Husqvarna AB (publ)

Second-quarter organic sales declined 4%. Operating income was SEK 1.95 billion and the operating margin was 13.6%, versus 13.4% a year ago. Terry Burke said EBITDA margin improved by 20 basis points to 13.6% and EBITDA was SEK 1,950. The quarter included a SEK 240 million tariff refund in COGS; management also cited about SEK 65 million-SEK 70 million of inflationary pressure from the Middle East conflict, plus currency headwinds of SEK 60 million. By division, Forest & Garden sales fell 3%, Gardena fell 11%, and Construction rose 5%. Year to date, operating margin improved by 90 basis points to 12.9% and EBITDA was just shy of SEK 3.7 billion. Free operating cash flow was SEK 3.9 billion in the quarter and SEK 2.8 billion year to date. Net debt was SEK 11.8 billion, borrowings were down to SEK 1.1 billion, and net debt/EBITDA improved to 2.0 from 2.3 a year ago. For the full year, management now expects inflationary increases tied to the Middle East conflict of SEK 300 million-SEK 350 million, cost savings of about SEK 1 billion in 2026, and some additional tariff refunds are possible but uncertain.

Glen Instone framed the quarter as difficult operationally but strong on execution. He said the company is taking firmer strategic actions, including logistics supplier consolidation, warehouse reductions, a manufacturing shift in Gardena from Germany to the Czech Republic, and portfolio reviews/exits in underperforming businesses. He was upbeat about North America growth, aftermarket momentum in Construction, and the pace of savings, saying Husqvarna is “very much on track” with its strategy.

Terry Burke focused on the bridge from lower sales to margins, highlighting approximately half of the SEK 660 million negative EBITDA impact as volume/under-absorption, with the rest from unfavorable mix, inflation, and currency. He quantified Middle East-related inflation at SEK 65 million-SEK 70 million in Q2 and SEK 300 million-SEK 350 million for the full year, while tariff refunds totaled SEK 240 million and net tariff impact was positive SEK 145 million after SEK 95 million of additional tariffs. He also highlighted strong cash generation, reduced borrowings by more than SEK 1 billion, net debt at SEK 11.8 billion, and a healthy maturity profile after renewing a SEK 2 billion RCF and amortizing a SEK 500 million bond.

Analysts pressed on the gross margin decline excluding the tariff refund, the split between raw materials and logistics within the Middle East inflation headwind, inventory levels in the trade for robotics, and the outlook for tariffs and pricing. Management said the gross margin pressure was mainly volume, mix, and inflation; the Middle East effect was roughly two-thirds raw materials and one-third logistics; and robotics sell-in remained positive in Q2 but trade inventories were still elevated in Germany and the U.S. On tariffs, Burke said Husqvarna has already received most of its claim and should not expect much more, while Glen said the company is implementing more frequent price increases, including some in June and July, but must stay competitive.