Husqvarna Group · Husqvarna PRO service dealer •Expand Pro sales organization •Pipeline of new products and concepts •Support with PR and marketing •Sustainability as a business

Husqvarna Group Capital Markets Day 2019

September 17, Huskvarna

Agenda

10:00 Husqvarna Group’s transformation and next phase

11:30 Product demonstrations at Slottsvillan park incl. lunch

14:15 Divisional updates and future technology

CEO Kai Wärn

CFO Glen Instone

Husqvarna, Gardena and Construction

Husqvarna Division, Sascha Menges

Gardena Division, Pär Åström

Construction Division, Henric Andersson

Technology, CTO Anders Johansson

Closing remarks16:15

16:30 Factory tour – optional

CEO Kai Wärn

Poised for

profitable growth

Kai Wärn

September 17, 2019

Poised for profitable growth

• Attractive market – significant opportunity

for strong brands and technology

• We are well positioned after substantial

transformations and investments

• Next phase focus: customer experience,

robotics and battery, winning core and

services & solutions

• Value creation – above average industry

growth and profitability

(1) Defined as 2 percentage points above market growth, historically at 2-3%. Currency adjusted.(2) Weighted average industry profitability based on peer group benchmark.

Growth(1):(CAGR) 4-5%EBIT margin: >10%

GROW TH

”Profitability first”

“Above industry growth and margin(2)”

2020

“Expansion and profitable growth”

2016

PR

OF

ITA

BIL

ITY

2013

Focus on

leading brands

and positionsEnd-customer

based strategy

and organizational

structure

Dissolving

Consumer Brands

Division

Market leadership supported by significant and

continuous transformation

Built a culture of strong

efficiency programs

funding strategic initiative

cost additions

Significant capability

expansion in software,

electronics and IoT

A market and tech

LEADERin our industry

2019

2013

Year2013

Branded sales

65%

2019 12M rolling

Branded sales

85%

Transformation

Focus on strong brands

Net sales

2013 12M rolling

Consumer brands / legacy

Winning core

Parts, services and solutions

Robotics and battery

(1)Sales CAGR of 3% is based on Group, growth adjusted for Consumer Brands exits.

Transformation

Focus on high growth segments and a winning core

SEK1.5 bn

Efficiencyprograms

SEK1.5 bn

Additional cost for strategic growth

Transformation

Culture of strong efficiency programs to finance strategic initiatives

Note: savings and cost increases/investments during 2016-2019

Transformation

Significant capability expansion

Tech leadership aspiration

• 300 new recruitments last

five years

• Software, electronics & IoT

5,0%

5,5%

6,0%

6,5%

7,0%

7,5%

8,0%

8,5%

9,0%

9,5%

10,0%

1 000

1 500

2 000

2 500

3 000

3 500

4 000

Q3

201

3

Q4

201

3

Q1

201

4

Q2

201

4

Q3 2

014

Q4

201

4

Q1

201

5

Q2

201

5

Q3

201

5

Q4

201

5

Q1

201

6

Q2

201

6

Q3

201

6

Q4 2

016

Q1

201

7

Q2

201

7

Q3

201

7

Q4

201

7

Q1

201

8

Q2

201

8

Q3

201

8

Q4

201

8

Q1 2

019

Q2

201

9

Operating income rolling 12 months* Operating margin rolling 12 months*

SEKm Group operating income and margin development

* Excluding items affecting comparability

Our profitability improvement trajectory

Absorbed increase of SEK 0.8 bn of raw materials and tariffs

No. 1 – Robotic lawn mowers

Leading the way through innovation in high growth residential segments

Inventor and market leader

No. 1 – Watering & smart garden systems

Growing through innovation in the professionalsegments

No. 2 – Pro handheld solutions No. 1 – Light construction products

Capturing

growth in

our

MARKETS

TRENDS

Growing professional segment

requesting productivity,

automation and connectivity

Strong demand for new

technology and innovation

Services / solutions

Evolving multichannel

distribution

Attractive market fundamentals

MARKET

A sizeable market of

SEK 245 bn

Overall market growth 2–3%, with

double digit growth potential in

several segments and geographies

A market which rewards innovation and

strong premium brands

We are well positioned in the residential lawn mowing

market

Residential lawn mower market

Robotic and battery

Ride on

Petrol walk behind

2013 2014 2015 2016 2017 2018 2019

Value share

Next phaseCAGR

+15%

+1%

-2%

Leveraging on our group strengths to accelerate growth

in our divisions

Vision, culture and

leadership

Strong brands and global

go-to-market expertise

Services and new

business models

Technology and

innovation

Globally first forest and

garden company with CO2

reduction targets approved

by the Science Based

Targets Initiative

Sustainability – committed to the green path

Achieved 21% CO2 intensity

reduction since 2015

– well ahead of our

10% reduction target

shaping

Greatexperiences

next phase

OUR STRATEGY

OUR STRATEGY

(1) Defined as 2 percentage points above market growth, historically at 2-3%. (2) Weighted average industry profitability based on peer group benchmark


GROW TH



2020


2016

PR

OF

ITA

BIL

ITY

2013

Operational &

commercial excellence

Customer

experience

Robotic

and

battery

Services

and

solutions

Winning

core

Customer

experience

Robotic and

battery

Services

and

solutions

Winning

core

Construction

Customer focus

Customer

experience

Robotic

and

battery

Services

and

solutions

Winning

core

Connectivity and AI bring us closer to, and create

value for the customer

Market leader

• >300k connected

products and users

• Residential and

Professional solutions

Expanding services and solutions

• Expand from the

established P&A base

• XaaS and other new

business models

• Experimentation and

Eco-systems key

• Grow services business

Customer

experience

Robotic

and

battery

Winning

core

Services

and

solutions

• Leverage our strong brands and

leadership positions

• Continue to develop and innovate

core categories and go-to-market

• Capture fair share of P&A and

aftermarket

Winning

core

Customer

experience

Services

and

solutions

Robotic

and

battery

HusqvarnaGardenaConstruction

Our winning core – continue to invest and innovate

Robotic lawn mowers

Residential robotic lawnmowers

– established segment

Robotic

and

battery

Customer

experience

Winning

core

Services

and

solutions

• Clear market leader since 1995 with

2 millions systems sold

• Strong product development pipeline

• Geographic expansion

• Exploring new go-to market

concepts and new business models

• Residential market size: SEK ~7bn

• Mid term annual growth rate: ~15%

Next opportunity – solutions for green space

professionals

PRO Products Fleet & business management Dedicated sales organization

PRO service dealer

Robotic

and

battery

Customer

experience

Winning

core

Services

and

solutions

Innovation leadership – providing flexible solutions for

Green Space Professionals

• Built on 25 years of robotic

lawnmowing experience

• Virtual boundary solution for flexible

multi-area use

• Provide centimeter accuracy

• Focused introduction 2020

• Part of demonstration today

www.husqvarnagroup.com

Financial

next phase

Glen Instone, CFO

September 17, 2019

Our continued path to value creation

(1) Defined as 2 percentage points above market growth, historically at 2-3%. (2) Weighted average industry profitability based on peer group benchmark


GROW TH



2020


2016P

RO

FIT

AB

ILIT

Y

2013

Our financial focus

Capital efficiency

Profitability

Growth

Seasonality is predictable in our business

3234

19

15

Q1 Q2 Q3 Q4

Net sales (% by quarter) Operating income (% by quarter)

40

55

11

-5

Q1 Q2 Q3 Q4

Capital efficiency

Profitability

Growth

Note: based on 5 year average net sales and operating income by quarter.

2/3 of net sales and 95% of EBIT in first half

Key organic growth drivers

Next phase

Roboticsand battery

Parts,services & solutions

Further exits 2020 - legacy

segments

Winning core

Rolling12 months

Capital efficiency

Profitability

Growth

Illustrative

(1) Defined as 2 percentage points above market growth, historically at 2-3%. Year 2020 will be affected by previously communicated exit from legacy Consumer brands business

Illustrative

Next phase EBIT margin development Capital efficiency

Growth

Profitability

8.9%

Strategic initiatives

Volume, price & mix

EfficienciesRolling12 months

• Operational leverage

• COGS and SG&A

The continued transformation journey requires

further efficiency savings

Efficiencies and savings

• Robotics and Battery

• Services and solutions

Strategicgrowth initiatives

Capital efficiency

Growth

Profitability

8.9%

>10%

Illustrative

Capital efficiency

Growth

Profitability

Next phase EBIT margin development

Next phase

Strategic initiatives

New business models

Volume, price & mix

EfficienciesRolling12 months

Capital expenditures Net working capital to net sales

Continued investments into profitable growth.

Improved capital efficiency is a prerequisite.

0%

2%

4%

6%

8%

0

500

1 000

1 500

2 000

2 500

2013 2014 2015 2016 2017 2018

CAPEX CAPEX / net sales

SEK m CAPEX / net sales

Capital efficiency

Growth

Profitability

20%

22%

24%

26%

28%

30%

Q22016

Q42016

Q22017

Q42017

Q22018

Q42018

Q22019

Working capital / sales Target level <25%

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Times

Substantial headroom given strong balance sheet

Q22013

Q22014

Q22015

Q22016

Q22017

Q22018

Q22019

Average net debt / rolling 12 months EBITDA, excl. items affecting comparability.

Average net debt / EBITDA

Capital efficiency

Growth

Profitability

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019

Index

Husqvarna

OMX30

+131%

+53%

Proven track record of value creation

Including reinvested dividend, period 2014-01-02 – 2019-09-10

Total shareholder return

Growth

EBIT

margin

Capital

efficiency

Capital

allocation

Net sales growth 4-5%(1)

EBIT-margin >10%

Average net working

capital / net sales ≤ 25%

Rating: BBB

Dividend: >40% of net profit

Next phase financial targets

(1) Defined as 2 percentage points above market growth, historically at 2-3%. Currency adjusted

Poised for profitable growth

• Attractive market – significant opportunity

for strong brands and technology

• We are well positioned after substantial

transformations and investments

• Next phase focus: customer experience,

robotics and battery, winning core and

services & solutions

• Value creation – above average industry

growth and profitability

(1) Defined as 2 percentage points above market growth, historically at 2-3%. Currency adjusted.(2) Weighted average industry profitability based on peer group benchmark.


GROW TH



2020


2016

PR

OF

ITA

BIL

ITY

2013

SHAPING CUSTOMER EXPERIENCES

Husqvarna Division

September 17, 2019

HUSQVARNA SHAPING CUSTOMER EXPERIENCES

44

Leading global brand

for professionals and

consumers

Strong market positions

and leading in innovation

Privileged network of

servicing dealers

Continued growth

through customer

centricity

MEET OUR END-CUSTOMERS

GREEN SPACE PROFESSIONALS

PRO-GRADEEXPERTS

TREE PROFESSIONALS

BACK ON MARGIN IMPROVEMENT TRAJECTORY

46

0%

2%

4%

6%

8%

10%

12%

14%

2 000

7 000

12 000

17 000

22 000

27 000

32 000

2014 2015 2016 2017 2018 R12 months

Net sales EBIT margin (ex xo-items)

(1) Sales CAGR of 3% is based on Husqvarna Division prior to inclusion of Consumer Brands North America. Including -1%.

Net sales CAGR: 3%(1)SEKm NET SALES GROWTH

• High growth in robotics, parts &

accessories and battery products

• Exit of North American consumer

brands business in 2018 and 2019

EBIT

• Product mix and pricing

• Higher costs for raw materials /

logistics and tariffs

• Restructuring of Consumer Brands in

NA

POSITIONED TO CAPITALIZE ON MARKET CHARACTERISTICS AND TRENDS

47

Urbanization shiftingcustomer needs

Robotization growth of automated/connectedoutdoor care

Shift in power sources high demand for battery products

Changing consumer behaviors distribution changes and new business models

Global 135 bn SEK market

Underlying market growth +2-3%

High growth segments include robotics

and battery products

Attractive aftermarket

MARKET SIZE AND POSITION TRENDS

FIVE STRATEGIC GROWTH INITIATIVES AND DRIVERS

48

Customer centric solutions & services

Accessibility and go-to market

Pro battery leadership

Robotics leadership

Innovation in the core

CUSTOMER CENTRIC SOLUTIONS AND SERVICES

49

AMC

INNOVATION TO GROW AND WIN IN OUR CORE

50

GLOBAL MARKET LEADER IN ROBOTICS

• Created and continue to shape the global

robotics market

• Broadest offering in the market

For both residential and commercial

segment

• Strong product pipeline of coming

launches Investing in Robotic R&D and

Go-to-market

• Mid term growth rates ~15% p.a. globally

51

SIGNIFICANT LONG-TERM MARKET OPPORTUNITY

52

DACH

SWITZERLAND

UK

Robotics value

share of sales

(residential

lawn mowing

market)

SCANDINAVIA

SOUTHERN

EUROPE

NORTH AMERICA

HIGH

MEDIUM

LOW

SOLUTIONS FOR GREEN SPACE PROFESSIONALS

53

PROFESSIONAL AUTOMOWER LINE-UP

Fleet ServicesTM

Husqvarna PRO

service dealer

• Expand Pro sales

organization

• Pipeline of new

products and

concepts

• Support with PR

and marketing

• Sustainability as a

business driver

HUSQVARNA EPOS TECHNOLOGY

• Virtual boundary solution

• Flexible multi-area use

• Provide centimeter accuracy

• Selective introduction 2020

PRO ROBOTICS: SIGNIFICANT COMMERCIAL MARKET POTENTIAL

COST STRUCTURE FOR COMMERCIAL LAWN MOWING, ILLUSTRATIVE

TODAY FUTURE

HIGH GROWTH IN PROFESSIONAL BATTERY PRODUCTS

55

• Leading pro portfolio,

single eco-system

• Supporting all three

target groups

• Fleet ServicesTM as

differentiator

• Direct distribution for

large accounts supported

by servicing dealer

network

INCREASING ACCESSIBILITY AND EXPERIENCE -BUILDING ON SERVICING DEALER NETWORK

Servicing dealers

Pop-up stores Retail pilots

Pro sales E-commerce

Increasing accessibility

Integrated distribution and service

setup

HUSQVARNA SHAPING CUSTOMER EXPERIENCES

57

Leading global brand

for professionals and

consumers

Strong market positions

and leading in innovation

Privileged network of

servicing dealers

Continued growth

through customer

centricity

Realising your

gardening dreams

Capital Markets Day

September 17, 2019

Gardena – Passion and Growth

Preferred brand in

gardening

Gardening domain

expansion

opportunity

Unique leading

position in watering

and Smart Garden

Strong financial

track record and

potential

A gardening super brand

The broadest branded product

range for gardeners

A true multichannel distribution

presence

Leading the evolution of the

garden industry

An integrated supply chain with

market proximity

A passionate team

Foundational strengths for growth momentum

The passionate gardener is in focus

“We value our green space and want to create a beautiful result.”

Watering systems Lawn care

Unrivalled product range for gardening

Tree and shrub care Ground and court care

GARDENA smart system

New concepts; City Gardening

0%

2%

4%

6%

8%

10%

12%

14%

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

2014 2015 2016 2017 2018 Rolling12M

Net sales EBIT margin (as rep, excl IAC)

Net sales CAGR: ~10%(1)

Strong growth and EBIT performance

STRONG SALES GROWTH

• Innovation in core categories

• Category and channel expansion

• Focus markets growth

EBIT MARGIN >10%

• Value from innovation and new

products, mix

• Cost control to leverage growth

• Restructuring of Consumer Brands in

Europe

SEKm EBIT %

(1)Sales CAGR of 10% is based on Gardena Division prior to inclusion of Consumer Brands EUAP. Including 4%.

TRENDS

Gardening as an area of passion in a growing community

Multichannel consumer engagement

Urbanization with city gardening

Connectivity and IoT

Sustainable gardening

MARKET SIZE AND POSITION

Global market size of SEK 65bn,

whereof ~50% in Europe

Leading market shares in all

categories in Europe

High growth segments include, watering,

robotics and smart garden systems

In a leadership position aligned with trends

Priorities to drive continued growth

Geo and category expansion

Passionate Gardener engagement

Multichannel experience

Innovation leadership

Market leadership both in Core and Focus

Markets with further growth potential

Core markets

Focus markets

• Germany

• Austria

• Switzerland

• Netherlands

• Belgium

• Southern Europe

• Nordics & UK

• Russia

• Australia

• China & Japan

~55%

~30%

Shovel Rake - hand tools AquaBloom - watering

Innovation to grow and win in core categories

Innovation to lead in new technology areas

Gardena is the leader in the Smart Garden

Major app store ratings

above

> 100k SMART DEVICES CONNECTED

Gardena – Passion and Growth

Preferred brand in

gardening

Gardening domain

expansion

opportunity

Unique leading

position in watering

and Smart Garden

Strong financial

track record and

potential

Q&A


Building tomorrow

Construction Division

Henric Andersson

September 17, 2019

Building tomorrow

75

Strong position

in attractive market

Large, recurring

revenues from

consumables and

services

Second core

established in

Concrete Surfaces

& Floors

Successful M&A

track record

with further

opportunities

Key strengths in light construction products

76

Innovation and user centric

design and application capability

Broad and high performing

premium product offering

Industry leading brands with

relevant equity and heritage

Strong customer focus and

long lasting relationships

Proven track record of acquiring

and integrating new business

Capabilities optimized for light

equipment and consumables

77

Concrete Sawing & Drilling Concrete Surfaces & Floors

Light Demolition Stone

▪ Civil contractors and tradesmen▪ Sawing and drilling contractors

▪ Abatement contractors▪ Demoltion contractors ▪ Stone quarries

▪ Flooring contractors

End-user focus in four business segments

▪ Compaction, placement & finishing contractors

▪ Natural stone processing companies

Track record of profitable growth

78

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

6 500

2014 2015 2016 2017 2018 Rolling12M

Net sales EBIT margin (as rep, excl IAC)

Net Sales CAGR: 10%(1)

SEKm

NET SALES GROWTH

• Track record of organic growth

strategy

• Execution of acquisitions

EBIT IMPROVEMENT

• Sales growth, cost efficiency and

integration of acquisitions

• 19% CAGR in SEK

• 1.8 percentage points EBIT margin

improvement

(1)Currency adjusted growth

EBIT %

In a leadership position to capitalize on trends

and market characteristics

79

79

TRENDS

Urbanization and

mega cities

Development of

emerging markets

New and sustainable

work techniques

New business models

(e.g. servitization)

MARKET SIZE AND GROWTH

Global SEK ~45 bn

market

Underlying global market growth

~3%, slightly above GDP growth

Large share of aftermarket

and consumables

Strategic growth initiatives and drivers

Customer experience excellence

#1 in battery powered solutions

Enhance customer value through best-in-class services and after market

Accelerate growth in emerging markets

Growth through acquisitions

80

Growth in services & solutions enhances both

customer loyalty and profitability

81

Parts Accessories

Service Offers

Service Connectivity

Diamond Tools

High pace in service & solution launches

Second core created in Concrete Surfaces & Floors

83

Concrete Sawing & Drilling Concrete Surfaces & Floors

Dirt CompactionConcrete Placement

Floor Creation1 2 3

Rammers

Forward

Plate

Compactors

Reversible

Plate

Compactors

Rollers

Trench

Compactors

Framework

Concrete

Vibration

Concrete

Levelling

Concrete

Surfacing

Concrete

Cutting

Floor

Grinding/

Polishing

Strong brands sharing capabilities and synergies

84

▪ Successful integrations across the value chain with realized cost synergies

▪ Multi-brand organization established

▪ Strong platform for growth both in mature and emerging markets

Building tomorrow

85

Strong position

in attractive market

Large, recurring

revenues from

consumables and

services

Second core

established in

Concrete Surfaces

& Floors

Successful M&A

track record

with further

opportunities


86

www.husqvarnacp.com

Technology

Anders Johanson, Group CTO

September 17, 2019

Focus on

leading brands

and positionsEnd-customer

based strategy

and organizational

structure

Dissolving

Consumer Brands

Division

Market and tech leadership supported by significant

and continuous transformation

Built a culture of strong

efficiency programs

funding strategic initiative

cost additions

Significant capability

expansion in software,

electronics and IoT

A market and tech

LEADERin our industry

2019

2013

The ongoing tech revolution provides opportunities

Petrol to battery shift

Manual operations to autonomous operations

Re-orientation from mechanics to digital / AI

Ability to scale at speed

We transform our portfolio and hold a leading

position in battery for consumers and pro

• We innovate and capitalize on

technology shifts

• A leading professional offering

• Strength in application and battery

technology know-how

• Dedicated team for battery

technology with key partnerships

Humans are already outsmarted

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015 2016

Vision error rates, %

ALGORITHMS

HUMANS

We transform manufacturing operations- Example Huskvarna

Current level

• Vision cameras incorporating AI

– better than the human eye

Next level

• AI propose actions to operator to

address root causes to error

• Cameras combined with ultra sonic

sensors and AI address wider scope

Vision

• Self-optimizing autonomous system

We explore on ECOSYSTEM level– Example the Gardena Smart System

Platforms Direct integrations

We explore on SYSTEM level– Example the Husqvarna autonomous operations

• An edge to Green Space Professionals

• Start to push the technology frontier in

our industry

• Accelerated capability-building

including applied academic research

• Well connected to the key technology

& start-up community

• Partnerships, example Yeti

Note 1) Mobile World Congress, Barcelona 2019

We explore on PRODUCT level– Great reactions from launch of the AI enabled 435X at MWC1

F8

Predictive and

preventive decisions

support with AI in the

Cloud or on the edge,

i.e. the device

Green surface

intelligence using

e.g. satellites, drones,

ground sensors and AI

We start to push the frontier in our industry- Example AI Lab concepts

End customer

interaction through

Conversational AI

We assess cities of the world against Husqvarna

Urban Green Space Index

Demonstrated

at Living City 2019▪ Benchmark Smart Green

Cities

- 98 cities in 51 countries,

including C40

- 6 KPI’s

- In depth insights

▪ Raise awareness for

importance of green cities

▪ Share our capability as green

data provider and committed

sustainability innovator

• The DSP is established

• Has been a significant effort to

build it

– Including services like

Subscription, API1 mgmt. and

AI models

• A collaborative platform to

innovate with othersOpen

Ecosystem

Common

Services

Cross

Domain

Information

Cloud

Infra-

structure

Strong

Security

Digital Service Platform (DSP)

In position to scale services and solutions fast

Note 1) Application programming interface

Our AI Lab and Venture ability play a key role to

find and explore new opportunities

• Group AI strategy and CoE

• Technology exploration and PoC

• Start-up collaborations

• Applied academic research

• Robotics

• IoT and AI

• New business models

Petrol to

battery shift

Re-orientation

from

mechanics to

digital / AI

Manual

operations to

autonomous

operations

Ability to scale

at speed

Future technology shifts provide significant

opportunities for Husqvarna Group


Documents

Husqvarna Group · Husqvarna PRO service dealer •Expand Pro sales organization •Pipeline of new products and concepts •Support with PR and marketing •Sustainability as a business