Terms of Service Violation By Niklas Magnusson July 17, 2018, 4:08 AM EDTUpdated on July 17, 2018, 4:31 AM EDT Shares fall the most since Husqvarna was listed in June 2006 Company to restructure Consumer Brands Division, exit segments Photographer: Krisztian Bocsi/Bloomberg Husqvarna AB sank the most in its 12 years on Sweden’s stock exchange after the maker of lawnmowers and chainsaws reported earnings that fell far short of market expectations. The stock dropped as much as 18 percent, with the decline pushing it to the bottom of the Stoxx 600 Europe index on Tuesday. Husqvarna said operating profit fell 3.8 percent in the second quarter to 1.93 billion kronor ($219 million), missing even the lowest analyst estimate. The company blamed its Consumer Brands Division for the decline. The unit suffered a loss after it was "mainly burdened by raw material cost inflation and a continued challenging U.S. retail market environment," it said. Management is now planning to restructure the division, which accounted for about a fifth of sales in the quarter. Husqvarna says it now wants to “increase focus and efforts” on what it’s describing as its “future premium product and service offerings under the core brands of Husqvarna and Gardena.” The company also said that “decisive steps” are being taken “to resolve the underperforming Consumer Brands Division.” “The presence in certain consumer segments will be exited,” it said. “As a consequence of the future direction, the Consumer Brands division will be dissolved into the Husqvarna and Gardena divisions." The company will gradually exit from segments and brands in which prices are lower, such as petrol-powered walk-behind lawnmowers and garden tractors. The North American operations of the Consumer Brands Division will be folded into the Husqvarna unit while the European and Asian operations will be absorbed by the Gardena division, it said. According to DNB, that means the company is exiting only 25 percent of Consumer Brands while moving the remaining 75 percent to Husqvarna and Gardena. "The step to walk away from unprofitable consumer brands business is the right way to go, but we hoped for a larger exit and not a gradual phase-out which could result in sizable restructuring costs and might also burden profitability," DNB, which has a buy rating on Husqvarna, said in a note. Husqvarna said the extent of the exits and associated adjustments to the manufacturing footprint and brand portfolio are now being reviewed, with changes to be realized in two steps as customer commitments for the 2019 season are honored. While the net sales impact for 2019 is estimated at close to 2 billion kronor, it will have "a favorable impact" on the group’s operating margin.
Not surprising. The tarriffs are not helping with 25% tax on many global goods. I'm a corporate Buyer by trade. I'm seeing crazy amounts of price increases from all sorts of suppliers due to the new tarriffs on raw and finished goods. Now the riding lawnmower/lawn tractors, I thought the Huskies were made by Ariens, just like the snowblowers? Maybe just the snowblowers??
Swedish Chainsaw Massacre Hits Husqvarna This will need to be linked. We don't want to get FHC into trouble.
I am not so sure tariffs have a lot to do with the low sales and poor stock performance as much as a weaker need for power equipment; chainsaws in particular. Chainsaws (all and not just Huskies) are short life tools. They need replacement far more then the other equipment that they sell, yet the demand just is not there like it was. Fewer people are burning firewood due to insurance regulations, being crazy busy at jobs, the increase of mini-splits, etc. And that does not even include the logger. While I might make more money per cord with a chainsaw and cable skidder, I am a dying breed. Ten years ago cable skidders were going for $25,000 and good one sought after, today everything is mechanical logging. With mechanical logging now being around for 20 years, the older equipment is available for sale for cheap to even the small scale guys, so most are mechanical loggers now. Those that are not do not get a lot of lots because landowners want the tops and limbs chipped and hauled off...it looks better! But when the mechanical guys were here, they cut 72 truck loads of wood, and yet only pulled the single, homeowner-type saw out of the trailer twice in the two months they were here. In short chainsaws are not being used in the woods like they were. But how many lawn tractors do people buy? Or leaf blowers? Or woodsplitters? I am betting chainsaw sales were their biggest market, and it is just plain down in shear number of sales.
Good heads up. I need to do my homework first but maybe it is a good chance to get in cheap on a solid stock. Folks almost always over-react and panic to news like that. Look at Alcoa today, they reported great earnings yesterday but said that tariffs are killing them. Today that $48 stock has dropped $6.50 to about $41.50. By next week I expect to see it back up at least $2 or $3 of that $6.50 drop. I took the opportunity to make that bet today by selling PUT options reflecting the present price. I figure that market panic is a chance to make money by not paniccing.
It sounds like they are concentrating on the saws. Duh, $900-$1200 for a 14 pound chunk of metal. Just like Detroit and their $70k pickups.
Their article says the 2nd quarter decline is due to raw material inflation and and a challanging US retail environment. Includes all that low end mowers and tractors they sell to the big US chains. Sounds to me that they are unable to pass along needed pricing to the big box stores in the US. No surprise. Just my guess....
hmmmm? Is it possible that investors in stock, and investors in their products are worried about a Swedish companys' viability? That country seems to be getting rid of anything swedish, including the virtue of their wives and daughters. How can continuity be a factor in any manufacturing company that resides in a country that goes from socialist to muslim? That stuff makes some investors nervous. I don't buy Husky explanation at all. Just my opinion, nothing more. I don't care how they restructure, move everything to other countrys ect. Loss of confidence matters when it comes to me investing in anything.
Not trying to be political, BUT 35 years ago Sweeden made good stuff! Aircraft, autos (Saab and Volvo) husky etc etc.. They used to be cheap, well built, and extremely well engineered. That has changed and the quality has gone down. Sad really. I won't go into reasons as to why..
nothing new there - same all over - brand names mean nothing. If ya want to make a silk purse out of sows ear ya can't substitute the belly skin and expect to get the same product.
Bingo. The same idea of living has recently wreaked havoc across Europe. Recent events here in the U.S. show what confidence can do to investment. This is just perception driven marketing. Like Tesla or ford. Both low profit companies with decent public perception. Quite the marketing trick though.
