Husqvarna issues second consecutive profit warning; shares down

Investing.com -- Husqvarna has issued its second consecutive profit warning on Tuesday, sending shares down over 6% as the company grapples with tough market conditions and reduced consumer spending. 

The Swedish manufacturer now expects a 5% fall in organic growth for the fourth quarter, slightly worse than the 4.6% decline anticipated by analysts surveyed by FactSet. 

The company is also forecasting a drop in operating income, with estimates ranging from loss of SEK 700 million to SEK 800 million, a far steeper loss than the SEK 326 million expected by market consensus.

This grim outlook is due to several factors impacting Husqvarna's business. Margins are being squeezed by heightened promotional activity, underutilized factory capacity, and an unfavorable product mix. 

Affected segments include the Gardena brand in Europe and Husqvarna's Forest and Garden and Construction divisions in North America. 

These areas, which are usually more profitable, are now contributing to a less favorable overall product mix. As a result, the company’s performance has been impacted, more than half of its product range being hit by the current market slowdown.

Despite these challenges, Husqvarna remains cautiously optimistic about a recovery in 2025. 

Analysts at Jefferies note that the company has a robust product launch pipeline, including the introduction of 13 new robotic lawn mower models, which could help stimulate demand and offset the current slump. 

Alongside this, Husqvarna continues to pursue cost-saving measures. The company announced a new program in the third quarter aimed at reducing fixed costs by SEK 500 million, with total expected savings of SEK 1.7 billion, nearly SEK 1 billion of which has already been realized.

Source: Investing.com