By Jesus Calero
(Reuters) -Swedish garden equipment maker Husqvarna reported second-quarter operating earnings above market expectations on Friday, helped by demand for robotic lawnmowers and margin gains from cost savings and efficiency measures.
The second quarter, when demand for garden tools and robotic mowers peaks, marks Husqvarna’s most important sales season that offers a clearer view of what is resonating with consumers after the early spring sell-in.
Its earnings before interest and tax rose 8.6% to 2.06 billion Swedish crowns ($211.8 million) in the period, beating analysts’ average forecast of 1.84 billion crowns according to data compiled by LSEG.
Husqvarna’s shares rose 6% in early trading in Stockholm.
Favourable spring weather in Europe supported both sell-in and sell-out, CEO Pavel Hajman told Reuters. While weather conditions in the U.S. were acceptable, softer consumer demand negatively impacted sales, he added.
Weather has helped irrigation sales in Europe, even though broader demand remains uneven, analysts had said ahead of the publication.
Husqvarna had warned of weaker sales and operating losses in previous quarters due to soft consumer demand, retailer destocking and a tougher product mix.
But in the second quarter, the garden gear maker’s margins improved across all divisions, helped by stronger volumes, cost savings and a shift toward higher-margin products.
Quarterly sales were 15.27 billion Swedish crowns, beating the 15.05 billion expected by analysts.
Analysts from Jefferies said a strong performance in robotics and watering products offset softness in the construction division, particularly in North America.
Investors are watching out for signs that the robotic mower business is regaining lost ground, with attention now turning to how the newly appointed CEO, Glen Instone, will steer the group forward.
Husqvarna’s robotic lawnmower sales grew 15% in the quarter even as competition intensifies in the entry-level market.
There are around 20 to 25 emerging Chinese competitors in the robotic mower market, Hajman said.
($1 = 9.7268 Swedish crowns)
(Reporting by Jesus Calero in Gdansk, editing by Milla Nissi-Prussak)
