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Interim Financial Report Released by Husqvarna
"Market demand in the quarter was substantially weaker than in the previous year in all product areas,” says Magnus Yngen, president and CEO. “Adjusted for changes in exchange rates and acquisitions, Group sales declined by 11% and operating income by 11% exclusive of the restructuring charge. The decline in income resulted mainly from lower volumes and a less favorable product and country mix. Lower material costs had a positive effect, as did savings from previously implemented cost cutting measures. Despite a difficult market environment, income for Professional Products remained at a high level. Forestry reported largely unchanged income with a higher margin, while Construction showed a decline.
Cash flow for the nine month period was strong as our efforts to reduce working capital have paid off.
In line with our strategic plan, we intend to implement a number of structural changes to improve internal efficiency. The total cost for these measures is estimated at approx. SEK 400m, of which SEK 59m was charged against operating income in the third quarter. The remaining part, i.e. approx. SEK 340m, is expected to be charged against operating income in the fourth quarter of 2009. The restructuring refers mainly to consolidation of production in Sweden and the US, and to changes within the sales organization. Annual savings from all these activities are expected to amount to approximately SEK 400m, and will be generated gradually from the second half of 2010 with full effect as of the start of 2012.
• Net sales for the first nine months rose by 8% to SEK 29,342m (27,216). Adjusted for acquisitions and changes in exchange rates, net sales declined by 9%. Operating income decreased by 27% to SEK 2,075m (2,833). Income for the period was SEK 1,355m (1,706), corresponding to SEK 2.50 (3.74) per share.
• Net sales for the third quarter declined by 2% to SEK 6,709m (6,830). Adjusted for acquisitions and changes in exchange rates, net sales declined by 11%.
• Operating income for the third quarter includes a restructuring charge of SEK 59m (15), referring to relocation of production from Italy to China.
• Excluding the above restructuring, operating income for the third quarter declined by 29% to SEK 232m (325).
• The decline in operating income in the quarter, exclusive of restructuring refers mainly to Consumer Products. Income for Professional Products also declined, but margin was unchanged.
