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Husqvarna Reports Surprise Q4 Loss
By Niklas Pollard and Victoria Klesty
Source: Reuters
STOCKHOLM, Sweden (Feb. 24, 2010) — Garden and construction tool maker Husqvarna posted a surprise fourth-quarter loss on weak demand for gardening products, and said caution by retailers to stock up would lead to lower deliveries in coming months.
Husqvarna shares slid 5.2 percent to 45.40 crowns on the news, underperforming a 0.3 percent gain in the Stockholm bourse's blue chip index.
The global downturn weighed on demand for gardening products last year, and retailers on both sides of the Atlantic have been reluctant to boost their inventories while there are still doubts about a recovery in consumer spending.
Husqvarna posted an operating loss of 175 million crowns ($24.3 million) excluding restructuring costs of 340 million. This compared with a year-ago loss of 171 million crowns and a mean forecast for an 84 million profit in a Reuters poll of analysts.
"They guide for negative sales volume development in the first quarter which was also worse than expected," ABG Sundal Collier analyst Christer Fredriksson said.
"There are few things in the report that I feel are positive, apart from the cash flow, but I don't think that offsets the negative results."
Husqvarna, which makes lawn mowers, chain saws and other garden equipment, as well as diamond tools for the construction industry, has cut costs in the face of the downturn, shedding more than 1,000 jobs since the end of 2008.
The company, whose cash flow rose to 801 million crowns from a year-ago 116 million, said in a statement the uncertain market conditions meant retailers of its brands, which include Weed Eater and Poulan, would be cautious about building up stocks.
"Inventories in the trade for the coming garden season are estimated to be lower than in the previous year," it said.
"Shipments in the first quarter are expected to be lower than in the first quarter of 2009. A long winter could cause a late start of the season and delay pre-seasonal shipments from the first to the second quarter."
Husqvarna, spun out of white goods group Electrolux in 2006, said sales in the quarter fell to 4.7 billion crowns from 5.1 billion a year ago, lagging the 4.8 billion seen by analysts.
"The group's listings with major retailers for the 2010 season are lower in North America, primarily in terms of low-margin products, and slightly improved in Europe in comparison with 2009," the company said.
