Husqvarna AB Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gustav Hageus - SEB - Analyst : Thanks, operator. Good morning, guys. Thanks for taking my questions. If I may start with your comment on the negative price in the quarter, which was the driver, then the decline, what do you see in terms of promotional activity or rebates going into Q3? And linked to that, if we can have an update now on the channel inventories you see in the market, given that the sales were a bit lower, I guess, than you had planned for. That helpful.

Question: Gustav Hageus - SEB - Analyst : Thanks. That's helpful. And in terms of the inventory reductions, could you please elaborate a bit if that has impact on margins as well in terms of under-absorption effects and so forth in the quarter? And what do you expect in H2 in that regard as well? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 18, 2024 / 8:00AM, HUSQb.ST - Q2 2024 Husqvarna AB Earnings Call

Question: Gustav Hageus - SEB - Analyst : Okay, thanks. That's clear.And if I may turn to robotics, then, as you mentioned, NERA was one-third of robotics sales and residential in Q2. I guess that means that you must have lost quite a lot of market share within gardena, the gardena robotic mowers, which are boundary wired still. Can you please confirm if that is the correct assumption then maybe looking into next year when you do launch boundary three versions in the gardena brand? And what do you think is the potential in terms of catch-up for gardena in that sense, if you look into 2025?

Question: Gustav Hageus - SEB - Analyst : And then just a quick follow-up there. With the shift ongoing, will that impact your sales distribution, given that maybe you have a stronger position in dealers versus retailers some perhaps with boundary free, the channel sales, channel mix will shift more into favor of traditional retailers. Is that something that you see out there and something that one can can think about in another way?

Question: Gustav Hageus - SEB - Analyst : And as a final one for me, you have previously been adding a few data points on the development for your professional, moving with the number of [CEORAs] or share of golf courses that are currently using one of you robot and so forth. There was a lot of those data points that I can see in this report. Could you please elaborate a bit on the development per se? Or it seems like you have a good momentum, especially in golf in Europe but any update on that would be helpful.

Question: Gustav Hageus - SEB - Analyst : Thanks. That's all my question.

Question: Bj÷rn Enarson - Danske Bank - Analyst : Yeah, thank you. I would like to get back to the inventory situation and underutilization. You talked about that the underutilization were offset by savings in Q2 and some other items like FX is it fair to say that the utilization impacted EBIT by SEK250 million or slightly more?

Question: Bj÷rn Enarson - Danske Bank - Analyst : Is it material?

Question: Bj÷rn Enarson - Danske Bank - Analyst : And between the different divisions, I mean, you mentioned within forest and garden and construction but in terms of gardena, is the impact the relatively equal between the divisions or how is split?.

Question: Bj÷rn Enarson - Danske Bank - Analyst : And looking ahead in that sense, I mean, then, of course, you have the seasonality, but adjusted for that do you still see to expect to see that the same pattern near term?

Question: Bj÷rn Enarson - Danske Bank - Analyst : And if it's possible to get some more color on the weather impact, especially them for gardena, what kind of impact that had on EBIT would you say?

Question: Bj÷rn Enarson - Danske Bank - Analyst : And do you dare to have some view on Q3 at this stage and help us a little bit on the direction.

Question: Bj÷rn Enarson - Danske Bank - Analyst : Okay. Thank you.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Hi, this is Johan Eliason at Kepler Cheuvreux. Thanks for taking my question. I was wondering if you could go back to this technology shift within the consumer robotics from why are the boundaries to this? Why a free boundary, what would you say it does to the average selling price of a robotic going from the traditional weather with a wire and the ground, too. It's why have three technologies that you have been introducing them for a couple of years, but obviously your competitors are coming with right now?

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Would you say that you may indicating that the competitors are introducing this, it is on average a higher price point for the boundary three than the existing wired solution? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 18, 2024 / 8:00AM, HUSQb.ST - Q2 2024 Husqvarna AB Earnings Call

Question: Johan Eliason - Kepler Cheuvreux - Analyst : And with this price points on the entry-level buyer a free solutions, how would you compare the modern profile versus the traditional with the wiring the ground for you, for your competitors?

Question: Johan Eliason - Kepler Cheuvreux - Analyst : So you wouldn't say detrimental to the margin that it goes from a boundary with the wire to a boundary with a wire free solution?

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Yes, that I understand, but I'm just comparing, you know, the traditional solution with the new entry-level sort of wire free solutions, would you say it as a significant margin difference here? When you see some, when you have the products in the entry-level price point.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : But from a consumer point of view, if I buy a wireless solution today and also ask someone to install it for me, it's one price tag, how would this price there compare with a wire free solution wish I could potentially install by myself will be total some the consumer will spend. Will it be less or will it be the same, but the buckets are different.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Okay. Thank you very much.

Question: Ebba Bjorklid - DNB - Analyst : Good morning, and thank you for taking my questions. Two questions from me, please. The first one is how did the market growth for residential and professional robotic lawn mowers developed in Q2?

Question: Ebba Bjorklid - DNB - Analyst : Thank you for that answer. And my last question is, what was the balance of the factoring trade receivables at end of Q2 last year versus end of Q2 this year?

Question: Ebba Bjorklid - DNB - Analyst : Well, thank you so much. That was all of my questions.

Question: Adela Dashian - Jefferies - Analyst : Yes. Hello. One quick question from me. I understand that you're obviously growing your market position and shares when it comes to the robotic products and battery products. But could you maybe comment on the market position currently in gardena with the watering products and you're seeing new entrants at lower price points, gaining more share in the current environment than if that's going to shake things around for the remainder of the year and potentially also for the next season in 2025, especially since you're entering the US retail space with this brand, too, are that putting pressure on you to, I guess, some of point defend your position and growth.

Question: Adela Dashian - Jefferies - Analyst : Yeah, I was just going to ask, should we -- are you seeing any type of competition cheapening up or and end users shifting over to lower price point products as a result of the underlying economic conditions?

Question: Adela Dashian - Jefferies - Analyst : It makes sense. Can I maybe also ask one on the recently announced partnership for robotic mowers in the professional segment with Liverpool. Is this the type of, I guess, strategic model that you have going forward should we expect similar type of partnerships to be announced or was this a one-off?

Question: Adela Dashian - Jefferies - Analyst : What does the revenue structure look like in this kind of a partnership versus when you sell without sponsorship?

Question: Adela Dashian - Jefferies - Analyst : But can we assume that it's different?

Question: Adela Dashian - Jefferies - Analyst : Yeah, obviously. No, I understand. I understand that it's difficult to comment specifically. Thank you.