Presentation of Husqvarna€¦ · cutting equipment for construction and stone industries Lawn and garden Forestry Construction The Husqvarna Group. Key data, 2005 Production facilities

Presentation of HusqvarnaStockholm, May 29-30, 2006

Bengt AnderssonPresident and CEO

Global leader in outdoor power products and cutting equipment for construction and stone industries

ForestryLawn and garden Construction

The Husqvarna Group

Key data, 2005

Production facilities

Europe7

North America

5

Rest of world

1

Sales by region

• Sales: SEK 28.8bn• EBIT: SEK 2.9bn• Net debt/equity ratio: 1.12• No. of employees: 11,700

Financial data pro forma

Consumer64%

Sales by business area

Professional36%

Forestry

Lawn & garden

Construction

NorthAmerica

ROW

North America57%

Europe37%

ROW 6%

Latin America

1

Lawn and gardenForestry

Garden productsConstruction products Garden products

Interrelated end-user markets

Lawn and gardenForestry

Garden productsConstruction products Garden products

Interrelated end-user marketsInterrelated:• Portable products• Distribution• Husqvarna brand

Europe - Consumer Global

Garden productsConstruction USA - Consumer

Electric, high-end segment:

Petrol, mid-segment:

TARGET

Petrol, mid-and low-endsegments:

Professional and high-end consumer:

NA andEurope:

Strong brand portfolio

Time

Portable petrol –professional

Electric

Wheeled petrol

Portable petrol –consumer

Professionallawn & garden

Constructionproducts

HusqvarnaPartnerJonsered

PioneerJobu


PioneerJobu

Flymo


PioneerJobu

Flymo

Norlett


PioneerJobu

Flymo

NorlettPoulan

WeedEater


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch

Marazzini


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch

Marazzini

PartnerIndustrial


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch

Marazzini

PartnerIndustrial Dimas


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch

Marazzini


CushionCut

Magnum


PioneerJobu

Flymo

NorlettPoulan

WeedEater

AmericanYard

Products

Allegretti

McCulloch

Marazzini


CushionCut

MagnumDiamant

Boart


PioneerJobu

Flymo

NorlettPoulan WeedEater 1986

American Yard Products1988

Allegretti1990

McCulloch1999

Marazzini2001

PartnerIndustrial

Dimas1987

CushionCut

Magnum 2000

DiamantBoart2002

Yazoo-Kees1999

Bluebird2000

Successful acquisitions

Leading global positions for 90% of sales

• Chainsaws

• Other portable petrol

• Tractors

• Lawn mowers

• Diamond tools for constructionand stone industries

Global no. 1

Global no. 1

Global no. 1-2

Global no. 1

Global no. 1

0

6

12

18

24

30

36

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Sale

s, S

EK b

n

0%

2%

4%

6%

8%

10%

12%

EBIT

mar

gin

EBIT margin

Sales

History of profitable growth

Organic growth driversGrowth in demandMarket share gainsProduct/market expansion

Sales CAGR 1996-2005: 7.5% (5.5% excl. acquisitions)EBIT CAGR 1996-2005: 10%

Note: As reported in Electrolux segment reporting. Corporate costs not included

Strong position for Husqvarna brandin high-end segments

Key drivers of performance

Successful product development

Global sales and service organization

Strong positions with leading retailers

Successful integration of acquisitions

1

2

3

4

5

9 5279 885

10 40815,4%15,8%

16,7%

2003 2004 2005

Sales Operating Margin

SEKm

4.5% annual sales growth 2003-2005

Key demand drivers:• Logging activities• ”Prosumers”• Private gardens maintained

by contractors• Construction – infrastructure

and commercial buildings

Key performance drivers:• Brand• Growth • Price management

Major competitors:Stihl, Toro, Tyrolit

Professional Products

2003 2004 200535.3% 36.7% 38.5%

RONA:

Sales and margin(In comparable currency)

16 430

17 967 18 360

8,6% 9,1%

7,3%

2003 2004 2005

Sales Operating Margin

Consumer Products

SEKm

Sales and margin(In comparable currency)

5.7% annual sales growth 2003-2005

Key demand drivers:• Housing starts• Consumer spending on

home improvement• Weather

Key performance drivers:• Cost-efficiency• Brand• Price management• Growth

Major competitors:MTD, GGP, TTI

2003 2004 200525.5% 27.8% 18.6%

RONA:

*) Includes provision of SEK 40m for closure of Parabiago plant, Italy

*)

1. Organic growth• Continued investments in product development• Expand distribution network• Make full use of Husqvarna brand’s potential

2. Maintain high margins• Focus on growing high-margin businesses• Price management• Cost-efficiency

3. Complementary acquisitions

How to meet our targets

• Strong expertise - Engines for portable products- Working close to professional users

• R&D concentrated to few resource centers• High cost-efficiency based on large

volumes

Product development

Strong global sales network

Strong positions with leading retailers in both Europe and US• Sears – Husqvarna’s largest customer• Growing shares with other major retailers

Strong global dealer base• Loyalty and stability• Decades of investments to develop

LCC challenges and opportunities

Pricing pressureNew competitors

Industry is relocating

Cost benefits

• Continue to strengthen brand position

• Add value for retailers and consumers- Excellence in products and services

• Optimize pace of transfer to LCC manufacturing and sourcing

Husqvarna´s strategy

LCC challenges and opportunities

Long-term financial targetsAnnual organic growth of approx. 5% over abusiness cycle

Growth through complementary acquisitions

Operating margin of more than 10% over abusiness cycle

Dividend to correspond to 25-50% of net income

Presentation of HusqvarnaStockholm, May 29-30, 2006

Bernt IngmanCFO

Husqvarna Group, Q1 2006Pro forma

SEKm 1st QuarterChange,

%

Net sales 9 338 7 880 18.5 8.2 28 768Gross Profit 2 218 23.8 1 935 24.6 7 659 26.6

EBIT 929 9.9 814 10.3 14.1 6.7 2 871 10.0

Income after fin. items 792 8.5 676 8.6 17.2 – 2 392 8.3

Income for the period 546 5.8 453 5.7 20.5 – 1 603 5.6

Key ratiosEarnings per share SEK 1.85 1.53 5.46Equity per share, SEK 17.80 12.07 16.07ROCE, % 23.4 27.1 23.5

Adj.*)

Change2006 % of

sales2005 % of

sales

Full year2005 % of

sales

*) In comparable currencies

• Strong pre-season sales inboth Europe and North America,based on improved shareswith retailers.

• Higher operating income,margin in line with previous year.

Q1 2006 SEKm

Sales 6,540 20.7% EBIT 503 19.5%Margin 7.7%

In comparable currencySales 9.1%EBIT 8.6%

Change

Consumer Products, Q1 2006

Professional Products, Q1 2006

• Higher sales and EBITfor chainsaws, in comparison with strong Q1 2005

• Strong sales and higher EBIT for both Lawn and gardenand Construction

• Overall, slightly lower margindue to product/countrymix effects

Q1 2006 SEKm

Sales 2,798 13.6% EBIT 455 7.8%Margin 16.3%

In comparable currencySales 6.3%EBIT 3.9%

Change

Mar 31 Mar 31 Dec 31SEKm 2006 2005 2005

Intangible assets 2 293 1 963 2 182Tangible assets 3 830 3 164 3 846Other fixed assets 1 019 952 931Inventories 6 240 6 022 6 264Accounts receivable 7 882 7 030 3 325Other assets 446 588 596Liquid funds 1 057 1 061 1 104Total assets 22 767 20 780 18 248

Total equity 5 264 3 567 4 717Int bearing liab. 10 983 10 469 6 404Provisions 1 450 1 631 1 473Accounts payables 3 036 2 999 4 222Oth non int. bearing liabilities 2 034 2 114 1 432Tot equity and liabilty 22 767 20 780 18 248

Net Debt 9 926 9 408 5 300Net Debt/Equity 1,89 2,64 1,12Investments 266 253 1 259

Balance Sheet, Pro forma

0

2 000

4 000

6 000

8 000

10 000

12 000

Q1 Q2 Q3 Q4

2003 2004 2005 2006

0

200

400

600

800

1 000

1 200

1 400

Q1 Q2 Q3 Q4

2003 2004 2005 2006

Average of Q1 Q2 Q3 Q4Total Year 29% 34% 21% 16%

Average of Q1 Q2 Q3 Q4Total Year 29% 39% 21% 11%

SEK m SEK m

Operating ProfitNet Sales

Strong seasonal variationsFirst half represents approx. 60% of sales and 65% of operating profit

Seasonality

-5 000

-4 000

-3 000

-2 000

-1 000

0

1 000

2 000

3 000

4 000

Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec

-50 000

-40 000

-30 000

-20 000

-10 000

0

10 000

20 000

30 000

40 000

Distinct seasonal variation pattern:

Sales; approx. 60% in first half of the year

Operating profit; approx. 65% in first half

Operating cash flow; approx. 100% in second half

EBIT/ OP CFSEKm

Net SalesSEKm

SeasonalitySales, EBIT and operating cash flow

Summary

Create value for shareholders through good growth, high profitability and strong cash flow

• Leading market positions

• Strong brand portfolio

• Expertise in product development

• Strong distribution network

• Organic growth

• Complementary acquisitions

• Strong, stable cash flow

Global leader in outdoor power products and cutting equipment for construction and stone industries

ForestryLawn and garden Construction

The Husqvarna Group

Documents

Presentation of Husqvarna€¦ · cutting equipment for construction and stone industries Lawn and garden Forestry Construction The Husqvarna Group. Key data, 2005 Production facilities