Good morning, everyone, and welcome to the presentation of the second quarter results of 2026 for Husqvarna Group. My name is Emelie Alm, and I am Head of Investor Relations.

I'm joined here today by our CEO, Glen Instone, and also our CFO, Terry Burke. Terry and Glen will go through the presentation, and we will then have a Q&A session.

With that, I would like to hand over to you, Glen.

Thank you, Emelie. Good morning, all, and a warm welcome from my side, and welcome to our Q2 report.

Let's jump straight in. Following a very strong start to the year with a strong sell-in to our trade partners and very successful product launches, Q2 has been somewhat difficult.

That's been really geopolitical uncertainties and a weaker consumer sentiment has certainly weighed on consumer demand. We also had a somewhat unfavorable weather conditions really impacting the first half of the quarter, the first 6 weeks of the quarter, and that certainly had an impact particularly in Europe.

Despite that, we managed to see a good growth in North America, and that is a good build on where we were actually after the first quarter. We're very pleased with the continued growth in North America.

Of course, the lower volumes overall and higher cost inflation is impacting our margins. However, very, very pleased to see our cash flow developed strongly into the second quarter, and we'll come back in more detail on that later in the presentation.

From a real strategic execution perspective, I'm actually very pleased with where we're heading. We've managed to actually achieve and implement strong savings, and we've triggered some strong savings programs.

We've also accelerated our strategic portfolio work in terms of making some firm decisions during the second quarter. Again, I'll come back to them in more detail as we go through the presentation.

All in all, second quarter, our activities have been very, very good. What I'm very pleased to see is actually we've managed to finalize our recruitments for 4 new group management members.

All will join us during the remainder of the year. Actually Anders, Lily, and Patrick will come in during Q3, and Anders Candell will join us during the fourth quarter.

The one addition to the group management team is actually the CPO, the Chief Procurement Officer, with Lily. That is a new position we've created because we really feel sourcing and procurement is a strategic value creation lever for this group.

It's where we feel we can add more value, and it is much more than just a cost area. Having this really put together under one leader at the executive table, who's really going to drive our strategic sourcing agenda as well as a common agenda around supplier strategy, that is going to add a lot of value as we go forward.

Within our total cost-out program, sourcing is the biggest lever. As such, we're very, very pleased to bring Lily to the table and into the executive team.

Very, very pleased with the new perceptions, the new experience that the 4 new leaders will bring to the group. Just to look at some of those strategic highlights that I mentioned on the first page that I'm really happy with during the second quarter, I'll give some examples.

These are just a few examples. Within the area of logistics, we started to look at this much more holistically as a group.

We've actually managed in the logistics network to reduce the number of suppliers by 2/3. That is quite a big number.

That will help us with cost savings, but actually more importantly, it helps our service level agreements. We expect increased service level agreements and service level rates as a result of this.

Of course, we see a cost saving that will start to impact and benefit us going forward. We've also managed to do some good warehouse consolidations already during the second quarter, and this will continue now going forward in the remainder of the year and into 2027.

Reducing the number of warehouses we have and therefore also over time reducing the inventory as well that we have, again, driving savings, lower inventory, but also benefiting from the better service level agreements from the logistics providers. In the manufacturing footprint area, an example we can also bring is what we've been doing in the Gardena division.

We've been very much looking strategically at manufacturing in terms of where the core skill set sits. We're going to move some operations from Germany into Czech Republic.

The main rationale there is where we have high-volume, highly automated processes, they will stay in Germany. Where we have more labor-intensive and more manual processes, they will be moved into the Czech Republic.

Again, very strategically set strategic manufacturing footprint. This would, in essence, impact the hand tools and watering business portfolio units within the Gardena division.

As part of the strategy, we talked a lot more about strategic portfolio management, and by that means we're going to address our underperforming parts of the portfolio to spend more time on the high-performing business portfolio units. Some of the measures we've taken during the second quarter, one is our intention to discontinue our stone diamond tool business in the Construction division.

This will be done during the remainder of 2027 and have an impact on sales of some 250 million SEK, but be EBIT margin accretive both to the Construction division as well as the total group. Today we also announced that we will move from a turnaround case to a strategic review of our powered garden business portfolio unit within the Gardena division.

This continues to be pressured as a segment, and therefore we're going to really move this into a more formal strategic review. We will come back to you with the results of that and our firm decision during the first couple of months of 2027.

Very, very pleased with what we're doing and the decisions we've made during the second quarter. From a total cost-out perspective, we're actually ahead of plan.

We previously indicated a cost-savings program of some 4 billion SEK effective by 2030. Given the second quarter, we've actually managed to add some 385 million SEK in savings on the back of a 245 million SEK benefit in Q1, 630 million SEK run-rate savings already effective now.

This actually gives us the confidence that we need to increase the timing effect of our savings. As such, we now target achieving some 3 billion SEK effective by the end of 2028.

We remain with the 4 billion SEK, but want to really increase the benefit and the timing of that benefits, 3 billion SEK in the time frame 2028. The reason we're also doing this, of course, headwinds continue to come.

The Middle East crisis does impact raw materials and logistics, and we need to continue with our savings initiative to make sure we more than offset those headwinds that we see going forward. I'm extremely proud and pleased to announce that our science-based targets have been validated during the second quarter as well.

Our targets of reducing our carbon emissions by 60% versus the 2015 baseline have been validated during the second quarter. This is a further support to what we're doing, and we're very happy that the science-based targets have been validated in this way.

We'll continue driving this by way of electrification, as the portfolio electrifies, really driving further carbon reductions through our total supply chain and our operational excellence programs, and also really looking at how we engage with our supply chain partners to make sure they're also reducing their carbon emissions, and really walking the talk in terms of our commitments when it comes to our carbon reductions. Over to the P&L, and we'll start with sales.

Sales in the second quarter organically declined by 4%. I just want to put that in context.

We had a strong sell-in in Q1 with a positive 3%. We also had a very strong quarter 2 in 2025, actually a positive 5% sales.

So 4% decline given the macro uncertainty and given the weak consumer sentiment is actually reasonable, especially looking that in conjunction with the prior year and the strong sell-in in Q1. We saw a decline in the Forest & Garden division of some 3%, a decline in Gardena of 11%, but a growth in the Construction division of 5%.

As mentioned on the opening slide, we certainly saw, let me say, more of an impact in Europe. Weak consumer sentiment globally, but the weather impact in Europe certainly weighed on demand in terms of that replenishment cycle that we normally see, particularly early in Q2, which are our main selling months.

However, very pleased with the performance in North America, a continued improvement. Actually that improvement was across the board, all 3 divisions growing in the second quarter and across most of our product categories.

Very, very pleased that North America take a further step forward. If we look at that from a earnings perspective, we generated earnings in the second quarter of 1.95 billion SEK, and that is an operating margin of 13.6% corresponding to 13.4% in the same period last year.

However, worth calling out that we did have a tariff refund during the second quarter of some 240 million SEK, costs that we took during the course of last year and we've managed to get refunds into our P&L this year. So 240 million SEK into the P&L, and that's in the COGS numbers.

However, having a lower 4% top line of course impacts our volumes, has an impact onto the P&L, and that's the main drag that we see actually impacting our earnings. Terry will cover this in much more detail in the EBIT bridge, but we also had of course some headwinds in raw materials, some logistics costs, as well as a negative impact from FX.

If we look at this on a division level, we start with the Forest & Garden division. The second quarter, we saw a decline of 3%.

That was following a strong Q1. Actually through the first half year, we see a flat sales development despite the macroeconomic headwinds and despite the uncertainty we're seeing out there.

All in all, still positive. In isolation in the second quarter, that weak consumer sentiment particularly impacted the wheeled business portfolio unit, and that was actually mainly in Europe.

We actually had a growth in North America there. North America, despite growing on wheeled products, also had a growth in handheld products, good growth across the core categories in the North America space.

In particular, the tariff refunds of 240 million SEK on the group, some 112 million was attributable to the Forest & Garden division. Lower volumes also of course impacting the division, and cost inflation is a headwind in terms of raw materials and logistics, and a significant FX effect there of some 45 million SEK.

All in all, operating income excluding items affecting comparability moving from 13.3% to 14.3% in the quarter. Moving over to the Gardena division, and of course the headline number there is minus 11% in sales, but again, I want to put this in context.

This is comping to a plus 7% in the same quarter last year, we had a very, very strong quarter 2 last year, and we now see a minus 11%. We also had a very, very strong sell-in in Q1, particularly in watering in the Gardena division, and we indicated that during the Q1 report that the channel partner inventory was slightly elevated as a result of that strong sell-in.

Of course colder weather, weaker consumer sentiment has impacted the replenishment and the sell-through. All in all, we have extremely strong positions through the first half year, particularly in the watering segment, strong market-leading positions, and I do want to leave you with that.

Tariff refunds for the Gardena division relatively small, only 29 million SEK of the 240. Of course, the negative effect from volumes does weigh on the margin.

We also see actually one of the turnaround cases we've been talking about, that we now move to a strategic review, is the powered garden business portfolio unit. That also of course dilutes the margins.

We see a continued double-digit decline in the powered garden business portfolio unit, really weighing on the Gardena division during the second quarter. Moving over to Construction, a positive 5% sales growth attributable to all business portfolio units and attributable to all geographies, growth across the board in Construction.

Very, very pleased to see that, and very pleased to see the rebound in the Construction division. Particularly happy in that the most profitable BPU is sawing and drilling, where we saw good improvements, particularly in power cutters, strong growth in Q2.

Also very clear strategic area for this group is our aftermarket development, and in the Construction division, we actually had a record aftermarket quarter in Construction. The initiatives we implemented and we talked about during the strategy launch are really starting to come through, and I'm very, very pleased to see the development in the sawing and drilling business portfolio unit as well as aftermarket in the Construction division.

Tariff refunds relatively speaking very, very high into the Construction division. That was some 99 million SEK.

The Construction division is somewhat more heavily impacted by the inflationary pressures that are impacting raw materials and logistics. The timing of that is impacting Construction much earlier than the other two divisions.

At the same time, from a relative perspective, a much higher exposure to the US, and therefore a higher impact from FX hitting the Construction division. One final point to call out, of course, we announced the intention to exit the stone diamond tool business during the remainder of 2027.

That continues to have a dilutive effect onto the margins of the Construction division. That is our 80 basis points that we see hitting the Q2 result.

As we expect to continue and finalize this exit during the remainder of 2027, and then it will become EBIT margin accretive to this division. With that, I would like to pass across to Terry.

Thank you, Glen. A good morning everybody from my side as well.

The Q2 EBIT margin improved by some 20 basis points to 13.6%, delivering an EBIT of 1,950. There's a couple of big items in there which we should we should walk through just to get a better understanding of of how we've landed at the 1,950.

Starting from the left, you see a big red block, and that is some negative 660. Just to give a little bit more detail in what's behind that, approximately half of that is a volume impact.

We have lower sales in the quarter, and we have underabsorption in the manufacturing sites, there's a volume impact approximately half of the 660. In addition to that, we have unfavorable mix from a product perspective, but also from a geographical perspective.

As Glen referred to earlier, North America has grown and Europe has declined. From a profit perspective, that's an unfavorable mix.

We we're more profitable in Europe than we are in North America. Then finally, we have some inflationary pressures, the cost inflationary pressures, particularly around raw materials, logistics, and of course some other costs as well.

Maybe just to highlight, the Middle East inflationary pressures have started to kick in during quarter 2, and we have some 65, 70 million estimated inflationary pressures in quarter 2 as a direct consequence of the Middle East conflict. Cost-savings program: we continue in a very good way with our cost-savings program, 385 million in the quarter.

There's a couple of areas that we really seem to be doing very well in, and that is in sourcing and design to value. There are other areas and pockets of of cost savings as well, of course, but those are the two main drivers behind the 385.

Good progress there. A modest price increase of some 45 million in the quarter 2, and some limited transformational investments.

We remain quite cautious, it's highly uncertain times, and we we're quite limited on some of our investments in that area. We had a currency headwind of some negative 60 million, driven really by the Chinese yuan and the USD, a negative 60 there in the quarter.

Then we had the positive tariff refund. We actually had a small tariff cost in the quarter, and then we received 240 million tariff refund.

That's physical cash received back in the bank, and we have recognized that into our COGS, which has improved our EBIT and our EBIT margin. The quarter, as I said, lands at 13.6% margin.

Moving on to the year to date, a little bit of a mirror image on the left-hand side. We have improved our operating margin by some 90 basis points to 12.9%, 3.7 billion of of EBIT, just shy of 3.7 billion.

Taking it from the left to the right, as I've just talked about previously, negative volume impact in quarter 2 is really what is carried into the year-to-date perspective. We didn't have so much of a negative in quarter 1.

Those themes that I talked around in the quarter 2 bridge really are the ones that are applying here. We have the negative volume, we have the negative mix.

North America grew in Q1 and Q2 compared to Europe slightly declined, and then of course the inflationary pressures which I've referred to. I did talk about the Middle East, and directionally we said some 65 to 70 million in Q2.

Just to give you a feel for how we see that for the year, we believe the inflationary increases as a direct result of the Middle East will be some 300 to 350 million full year, of which we've already taken some 65 to 70 million in Q2. Cost savings year to date: very well progressing, 630 million year to date.

Again, just to give you a feel of how we see this for the year, with our ambition to accelerate our cost-out program to 3 billion over the next 3 years, we believe we will directionally land at 1 billion of cost savings during 2026. Modest price increases: it's a very challenging market out there.

There will perhaps be some smaller price increases to reflect the Middle East inflationary pressures, but at the moment we have a modest price of of 95 million. Continue to limit our transformational initiatives, some 80 million year to date, and that will remain on that kind of run rate for the rest of the year.

Currency: we have 90 million negative currency headwind so far in the year to date. Again, just to give you a little bit of an outlook for the rest of the year, we expect relatively flat currency during Q3 and a small positive in Q4, but overall for the year, we will still have a negative currency impacting the business.

Tariffs: we have, as I said earlier, received the 240 million tariff refund. We have incurred additional tariffs of 95 million year-over-year, we have a net effect of positive of 145.

As Glen said earlier, we incurred those tariff costs during quarter 1 of this year and also last year as they started to kick in. Those tariff refunds are recognized in our COGS.

Again, just to give you a little bit of an outlook, our tariff refund claim is slightly higher than the 240 million we have received. However, the majority has been received now, with regards to tariffs, we don't expect significant changes for the rest of the year.

We may get some further refund, but it's highly uncertain and we have to wait and see. That brings us to the 12.9% margin year to date.

Cash flow: I was particularly pleased about cash flow in the quarter. Cash is extremely important to this business.

We continue to stay focused in this area, and we delivered a positive free operating cash flow of some 3.9 billion in the year, sorry, in the quarter, and 2.8 billion year to date. Really the main factors driving the positive development into quarter 2 was the reduced CapEx levels and the improvement and the change in the net working capital from Q1 to Q2.

Very good development there. Return on capital employed is one of our key financial metrics, and we have improved our performance moving to 7.4% ROCE compared to 7% same time last year.

We continue with the ambition of reducing our capital employed, becoming a more asset-light organization, and we start to see some of the benefits of that coming through here. Again, an improved situation.

Our balance sheet remains very solid. I think we can be quite satisfied with the position of our balance sheet.

There's always a couple of things we can do better, but overall we have a solid financial position and we have a solid cash flow performance, I think that is something to be feeling good about. Maybe a couple of things to to call out on the on the balance sheet in particular: inventories are a little bit high.

Of course, that's a consequence of the weaker sales demand during Q2. Currency adjusted, we are 4% higher in our inventory than the same time last year, and we will continue to work on our inventory levels during Q3 and Q4 to manage those down in a good way.

Maybe the second item to point out is the borrowings. We have been able, with that good positive cash flow, we've been able to reduce our borrowings by more than 1 billion, as you can see here, down to 1.1 billion.

That's a good a good development. Finally, just following on from lowering our borrowings, our net debt position has now reduced, and we are some 11.8 net debt, billion of net debt, compared to 12.3 same time last year.

Also what is good to see, our net debt to EBITDA ratio is now down to 2.0 compared to a 2.3 same time last year. We continue to work on our net debt and we continue to do the right thing here on our balance sheet.

Maturity profile is healthy. I think you can see in the chart there that's in in good shape.

We did renew a 2 billion bilateral RCF by a further 5 years recently, and we were able to amortize a 500 million bond just last month in in June. Again, all good activities helping with our debt position and and debt profile.

Finally, just to mention, our S&P credit rating remains at BBB- with a stable outlook, we feel in a good position there. With that, Glen, I pass it back to you.

Thank you, Terry. Just to wrap up then before we go to Q&A: again, very strong start to the year in terms of sell-in and very well-received product launches from our channel partners.

Followed that, of course, was a weakened consumer demand and some unfavorable weather conditions that really weighed on the overall demand in the second quarter, particularly the first half of the second quarter. Despite that, we saw a good growth in North America, and that is a continuation, we're very happy with that.

Putting it in the context of the quarter, of course lower volumes do have an impact onto the margin. However, we continue to execute on our cost-out program at a higher pace than we actually initially envisaged, and we need to do that in order to offset the currency headwinds and particularly the raw material headwinds that we're seeing.

Great to see the cash development as Terry just presented, really coming through from a little bit of a weaker Q1 as a result of higher receivables, but really coming through into Q2, a very, very solid cash position that we're very, very happy with. Most importantly, our strategic execution: we're very, very much on track, I want to leave you with that message.

We've took some very firm decisions on cost-out during the second quarter, supplier consolidation around logistics, closing down warehouses, moving manufacturing, and being very, very clear on our strategic portfolio management. We will continue to do this, and we'll continue reporting back as we take these decisions, but very much on track with what we said from our strategic plan and journey.

At that, I pass over to Emelie.

Thank you, Glen, and thank you, Terry. Now it's time to start the Q&A session.

As always, you can ask your questions on the conference call, and you can also write them in the web interface. With that, operator, please go ahead.

Thank you. Good morning.

First, maybe on the gross margin, when we strip out the tariff refund from COGS, it seems like it's down 3 percentage points on the gross level, and then you're obviously quite helpful with all the pieces. If you could give us some more granularity on the different pieces to the bridge, it would be helpful, I guess.

It was raw mats, logistics, you call out the geographical mix, and some FX, but yeah, if you could give us some more help with the building blocks. Yeah.

As I explained in the EBIT bridge, of course we had a significant negative impact through volume, mix, and inflationary pressures. All of those really impacted the COGS and the margin.

As I said, approximately half of the 660 was impacted through the volume and underabsorption that we had. That's really impacted there.

All of the inflationary pressures that we've incurred are more or less into the COGS side of things, the raw materials and some of the logistics. That is really also driven it down.

Then finally, the mix. As I said earlier, there is a mix impact here as well.

Europe as a region is a more profitable business to us than North America. Of course, it's great to see North America growing, and we will continue to drive that growth.

As from a group perspective, of course it's different into divisions and different segments. Directionally, the mix of the geographical is unfavorable for us with North America growth, Europe down.

Then of course, the product mix as well, categories such like watering having a negative decline impacts the margin as well. There's a lot of moving parts that sit within that, but hopefully that at least gives a little bit more transparency.

Absolutely. Thanks, Terry.

Very clear. Then jumping to robotics, and more specifically maybe on the Husqvarna-branded robotics, you grew double-digit in Q1, good contribution I suppose from the 300 and 400 series, and now it sounds like a small decline in Q2.

First, maybe if you have a view on the sellout levels, and second, if you have any sort of granularity to give us in terms of the inventory levels in the trade at the moment, if you have one.

I can take that, Fredrik. Firstly, we actually saw a growth in Q2 in Husqvarna-branded robotics.

It wasn't at the level of Q1, but we did see a growth in Husqvarna-branded robotics. I think that's important to see, and therefore we see a good growth through the first, albeit single-digit growth through the first half year.

The sellout is reasonable, very well received on the new product launches, particularly the 300 series is very well received by customers, and we see a good sellout of that SKU in particular, really accounting for a big part of our sales now. When I look at the inventory in the trade, I would say there's a couple of standouts.

It's much higher in or higher in Germany. It's higher in the US, and the rest of Europe, I would say, it is normalized.

There's really a couple of markets that are standing out: US in particular and Germany where it's higher, but the rest of the markets, I would say, are as pretty much normalized inventory levels.

Good. Thanks.

Then maybe a nitty-gritty one, but on the 300 to 350 million headwind from the Middle East inflation, just to clarify, that's raw mats and logistics, right?

Yes.

Predominantly, yes.

2/3 raw mats, 1/3 logistics, roughly, Fredrik.

Right. I believe you guided after Q1 for 200 raw mats.

That didn't really change despite the recent fluctuations,

or

am I sort of missing—

No, you're correct. We previously guided on 300, 200 raw mats, 100 logistics, and we're saying 300 to 350.

It's pretty much the same and pretty much the same split between the two areas.

Good. Thanks.

Last one, maybe a quick one from me before I jump back: on the strength in balance sheet in terms of net financials on a sort of annualized basis, what's a good level for modeling going forward?

I would say where we are now is probably going to be appropriate. I don't see us fluctuating too much from where we are now.

I would like to say this is pretty much about right. I would model on the recent development.

Good. Thanks.

That's all.

Next question, please.

Yes, thank you. I just wonder in terms of the tariffs, given that they are split in different phases, is the tariff that you recognized this quarter, is that for Phase 1 or and Phase 2, or what's included in that, let's say?

I think we've actually been quite transparent with what numbers we have already disclosed. I think the way to look at it is our overall tariff claim is larger than what we have received.

However, it's very much uncertain. There's a lot of moving parts.

There's a lot of backwards and forwards with the US government on these claims, etc. We have received the majority of the claim, and I think it's really uncertain as to what more will come.

I wouldn't factor in too much more of a tariff refund. I think what we've got is good.

It's basically half of the tariff that we've incurred over the last 12 months. We've incurred some 470 million of tariff cost pressure, and we've managed to refund approximately half of that at 240.

I would work along that there's not that much more to come. There may be something, but it's highly uncertain and the tariff situation changes.

Yesterday there was talk around Section 301 for Brazil, 25% tariff starting. Again, it's highly uncertain.

We navigate as we go.

Thank you. Can I just ask you a little bit more, it's a broader question of course, but what is your strategy in terms of pricing going forward?

I assume that it is of course hard to increase prices, but yeah, can you relate anything to historically how it has developed and how long it usually takes for you to push forward prices, etc.?

Historically we would put annual price increases through, but of course in the recent years that's changed given how many headwinds we've been facing during the COVID times, the supply chain crisis, and then of course tariffs more recently. We've been much more, I would say, frequent with price increases.

This year we're now implementing another price increase. Some was effective in June, we'll put some more price increases through in other markets in July as a result of some of those raw material headwinds.

We will aim to put price increases through. I expect over time we still have a positive net improvement from by way of price.

At the same time, we've got to stay relevant and competitive, so that's always the balancing point here that we stay relevant and competitive and how much premium we can take. As a market leader, I do expect price increases.

Fair enough. Thank you, that was all for me.

Thank you, Igor. We have one question from the webcast.

It's from Stefan Stjernholm, Handelsbanken: "So how is profitability for Husqvarna Automowers developing in H1, up, down or flat year-on-year?"

I can take that. There is not a big movement.

It is not up, Stefan, that is for sure. It's a very EBIT margin accretive segment as and of course we continue to look at this.

It is slightly down as a result of some price adjustments we made for this year. We adjusted price on average 5% on some of the older SKUs, some of the newer SKUs not so much.

Some of the new technology of course adds cost pressure into some of the units that we need to continue working with, but I would say slightly down, Stefan, overall through the first half of 2026.

Maybe just to add to that, Glen, that's also where we can focus on driving some cost out as well with the raw materials and suchlike as well. Whilst the price comes down, we also look to address our cost structure of robotics.

Very valid. We see more savings potential in that area maybe than the rest of the core call range.

Thank you. Operator, do we have any further questions?

With that, then I'll hand over to you for the closing.

No, thank you. First and foremost, the gentleman to my left, I want to say a big thank you to.

This is Terry's last quarter. We've worked together for some 16 and a half years, a big thank you to Terry.

Been a great support to this group and to me personally, thank you.

My pleasure, Glen.

Just as a final closing comments, we continue to deliver and execute our strategy. Aftermarket is going to be fundamental.

We've seen a good growth so far this year, particularly in the Construction division. We're working aggressively on the cost-out, and as such we increase our ambitions around the timing of that, and we want 3 billion SEK fully effective 2028.

We continue to take bold decisions and clear decisions when it comes to our portfolio, really executing on the strategy. At that, I want to wish you all a fantastic summer and look forward to seeing you in Q3.

Thank you.

Thank you.