September 18, 2018 / 7:31 AM / a year ago

Weather, tariffs and restructuring costs to shrink Husqvarna's profit

STOCKHOLM (Reuters) - Swedish outdoor tools group Husqvarna (HUSQb.ST) warned its third-quarter core operating profit would halve due to unfavourable weather, restructuring costs and rising trade tariffs.

FILE PHOTO: A Husqvarna Automower robotic lawn mower cuts grass outside the Manoir Richelieu, site of the upcoming G7 leaders' summit in Quebec's Charlevoix region, in La Malbaie, Quebec, Canada, May 24, 2018. REUTERS/Chris Wattie/File Photo

The world’s biggest maker of outdoor power tools, such as lawn mowers and trimmers, said in July it would restructure its struggling Consumer Brands division partly due to weak demand in the United States.

“In addition to the restructuring, the third quarter has also been impacted by the extended warm and dry weather,” it said on Tuesday.

In the year-ago quarter, operating profit excluding one-off items was 433 million crowns ($48.7 million).

Husqvarna said the profit drop came mainly on the back of a negative product- and regional mix for its core Husqvarna division as warm and dry weather in Europe hit demand.

It said both Husqvarna and Consumer Brands, whose products include petrol lawnmowers and garden tractors, also had higher costs for raw materials and new tariffs.

“For 2019 the expectation is that these will be mitigated by price increases,” it added.

Husqvarna said that the restructuring it plans to carry out this year and next would cost an estimated total 1.2 billion crowns ($135 million) before tax.

Of that, around 400 million crowns refers to cash items, most of which to be booked in the third and fourth quarters of 2018, it said.

Husqvarna predicted annual savings from the restructuring of around 250 million crowns with full effect from 2020.

Husqvarna is due to publish its full third-quarter report on Oct. 19.

Reporting by Anna Ringstrom, Editing by Louise Heavens

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