Husqvarna Sales Up, 10% Operating Margin Closer in Sight

Husqvarna’s “Americas” sales up 6% in July-September 2014; operating margin climbs two points.

Husqvarna recently released its third quarter 2014 financial results for the period of July through September.

Total worldwide sales were up 3% (once adjusted for currency exchange rates) compared to the third quarter of 2013. Sales for the “Americas” and “Construction” segments were each up about 6%.

For the first nine months of the year, total sales are up 6%, Americas sales specifically are up 6%, and Construction sales are up 8%. Favorably developing demand in the U.S. is a big reason for the sales bump.

Additionally, Husqvarna continues on its longer-term quest to improve profitability. The company set a goal of achieving a 10% operating margin by 2016. Thus far, operating margin has been improved by a couple points to roughly 7%. Two primary tactics are being utilized to reach the ultimate goal of 10%: reduction in materials cost, heightened focus on core brands and products where the company has leadership positions.

Husqvarna’s decision to terminate the Dixon brand of lawnmowers in North America (read story) is one example of strategic change to accommodate the desired reduction in brand complexity. Husqvarna also produces Husqvarna-branded equipment, in addition to BlueBird, RedMax, Jonsered, PoulanPro, WeedEater and McCulloch, among others.

“We are now taking the final steps of preparing for next season,” said Kai Wärn, president and CEO of Husqvarna. “Keeping the momentum in the execution of the Accelerated Improvement Program is the priority for 2015. In parallel, the new brand-based organization will be fully operational as of January 1, 2015, and forms the base for taking steps towards expansion beyond 2015. From a short-term demand perspective, we expect the fourth quarter to show a stable development compared to the corresponding quarter prior year."

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