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Husqvarna — Interim / Quarterly Report 2015
Aug 14, 2017
2926_10-k_2017-08-14_f3405a23-aa66-4b63-9c70-c906a4804cc9.pdf
Interim / Quarterly Report
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YEAR-END REPORT 2015
Stockholm February 5, 2016
Kai Wärn, President and CEO:
"The Group's trend of improvement continued into the seasonally less important fourth quarter. Currency adjusted sales were 2% higher than prior year's corresponding quarter. Husqvarna, Gardena and Construction divisions grew by 6%. The decline for Consumer Brands was 10% which reflects our ambitions to prioritize value before revenue. The normal seasonally generated operating loss, excluding items affecting comparability, was reduced to SEK -212m (-265) and the margin recovered to -3.7% (-5.0) despite unfavorable currency impact. The Accelerated Improvement Program continued to yield positive results, mainly related to further cost reductions.
For the full year, the Group's development was positive in several dimensions. Operating income was 27% higher and reached SEK 2,980m, excluding items affecting comparability, with all divisions contributing to the improvement. Operating cash flow increased to SEK 1,668m (1,425) and the net debt declined to SEK 6,375m (7,234).
The Accelerated Improvement Program was successfully closed as of the end of 2015. In two years, the Group's operating income has improved by 85% and the margin has recovered from 5.3 to 8.2%, excluding items affecting comparability, despite a dilution of more than 1 percentage point due to currency translation effects on net sales.
Building on the success of the Accelerated Improvement Program and our strong improvement momentum, we aim to capture further cost reductions and efficiency improvements during 2016-17. The additional efficiency measures will focus on continued product cost out activities, reduction of indirect material and logistic costs, capacity adjustments in the supply chain and improved efficiency in terms of selling and administrative expenses.
The challenge now is to maintain enough momentum to offset the currency head-wind in 2016, which is estimated to up to SEK -500m, as well as to fund new activities related to our profitable growth ambition. The challenge is especially pronounced in the first quarter when we expect half of the full-year currency impact to materialize.
From a market point of view, we expect a stable to slightly higher demand in the preseason of 2016."
Fourth quarter 2015
- Net sales increased 2% to SEK 5,672 (5,323), adjusted for exchange rate effects.
- Operating income improved to SEK -212m (-265), excluding items affecting comparability.
- Operating income includes restructuring charges amounting to SEK -153m.
Full-year 2015
- Net sales increased to SEK 36,170m (32,838), but decreased 1% adjusted for exchange rate effects.
- Operating income increased 27% to SEK 2,980m (2,348), excluding items affecting comparability, corresponding to a margin of 8.2% (7.2).
- Earnings per share after dilution rose to SEK 3.28 (1.43).
- Net debt decreased to SEK 6,375m (7,234) and the net debt/equity ratio declined to 0.49 (0.60).
- The Board proposes a dividend of SEK 1.65 per share (1.65).
| Group | Q4 | Q4 | Change, % | Jan-Dec | Jan-Dec | Change, % | ||
|---|---|---|---|---|---|---|---|---|
| SEKm | 2015 | 2014 2 As rep. | Adj.1 | 2015 | 2014 2 As rep. | Adj.1 | ||
| Net sales | 5,672 | 5,323 | 7 | 2 | 36,170 | 32,838 | 10 | -1 |
| EBITDA | -35 | -5 | n/a | n/a | 3,980 | 3,315 | 20 | 10 |
| EBITDA margin, % | -0.6 | -0.1 | - | - | 11.0 | 10.1 | - | - |
| Items affecting comparability | -153 | -767 | - | - | -153 | -767 | - | - |
| Operating income | -365 | -1,032 | 65 | 65 | 2,827 | 1,581 | 79 | 55 |
| Excl. items affecting comparability | -212 | -265 | 20 | 21 | 2,980 | 2,348 | 27 | 15 |
| Operating margin, % | -6.4 | -19.4 | - | - | 7.8 | 4.8 | - | - |
| Excl. items affecting comparability, % | -3.7 | -5.0 | - | - | 8.2 | 7.2 | - | - |
| Income after financial items | -432 | -1,081 | 60 | n/a | 2,483 | 1,256 | 98 | n/a |
| Income for the period | -239 | -962 | 75 | n/a | 1,888 | 824 | 129 | n/a |
| Earnings per share after dilution, SEK | -0.42 | -1.68 | 75 | n/a | 3.28 | 1.43 | 129 | n/a |
| Net sales, Divisions | ||||||||
| Husqvarna | 3,036 | 2,789 | 9 | 6 | 17,624 | 15,449 | 14 | 6 |
| Gardena | 495 | 469 | 5 | 6 | 4,669 | 4,212 | 11 | 8 |
| Consumer Brands | 1,242 | 1,259 | -1 | -10 | 9,936 | 9,838 | 1 | -16 |
| Construction | 899 | 806 | 12 | 6 | 3,941 | 3,339 | 18 | 6 |
| Operating income, Divisions | ||||||||
| Husqvarna, excl. items affecting comparability | 65 | 91 | -29 | -29 | 2,284 | 2,008 | 14 | 8 |
| Gardena, excl. items affecting comparability | -123 | -186 | 34 | 35 | 591 | 383 | 55 | 46 |
| Consumer Brands, excl. items affecting comparability | -168 | -158 | -6 | -1 | -120 | -155 | 23 | -39 |
| Construction, excl. items affecting comparability | 87 | 49 | 79 | 59 | 465 | 354 | 31 | 15 |
1 Adjusted for currency translation effects (i.e. excluding transaction and hedging effects). 2 2014 has been restated, see page 16.
Husqvarna AB (publ) Box 7454 SE-103 92 Stockholm Sweden
Regeringsgatan 28 +46 8 738 90 00 556000-5331 www.husqvarnagroup.com HUSQ A
Address Visiting address Telephone Reg. No. Web site NASDAQ OMX Stockholm HUSQ B
FOURTH QUARTER
Net sales
Net sales for the fourth quarter 2015 increased by 7% to SEK 5,672m (5,323). Adjusted for exchange rate effects, net sales for the Group increased 2%.
Sales in Husqvarna, Gardena and Construction divisions increased, while Consumer Brands declined.
Operating income
Operating income for the fourth quarter 2015 was charged with restructuring costs amounting to SEK -153m (see page 3) and the fourth quarter 2014 was charged with an impairment of goodwill amounting to SEK -767m. Both are recorded as items affecting comparability.
Operating income for the fourth quarter improved to SEK -212m (-265), excluding items affecting comparability, corresponding to an operating margin of -3.7% (-5.0).
Operating income was positively impacted by the higher sales volume and cost reductions.
Changes in exchange rates had a total year-on-year negative impact on operating income of approximately SEK -45m compared to the fourth quarter 2014.
Financial items net
Financial items net amounted to SEK -67m (-49), of which net interest amounted to SEK -93m (-73). The average interest rate on borrowings at December 31, 2015, was 4.0% (3.5).
Income after financial items
Income after financial items amounted to SEK -432m (-1,081).
Taxes
Tax amounted to SEK 193m (119). The positive tax impact was due to the seasonally negative result. The impairment of goodwill in Q4 2014 was not tax deductible and has thus impacted prior year's fourth quarter tax rate.
Earnings per share
Income for the period attributable to equity holders of the Parent Company amounted to SEK -238m (-961), corresponding to SEK -0.42 (-1.68) per share after dilution.
JANUARY – DECEMBER
Net sales
Net sales for January – December increased by 10% to SEK 36,170m (32,838). Adjusted for exchange rate effects, net sales for the Group decreased by 1%.
The decline in sales adjusted for exchange rate effects refers to the Consumer Brands Division. Sales in Husqvarna, Gardena and Construction divisions increased.
Operating income
Operating income was charged with restructuring costs amounting to SEK -153m. Prior year was charged with an impairment of goodwill amounting to SEK -767m. Both are recorded as items affecting comparability.
Operating income, excluding items affecting comparability, for January – December increased by 27% to SEK 2,980m (2,348) and the corresponding operating margin rose to 8.2% (7.2).
Operating income for the full year was positively impacted primarily by favorable price/mix and cost reductions, which was partially offset by the lower sales volume and increased costs for selling and administration.
Changes in exchange rates for the full-year had a total positive impact on operating income of approximately SEK 110m compared to January - December 2014.
Financial items net
Financial items net amounted to SEK -344m (-325), of which net interest amounted to SEK -336m (-340).
Income after financial items
Income after financial items increased to SEK 2,483m (1,256), corresponding to a margin of 6.9% (3.8).
Taxes
Tax amounted to SEK -595m (-432), corresponding to a tax rate of 24% (34) of income after financial items. The higher tax rate prior year is mainly explained by the goodwill impairment charge which was not tax deductible.
Earnings per share
Income for the period attributable to equity holders of the Parent Company increased to SEK 1,883m (820), corresponding to SEK 3.28 (1.43) per share after dilution.
RESTRUCTURING
As communicated in the fourth quarter, Husqvarna Group is implementing changes to drive further cost reductions. Changes include adjustments of the manufacturing and logistics footprint in Sweden, the US and China, as well as efficiency improvements in sales and service resources. The cost reductions will be utilized for investments in profitable growth activities and to mitigate unfavorable currency impact going forward. The measures will entail restructuring costs amounting to SEK -153m, which have been included in the Group's income statement for the fourth quarter of 2015. Restructuring charges in the Husqvarna Division amount to SEK -51m, in Gardena SEK -5m, in Consumer Brands SEK -27m and Construction SEK -70m.
OPERATING CASH FLOW
Operating cash flow for January – December 2015 amounted to SEK 1,668m (1,425). The improved earnings supported an increase in cash flow from operations, excluding changes in operating assets and liabilities. This was partially offset by lower cash flow from changes in operating assets and liabilities, which was negatively affected by a change in divisional mix and somewhat higher inventory.
| Operating cash flow | Q4 | Q4 | Jan-Dec | Jan-Dec |
|---|---|---|---|---|
| SEKm | 2015 | 20141 | 2015 | 20141 |
| Cash flow from operations, excluding changes in | ||||
| operating assets and liabilities | 474 | -256 | 3,639 | 2,608 |
| Changes in operating assets and liabilities | 286 | 512 | -583 | 203 |
| Cash flow from operations | 760 | 256 | 3,056 | 2,811 |
| Cash flow from investments, excluding acquisitions and | ||||
| divestments | -441 | -483 | -1,388 | -1,386 |
| Operating cash flow | 319 | -227 | 1,668 | 1,425 |
1 2014 has been restated, see page 16.
FINANCIAL POSITION
Group equity as of December 31, 2015, excluding non-controlling interests, increased to SEK 13,041m (12,068), corresponding to SEK 22.7 (21.1) per share after dilution.
Net debt decreased to SEK 6,375m (7,234) of which liquid funds and other interest-bearing assets amounted to SEK 1,972m (2,105) and interest-bearing debt amounted to SEK 6,952m (7,504), excluding pensions. The major currencies used for debt financing are SEK and USD.
The net debt/equity ratio amounted to 0.49 (0.60) and the equity/assets ratio was 44% (41).
| Net debt | Dec 31, | Dec 31, |
|---|---|---|
| SEKm | 2015 | 2014 |
| Net pension liability | 1,395 | 1,835 |
| Other interest-bearing liabilities | 6,952 | 7,504 |
| Less: Liquid funds and other intrest-bearing assets | -1,972 | -2,105 |
| Net debt | 6,375 | 7,234 |
On December 31, 2015, non-current borrowings including financial leases amounted to SEK 4,580m (5,598) and current borrowings including financial leases to SEK 2,016m (1,154). Non-current borrowings consist of
SEK 2,932m (3,493) in issued bonds and of SEK 1,648m (2,105) in bank loans and financial leases. The bonds and bank loans mature in 2016 - 2019. The Group also has an unutilized SEK 5bn committed revolving credit facility maturing in 2020, with an option for an additional 1 year.
PERFORMANCE BY BUSINESS SEGMENT
Husqvarna
| Q4 | Q4 | Change, % | Jan-Dec Jan-Dec | Change, % | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | 2015 | 2014 | rep. | Adj.1 | 2015 | 2014 | rep. | Adj.1 | ||||||||||||
| Net sales | 3,036 | 2,789 | 9 | 6 | 17,624 | 15,449 | 14 | 6 | ||||||||||||
| Operating income | 14 | 91 | -84 | -84 | 2,233 | 2,008 | 11 | 6 | ||||||||||||
| Excl. items affecting comparability | 65 | 91 | -29 | -29 | 2,284 | 2,008 | 14 | 8 | ||||||||||||
| Operating margin, % | 0.5 | 3.3 | - | - | 12.7 | 13.0 | - | - | ||||||||||||
| Excl. items affecting comparability | 2.1 | 3.3 | - | - | 13.0 | 13.0 | - | - |
1 Adjusted for currency translation effects.
Net sales, adjusted for changes in exchange rates, in the Husqvarna Division increased by 6% in the fourth quarter. The corresponding full-year net sales increase was 6%.
The increase in the fourth quarter was mainly attributable to wheeled products including snow throwers in North America. Over the full-year, all regions showed growth with the largest contribution coming from EMEA where in particular robotic mowers and riders had a strong development.
Operating income for the seasonally small fourth quarter, excluding items affecting comparability, decreased to SEK 65m (91) and the operating margin amounted to 2.1% (3.3). The effect from increased sales volume was offset by adverse currency impact, unfavorable product mix and lower production volumes. The full-year operating income, excluding items affecting comparability, increased SEK 276m or 14% to SEK 2,284m (2,008). The higher sales volume and a favorable product mix development contributed to the full-year increase, whereas higher selling and administrative expenses impacted negatively.
The fourth quarter was charged with restructuring costs of SEK -51m referring to staff reductions in the production facility in Huskvarna, Sweden.
Changes in exchange rates had a total negative year-on-year impact of around SEK -15m on operating income in the fourth quarter and around SEK 65m positive impact for January – December.
Gardena
| Q4 | Q4 | Change, % | Jan-Dec Jan-Dec | Change, % | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | 2015 | 2014 | rep. | Adj.1 | 2015 | 2014 | rep. | Adj.1 | ||
| Net sales | 495 | 469 | 5 | 6 | 4,669 | 4,212 | 11 | 8 | ||
| Operating income | -128 | -186 | 31 | 32 | 586 | 383 | 53 | 45 | ||
| Excl. items affecting comparability | -123 | -186 | 34 | 35 | 591 | 383 | 55 | 46 | ||
| Operating margin, % | -25.9 | -39.7 | - | - | 12.5 | 9.1 | - | - | ||
| Excl. items affecting comparability | -24.8 | -39.7 | - | - | 12.7 | 9.1 | - | - |
1 Adjusted for currency translation effects.
Net sales, adjusted for changes in exchange rates, in the Gardena Division increased by 6% in the fourth quarter. The corresponding full-year net sales increase was 8%.
Europe and Asia/Pacific, in particular Australia and New Zeeland, contributed to the good growth in the fourth quarter. The full-year increase was mainly attributable to higher sales of mobile watering products and robotic lawn mowers in Europe. Demand over the season was strong, driven by warm and dry weather in Europe in the third quarter.
Operating income in the seasonally weak fourth quarter improved to SEK -123m (-186), excluding items affecting comparability, largely as a result of the volume growth, productivity and improved matching of costs throughout the year. Operating income for the full year, excluding items affecting comparability, rose to SEK 591m (383), mainly as a result of the higher sales volume and favorable product mix driven by good growth in high margin products such as watering and robotic mowers. Improved productivity and reduced material costs also impacted positively whereas higher selling and administrative expenses impacted negatively. The corresponding operating margin rose to 12.7% (9.1).
The fourth quarter was charged with restructuring costs of SEK -5m referring to staff reductions.
Changes in exchange rates had a total negative year-on-year impact of around SEK -10m on operating income in the fourth quarter and around SEK -25m for January – December.
Consumer Brands
| Q4 | Q4 | Change, % | Jan-Dec Jan-Dec | Change, % | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | 2015 | 2014 | rep. | Adj.1 | 2015 | 2014 | rep. | Adj.1 | ||||||||||||
| Net sales | 1,242 | 1,259 | -1 | -10 | 9,936 | 9,838 | 1 | -16 | ||||||||||||
| Operating income | -195 | -158 | -23 | -16 | -147 | -155 | 5 | -70 | ||||||||||||
| Excl. items affecting comparability | -168 | -158 | -6 | -1 | -120 | -155 | 23 | -39 | ||||||||||||
| Operating margin, % | -15.7 | -12.5 | - | - | -1.5 | -1.6 | - | - | ||||||||||||
| Excl. items affecting comparability | -13.6 | -12.5 | - | - | -1.2 | -1.6 | - | - |
1 Adjusted for currency translation effects.
Net sales, adjusted for changes in exchange rates, in the Consumer Brands Division decreased by 10% in the fourth quarter. The corresponding full-year net sales decrease was 16%.
Sales in North America and Europe continued to decline in the fourth quarter due to the Group's ambition to prioritize value before revenue. The priority is also reflected in all regions and across most product categories over the full-year.
The seasonal operating loss in the fourth quarter, excluding items affecting comparability, was almost in line with prior year's corresponding quarter. Cost reductions offset unfavorable impact from currency, lower sales and production volumes. For the full year, the operating loss, excluding items affecting comparability, declined to SEK -120m (-155) and the margin recovered to -1.2% (-1.6). Cost reductions compensated for the adverse impact due to lower sales and production volumes as well as unfavorable currency effects.
The fourth quarter was charged with an impairment of SEK -27m mainly referring to restructuring of the logistics footprint, which will be fully implemented in 2016 and 2017.
Changes in exchange rates had a total negative year-on-year impact of around SEK -40m on operating income in the fourth quarter and around SEK -50m for January – December.
Construction
| Q4 | Q4 | Change, % | Jan-Dec Jan-Dec | Change, % | ||||
|---|---|---|---|---|---|---|---|---|
| SEKm | 2015 | 2014 | rep. | Adj.1 | 2015 | 2014 | rep. | Adj.1 |
| Net sales | 899 | 806 | 12 | 6 | 3,941 | 3,339 | 18 | 6 |
| Operating income | 17 | 49 | -66 | -70 | 395 | 354 | 11 | -2 |
| Excl. items affecting comparability | 87 | 49 | 79 | 59 | 465 | 354 | 31 | 15 |
| Operating margin, % | 1.9 | 6.0 | - | - | 10.0 | 10.6 | - | - |
| Excl. items affecting comparability | 9.7 | 6.0 | - | - | 11.8 | 10.6 | - | - |
1 Adjusted for currency translation effects.
Net sales, adjusted for changes in exchange rates, in the Construction Division increased by 6% in the fourth quarter. The corresponding full-year net sales increase was also 6%.
The good sales development in North America continued in the fourth quarter. Sales increased on the basis of higher demand as a result of increased construction activity, as well as market share gains. Sales in Europe also continued to grow, however at a slow pace and with a mixed development between different countries. The full-year sales development followed a trend similar to the fourth quarter's. Sales related to Latin America and Asia/Pacific recovered somewhat towards the end of the year.
Operating income in the fourth quarter, excluding items affecting comparability, rose to SEK 87m (49), mainly as a result of the higher sales volume and favorable mix. Investments in sales and service resources increased. The corresponding operating margin increased to 9.7% (6.0). For the full-year, operating income increased by 31% to SEK 465m (354), excluding items affecting comparability. The operating income was positively impacted by the higher sales volume, which primarily was offset by higher costs due to investments in the sales and service structure.
The fourth quarter was charged with restructuring costs of SEK -70m related to staff reductions and asset impairment in order to increase efficiency in manufacturing and sales.
Changes in exchange rates had a total positive year-on-year impact of around SEK 20m on operating income in the fourth quarter and around SEK 120m for January – December.
CHANGES IN MANAGEMENT
Sofia Axelsson has been appointed Senior Vice President Group Communications, Brand & Marketing. Sofia Axelsson is a member of Group Management and she took on her new position as of October 1, 2015.
Effective October 1, Anders Johanson was appointed Senior Vice President Technology Office & CTO and member of Group Management. Anders Johanson replaced Henric Andersson who previously was appointed President of the Construction Division.
SUSTAINABILITY RECOGNITION
Husqvarna Group has been reconfirmed as member of the FTSE4Good Index Series and of the STOXX® Global ESG Leaders Index. These indices are designed to facilitate investments in companies that meet globally recognized corporate responsibility standards in environmental and social care as well as corporate governance.
ANNUAL GENERAL MEETING 2016
The Annual General Meeting (AGM) of Husqvarna AB (publ) will be held in Jönköping, Sweden on April 6, 2016.
Proposals to the AGM
The notification to the AGM 2016 will be available on the Group's website www.husqvarnagroup.com/agm as of March 3, 2016. The full proposal to the AGM will be published on the Group's website no later than March 16, 2016.
Shareholders who wish to propose an item for the AGM agenda may do so by email to [email protected], or by post to Husqvarna AB, General Counsel, PO Box 7454, SE-103 92 Stockholm, if possible by February 17, 2016.
Dividend
The Board of Directors proposes a dividend for 2015 of SEK 1.65 (1.65) per share, corresponding to a total dividend payment of SEK 945m (945) based on the number of outstanding shares at the end of 2015.
It is also proposed that the dividend is to be paid in two installments in order to better match the Group's cash flow profile. The first payment of SEK 0.55 per share in April and the second payment of SEK 1.10 per share in October.
The proposed record dates are April 8, 2016 for the first payment and October 10, 2016, for the second payment.
PARENT COMPANY
Net sales January - December 2015 for the Parent Company, Husqvarna AB, amounted to SEK 12,763m (11,453), of which SEK 9,844 (8,923) referred to sales to Group companies and SEK 2,919m (2,530) to external customers.
Income after financial items amounted to SEK 2,079m (985). Income for the period was SEK 1,845m (779). Investments in property, plant and equipment and intangible assets amounted to SEK 865m (658). Cash and cash equivalents amounted to SEK 238m (166) at the end of the quarter. Undistributed earnings in the Parent Company amounted to SEK 18,388m (17,506).
CONVERSION OF SHARES
According to the Company's articles of association, owners of A-shares have the right to have such shares converted to B-shares. Conversion reduces the total number of votes in the Company.
In the fourth quarter 2015, 553 A-shares were converted to B-shares. In January 2016, another (1) A-share was converted to B-share at the request of a shareholder. The total number of votes thereafter amounts to 159,959,720.3.
The total number of registered shares in the company at December 31, 2015 amounted to 576,343,778 of which 113,694,826 were A-shares and 462,648,952 were B-shares.
RISKS AND UNCERTAINTY FACTORS
A number of factors may affect Husqvarna's operations in terms of operational and financial risks. Operational risks are managed by the operative units, and financial risks by Group Treasury.
For more information on risk than stated below, see the Annual Report, which is available at www.husqvarnagroup.com/ir.
Operational risks
Operational risks include general economic conditions, as well as trends in consumer and professional spending, particularly in North America and Europe, where the majority of the Group's products are sold. An economic downturn in these markets may have an adverse effect on Group sales and earnings. Shifts in product technology as well as shifts in distribution structure could also have a negative impact on Group sales and earnings, as will fluctuations in prices of sourced raw materials and components.
The Group is currently investing in a new production facility for manufacturing of chainsaw chains. As the Group has limited experience of producing saw chains, such an investment involves risks including, but not limited to, unsatisfactory ramp-up of production capacity, or fine tuning of the manufacturing equipment parameters could take longer time to achieve adequate quality of the finished products.
A new organization was fully implemented in the Group as of January 1, 2015. Organizational changes always involve the risk of adverse effects such as creating higher costs than anticipated or loosing key personnel.
Demand for the Group's products is also dependent on weather conditions. Dry weather can reduce demand for products such as lawn mowers and tractors, but can stimulate demand for watering products. Demand for chainsaws normally increases after storms and during cold winters.
The Group's operations are also subject to seasonal variations. Demand for consumer garden products and commercial lawn and garden products normally peaks in the second quarter, while the peak season for chainsaws normally is in the third quarter. Husqvarna has adapted its production processes and supply chain to respond to these conditions. However, parameters such as cash flow and production levels follow the seasonal variations in demand, which results in relatively greater risk exposure for the Group over short periods of time.
The Group operates in many countries and undertakes a great number of international transactions. The operations are subject to complex national and international tax rules, which change over time. From 2013, new restrictions on tax deductibility of interest expenses on intra-group loans apply in Sweden. Interest is only deductible provided one of two exceptions is satisfied: i) the loan is mainly justified by business reasons, or ii) the interest beneficiary is taxed at income tax rate of at least 10% and the loan is not merely tax driven. It is unclear how these exceptions shall be applied. Therefore, Husqvarna Group has made provisions to mitigate potential exposure related to these new restrictions.
In the ordinary course of business, the Group is exposed to legal risks such as commercial, product liability and other disputes and provides for them as appropriate.
Financial risks
Financial risks refer primarily to currency exchange rates, interest rates, financing, and credit risks. Risk management within Husqvarna Group is regulated by a financial policy established by the Board of Directors. A higher indebtedness resulting from the seasonality of the Group's operations involve greater exposure to changes in exchange rates and interest rates, as well as financing risks.
ACCOUNTING PRINCIPLES
This year-end report has been prepared in accordance with IAS 34, Interim financial reporting and the Swedish Annual Act. The financial statement of the Parent Company has been prepared in accordance with the Swedish Annual Act, chapter 9 and the Swedish Financial Reporting Board's standard RFR 2 Accounting for Legal Entities.
The accounting policies adopted are consistent with those presented in the Annual Report of 2014. The Annual Report 2014 is available at www.husqvarnagroup.com/ir.
AUDITORS' REVIEW REPORT
This year-end report has not been subject to review by the auditors.
Stockholm, February 5, 2016
Kai Wärn President and CEO
Consolidated income statement
| Q4 | Q4 | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| SEKm | 2015 | 20142 | 2015 | 20142 |
| Net sales | 5,672 | 5,323 | 36,170 | 32,838 |
| Cost of goods sold | -4,366 | -3,921 | -25,996 | -23,488 |
| Gross income | 1,306 | 1,402 | 10,174 | 9,350 |
| Gross margin, % | 23.0 | 26.3 | 28.1 | 28.5 |
| Selling expenses | -1,315 | -1,282 | -5,833 | -5,626 |
| Administrative expenses | -361 | -388 | -1,532 | -1,392 |
| Other operating income/expense | 5 | 3 | 18 | 16 |
| Impairment of goodw ill | - | -767 | - | -767 |
| Operating income1 | -365 | -1,032 | 2,827 | 1,581 |
| Operating margin, % | -6.4 | -19.4 | 7.8 | 4.8 |
| Financial items, net | -67 | -49 | -344 | -325 |
| Income after financial items | -432 | -1,081 | 2,483 | 1,256 |
| Margin, % | -7.6 | -20.3 | 6.9 | 3.8 |
| Income tax | 193 | 119 | -595 | -432 |
| Income for the period | -239 | -962 | 1,888 | 824 |
| Income for the period attributable to: | ||||
| Equity holders of the Parent Company | -238 | -961 | 1,883 | 820 |
| Non-controlling interest | -1 | -1 | 5 | 4 |
| Earnings per share: | ||||
| Before dilution, SEK | -0.42 | -1.68 | 3.29 | 1.43 |
| After dilution, SEK | -0.42 | -1.68 | 3.28 | 1.43 |
| Average number of shares outstanding: | ||||
| Before dilution, millions | 573.0 | 572.9 | 573.0 | 572.8 |
| After dilution, millions | 574.3 | 573.5 | 574.2 | 573.1 |
Consolidated comprehensive income statement
| Q4 | Q4 | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| SEKm | 2015 | 20142 | 2015 | 20142 |
| Income for the period | -239 | -962 | 1,888 | 824 |
| Items that will not be reclassified to the income statement: | ||||
| Remeasurements on defined benefit pension plans, net of tax | 218 | -136 | 295 | -377 |
| 218 | -136 | 295 | -377 | |
| Items that may be reclassified to the income statement: | ||||
| Currency translation differences | -284 | 772 | 12 | 1,762 |
| Net investment hedge, net of tax | 92 | -478 | -250 | -721 |
| Cash flow hedges, net of tax | 42 | 73 | -60 | 132 |
| -150 | 367 | -298 | 1,173 | |
| Other comprehensive income, net of tax | 68 | 231 | -3 | 796 |
| Total comprehensive income for the period | -171 | -731 | 1,885 | 1,620 |
| Total comprehensive income attributable to: | ||||
| Equity holders of the Parent Company | -169 | -731 | 1,882 | 1,614 |
| Non-controlling interest | -2 | 0 | 3 | 6 |
| 1 Of which depreciation, amortization and impairment | -330 | -1,027 | -1,153 | -1,734 |
Consolidated balance sheet
| Dec 31, | Dec 31, | |
|---|---|---|
| SEKm | 2015 | 20141 |
| Assets | ||
| Property, plant and equipment | 4,620 | 4,481 |
| Goodw ill | 5,613 | 5,520 |
| Other intangible assets | 3,926 | 4,001 |
| Derivatives | 4 | 0 |
| Deferred tax assets | 1,421 | 1,644 |
| Other assets | 165 | 102 |
| Total non-current assets | 15,749 | 15,748 |
| Inventories | 7,874 | 7,709 |
| Trade receivables | 3,126 | 2,898 |
| Derivatives | 342 | 526 |
| Tax receivables | 70 | 51 |
| Other current assets | 882 | 665 |
| Other short term investments | 4 | 0 |
| Cash and cash equivalents | 1,622 | 1,579 |
| Total current assets | 13,920 | 13,428 |
| Total assets | 29,669 | 29,176 |
| Equity and liabilities | ||
| Equity attributable to equity holders of the Parent Company | 13,041 | 12,068 |
| Non-controlling interests | 20 | 20 |
| Total equity | 13,061 | 12,088 |
| Borrow ings | 4,580 | 5,598 |
| Deferred tax liabilities | 1,554 | 1,492 |
| Provisions for pensions and other post-employment benefits | 1,425 | 1,835 |
| Derivatives | 10 | 30 |
| Other provisions | 860 | 848 |
| Total non-current liabilities | 8,429 | 9,803 |
| Trade payables | 3,077 | 3,154 |
| Tax liabilities | 121 | 50 |
| Other liabilities | 2,080 | 1,995 |
| Borrow ings | 2,016 | 1,154 |
| Derivatives | 346 | 722 |
| Other provisions | 539 | 210 |
| Total current liabilities | 8,179 | 7,285 |
| Total equity and liabilities | 29,669 | 29,176 |
Consolidated cash flow statement
| Q4 | Q4 | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| SEKm | 2015 | 20141,2 | 2015 | 20141,2 |
| Cash flow from operations | ||||
| Operating income | -365 | -1,032 | 2,827 | 1,581 |
| Non cash items | ||||
| Depreciation/amortization and impairment | 330 | 1,027 | 1,153 | 1,734 |
| Capital gain and losses | -18 | -4 | -18 | -4 |
| Other non cash items | 417 | -138 | 271 | -113 |
| Cash items | ||||
| Paid restructuring expenses | -3 | -18 | -27 | -96 |
| Net financial items, received/paid | 131 | -29 | -315 | -263 |
| Taxes paid | -18 | -62 | -252 | -231 |
| Cash flow from operations, excluding change in | ||||
| operating assets and liabilities | 474 | -256 | 3,639 | 2,608 |
| Change in operating assets and liabilities | ||||
| Change in inventories | -738 | -812 | -89 | -60 |
| Change in trade receivables | 954 | 1,097 | -287 | 137 |
| Change in trade payables | 412 | 468 | -175 | -10 |
| Change in other operating assets/liabilities | -342 | -241 | -32 | 136 |
| Cash flow from operating assets and liabilities | 286 | 512 | -583 | 203 |
| Cash flow from operations | 760 | 256 | 3,056 | 2,811 |
| Investments | ||||
| Acquired and divested assets/subsidiaries | 63 | -1 | 63 | -26 |
| Investments in property, plant and equipment | -348 | -407 | -1,029 | -1,131 |
| Investments in intangible assets | -93 | -76 | -359 | -255 |
| Other | 0 | 0 | 0 | 0 |
| Cash flow from investments | -378 | -484 | -1,325 | -1,412 |
| Cash flow from operations and investments | 382 | -228 | 1,731 | 1,399 |
| Financing | ||||
| Change in interest-bearing assets and liabilities, net | 120 | 231 | 4 | -180 |
| Net investment hedge | -147 | -513 | -774 | -557 |
| Transfer of treasury shares | - | 3 | 5 | 5 |
| Dividend paid to shareholders | -630 | - | -945 | -859 |
| Dividend paid to non-controlling interests | -2 | - | -3 | -4 |
| Cash flow from financing | -659 | -279 | -1,713 | -1,595 |
| Total cash flow | -277 | -507 | 18 | -196 |
| Cash and cash equivalents at beginning of period | 1,920 | 2,029 | 1,579 | 1,594 |
| Exchange rate differences referring to cash and cash equivalents | -21 | 57 | 25 | 181 |
| Cash and cash equivalents at end of period | 1,622 | 1,579 | 1,622 | 1,579 |
1 Net investment hedge has been moved from cash flow from operations to cash flow from financing activities, w hich is a more appropriate presentation under IFRS.
Change in Group equity
| Attributable to equity | |||
|---|---|---|---|
| holders of the Parent | Non-controlling | ||
| SEKm | company | interests | Total equity |
| Opening balance January 1, 2014 | 11,372 | 18 | 11,390 |
| Correction of prior year2 | -75 | - | -75 |
| Opening balance January 1, 2014 | 11,297 | 18 | 11,315 |
| Share-based payment | 11 | - | 11 |
| Transfer of treasury shares1 | 5 | - | 5 |
| Dividend | -859 | -4 | -863 |
| Total comprehensive income | 1,614 | 6 | 1,620 |
| Closing balance December 31, 2014 | 12,068 | 20 | 12,088 |
| Opening balance January 1, 2015 | 12,068 | 20 | 12,088 |
| Share-based payment | 31 | - | 31 |
| Transfer of treasury shares1 | 5 | - | 5 |
| Dividend | -945 | -3 | -948 |
| Total comprehensive income | 1,882 | 3 | 1,885 |
| Closing balance December 31, 2015 | 13,041 | 20 | 13,061 |
1Options exercised related to 2009 LTI-program.
2 2014 has been restated, see page 16.
Key data, Group
| Q4 | Q4 | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| 2015 | 20141 | 2015 | 20141 | |
| Net sales, SEKm | 5,672 | 5,323 | 36,170 | 32,838 |
| Net sales growth, % | 6.6 | 13.1 | 10.1 | 8.4 |
| Gross margin, % | 23.0 | 26.3 | 28.1 | 28.5 |
| Operating income, SEKm | -365 | -1,032 | 2,827 | 1,581 |
| Excl. items affecting comparability | -212 | -265 | 2,980 | 2,348 |
| Operating margin, % | -6.4 | -19.4 | 7.8 | 4.8 |
| Excl. items affecting comparability | -3.7 | -5.0 | 8.2 | 7.2 |
| Working capital, SEKm | - | - | 5,275 | 5,066 |
| Return on capital employed, % | - | - | 12.4 | 7.6 |
| Excl. items affecting comparability | - | - | 13.1 | 11.1 |
| Return on equity, % | - | - | 14.6 | 6.7 |
| Excl. items affecting comparability | - | - | 15.5 | 12.9 |
| Earnings per share after dilution, SEK | -0.42 | -1.68 | 3.28 | 1.43 |
| Capital turn-over rate, times | - | - | 1.7 | 1.7 |
| Operating cash flow , SEKm | 319 | -227 | 1,668 | 1,425 |
| Net debt/equity ratio | - | - | 0.49 | 0.60 |
| Capital expenditure, SEKm | 441 | 483 | 1,388 | 1,386 |
| Average number of employees | 12,560 12,852 | 13,572 | 14,337 |
Fair value of financial instruments
The Group's financial instruments carried at fair value are derivatives. Derivatives belong to Level 2 in the fair value hierarchy. Future cash flows have been discounted using current quoted market interest rates and exchange rates for similar instruments. Further information about the accounting principles for financial instruments and methods used for estimating the fair value of the financial instruments are described in note 1 and note 19, respectively, in the Annual Report 2014.
The carrying value approximates fair value for all financial instruments except for non-current borrowings, which are shown in the table below.
| December 31, 2015 | December 31, 2014 | ||||
|---|---|---|---|---|---|
| Book | Fair | Book | Fair | ||
| SEKm | value | value | value | value | |
| Non-current borrowings | |||||
| Financial leases | 214 | 225 | 159 | 179 | |
| Loans | 4,366 | 4,466 | 5,439 | 5,608 | |
| Total non-current borrowing | 4,580 | 4,691 | 5,598 | 5,787 |
Items affecting comparability
| SEKm | Q1 | Q2 | Q3 | Q4 | Full-year | |
|---|---|---|---|---|---|---|
| Restructuring charge | 2015 | - | - | - | -153 | -153 |
| Impairment of goodw ill | 2014 | - | - | - | -767 | -767 |
Five-year review, Group
| 2015 | 2014 2 | 2013 | 2012 1 | 2011 | |
|---|---|---|---|---|---|
| Net sales, SEKm | 36,170 | 32,838 | 30,307 | 30,834 | 30,357 |
| Net sales growth, % | 10.1 | 8.4 | -1.7 | 1.6 | -5.8 |
| Gross margin, % | 28.1 | 28.5 | 26.5 | 26.9 | 27.7 |
| Operating income, SEKm | 2,827 | 1,581 | 1,608 | 1,675 | 1,551 |
| Excluding items affecting comparability, SEKm | 2,980 | 2,348 | 1,608 | 1,931 | 1,615 |
| Operating margin, % | 7.8 | 4.8 | 5.3 | 5.4 | 5.1 |
| Excluding items affecting comparability, % | 8.2 | 7.2 | 5.3 | 6.3 | 5.3 |
| Return on capital employed, % | 12.4 | 7.6 | 7.7 | 7.4 | 7.4 |
| Excluding items affecting comparability, % | 13.1 | 11.1 | 7.7 | 8.5 | 7.7 |
| Return on equity, % | 14.6 | 6.7 | 8.1 | 8.8 | 8.0 |
| Excluding items affecting comparability, % | 15.5 | 12.9 | 8.1 | 10.5 | 8.6 |
| Capital turn-over rate, times | 1.7 | 1.7 | 1.6 | 1.5 | 1.6 |
| Operating cash flow , SEKm | 1,668 | 1,425 | 1,813 | 1,144 | -472 |
| Capital expenditure, SEKm | 1,388 | 1,386 | 1,078 | 776 | 994 |
| Average number of employees | 13,572 | 14,337 | 14,156 | 15,429 | 15,698 |
1 2012 has been restated due to the amended IAS 19. 2011 is not affected by the amendment.
2 2014 has been restated due to a correction.
| SEKm | Q1 | Q2 | Q3 | Q4 | Full-year | |
|---|---|---|---|---|---|---|
| Net sales | 2015 | 10,928 12,263 | 7,307 | 5,672 | 36,170 | |
| 2014 | 9,685 11,045 | 6,785 | 5,323 | 32,838 | ||
| 2013 | 9,024 10,227 | 6,349 | 4,707 | 30,307 | ||
| Operating income | 2015 | 1,112 | 1,675 | 405 | -365 | 2,827 |
| M argin, % | 10.2 | 13.7 | 5.5 | -6.4 | 7.8 | |
| 2014 | 908 | 1,373 | 332 | -1,032 | 1,581 | |
| Margin, % | 9.4 | 12.4 | 4.9 | -19.4 | 4.8 | |
| 2013 | 688 | 1,022 | 206 | -308 | 1,608 | |
| Margin, % | 7.6 | 10.0 | 3.2 | -6.5 | 5.3 | |
| Income after financial items | 2015 | 1,057 | 1,536 | 322 | -432 | 2,483 |
| M argin, % | 9.7 | 12.5 | 4.4 | -7.6 | 6.9 | |
| 2014 | 812 | 1,263 | 262 | -1,081 | 1,256 | |
| Margin, % | 8.4 | 11.4 | 3.9 | -20.3 | 3.8 | |
| 2013 | 602 | 916 | 95 | -433 | 1,180 | |
| Margin, % | 6.7 | 9.0 | 1.5 | -9.2 | 3.9 | |
| Income for the period | 2015 | 788 | 1,143 | 196 | -239 | 1,888 |
| 2014 | 620 | 967 | 199 | -962 | 824 | |
| 2013 | 467 | 661 | 92 | -304 | 916 | |
| Earnings per share after dilution, SEK 2015 | 1.37 | 1.98 | 0.34 | -0.42 | 3.28 | |
| 2014 | 1.08 | 1.68 | 0.35 | -1.68 | 1.43 | |
| 2013 | 0.81 | 1.15 | 0.16 | -0.53 | 1.60 |
Net sales and income by quarter, Group*
* Including items affecting comparability, 2014 has been restated, see page 16.
Net sales and operating income, 12 months rolling, Group
| SEKm | Q1 | Q2 | Q3 | Q4 | |
|---|---|---|---|---|---|
| Net sales | 2015 | 34,081 | 35,299 | 35,821 | 36,170 |
| 2014 | 30,968 | 31,786 | 32,222 | 32,838 | |
| 2013 | 30,047 | 29,568 | 30,076 | 30,307 | |
| Operating income1 | 2015 | 1,785 | 2,087 | 2,160 | 2,827 |
| Excluding items affecting comparability | 2015 | 2,552 | 2,854 | 2,927 | 2,980 |
| M argin, % | 5.2 | 5.9 | 6.0 | 7.8 | |
| Excluding items affecting comparability | M argin, % | 7.5 | 8.1 | 8.2 | 8.2 |
| 2014 | 1,828 | 2,179 | 2,305 | 1,581 | |
| Excluding items affecting comparability | 2014 | 1,828 | 2,179 | 2,305 | 2,348 |
| Margin, % | 5.9 | 6.9 | 7.2 | 4.8 | |
| Excluding items affecting comparability | Margin, % | 5.9 | 6.9 | 7.2 | 7.2 |
| 2013 | 1,433 | 1,303 | 1,312 | 1,608 | |
| Margin, % | 4.8 | 4.4 | 4.4 | 5.3 |
1 2014 has been restated due to a correction.
Net sales by segment
| SEKm | Q1 | Q2 | Q3 | Q4 | Full-year | |
|---|---|---|---|---|---|---|
| Husqvarna | 2015 | 5,342 | 5,727 | 3,519 | 3,036 | 17,624 |
| 2014 | 4,358 | 5,038 | 3,264 | 2,789 | 15,449 | |
| Gardena | 2015 | 1,319 | 1,795 | 1,060 | 495 | 4,669 |
| 2014 | 1,152 | 1,712 | 879 | 469 | 4,212 | |
| Consumer Brands | 2015 | 3,343 | 3,643 | 1,708 | 1,242 | 9,936 |
| 2014 | 3,393 | 3,410 | 1,776 | 1,259 | 9,838 | |
| Construction | 2015 | 924 | 1,098 | 1,020 | 899 | 3,941 |
| 2014 | 782 | 885 | 866 | 806 | 3,339 | |
| Total Group | 2015 | 10,928 12,263 | 7,307 | 5,672 | 36,170 | |
| 2014 | 9,685 11,045 | 6,785 | 5,323 | 32,838 |
Operating income by segment
| SEKm | Q1 | Q2 | Q3 | Q4 | Full-year | |
|---|---|---|---|---|---|---|
| Husqvarna | 2015 | 897 | 1,001 | 321 | 14 | 2,233 |
| Excluding items affecting comparability | 2015 | 897 | 1,001 | 321 | 65 | 2,284 |
| 2014 | 667 | 818 | 432 | 91 | 2,008 | |
| Gardena | 2015 | 204 | 397 | 113 | -128 | 586 |
| Excluding items affecting comparability | 2015 | 204 | 397 | 113 | -123 | 591 |
| 2014 | 177 | 399 | -7 | -186 | 383 | |
| Consumer Brands | 2015 | -11 | 178 | -119 | -195 | -147 |
| Excluding items affecting comparability | 2015 | -11 | 178 | -119 | -168 | -120 |
| 2014 | 44 | 97 | -138 | -158 | -155 | |
| Construction | 2015 | 74 | 160 | 144 | 17 | 395 |
| Excluding items affecting comparability | 2015 | 74 | 160 | 144 | 87 | 465 |
| 2014 | 81 | 117 | 107 | 49 | 354 | |
| Group common costs | 2015 | -52 | -61 | -54 | -73 | -240 |
| 2014 | -61 | -58 | -62 | -828 | -1,009 | |
| Excluding items affecting comparability | 2014 | -61 | -58 | -62 | -61 | -242 |
| Total Group | 2015 | 1,112 | 1,675 | 405 | -365 | 2,827 |
| Excluding items affecting comparability | 2015 | 1,112 | 1,675 | 405 | -212 | 2,980 |
| 2014 | 908 | 1,373 | 332 | -1,032 | 1,581 | |
| Excluding items affecting comparability | 2014 | 908 | 1,373 | 332 | -265 | 2,348 |
Operating margin by segment
| % | Q1 | Q2 | Q3 | Q4 | Full-year | |
|---|---|---|---|---|---|---|
| Husqvarna | 2015 | 16.8 | 17.5 | 9.1 | 0.5 | 12.7 |
| Excluding items affecting comparability | 2015 | 16.8 | 17.5 | 9.1 | 2.1 | 13.0 |
| 2014 | 15.3 | 16.2 | 13.2 | 3.3 | 13.0 | |
| Gardena | 2015 | 15.5 | 22.1 | 10.7 | -25.9 | 12.5 |
| Excluding items affecting comparability | 2015 | 15.5 | 22.1 | 10.7 | -24.8 | 12.7 |
| 2014 | 15.4 | 23.3 | -0.8 | -39.7 | 9.1 | |
| Consumer Brands | 2015 | -0.3 | 4.9 | -7.0 | -15.7 | -1.5 |
| Excluding items affecting comparability | 2015 | -0.3 | 4.9 | -7.0 | -13.6 | -1.2 |
| 2014 | 1.3 | 2.8 | -7.8 | -12.5 | -1.6 | |
| Construction | 2015 | 8.0 | 14.6 | 14.1 | 1.9 | 10.0 |
| Excluding items affecting comparability | 2015 | 8.0 | 14.6 | 14.1 | 9.7 | 11.8 |
| 2014 | 10.4 | 13.2 | 12.4 | 6.0 | 10.6 | |
| Total Group | 2015 | 10.2 | 13.7 | 5.5 | -6.4 | 7.8 |
| Excluding items affecting comparability | 2015 | 10.2 | 13.7 | 5.5 | -3.7 | 8.2 |
| 2014 | 9.4 | 12.4 | 4.9 | -19.4 | 4.8 | |
| Excluding items affecting comparability | 2014 | 9.4 | 12.4 | 4.9 | -5.0 | 7.2 |
Net assets by segment
| Assets | Liabilities | Net Assets | |||||
|---|---|---|---|---|---|---|---|
| SEKm | Dec 31, 2015 |
Dec 31, 2014 |
Dec 31, 2015 |
Dec 31, 2014 |
Dec 31, 2015 |
Dec 31, 2014 |
|
| Husqvarna | 10,917 | 10,025 | 3,021 | 2,942 | 7,896 | 7,083 | |
| Gardena | 6,434 | 6,449 | 735 | 639 | 5,699 | 5,810 | |
| Consumer Brands | 5,443 | 5,645 | 1,699 | 1,723 | 3,744 | 3,922 | |
| Construction | 3,342 | 3,215 | 624 | 538 | 2,718 | 2,677 | |
| Other | 1,531 | 1,737 | 2,152 | 1,907 | -621 | -170 | |
| Total | 27,667 | 27,071 | 8,231 | 7,749 | 19,436 | 19,322 |
Liquid assets and other interest-bearing assets, interest-bearing liabilities and equity are not included in the above table.
Other include tax items and Husqvarna's common group services such as Holding, Treasury and Risk M anagement.
CORRECTION OF BALANCE SHEET AND INCOME STATEMENT 2014
Husqvarna Group has established a new brand-driven organization for its forest and garden operations, which was fully effective as of January 1, 2015. The new organization includes three global divisions for the forest and garden operations; Husqvarna, Gardena and Consumer Brands. The Construction Division was not affected by the reorganization. The business area reporting for 2014, restated into the new divisions, is included in the Group's annual report for 2014.
Furthermore, the Group has revisited the calculation model for elimination of internal profits in inventory. The application of the new model results in a correction of the opening balance of Group inventory as of January 1, 2015, by SEK -245m before tax. The impact on Group income for the period 2014 is limited to SEK -7m, with differences between the four individual quarters and divisions. In addition, there has also been a minor correction of prior years' reported equity, primarily related to income tax.
The restatements are shown below and on the next page.
| Q1 2014 | Q1 | Q2 2014 | Q2 | Q3 2014 | Q3 | Q4 2014 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 | 2014 restated | 2014 |
| Cost of goods sold | -7,128 | -7,133 | -7,620 | -7,609 | -4,819 | -4,850 | -3,921 | -3,886 | -23,488 | -23,478 |
| Gross income | 2,557 | 2,552 | 3,425 | 3,436 | 1,966 | 1,935 | 1,402 | 1,437 | 9,350 | 9,360 |
| Operating income | 908 | 903 | 1,373 | 1,384 | 332 | 301 | -1,032 | -997 | 1,581 | 1,591 |
| Income tax | -192 | -191 | -296 | -299 | -63 | -55 | 119 | 110 | -432 | -435 |
| Income for the period | 620 | 616 | 967 | 975 | 199 | 176 | -962 | -936 | 824 | 831 |
| Earnings per share | ||||||||||
| before dilution, SEK | 1.08 | 1.07 | 1.68 | 1.70 | 0.35 | 0.31 | -1.68 | -1.63 | 1.43 | 1.44 |
| Earnings per share | ||||||||||
| after dilution, SEK | 1.08 | 1.07 | 1.68 | 1.70 | 0.35 | 0.31 | -1.68 | -1.63 | 1.43 | 1.44 |
| Other comprehensive | ||||||||||
| income | 606 | 602 | 1,434 | 1,442 | 311 | 288 | -731 | -705 | 1,620 | 1,627 |
Group Balance Sheet
| Jan 1, 2014 | Jan 1, | Mar 31, 2014 | Mar 31, | Jun 30, 2014 | Jun 30, | Sep 30, 2014 | Sep 30, | Dec 31, 2014 | Dec 31, | |
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 |
| Property, plant and | ||||||||||
| equipment | 3,627 | 3,609 | 3,704 | 3,686 | 3,878 | 3,860 | 4,094 | 4,076 | 4,481 | 4,463 |
| Deferred tax assets | 1,178 | 1,122 | 1,276 | 1,221 | 1,326 | 1,268 | 1,281 | 1,231 | 1,644 | 1,585 |
| Inventories | 6,852 | 7,087 | 7,277 | 7,507 | 6,704 | 6,945 | 6,577 | 6,787 | 7,709 | 7,954 |
| Total assets | 26,601 26,762 | 31,482 | 31,639 | 31,301 | 31,466 | 28,827 | 28,969 | 29,176 | 29,344 | |
| Total equity | 11,315 11,390 | 11,923 | 11,994 | 12,497 | 12,576 | 12,816 | 12,872 | 12,088 | 12,170 | |
| Tax liabilities | 10 | 96 | 186 | 272 | 438 | 524 | 231 | 317 | 50 | 136 |
| Total liabilities | 15,286 15,372 | 19,559 | 19,645 | 18,804 | 18,890 | 16,011 | 16,097 | 17,088 | 17,174 | |
| Total equity and | ||||||||||
| liabilities | 26,601 26,762 | 31,482 | 31,639 | 31,301 | 31,466 | 28,827 | 28,969 | 29,176 | 29,344 |
Husqvarna
| Q1 2014 | Q1 | Q2 2014 | Q2 | Q3 2014 | Q3 | Q4 2014 | Q4 | Full-year 2014 | Full-year | |
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 |
| Net sales | 4,358 | 4,358 | 5,038 | 5,038 | 3,264 | 3,264 | 2,789 | 2,789 | 15,449 | 15,449 |
| Operating income | 667 | 653 | 818 | 818 | 432 | 400 | 91 | 145 | 2,008 | 2,016 |
| % | 15.3 | 15.0 | 16.2 | 16.2 | 13.2 | 12.2 | 3.3 | 5.2 | 13.0 | 13.0 |
| Assets | 10,720 10,845 | 10,696 10,827 | 9,715 | 9,826 | 10,025 10,189 | 10,025 | 10,189 | |||
| Liabilities | 3,404 | 3,404 | 3,356 | 3,356 | 2,754 | 2,754 | 2,942 | 2,942 | 2,942 | 2,942 |
| Net assets | 7,316 | 7,441 | 7,340 | 7,471 | 6,961 | 7,072 | 7,083 | 7,247 | 7,083 | 7,247 |
Gardena
| Q1 2014 | Q1 | Q2 2014 | Q2 | Q3 2014 | Q3 | Q4 2014 | Q4 | Full-year 2014 | Full-year | |
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 |
| Net sales | 1,152 | 1,152 | 1,712 | 1,712 | 879 | 879 | 469 | 469 | 4,212 | 4,212 |
| Operating income | 177 | 186 | 399 | 401 | -7 | 2 | -186 | -207 | 383 | 382 |
| % | 15.4 | 16.1 | 23.3 | 23.4 | -0.8 | 0.3 | -39.7 | -44.2 | 9.1 | 9.1 |
| Assets | 7,285 | 7,321 | 7,441 | 7,473 | 6,841 | 6,873 | 6,449 | 6,460 | 6,449 | 6,460 |
| Liabilities | 804 | 804 | 867 | 867 | 563 | 563 | 639 | 639 | 639 | 639 |
| Net assets | 6,481 | 6,517 | 6,574 | 6,606 | 6,278 | 6,310 | 5,810 | 5,821 | 5,810 | 5,821 |
Consumer Brands
| Q1 2014 | Q1 | Q2 2014 | Q2 | Q3 2014 | Q3 | Q4 2014 | Q4 | Full-year 2014 | Full-year | |
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 | restated | 2014 |
| Net sales | 3,393 | 3,393 | 3,410 | 3,410 | 1,776 | 1,776 | 1,259 | 1,259 | 9,838 | 9,838 |
| Operating income | 44 | 48 | 97 | 102 | -138 | -148 | -158 | -156 | -155 | -154 |
| % | 1.3 | 1.4 | 2.8 | 3.0 | -7.8 | -8.3 | -12.5 | -12.4 | -1.6 | -1.6 |
| Assets | 7,330 | 7,325 | 6,194 | 6,193 | 5,350 | 5,336 | 5,645 | 5,635 | 5,645 | 5,635 |
| Liabilities | 2,599 | 2,599 | 2,068 | 2,068 | 1,514 | 1,514 | 1,723 | 1,723 | 1,723 | 1,723 |
| Net assets | 4,731 | 4,726 | 4,126 | 4,125 | 3,836 | 3,822 | 3,922 | 3,912 | 3,922 | 3,912 |
Construction
| SEKm | Q1 2014 restated |
Q1 2014 |
Q2 2014 restated |
Q2 2014 |
Q3 2014 restated |
Q3 2014 |
Q4 2014 restated |
Q4 2014 |
Full-year 2014 restated |
Full-year 2014 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | 782 | 782 | 885 | 885 | 866 | 866 | 806 | 806 | 3,339 | 3,339 |
| Operating income | 81 | 77 | 117 | 121 | 107 | 109 | 49 | 49 | 354 | 356 |
| % | 10.4 | 9.8 | 13.2 | 13.7 | 12.4 | 12.6 | 6.0 | 6.0 | 10.6 | 10.7 |
| Assets | 3,023 | 3,080 | 3,179 | 3,240 | 3,226 | 3,288 | 3,215 | 3,278 | 3,215 | 3,278 |
| Liabilities | 507 | 507 | 565 | 565 | 558 | 558 | 538 | 538 | 538 | 538 |
| Net assets | 2,516 | 2,573 | 2,614 | 2,675 | 2,668 | 2,730 | 2,677 | 2,740 | 2,677 | 2,740 |
Liquid assets, interest bearing assets and liabilities, tax items and equity are not included in the tables above.
PARENT COMPANY
Income statement
| Q4 | Q4 | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| SEKm | 2015 | 2014 | 2015 | 2014 |
| Net sales | 2,328 | 1,946 | 12,763 | 11,453 |
| Cost of goods sold | -1,327 | -1,656 | -9,376 | -8,762 |
| Gross income | 1,001 | 290 | 3,387 | 2,691 |
| Selling expense | -316 | -337 | -1,385 | -1,300 |
| Administrative expense | -225 | -191 | -814 | -693 |
| Other operating income/expense | -1 | 0 | -1 | 0 |
| Operating income | 459 | -238 | 1,187 | 698 |
| Financial items, net | 131 | 603 | 892 | 287 |
| Income after financial items | 590 | 365 | 2,079 | 985 |
| Appropriations | 11 | -115 | -99 | -406 |
| Income before taxes | 601 | 250 | 1,980 | 579 |
| Tax on profit for the year | -122 | 229 | -135 | 200 |
| Income for the period | 479 | 479 | 1,845 | 779 |
Balance sheet
| Dec 31, | Dec 31, | |
|---|---|---|
| SEKm | 2015 | 2014 |
| Non-current assets | 32,485 | 32,152 |
| Current assets | 5,243 | 5,330 |
| Total assets | 37,728 | 37,482 |
| Equity | 19,563 | 18,681 |
| Untaxed reserves | 0 | 25 |
| Provisions | 127 | 75 |
| Non-current liabilities | 4,205 | 5,292 |
| Current liabilities | 13,833 | 13,409 |
| Total equity and liabilities | 37,728 | 37,482 |
Number of shares
| Outstanding | Outstanding | Re-purchased | ||
|---|---|---|---|---|
| A-shares | B-shares | B-shares | Total | |
| Number of shares as of 31 December 2014 | 122,425,469 | 450,469,775 | 3,448,534 | 576,343,778 |
| Conversion of A-shares into B-shares | -8,730,643 | 8,730,643 | - | - |
| Options exercised related to 2009 LTI-program | - | 105,519 | -105,519 | - |
| Number of shares as of 31 December 2015 1 | 113,694,826 | 459,305,937 | 3,343,015 | 576,343,778 |
1 In January 2016 another (1) A-share was converted.
DEFINITIONS
| Capital indicators | |
|---|---|
| Capital employed | Total liabilities and equity less non-interest-bearing debt, including deferred tax liability. |
| Equity/assets ratio | Equity as a percentage of total assets. |
| Liquid funds | Cash and cash equivalents, short-term investments and fair-value derivative assets. |
| Net assets | Total assets exclusive of liquid funds and interest-bearing assets, less operating liabilities, non-interest-bearing provisions and deferred tax liabilities. |
| Net debt | Total interest-bearing liabilities plus dividend payable, less liquid funds and interest-bearing assets. |
| Net debt/equity ratio | Net debt in relation to total adjusted equity. |
| Operating working capital | Inventories and trade receivables less trade payables. |
| Working capital | Current assets exclusive of liquid funds, less operating liabilities and non interest-bearing provisions. |
| Other definitions | |
| Adjusted | As reported adjusted for translation effects due to changes in exchange rates and acquisitions/divestments. |
| Average number of shares | Weighted number of outstanding shares during the period, after repurchase of own shares. |
| Capital expenditure | Property, plant and equipment and capitalization of product development and software. |
| Earnings per share | Income for the period divided by the average number of shares. |
| EBITDA | Earnings before interest, taxes, depreciation, amortization and impairment charges. |
| Gross margin | Gross operating income as a percentage of net sales. |
| LTM | Last twelve months. |
| Net sales growth | Net sales as a percentage of net sales in the preceding period. |
| Operating cash flow | Total cash flow from operations and investments, excluding acquisitions and divestments. |
| Operating margin | Operating income as a percentage of net sales. |
| Return on capital employed |
Operating income plus financial income as a percentage of average capital employed on rolling 12 months. |
| Return on equity | Income for the period as a percentage of average equity on rolling 12 months. |
TELEPHONE CONFERENCE
A combined press and telephone conference, hosted by Kai Wärn, President and CEO, and Jan Ytterberg, CFO, will be held at the Scandic Anglais Hotel, Humlegårdsgatan 23, Stockholm at 10:00 CET on February 5, 2016. To participate, please dial +46 (0) 8 5052 0110 (Sweden) or +44 (0)20 7162 0077 (UK) ten minutes prior to the start of the conference. The conference call will also be audio cast live on www.husqvarnagroup.com/ir. A replay will be available later the same day.
DATES FOR FINANCIAL REPORTS
| April 21, 2016 | Interim report for January - March |
|---|---|
| July 15, 2016 | Interim report for January - June |
| October 20, 2016 | Interim report for January - September |
The Group's Annual Report 2015 will be available on www.husqvarnagroup.com as of week 11.
The AGM 2016 will be held in Jönköping, Sweden, on April 6, 2016.
CONTACTS
- Jan Ytterberg, CFO, +46 8 738 90 77
- Tobias Norrby, Investor Relations Manager, +46 8 738 93 35
This interim report comprises information which Husqvarna Group is required to disclose under the Securities Markets Act and/or the Financial Instruments Trading Act. It was released for publication at 08:00 CET on February 5, 2016.
Factors affecting forward-looking statements
This report contains forward-looking statements in the sense referred to in the American Private Securities Litigation Reform Act of 1995. Such statements comprise, among other things, financial goals, goals of future business and financial plans. These statements are based on present expectations and are subject to risks and uncertainties that may give rise to major deviations in the result due to several aspects. These aspects include, among other things: consumer demand and market conditions in the geographical areas and lines of business in which Husqvarna operates, the effects of currency fluctuations, downward pressure on prices due to competition, a material reduction in sales by important distributors, success in developing new products and in marketing, outcome of product responsibility litigation, progress in terms of reaching the goals set for productivity and efficient use of capital, successful identification of growth opportunities and acquisition objects, integration of these into the existing business and successful achievement of goals for making the supply chain more efficient.