Henric Andersson, President & CEO:
"After a good start to the quarter, the financial performance of the Group was negatively impacted by the rapid spread of the Covid-19 disease. The negative impacts initially related to supply chain disturbances but towards the end of the quarter the lockdown measures in many of our main markets had an increasing impact on our sales. In total our net sales decreased by 4% adjusted for currency effects and the exited Consumer Brands business. The decline was particularly visible in the Husqvarna and Construction Divisions whereas the Gardena Division had an adjusted net sales increase of 5%. Operating income in the first quarter amounted to SEK 1,424m (1,644), corresponding to a margin of 11.7% (12.0). Lower net sales and manufacturing volumes contributed negatively but was partly compensated by cost saving activities. I was very pleased that our focused actions to address working capital has resulted in a SEK 1.7bn improvement in our direct operating cash flow to SEK -132m versus SEK -1,807m last year.
We are closely monitoring the Covid-19 situation. The health and safety of our employees and stakeholders is our highest priority. Governmental lockdown measures are having a fundamental negative impact on our industry and channel partners, ultimately impacting the demand for our solutions. We have a strong financial position and clear mitigating plans. We have already launched a number of cost reduction initiatives to proactively address the situation, such as planned working time reduction for approximately 30% of our employees, reduction of external costs and reduced travel as well as scaling back on some of our planned strategic initiatives. Currently, all our manufacturing and warehouse sites globally are in operation albeit at lower volumes. Actions are already in place to enable them to quickly ramp-up as the demand situation improves. In addition, our sites are also supporting society in general with production of parts for medical equipment in Europe and in the US.
It is an honor to be appointed President & CEO of the Husqvarna Group. Short-term, it will be a period of uncertainty and forceful decisions to manage the situation regarding Covid-19. We have a strong team in place and a clear plan ahead. Last year, we presented an updated business strategy building on a sharper focus on our end-customer segments, robotics and battery solutions, strengthening our winning core and expanding our services and solutions offering. This is the foundation for our long-term execution. I am convinced that we will continue to stand strong despite the current short-term challenges."
A conference call, hosted by Henric Andersson, President & CEO, and Glen Instone, CFO, will be held at 10:00 CET on April 24, 2020. To participate, please dial +46 (0) 8 505 583 55 (Sweden) or +44 333 300 9273 (UK) ten minutes prior to the start of the conference. Conference ID: Husqvarna. The conference call will also be audio cast live on https://husqvarna-group.creo.se/200424. A replay will be available later the same day.
- Glen Instone, CFO, Senior Vice President, Finance, IR & Communication
- Johan Andersson, Director, Group Corporate Communications and Investor Relations, +46 702 100 451
This press release contains insider information that Husqvarna AB is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact person set out above, at 08.00 CET on April 24, 2020.