fredrik, I think it's fairly early to say. Of course, as we mentioned, Q1 is our sell-in quarter, really preparing for the season.

And now we're hoping that Q2 is, we often say, where the music plays, where the demand really happens. So I think it's a little bit early to say, but we're very, very happy with our sell-in and very, very happy with our strong product launches.

But too early to say around the consumer demand at this point.

Okay. Fair enough.

And then a follow-up on the amendment of the 232 tariff. So you lowered the tariff guidance a little bit.

Is that due to the amendment of Section 232?

It's all factors considered. Of course, there's been quite some changes.

So I think it's a lot of moving parts. But ultimately, it's everything that we know of today and, of course, it can change.

But everything that we know of today is all baked into those numbers that we communicate now.

Okay. But should we assess that under this new sort of tariff structure, you actually expect lower tariffs?

Yes, yes.

Okay. Okay.

Good. And then on the current raw material cost inflation, can you say anything about what you're expecting in terms of input cost inflation and where you potentially could expect that to hit your P&L in terms of timing?

Yes. If we look at this, of course, what's going on in the world right now, particularly the Strait of Hormuz impact, we're seeing that would impact us across two areas, raw materials and logistics.

We think full year impact this year would be around SEK 300 million as we know today, if it continues through the remainder of the year. That will be SEK 100 million secreting to logistics and SEK 200 million relating to raw materials.

And really, the main raw materials that are impacted are plastics, aluminum and steel. And they take account of about 60% of our raw materials, and they are three main raw materials that are exposed.

But we would see again around SEK 200 million from raw materials in the remainder of the year given what we know today. But just to highlight though, of course, mitigated by price.

We will pass that price on. Yes, that's the gross impact.

Very clear. And last one maybe.

And potentially I missed this, the line broke up a little bit, but did you say anything about the growth in robotics?

We did. So we had a strong growth in robotics actually, particularly if I look at this in the three areas, we should say.

Strong growth in professional robotics under the Husqvarna brand, strong growth in residential Husqvarna robotics as well. And we actually saw a decline in the Gardena-branded robotics, but overall, a growth in robotic lawnmowers.

Talking a little bit about the good development in Q1 and what that is telling you. I mean, are we basically saying that the expectation are kind of downbeat and this is kind of a normalization?

Or do you believe that retailers and dealers are turning more positive on the season, betting on the staycation kind of environment, if you understand that?

Yes. There's probably a part of that in there, Bjorn.

I think the big thing is during your Q1, it's very much preparing for the season. Strong portfolio, strong innovation, so a strong sell-in in preparation for the season.

That's how we're seeing this. Anything to add, Terry?

I think we can only control, of course, what we can control and we feel in a good position going into the season. Of course, it's highly uncertain how things are playing out.

But there is an argument for a positive staycation effect, but there is also a counterargument of weak consumer sentiment, holding their money given the highly uncertain times and cost of living increases. So it's very, very difficult for us to judge and have an opinion.

But we're ready for the season to start.

But given that Q1 developed well, I mean, that must say something about sentiment among dealers, although they're coming from low level, if you understand what I mean.

Yes. That's absolutely valid, Bjorn.

We do see maybe a positivity from our channel partners that are willing to take in the inventory. And of course, they've selected Husqvarna Group as their supplier.

So that is a positivity. And again, well prepared for the season with what we have in the channels.

Yes. And second question, I mean, you're talking a bit about the inventory situation that you are well prepared but, also again, that it's very uncertain given where the world is here and now.

How should we think about that, I mean, if it's not developing along the lines of your expectation? Are we in a difficult situation?

Or how should we look upon this level of inventories?

So I think you look at inventory in sort of two lenses here. One, of course, is our inventory that we hold in preparation for the season.

And as Terry mentioned, this is slightly higher in preparation for Q2, and we feel well prepared. And then, of course, is the inventory with our trade partners as well that we monitor.

And again, we seem to be on a somewhat normalized level overall with our trade partners, 1 or 2 high levels on some segments. But we're keeping a very, very close eye on the inventory levels both, of course, with our trade partners and also making sure we address our own internal inventory levels.

Okay. And then maybe a quick one on the Gardena robotics.

You talked about it was a decline. Was this a little bit of an intentional decline?

Or I mean, are you losing share due to that you don't want to participate full out? Or is it a mix within the mix situation, where low end of the low-end robotics are perhaps growing better, et cetera?

No, we did expect a decline this year. It's a double-digit decline for robotics.

We knew that from the listing situation. We knew that from the competitive landscape.

So it was very much in line with what we thought going into the year. At the same time, the new product launches we've had under the Gardena brand in robotics, particularly the Gardena SILENO sense, that's been well received.

So we've got some positivity within the general decline for Gardena robotic lawnmowers, but in line with our expectations for Q1.

A couple of questions from me. Starting off with the cost savings program that came through there in Q1.

Obviously, very impressive. Do you expect sort of the same rate here in Q2?

And also if you could talk about the sort of full year guide on the run rate.

Yes. First of all, I absolutely agree.

We feel pleased with quarter 1, how that has developed, and SEK 245 million is a good number for quarter 1. As I did say, perhaps we picked up on a little bit of the low-hanging fruit during that first quarter.

So that was also important. We are working hard.

We are driving cost out of this organization. We were very clear on that at the Capital Markets Day.

We have a big target and we are working hard towards that target. We hold at the SEK 800 million for now.

Again, we are working hard towards it. So we'll have to see how that plays out.

But for now, we still stay with the SEK 800 million as the guidance for the year.

Okay. Cool.

And anything for Q2? Should we expect sort of SEK 200 million then there given the target or SEK 250 million?

Or is it too early to say?

It's too early to say. But I mean, directionally, I'm thinking it's going to be around the same, SEK 200 million, SEK 250 million.

Yes. Cool.

And then maybe just on the growth in the robotics segment. You mentioned that Gardena was down double digits.

Could you talk about the growth for sort of the non-Gardena robotics, so residential Husqvarna and professional? Was that in the sort of double digits or high single digits?

Or any color there?

So if we look at the Husqvarna robotics, we did have a double-digit growth very much across two different segments, professional and residential, and very much in line with the guidance we provided at Capital Markets Day. So we're pleased with the start for Husqvarna.

Very strong innovation pipeline, great product launches in Q1, and we feel we're very well prepared and we're really taking the shift as we move over to boundary wire-free and different vision technology.

Cool. And maybe just a final one on North America.

Impressive that you're back to growth there as well. Could you talk about sort of the main product segment drivers that you saw there and also maybe the impact from the storms?

Yes. So I think it's a valid point you raised on storms.

We actually saw a good growth in handheld products in North America, which is good to see. Actually, a decline with wheeled.

We saw a growth in the whole construction assortment in the quarter as well in North America, and we also saw a growth in watering under the Orbit brand in the Gardena division in the quarter. So growth in construction, growth in handheld products and growth in watering products in the U.S.

Yes. I guess this was me.

It's Johan Eliason from SB1. Can you hear me?

Yes, Johan.

So I was just wondering a little bit about the robotics, coming back to that. You mentioned strong growth for the professional and the Husqvarna-branded residential.

How would you say the margins for you are developing on those products and categories in a year-over-year perspective? Are you holding up the margins on that part of the robotics business, improving or declining?

And any indications there would be helpful.

By and large, Johan, we are holding up margins with the Husqvarna-branded robotics, very much in line with our business plans. So holding up the margins, to answer, yes.

Good. And on the Gardena where you see the decline, is there a mix?

So you said that the new introductions are at least doing well there. Is that allowing you for a sort of a positive margin mix so you can hold it there as well?

Or how should we think about the margin year-over-year on those products? I remember you did have some price cuts a year ago maybe and then still some sellout.

So maybe that is also helping that part of your robotics offering more.

Yes. We mentioned price in the presentation.

And the negative price on robotics, it really came from the Gardena assortment, particularly the older technology. Whereas the newer technology, the new launch I mentioned, that held up.

So we see more positive margin from the new products and a negative margin from the older products. But all in all, margin has moved down for the Gardena robotics assortment.

And maybe just to be clear. The Gardena robotic is margin decretive both to the division and to the group.

Okay. Okay.

Good to know. Then if we look at the consumer segment now when you are transitioning to the wire-free solution.

The total cost for the consumer, including with the old solution, wires and then maybe having some external help to install it vis-a-vis buying the wire-free solution today, is that a bigger total ticket for the consumer on the Husqvarna-branded side? Or is it lower?

Or it's basically the same?

It's basically the same. Actually, Johan, we see very comparable prices year-on-year in the marketplace if we -- say, for 1,000 square meter machine, we see very comparable prices.

Of course, it's higher technology and, hence, we need to take cost out of the system to maintain those margins. And that's exactly what we're doing.

Thank you. Before we go on with the conference call, we can maybe have a follow-up.

It's from Stefan Stjernholm regarding the inventory level at resellers. So if you can elaborate a bit on the regions and so on.

Yes. Stefan, so if we look at the inventory in the trade, which I understand your question is, we actually we see it normalized in Gardena, per se, with the exception of watering, and it's slightly higher given we've had a strong Q1 sell-in.

So that's where it actually stands out as being slightly higher. I say that's applicable globally.

If we go to Husqvarna Forest & Garden division, handheld is normalized globally. We have wheeled normal in Europe, normal to slightly higher in North America.

And robotics is normal to slightly higher globally as well, again, with a very, very strong sell-in in Q1 in preparation for the Q2 season. And Construction, I would say across the board is normalized.

There is still a reluctance to take on too much inventory from our construction partners. That has been the case for the past couple of years given the uncertain times we're living in.

So I would say a normalized situation within Construction.

A short follow-up on the cash flow and the timing impact. Should we expect that to sort of fully reverse in Q2?

Yes, Fredrik. As I said during that slide, it's really a timing issue.

And of course, having a stronger second half to quarter 1 from a sales perspective meant that the accounts receivable landed higher at the end of the quarter. It's purely a timing impact, and that will flush through during Q2.

So yes, I would say it will all get corrected just as the timing flows through.

We're happy to have higher accounts receivable, Fredrik. Good indication of strong sales.

Thank you. And with that, operator, I don't think we have any further questions.

Or do we?

Okay. And we've been through all the questions on my iPad here.

So with that, would you like to wrap up a little bit?

Absolutely. So again, thank you for joining our quarter 1 report.

Off to a solid start. This is a journey we're on and it's a long transformation journey, but again, good to get a strong Q1 behind us.

We are executing on our strategic areas, very strong portfolio management, good cost savings and a very strong innovation pipeline. So at that, we wrap up.

Thank you.

Yes. Thank you.

Thank you for listening.

Thank you.