Sweden's Husqvarna posts profit rise as costs, inventories ease

By Agata Rybska

(Reuters) -Husqvarna, the world's biggest maker of gardening power tools, on Tuesday posted an 11% rise in quarterly adjusted operating profit helped by price hikes and lower costs and made further progress trimming its inventory.

The Swedish firm is attempting to reduce high inventory levels it purposely built up toward the end of 2021 to cope with uncertain component supply.

"Given the continuing uncertain macroeconomic environment, our focus remains on further cost efficiency, improved cash flow and operational flexibility," CEO Pavel Hajman said in an earnings statement.

The company posted a 11% rise in adjusted operating profit to 2.31 billion Swedish crowns ($227 million) for the quarter to June 30.

Jefferies analysts said they were "particularly impressed" with the company's improved margins in all divisions despite the mixed sales performance, as this signifies a cost efficiency focus and strong pricing power.

The April-June quarter is typically Husqvarna's strongest, as it does the bulk of its business in the run-up to the gardening season in its key markets of Europe and North America, which last year comprised 51% and 35% of group sales, respectively.

Direct operating cash flow improved in the quarter due to higher operating income, and changes in inventory and accounts receivable, Hajman said.

KeplerCheuvreux analyst Johan Eliason noted investors have been concerned about a build-up in net working capital at consumer product companies.

The company recorded a second quarterly fall in inventory, to 17.95 billion crowns as of June 30 from 18.67 billion as of March 31.

It said it would continue to reduce inventory levels for the remainder of the gardening season.

Husqvarna shares were down 2.3% to 97.36 crowns at 0936 GMT, having hit their highest level since April 2022 last week.

($1 = 10.1821 Swedish crowns)

(Reporting by Agata Rybska in Gdansk; editing by Sherry Jacob-Phillips and Jason Neely)