Husqvarna AB (publ) (HUSQB) Earnings Call Transcript & Summary

Good morning, everyone, and warm welcome to Fotografiska and Husqvarna Group's Capital Markets Day 2021. My name is Johan Andersson, Head of Investor Relations, and will be the host here today. We, of course, also would like to welcome everyone that is listening in online. To support us taking through the day here in how we will create sustainable shareholder value, we have invited Mia Odabas. Mia will be our moderator, and she has very many years of experience from both journalism and television. So warm welcome, Mia.

Thank you very much, Johan. So you've been working with this day for quite some time now. Now it's today, it's the big day. What are your expectations?

Of course, from myself, I think that everyone will have a great understanding of our strategy going forward and, of course, how we will, in the long term, create sustainable shareholder value.

I hope we'll deliver on that. Thank you very much, Johan.

Thank you.

And good morning, I'd like to say, to you, of course, as well to all of you in the room, and good morning also to those of you following us online. I'll be the one to guide you through the very intense morning session that we have here today. And this is the agenda. We're going to spend 90 minutes on group strategy. We're going to show you a bit of history first and then talk about external trends, talk about the group's strategic decision with the CEO and the financials, of course, with the CFO, the new financial targets that, I guess, you've seen already yesterday evening, followed by Q&A. And then we have a product exhibition for you in the next room. The second part of this morning's session is about the divisional deep dives. We'll dive into Gardena, Husqvarna Division and Construction together with the Presidents, followed by a Q&A and a summary from the CEO. That's the morning session. And this is the management team. These are your hosts here today. They're all present, all 8 of them, 5 of them you're going to meet on stage together with me here later on in the program. But all of them are here. So if you would like to ask questions, just grab them during the coffee break or after the program. As for questions, we have 2 Q&A sessions. And for those of you in the room, it's really easy. [Operator Instructions] And for those of you following us online, it's also really easy. [Operator Instructions] So feel free to put forward questions when it's time for questions. Just a couple of housekeeping details before we start. Phones on silent mode, please. And if something happens that we do not want to happen, we have 2 emergency exits each side of the room. So are you ready to start the program? I can see some nods and some humming here. So let's kick off the first session of this Capital Markets Day. It's about Husqvarna Group strategy, and we are going to take you back 330 years in time and remind you of a couple of glorious moments in Husqvarna history. This film shows the continuous innovation and transformation in Husqvarna as well as a couple of major strategic decisions taken lately, taking the group to where they are today. [Presentation]

So I'm joined here by the CEO of the group, Henric Andersson; and the CFO, Glen Instone. Welcome to your own Capital Markets Day.

Thank you.

Let's give them a hand. So I could see a couple of iconic products in the film, rifles, sewing machines, the motorcycles, not to say the least. Looking back, Henric, you've been in the company for more than 20 years. And that goes for you, too.

It does.

So we're looking at like 40, 45 years of experience, of Husqvarna experience here. So looking back, Henric, what would you say are the most important strategic decisions?

I mean, 330 years is a long time. So I don't think I can cover them all. But if you just take a few in fairly recent times, I think the way the company was focused around auto, power and construction equipment, divesting many of the other businesses, I think was one big thing. Of course, the bet into robotics was one big. And in recent times, I will say it is how we reorganized to decentralize more and to focus more on the different customer segments that really enabled us to perform the way we have.

What do you say, Glen?

I would say it was when we exited the noncore business, some SEK 4.5 billion of exits really allowed us to focus on the core business.

Would -- some challenging decisions, the most challenging ones that you've been through?

Now many.

Many? Of course.

I mean, the whole COVID period, of course, I mean, it's more operational. But there were a lot of difficult decisions we had to make during that time frame. And I think speaking for the team, I think the reorganization was very challenging back then, and of course, giving up SEK 4.5 billion in revenue didn't -- it was not easy either.

I think we'll come back to that a little bit later. Now in the film that we're talking about continuous innovation, transformation, you're actually now in a new transformational period. How would you describe this transformation, Henric?

I mean, there's so many transformational trends that are affecting society at large and us as a company, of course. And I think we are incredibly well positioned to build on these and leverage these and build a different kind of Husqvarna Group for the future. So I think the transformation is more to continue the journey we have done -- we have been on here for a few years but try to accelerate it and to increase our ambitions.

We'll talk more about both trends and transformation later on in the program. Glen, now very eventful financial journey last couple of years. You've doubled the margins. You've exited segments. You said that you've lifted Gardena with a big acquisition just a month ago. you've built a very strong position financially. What would you say is the most important contributor to this strong financial position?

Multiple, but I would say it is that the focus on the core that really allowed us to increase the margins. We reduced the low-margin business, and therefore, put the focus on the higher-margin business.

That's also the exits that you were talking about. We have been through a corona period. It might not be over. We don't know yet. How much has this corona staying at home, taking care of your garden instead of traveling trend supported your results?

We feel we've had a tailwind, that's for sure. Of course, short term, people were spending more on their home, in their gardens and certainly on our products and services. And we made a lot of cost savings as well as cost avoidance activities when we had to stop. Now that may reverse to some extent. But at the same time, we feel there's a larger interest in our products and services. So more people are falling in love with their gardens and, therefore, want to spend time. So let's see.

Therefore, they swap the next traveling thing for the gardening. I was going to ask you how sticky it is, but you already said that you hope it's kind of sticky. Henric, they were talking about here in the film the innovating mindset and the pioneering spirit. How would you describe Husqvarna culture?

I mean, many times, we refer to ourselves as one of the older startups in the world. And I think if you go through our history, I mean the rich 330 years, one thing that stands out is this ability of continuously over and over again reinventing yourself. And I think that is tied to the culture. So I think at some level, I think as an organization, we are curious in the sense of is there a better way of doing things. I mean, is there a better way, and also to have the courage to actually go for it every now and then. I think that that is really in our culture.

So curiosity and the courage. I think you'll show some of it later in your presentations. Now finally, Glen, all-time high profitability, good momentum in the business. Where do you see 2022? What kind of year is that for you?

We're expecting a strong start to the year. That's for sure. I think people in the audience know as well enough, it's -- Q1 is a lot about selling in. So we expect that a strong start. Q2, it's where the music plays. So let's see how that happens.

Great. We're going to see how the music plays. So thank you, Henric and Glen. We'll be seeing a lot more of you, obviously, later on in the program. But before that, let's look into a couple of important future trends in society with direct implication on Husqvarna's business. [Presentation]

Time to welcome the Senior Vice President of Strategy & Innovation, Erik Winberg. Welcome.

Thank you.

Well, give him a hand as well.

Thank you.

Now Erik, you don't have 20 or 40 years in the company. You have a month, 2?

Six weeks, I think it is.

Six weeks in the company. So what would your reflection be on Husqvarna's history?

Well, the transformations that this company has gone through over 100 series, I think, is absolutely amazing, both the scale and scope, not least the one that's led up to where we are right now.

So the stage is yours, Erik.

Thank you, Mia. So good morning, everyone. I'll talk a little bit more about some of the external trends that underpin our strategy before we go into what we do about them, first of all. So as you saw from the movie, there were probably 4 big themes there. Sustainability, first of all, which is, of course, the overarching external trend we're focusing on as a matter of fundamentally a planet out of balance and the actions taken to mitigate that and also the opportunities that creates for us. It's also about electrification as a consequence of that, one of the largest transitions and investment needs we've seen. And what that also means in terms of what we deliver as an industry in terms of not just sustainability but also, frankly, product performance and convenience. Connectivity is something we'll look at a little bit as well, connectivity of people, devices and most particularly, what that leads to in terms of services and opportunities. And finally, of course, autonomous technology is coming out of age, consumer attitude shifting and the acceleration in this area that we see ahead. So if we start with sustainability, we need to talk about natural systems and the importance of natural systems to get the planet back into balance. And when we talk about natural systems and environments with lots of people, urban environments, we talk about green spaces. And the simple fact is that there isn't enough of them. Today, about 60% of urban populations in Europe don't have access to enough green space, and this is a health issue. Beyond that health issue, this is also one of the more important areas to address, to deal with and mitigate the climate crisis, to mitigate climate crisis and also to adapt in areas like drainage and so on. So in total, this is an area where we expect there will be significant investments in the world in the coming years and decades. There's also going to be a lot more engagement with green spaces from customers and society at large. And that again sets us up for a lot of engaged customers and a lot of need for innovation. Talking about green spaces and sustainability, we need to talk about water and water as a scarce resource. Already, billions of people, around 4 billion people have an issue with water scarcity, at least in some part of the year. This is not -- this is going to increase as a result of climate change, is going to increase as a result of stress in urban environments. It's basically going to make water somewhat restricted and more valuable. That puts solutions like smart watering and micro drip solutions into rather different context. There will be a lot more awareness of use and a lot of more needs to reduce and optimize use. Finally, talking about sustainability. We, of course, need to talk about CO2 reduction requirements. Husqvarna and many other companies have CO2 reduction targets that are in line, science-based targets in line with a 1.5-degree limit of global warming. The world in general is not there. Commitments are far short of what needs to be done to reach those targets. In fact, if you sum up the commitments of what the world is ready to do, and this is by 2030, we basically need to reduce CO2 6x the sum of all global commitments right now. This is an enormous gap. It needs to be closed over time. Perhaps some of that will be closed in the post COP26 targets. But this will lead to a lot of actions, a lot of new investments, a lot of new regulations and even more relevance for the targets we have set ourselves. One of the important areas to reach CO2 reduction requirements is, of course, electrification. One of the biggest transitions our industry has ever seen, full of constraints and challenges, of course, in terms of resources and technologies, but a lot of determination to get it done. And just as an example, we expect 20x increase in the battery volumes produced in Europe by 2030. This is enormous transition, but it's also one that has triggered already now a lot of innovation, as I'm sure you'll see, not just for sustainability, but also for customer convenience and better performing products as a result of that wave of investment. Electrification is one area. Another area related to convenience as well is connectivity. Connectivity of people has come a long way. Connectivity of devices is right behind that trend. Total number of devices expected to -- connected is expected to double by 2025, 27 billion. There are already more connected devices than there are people in the world. Now what does that lead to for someone like Husqvarna? Well, it leads to a change in the way we do business. It leads into us getting a lot more direct customer contact as a consequence of that, and it creates a lot of opportunities to develop new services. There's a lot of information data generated that creates value for watches and things related to your health and your movements. Now imagine the amount of data we will be able to generate from a garden, it's astounding, and the service opportunities that will follow on that. Finally, if we talk about autonomous solutions, this is really a large market opportunity that, to some extent, is a consequence of some of those technology trends coming together, technology maturity in many areas and also changes in consumer attitudes towards autonomous products. What you see here is a market overview of the global residential lawn mowing market, 2015 to 2020 and our projection for 2025. What you'll see at the bottom is that ride-on mowers is a very large part of the market. That's especially true in the U.S. That's really where a lot of those volumes come from. And that robotic has increased substantially and now has a value share of around 10% of the residential market, we believe. That's expected to increase further. We believe it will be something like 17% already 2025, and it will actually be a larger market than petrol walk-behind. On top of that, of course, you also have the professional market, which is not included in this picture. So those are some of the fundamental underlying trends that underpin the opportunities we see. If we look at the total market by application as it is relevant to us, that's a total global market of around SEK 265 billion, we believe. Much of it, as you see, is lawn care, outdoor power equipment, gardening and the construction markets. Within those markets, there are very high-growth subsegments that will continue to grow as a consequence of these trends. First of all, of course, robotic mowers. We expect that to be an area that will have continued double-digit growth. Secondly, smart watering, that will continue as well to be a double-digit growth subsegment. And last but not least, obviously, battery solutions across a number of different markets and segments that will outgrow the market as a whole and drive double-digit growth in that subsegment. So with that, thank you.

Thank you very much, Erik, and welcome to this chair. So Erik, you're coming in from the outside, 6 weeks in the company. Now you've described a couple of trends, obviously, very important for Husqvarna's business. Which of those trends would you say is the most important for Husqvarna?

I think the overarching one is sustainability. That's really the one that is driving a lot of the other trends as well. And it's dramatic, and it's a long-term trend.

And you have ambitious sustainable -- sustainability targets. You have the Sustainovate program. Would you say that you are prepared for delivery?

I think we have extremely ambitious targets that will be certain to keep us ahead. That's for sure, yes.

And as a whole in society, who's driving the sustainability trend? Is it the customers, the industry or maybe the regulators?

Well, over the long term, of course, emission targets have been very important for the industry as a whole. But right now in what you see, I think, it's really customer demand that's driving the current fast development along with innovation from industry, companies like Husqvarna and others, who actually are putting new and much higher performing products to the market that are also far more sustainable. I think in the future, maybe you'll see more on the regulatory side than what we're seeing right now as well.

Yes, because we're not really, in your industry, seeing very much on the regulatory side. But what if they would set like emission targets for mowers and something like that? Are you ready for that?

We are already seeing that happening in parts of the world, and we expect it to accelerate.

So your targets for sustainability will reduce absolute CO2 emissions from your value chain with 35% by 2025 compared to 2015 baseline. So this also mean that you include your customers' CO2 footprints, right?

Yes, that's -- absolutely. That is -- importantly, that includes the impact our products have in use, which also, of course, makes the target challenging. It's not just our own operations we're talking about. It's really the full impact.

And on top of that, you will empower 5 million customers to make sustainable choices by 2025. How will you do that?

Well, I think we're doing that every day, especially with the battery products we're launching and how we're managing to communicate the effects of that. It's not just about customer convenience. It's also about making more responsible choices. And this is an area where communication is, I would say, gradually becoming easier, actually. There's an appetite for that and to take that on.

So connectivity, you also mentioned connectivity, which is very important for Husqvarna. How important is it? You said it -- could it be a possible disruptor for the business?

It's massively important. It's not as disruptive for us, obviously, as it would be for finance or media, but it is disruptive in that it changes the way we have to do business. It changes the nature of our customer contact and consumer contact. So it is disruptive in the way we need to approach the market.

So we might come back to that also with you, Henric, on connectivity. Now thank you very much for this, Erik. And Henric, it's soon your turn. Just a little question on the sustainability that we're talking about. You talk a lot about sustainable value creation. How would you describe that? What is it?

I guess it's a little bit of a play on words. On one hand, we want to convey that we are committed to create shareholder value sustainably over time and, at the same time, show our passion for sustainability.

So how would you describe, there could be a trade-off between reaching the sustainable targets that you have and driving top line growth?

In the short term, we don't really see that conflict since the more sustainable choices are actually the things that are growing much faster. So in the short term, I don't really see that conflict. I think in the long term, that could potentially become an issue maybe because that we are so dependent on how society supports with making sure we get fossil-free electricity because that, of course, will have a big impact on our impact, so to speak.

So now curious, Henric, to hear more about the group strategy. The floor is yours.

Thank you. Hello, everyone. Great to see so many here taking time out of your busy schedule to spend the morning with us here at Fotografiska or online. And today, I will mainly speak about how we have built a stronger Husqvarna Group over the years and how we will continue this journey into the future. And we are ultimately transforming the group where we take more of a position of premium and pro and where we transform our offering to become more sustainable, more smart, more autonomous and more electrical. And given our recent performance and our strong financial position, we see a great opportunity now to lean a little bit further forward, to accelerate our strategy and to increase our ambitions. And this discussion we just had here in terms of trends and what the future might look like is actually making this very exciting times. I hope you all see that. In the end of the day, there are a handful or so trends that are affecting all of us, the society, companies and individuals. And what's key then is to embrace change. One interesting reflection is that if you look at history, when more than one big transformational trend occurs at the same time, that has actually resulted in some kind of an inflection point where the world took a different turn, where things actually change permanently into something new. And we believe that the Husqvarna Group is remarkably good at dealing with that. We touched it a little bit earlier. During 330-some years, one of the things that really stand out is a company that has a remarkable ability to constantly reinvent itself to transform from something into something new to always be fit for the future. And I think this is deeply ingrained in our culture, as I mentioned before. It's about this curiosity. It is about being courageous to actually go for it sometimes. I mean, take the robotic mowers as a striking recent example, curious to actually explore it early on, having the courage to actually go for it and then to be persistent, tenacious with it, taking it 10, 15 years before it actually turned out -- turned into a business opportunity. I think that says something about our culture. Another strength we have is our technology and innovation leadership capability, and that's also something that is striking when you look at the 330-some years. We have been able to bring innovation to each segment that we ever played in. And in some cases, we even invented a new segment. A third strength that we have is our strong brands. The Husqvarna and the Gardena brand are really strong brands that really are connecting with the customers and that are getting through the noise that is out there because as you can imagine, in a digital world and in more of an omnichannel environment, it's super critical to have those brands that can reach through all of them. And today, 90% of our revenue is behind these 2 brands, which should be compared to 65% only 5 years ago. And on top of that, we also have long-standing customer relationships and a great market reach. When we, a couple of years ago, set our strategic plan through 2025, we really created that in the intersection between these transformational trends that will affect our future and our core capabilities and our key strengths. That's how the strategy was put together. And starting with our purpose to shaping great experiences, we, of course, want every usage of our products, or our services should be a great experience for the customer. Every interaction with us as an organization should be a great experience. But Beyond that, we want to share output of what we do to be a great experience. And what I mean with that is that ultimately, our products are creating environments where we all work, live and recreate. The strategy itself, as depicted here to the left, you can see that Sustainovate is right in the middle. And there are many reasons for that. First of all, because we see a lot of business opportunity for us here, and we believe that this is an imperative piece of long-term market leadership. But of course, over and above that, it's also simply the right thing to do, the right thing for the planet and the right thing for next coming generations. Customer experience, critical part to the strategy, very much about how do we create more of intimate one-on-one relationships with our customers; how do we, in a much more omnichannel perspective, make sure that we meet our customers where, how and when the customer wants to be met. Closely related to customer experience, we have services and solutions, where we believe that is also a vehicle to create better or more intimate customer relationships. We need to expand our offering to also include services beyond regular products because that is how we can create additional customer value and we can create these intimate relationships with our customers. And in the future, we, of course, expect that to lead to incremental recurring revenue streams. And then, of course, we have the winning core, what really defines us, those product segments that truly defines the Husqvarna brand and the Gardena brand. It's important that we continue to invest in those and that we develop them in a good way, while we are investing heavily into the new segments in terms of robotics and battery. This strategy has not in any way changed. It is the same strategy. What we are saying is that given our performance, given our financial position, now is the time to lean further forward. Now is the time to accelerate this strategy to be clear on what is really important and to dial up our ambitions. And I will now, for the next few minutes, go through these different aspects of the strategy, give a little bit more color to the different areas and share some of our ambitions here, and clear to just state ambitions. It's not hard targets like financial targets or our ESG targets. It's our ambitions. But we want to share them so you get a better feel for how we're accelerating this strategy and what that really means. Starting with robotics. Our ambition is in 5 years to double our sales of robotic mowers. This is all-in, including parts and accessories, including both residential and professional. And that will basically take our business from about SEK 6 billion in revenue today to close to SEK 12 billion. And the way we will do this is to make sure that we lead and drive the geographical expansion. There's still so many markets that are not robotic markets, and we need to drive that harder and faster. And the other thing is that we have established markets, but there's still a lot of room to grow, and we need to make sure that we increase the market penetration in those markets. And this is very much about upping our investments into the market in terms of marketing or in terms of feet on the ground. The other key component here, of course, is to transform the professional lawn care segment with a lot of new opportunities. We'll touch that a little bit later on here. And of course, key for us in all of this is to make sure that we have this technology and leadership position that really is accelerating this transformation for us. Starting with the residential. This is the current penetration levels, the way we estimated. You can see quite a few of these blue markets, meaning that they are truly established but, as you can see, quite different penetration. So there's still room to grow in these markets. We also show the focus markets, which is basically 3 markets with a lot of potential, where we will put the additional resources. You have North America, the U.K. and Australia. Those are the 3 markets that we will focus on from a building new markets perspective. In the established markets, it's very much about fighting for market share. It's about telling everyone why our products are better than anyone else. Whereas in the new markets, it's very much about establishing a new concept. And there's a clear sentiment here or aspect of seeing is believing. And that sets very different requirements on marketing and also more feet on the ground to make sure that we can drive such a conversion faster than what we have done historically. Then going into the professional space. Autonomous has a very strong value proposition for the professional market. And if we look at all the different markets a robotic mower could work on, so to speak, or address, the total cost for cutting grass of those is about SEK 100 billion today, and about 60%, 65% of that cost is labor-related. And as we go autonomous, there is a clear cost saving for the customer. So actually, that total cost, SEK 100 billion, becomes smaller, but the equipment piece is actually coming up. Important when we talk about autonomous is that there are different kinds. And generally speaking, any autonomous solution will realize some cost savings, and you can do 24/7 operation. When you have conventional big diesel machines that you convert into autonomous operation, you get some of the cost savings, but you don't get all of them. What we bring to the table here is purpose-built robotics. What we are saying is if you're going to go autonomous, let's not stay in the old world. Let's go to the future, directly skip a few steps and develop the products that are the most optimum for autonomous operation. And we do that with our robotic mowers, meaning that additional cost savings; no direct emissions, which is super critical for many of our customers and their commitment to a better world; low noise, very important in certain applications for certain customers. It's a safe operation with smaller machines than big machines, and also, the grass quality becomes much better. So there's a strong value proposition here. And of course, one of our big bets here right now is the CEORA platform that we start -- we will start to sell in 2022. Some of the success factors for how we will address this segment and how we will try to build this market as quickly as we can is to make sure that we complement our current go-to-market with more of a dedicated B2B organization, meaning more feet on the ground to create a pull to our customers and to really have our own people trying to help making this conversion in the marketplace. And then, of course, we need to make sure that we are really in the forefront when it comes to technology. I talked about this purpose-built machines. We need to tailor them to the application. This CEORA, you can see there's a front and a back, so to speak. It's a modular system where the front can be adapted for different kinds of grass types or certain kinds of applications. And then, of course, you also need an operating system. How do you manage a fleet of CEORAs on a golf course to make sure that it's doing the job in a good way? And here, we need to also have the absolutely best operating system. Shifting to electrification. Our ambition here is that 2/3 of our motorized sales will be electrified in 5 years. And in 2015, that share was 11%. Today, it is 38%, and the ambition is to take it down to roughly that 67%. And as Erik said here before, there are many reasons for why this is increasing. I mean, one part of it is our own commitment to sustainability. We want to do this. We want to drive this. That's one part of it. The other one is, of course, the customer pool. And then we have regulations, not so much today, even though there are some, but it will come more and more. There are some clear customer benefits here. Of course, there's no direct emissions, which is one big thing from a sustainability perspective. But you also have the lower noise. It's easier to use, and you have lower operating cost over the total life cycle. So there's -- as you can see, we are really driving this trend, 67% of motorized sales. That would mean that we have 20% of our revenue in petrol by 2025. The only thing that is gating this a little bit why we can't go faster is battery cell technology. Because if the cells are not sufficiently good, then handheld products simply becomes too big, too heavy or get too short run time. And then, of course, we have some challenges when it comes to infill charging, like in the woods somewhere, for instance, how would you charge the battery. So we are balancing these things with a very strong ambition to make sure that we always have the best option when it comes to electrical products whenever it is technically feasible. We have two-pronged approach to battery. At the entry level, we, of course, realize that our customers are very price-sensitive, but also that the customer appreciates or would benefit from having the same battery and charger that they can use for many different verticals, for many different applications around their home. And therefore, we have, together with Bosch, founded an alliance because that way, we can leverage on Bosch's scale, volume to make sure we are cost-effective in this segment. And of course, we're now, together with Bosch and in this alliance, inviting other participants to really provide an ecosystem for the consumers. On the other side, in the premium and in the pro segments, we have an entirely different approach. Here, the product performance is so critical, and the customer is less price-sensitive. And then we really do everything in-house to make sure that we really can tailor to the application, to the customer, to the individual product. Important when we talk about battery is that we actually talk about battery-powered products. Very few customers actually buy a battery and a charger. They buy a trimmer. They buy a chainsaw. They buy a blower. They buy a power cutter. And this is what we bring to the table. We know the customer. We know the application. We know the product. That is what we bring to the table here, and we will be the best one indifferent of the power source. The winning core. Here, we have not as concrete ambition, so I skipped that one and I go straight into the details. Of course, we have an ambition to continue to grow our core business. I think this one is important for a couple of different reasons. It actually shows a little bit what I've been talking about many times before about building a stronger Husqvarna Group over time. We are today a very different company than we were 5 years ago or in this case, 8 years ago. Not just because of revenue is much higher, but if you look at the composition, how that revenue is built up is radically different. Look how robotic and battery is a big share. Parts and services solutions have increased. The winning core is much bigger. So the company is today very different with different prospect for growth and profitability. And we, of course, want to continue to invest in this winning core. And there are 3 very specific areas that we would like to invest more in than anything else. And for the Husqvarna Division, it's about building out the pro side of the business. For Gardena, it's very much about geographical expansion of watering and hand tools. And it's about continue to expand into adjacent segments for the Construction Division. And if we do this, of course, because these are the segments that defines us as a group, it makes us stronger, and we can continue to invest even more into the future segments. Then talking about customer experience and services and solutions. I will actually do that together because here, the divisions we'll spend a little bit more time later on. But if you start with the customer experience perspective, it's just to frame it a little bit that in the end of the day, what we're after is to create this intimate one-on-one relationships with our customers. It is to make sure that we meet with our customers on their terms, where, how, when the customer prefers. And we want to provide additional customer value beyond what our products can do. So that's a little bit to frame the customer experience. Here, we have picked one area, or I have picked one area to highlight, that is connected devices. The ambition is to double in the next 5 years. The reason why I picked this one is that to create customer -- a great customer experience and to really be able to develop services that are valuable that you can actually turn into revenue, there needs to be substance there somewhere. And nobody knows the products better than we do. And if we can get all our products to be able to tell important things about themselves and what's around them, then only our imagination can limit what real customer value we can build or how we can turn our data into valuable information to the customer, which also helps to create this intimate relationship. So that's why I decided here to highlight connectivity. In terms of connectivity, we have had a pretty nice development here, about 1.4 million connected devices in the last 12 months. And with the acquisition of Orbit yesterday, by the way, we immediately doubled that to 2.8 million. And our ambition here is to double it yet again in the next 5 years. As I said in the beginning, key here is, of course, to make sure that our products are connected and that they can tell meaningful things about themselves. So that's the one key activity here, of course. The other piece is, of course, that we need to invest in, how do we manage data and how do we gear up our capabilities when it comes to AI to really make sense out of this and create value out of this data. And then in parallel, the divisions, of course, are working on new data-driven services that we will launch in the years to come. Then Sustainovate at the very center of our strategy, and I hope you can see this throughout this presentation that all parts of our strategy is actually tying into sustainability. It's all tying into transforming Husqvarna Group into a company that's truly fit for the future. And in terms of Sustainovate, we don't have any ambitions per se. Here, we actually have hard targets. We have 3 hard targets, and we are not changing those. Those are 3 very ambitious targets in terms of carbon to reduce our absolute emissions by 35%, including product use, while we actually are still growing the business. That is a huge commitment, and we are currently trading at 27%. Another -- the other goal here in terms of circularity, here, we have again married our innovation capability with our passion for circularity. And here, we have committed to launch 50 innovations -- 50 circular innovations in the market by 2025. And then as we said here in the beginning, we also -- it's not enough that we develop the right things and we do a lot of the right things. We also want to take a bigger role in terms of empowering our customers and our employees to make more sustainable choices. And there, we have the target of 5 million. So that kind of concluded the strategy. And just one final comment or something that links into that, and that is M&A. We do believe that M&A is a good way to support or accelerate some of our organic initiatives. So really, it's not M&A for the sake of M&A. We have our strategy, but sometimes a quick way to get there is through M&A. And historically, we have done this quite a lot in the Construction Division. And we're now taking that way of thinking, that way of working and applying that to the other 2 divisions. So now we have emerging M&A plans in the other 2 divisions, and we will make sure that we actually use this tool in our toolbox given the financial position that we have. During this year, the Construction Division made a big acquisition in Blastrac to really become the market leader in all aspects of surface preparation. And as I said yesterday, we closed the transaction of Orbit, where Gardena is taking a giant leap in terms of geo expansion into North America. Of course, the main priority is to continue to grow Orbit in a great way, but it also gives us an opportunity to position Gardena in the right way in North America, which we wouldn't have been able to without that. So to summarize or to wrap this up a little bit, we have built a stronger Husqvarna Group for quite some years, and we have done this in phases or in steps. Early on in 2013, it was really profitability first. Some of you remember exactly the situation we were in back then. And as an example, we took out 10% of our product cost over a period of 3 years and many times at the expense of some growth. But that was the strategy at that time, and it was the right strategy to take us up to that first level. Then in 2016, we found a second gear, which was, let's now dial up the growth dimension here, really invest in those areas that -- where we have the best future opportunity. I mean, robotics, watering, I mean, a lot of these different areas, where we really stepped up our investments. We actually dialed back in some other areas, and we even stepped out of some. I mean, we talked about the SEK 4.5 billion of exits, but we also stepped out of quite a few brands. I mean, today, 90% of revenue is in Husqvarna and Gardena. It was 65% back in 2016 when we started this phase. And now we see an opportunity, given our performance, given our financial position that we can find the third gear. It's time to enter the next phase. And we simply have to lean further forward, accelerate the strategy that is working and is delivering results, and we need to dial up our ambitions. And I've tried to share a little bit more detail and give a little bit more color on how we are dialing up these ambitions here. Of course, that also comes with some increased financial targets. And here, we are stepping up all 3 of them, and Glen will go through much more in detail how all that will flow through. I think the important thing here to highlight, though, is that we, from a profitability perspective, we need to remember that to really lean forward, we need to also increase our investments, investments in go-to-market, feet on the ground and marketing and in R&D. And we need to invest further into our IT capabilities to make sure that we have world-class capabilities to really take a leadership in that digital arena. So when we set our EBIT ambition, it is a balancing act between short and midterm, and I think that's important that we carry with us. All in all, we are operating on attractive markets. We are well positioned in all the really attractive segments, the high-growth segments. We are executing on a very clear strategy, and we do that in a very consistent way. And given how we have built this company forward, it just makes sense to lean further forward and to dial up our ambitions going forward. And we are committed to create sustainable value creation here and also in the future. Thank you.

Thank you very much, Henric. Please, welcome back. Yes, that's good. So thank you very much, Henric, for giving us a bit of a flavor on the strategy and how you're going to execute it. Obviously, we are all here very interested in the financial targets. It's soon your turn, Glen. I will give you a go on that before we post questions.

Just a couple of other questions for you then, Henric. You were talking here about double the robotic mower sales from SEK 6 billion to SEK 12 billion, and you're talking about a SEK 100 billion market opportunity. How much of that is for Husqvarna?

I mean, the professional segment, that's a little bit complicated since the SEK 100 billion is the total cost of mowing grass, so the equipment portion is smaller. But on the other hand, that one is increasing as we convert that market. It's actually very difficult today to give a good number because we simply do not know yet what the conversion rate will be with the professional customers. So far, we have extremely good feedback. They are very excited about this. They see the logic. But it's a little bit too soon to say what is truly the -- what will truly be in the end.

When can you come back with a little bit more exact answer on this?

I think we will know much better in a year or 2 when we have started this.

Okay. So you're really successful in keeping up the market cap for the residential mowers. What would you say are the key success factors for driving robotic growth?

I think there are a couple. I mean, one is our go-to-market investments. We need to step up -- we will step up when it comes to marketing, and we will step up when it comes to feet on the ground to really drive the conversion in this very important segment. That's one piece. The other one is about technology leadership. We always need to be in the forefront when it comes to having the best offering when it comes to robotic mowers.

And I think, Glen, we might come back to you, as acting President of the Husqvarna Division, also how you penetrate the professional market a bit later on. But Henric, residential mowers, over 50% market share. You have good margins, but we can see new competitors moving in. Segway, for instance, how do you take on this increased competition?

I mean, first of all, it's a compliment, I mean that more and more players are getting into the segment that we have created. So I guess that's a compliment in one regard. Generally speaking, I always look at it as favorable with good competitors entering. It keeps us on our toes, and we just need to work a little bit harder.

That's a very corporate answer, I'd say. So you also mentioned M&A here, selective M&A, you said. How much growth should we expect from M&As?

We are not in a position to give a number on that. But what we are saying is that in the past, we have had 1 division active in M&A, and now we will have 3. So I mean, we are planning on increasing that activity. I think that's what we're saying.

Yes, it's a good indication of a big increase. Maybe we can dive into that a little bit more later on. Electrification, you will increase the rate of electrification of the motorized sales by -- up until 67%, 2/3 by 2026 or '27, 5 years. Now this transformation, it's a huge thing for you because you have also a legacy. It's nice for you to talk about the new things, the battery things, but you have a big legacy. How do you see that legacy? What kind of risks?

I mean, where we're very most vertically integrated is when it comes to handheld products, and we actually announced quite some onetime costs already a year ago. And a big part of that was to deal with that legacy when it comes to petrol engine component manufacturing, where we, for parts that are noncritical to performance and quality, we are outsourcing that. And for what is critical to quality and performance, we are consolidating that into much fewer factories, so we can become much more lean in this area. So we're taking proactive steps here.

And you are still quite small player in battery. Exactly how strong is your position? Could you...

It depends a little bit on what segments you look at. Generally speaking, we are overexposed in the true premium and the pro segments. And there, our position is strong. Whereas in the lower specifications, we have less of our position.

Working on that, I guess. Just something on connectivity as well. We were talking about connectivity with Erik as well as a kind of a disruptor. And you talked about connectivity as something that helps you get closer to your customer. You were talking about an intimate relationship with the customer. Could you just elaborate a little bit more concretely on that? What products are you connecting? How does it help you get closer to customers and collect the data?

I mean, generally speaking, we want all products that can be connected to be connected. So it's really everything. So that one is easy to answer. The other one is a little bit more difficult. But what you can say is that we know the product better than anyone else, and the product can tell a lot about itself. So you can either just share information with the customer that there is no reason to mow today because it has rained or whatever that can be, or you just share meaningful information to that you can create in the pro space, for instance, service contracts, where we can actually see and predict when the machine needs service so we can be proactive, making sure that the customer never -- a customer will never be down. So I think by both being able to share meaningful information on one hand, you can create a relationship, but also by developing services that actually are becoming much better and becoming more preventive through the data that we get from the products is a good way forward.

Okay. So we'll come back to you with a lot more questions, and these guys, I'm sure they have a lot of questions. Now, Glen, it's your turn. You're going to deliver on Henric's promises. It's going to cost you, I guess.

It is, indeed.

It is, indeed, so let's hear. The floor is yours.

Thank you. So good morning, all. Welcome here to Fotografiska in person and for those listening online. Great to be in person again. I feel a different energy already. So I have the pleasure of taking you through our financial ambitions for the coming period, our financial targets. Henric talked ambitions. I want to talk targets now, hard targets. But it's always good to, at least, reflect on where we've come from. And the previous targets up until yesterday evening, of course, have stood as well. We had a market growth or a growth ambition that we talked about market plus 2. And that was based on we expected the markets where we operate. We're growing some 2 to 3 percentage points per year, therefore, indicating a 4% to 5% growth. In the last 12 months, we've grown with 14%, so we've ticked that box. But I think it's fair to say that the market has been growing more in the recent months, particularly given the COVID pandemic. So we think market is about 10%. So we are growing by market plus 4 in the recent 12 months. The operating margin target of above 10%, we talked about 10% being our floor to operate above that. I think now we've proved for 2 years, we can do that. But of course, it was a tough task to get there, but now we're operating above and some 12.6 percentage points on a rolling 12-month basis. And last but not least, of course, the capital efficiency. We're a seasonal business, so we do move up and down a lot [indiscernible] in start. But in the past 18 months, we've really accelerated now on the capital efficiency improvements. And that, of course, is how we look at working capital in relation to net sales, so down to some 21%. So the 3 financial targets we had, we've managed to succeed with. Now what is our reality that we live in right now? I guess it's a different world to where we were some 18 months ago before this COVID world become so popular with us in our daily lives. We've really strengthened our market positions during this time. It's fair to say we've strengthened all of our core areas. Staying at home, as you, it's changed the way we behave. We couldn't travel as often. Therefore, we were spending more time at home and investing in the home and in the garden. That had a positive effect. Positive effect in the short term, increased demand, but it also increased the interest in our segments. People fell in love with their gardens. People fell in love with their outdoor space, and we feel that has a longer-term benefit to us. When the COVID crisis hit and some of the -- our channel partners had to close, we had to look at ourselves, how do we get to our end customers. If the channel partners are closed, can we accelerate in e-commerce? And we've had to do that. So we were forced to do this, and I'm pleased to say we have some 19 markets where we have our own dot-com e-commerce ability, 14 in the Husqvarna Division and 5 in Gardena. Pre-pandemic, by the way, that was 5, so 5 to 19 in this past 12- to 16-month timeframe. I shouldn't pass, of course, by -- without talking about we are all living in a more volatile world. I don't recall, at least in my 20 years in this group that we've seen so much volatility with the global supply chain, be it raw materials, albeit through logistics. That is the world we're living in, and that's what we need to adapt to, but that's the reality. Henric talked us through the different segments we've been in the different phases from 2013, the profitability journey, to then going into the growth journey. I think when we look at the sales development that we've had in this group from 2015, the more recent period, let's call it, we've actually grown with a CAGR of 4%, so more or less in line with our financial targets. At the same time, we've exited SEK 4.5 billion of noncore business. Over 10% of our business, we decided to walk away from. Personally, I feel that was the decision. That was our most key decision. If I exclude those exits, it's more like 6.5% CAGR. On the right-hand side, the income -- operating income, that's been developing nicely. We talked about in the opening movie earlier today going from 5.3% up to 12.6%. This chart shows the '15 -- 2015 to 2021 position. The orange line shows that the little blip -- we had a little blip in 2018. I've mentioned this before. It's quite simple. We did not sufficiently offset headwinds of raw materials and logistics, i.e., the pressures we see today. Since that time, we have accelerated on price and made sure that we're -- we can offset those headwinds. So we've managed to grow actually the operating income in the same period by some 12% CAGR. So a strong execution on the profitability improvement. And that leads us to actually raising the bar, raising our financial targets. So last night, we tried to give you a little bit of prewarning. We issued them a little bit earlier. So 8:00 last night, we issued our new financial targets. The same metrics, sales growth, EBIT margin and operating capital efficiency. Let me take you through each of them. We believe, and we add a worthy organic sales, Henric has talked a lot about the M&A aspect to complement what we're doing. But from an organic perspective, we feel we can grow with 5 percentage points. We do believe post-pandemic, the world normalizes, and we go back to some 2% to 3% market growth. So we continue with above-market growth. That's our clear target. The operating margin, we move up from above 10% to 13%, and I'll take you through that in some more detail in a couple of slides' time. And as we've taken such a big step when it comes to our working capital efficiency, and that's basically our inventory, receivables and payables, how we manage them, we feel we can go from that 21% level and actually accelerate further to operate below the 20% level -- mark. So when it comes to our sales targets, net sales growth of 5% organically, what gives us the belief in this target? What's really driving this ambition? I think the charts say it all ultimately. We have a strong belief in robotics and battery. We said we can double our robotics business. We feel there's a strong electrification that we're going to go from 38% electrified products to 2/3. So that orange bar will grow. We're very confident that is going to be the natural development. And being a market leader in robotics, we want to continue our market leadership position. The service and solution opportunity is also significant. The divisions will take you through some great examples later in the day. But we really feel that customer experience, getting closer to our end customers, the service and solution opportunity is significant. So the turquoise bar that will also be growing, again, giving us a strong confidence behind the 5% growth. And then the winning core, the real core of the divisions. Of course, we can grow that with at least the market, so at least in line with the market development. And then we'll continue to de-prioritize our noncore business. That's the natural progression I would hope you agree with. The EBIT margin expansion. As said, we've had a nice steady line upwards with the exception of 2018. In this time, we've exited, particularly from 2018, SEK 4.5 billion, with SEK 1 billion of exits coming through in '18 to short of SEK 1.5 billion in 2019 and just over SEK 2 billion in 2020. Those exits actually had a positive effect on the margin of about 70 basis points. So we exited business yet added up an improvement in the operating margin. So that's why I keep coming back to that point that I think it was absolutely one of our key decisions we took in recent years. And we believe we can continue this growth journey on the operating margin upwards. But it comes with some headwinds, and I'm going to allude to those headwinds in a couple of slides' time. Three years ago or 2 years ago, when we last met in this constellation in the Capital Markets Day setting, we didn't have all 3 divisions operating quite to the levels we want. What I'm really pleased about, and the 3 divisional Presidents will give you far more flavor of this later in the day, is we have 3 high-performing divisions. Three divisions operating way above the 10% operating margin, 3 divisions in growth mode, that's important. From the last 12 months' perspective, the Husqvarna Division has grown with 16% sales; the Gardena Division grown with 12%; and Construction with 11%. So strong sales growth, double-digit sales growth for all 3 divisions in the last 12 months. Husqvarna Division has an operating margin now of over 13%. In 2018, it was 7.6%, just to put it in context. Strong turnaround in that division. The Gardena Division, it's a natural weather hedge against the Husqvarna business. That was one of the main rationale, drivers behind that acquisition some 15 years ago -- 14, 15 years ago. And that itself actually is delivering Gardena a continued growth journey, but an EBIT margin of 15%. In Construction, less weather-dependent than the other 2 divisions, therefore, also a natural hedge to our weather-dependent divisions. Much more cyclical, much more macro affected, but also now coming back post-pandemic, showing a 12.1% EBIT margin. So 3 strong divisions. So when it comes to the EBIT margin and this 13% we talk about, what confidence do we have? Of course, we have confidence. But first, we should start with what's the baseline. We have a 12.6% operating margin today. And therefore, maybe initially, just to get to 13% sounds pretty easy. In the baseline, I come back to the COVID pandemic. We feel we have some 80 to 100 basis points of tailwind so far because of the COVID pandemic, increased demand when we stayed at home, and also, we took some pretty aggressive cost avoidance activities. So 80 to 100 basis points is sitting maybe artificially inflating us right now. Let's take that one with us. Pleased to say that we did conclude the Orbit acquisition yesterday. It is now a firm part of the Husqvarna Group and the Gardena Division. We mentioned when we met some 4 to 6 weeks ago when we announced this deal, it will be EBIT margin dilutive. It's about 25 to 30 basis points of EBIT dilution. At the moment, within 3 years, that will come up to the group average. But in the baseline, we now need to take in 25 to 30 basis points of EBIT margin dilution. So a little bit of on the bridge, bringing it down there to maybe 12.6% on a rolling basis to more like 11%, 11.3%, something. But then we need to start growing back up to the ambition. And this is where we have strong growth. As Henric showed, we have a much better composition of the product in our mix right now, so a stronger mix. And I hope we've proved that we, as a Husqvarna Group, can be a market leader when it comes to price. Price is going to be a key driver for this group going forward. First and foremost, to show market leadership. If we're going to be a market leader, we need to drive price as well. We have 2 amazing brands that we can continue to drive. But we need to offset the headwinds. The short-term headwinds we have from raw materials and logistics are significant. All industries are facing this, and we are no different. So we need to offset the headwinds of raw mats and logistics. And we commit to having a positive price effect that will offset and more than offset those 2 headwinds. We also would like to, of course, take the forward-leaning step that Henric talked about. How do we create the group for the future? How do we continue to generate those positive growth opportunities? And that's the transformational investments, we call them. That's going to be in go-to-market. How do we actually spend more on our brands? How do we put more feet on the ground? How do we spend even more in R&D and products? That's the transformational aspects we talk about. So we're going to continue investing in the future. Let's not see this as a bad cost, it's a good cost, and we're committed to doing this. And at the same time, and Henric said this and also Erik said it, digitization is -- it's a trend. And we need to move with that trend, and therefore, we've got to enhance our IT systems. They're going to have some pretty sizable investments. And when we take decisions, we'll come back and talk about them. But what's going to be some pretty sizable investments in the future around our IT landscape, and this is the right thing to do. This will allow us to get closer to our customers. So when I talk about good costs and good spending, this is what I mean. We've had a run rate on R&D to net sales of about 4%, SEK 1.6 billion in absolute terms. We want to start increasing that over time now up to more like 5 percentage points. That's that transformational aspect. We want to increase this, and this is an investment in the future. So I see this as a good cost add. We also want to continue with the capital expenditure. COVID actually, we put the brakes on in quite a lot of areas, particularly on the capital expenditure. We didn't quite know where things were going to be in 12 months' time. So let's take a rain check, and see how things are. So we slowed down some of our CapEx. Now we're going to increase it again. So we're going to go from 4.5% to 5%, up to 5.5% to 6% over time. Again, we see this as a positive investment in our future. So a little bit of guidance there going into the coming periods, but see it as a ramping up. I don't see this as a straight 2022 impact going forward. Very quickly on Orbit, and Pär will talk about this when we talk Gardena in some -- in a couple of hours' time. Pleased that we transacted this yesterday, finalized the deal. It's roughly USD 320 million of sales. That's 6 percentage points increase. I talked organic growth before, so I'm not diluting that or changing that. It will have a dilutive effect on the margin short term, 25 to 30 basis points. And that deal was done through existing cash and credit facilities. So pleased, and it's a really great acquisition to bring into this group. So hopefully, we have proven ourselves, at least in recent years, that this is a really solid cash-generating group. It's not only actually the absolute cash that we ramp up to there. What I'm pleased about is we don't really -- particularly in the past 2 years, we've never really gone cash negative. Being a seasonal business, we often have that minus position in the first half year before we started coming up during the latter part of Q2. But actually, in the last 2 years, we've managed to be more or less cash positive for the whole year. And that's important. That is a strong health check of this group. Last year, at the same time, we had over SEK 6 billion of positive cash. This year, a little bit lower at SEK 4.8 billion. A little bit of acquisition effect in there from Blastrac of SEK 250 million, SEK 300 million. But last year, of course, as we put the brakes on and stopped a lot of production, as sales increased, we had a lot of cash release by way of working capital release. So I feel the SEK 4.85 billion is a good guidance of our cash flow going forward. So a strong financial position, and it doesn't happen overnight. It takes time. And we often say these curves, particularly the left-hand one, is like an oil tanker in the ocean. You can't turn it so quickly. And that's the case with working capital. It doesn't happen in a quarter or a month. It happens over time, and it's going to be consistent execution of our working capital management. The main area that we need to continue to improve is going to be inventory. That's the biggest constituent that sits in there. We could always do things with payables and receivables, natural housekeeping. But the main aspect for us is to continue to have a solid inventory management, continued demand planning, continued S&OP improvements, and that's what gives us the optimism around our 20% going forward. And of course, a 5% sales growth also gives a strong support to that metric. On the right-hand side there, over the chart, we talk about net sales to EBITDA. In Q3, we had 0.6. Folding in the Orbit acquisition, that pro forma becomes more like 1.1, still giving us significant headroom to that 2.5 metric that we've previously talked about. So a strong headroom for M&A opportunities. For those who have done the calculation, even post Orbit, we still have, I would say, M&A firepower of some SEK 12 billion to SEK 13 billion post Orbit. So my final chart, and a question we often get when we meet virtually or in person in the past is, what are you going to do with the money? You're a strong cash-generating group, so what are you going to do with that? I think it falls into these 4 distinct boxes. We want to continue to invest the R&D investments, the go-to-market investments, invest behind our growth. That's first and foremost what we want to do. Secondly, of course, we want to make sure that we continue to maintain a strong balance sheet. We need to have liquidity headroom. We're going to have different cycles over time. And therefore, we need to make sure we have the liquidity headroom to tackle any future blips in the road or bumps in the road. And we will maintain -- our plan is to clearly maintain our BBB rating. Dividend policy has been to distribute over 40% of income by way of dividend. If we continue growing the group and growing the company, then that will continue being a growing dividend for our shareholders. And last but not least, the M&A opportunity. As Henric mentioned, this is there to complement our organic strategic growth journey. We're in a good position now in all 3 divisions to make some M&A moves. And when the right targets come along, we will be seriously interested, of course. And as said, we have some SEK 12.5 billion to SEK 13 billion of firepower when it comes to M&A at that.

Thank you very much, Glen.

Thank you.

Thank you, Glen, for giving us a deep dive into the financials. Now before I let you ask your questions, I have a couple of questions for both of you, actually, or maybe all 3 of you. Now let's dive into these financial targets. Glen, you've eventually met your old financial targets last year. It was a pretty long marathon run for the 10% there, but you got there finally. And now you raised the bar again. How long do we have to wait this time?

It's a very good question. And I have to come back to what's in the baseline. I have to come back to that COVID aspect. A little bit of dilution through M&A that will improve back to the group norm in 3 years, but then also that we want to continue with the investment and the transformation journey. So I'm not really answering your question then, Mia, but it's going to take time to get there to the new one because we want to continue that investment. So I'm not going to commit to a date. But of course, it's something which we will strive towards.

And if I just search for a little bit of a more specific answer. You have a 5-year perspective on what you're talking about here today. Could that be some -- giving something more?

We're talking 5 years in most of our outlooks there, but I leave the -- our investors and analysts to decide when they feel we could get there. But we have a strong drive to get there. That's why we put this target there, and we have a strong drive to get there.

Henric and Glen, now new financial targets, 5% sales growth. You have 13% EBIT margin now. You're already, though, you said, Glen, on 12.6% running on a yearly basis. So if -- I'm not a financial analyst, but I read what they say, these guys, and it's good financial -- new financial targets. We want that, all of us, but it's kind of on the modest side. If you're already on 12.6% and now you say 13%, Henric, isn't it a bit too modest?

We don't believe so, and the reason is that the jump-off point is in reality lower. That's one piece. And the other thing is the trade-off between short and midterm. Of course, we could get to 13% sooner if we didn't take the investments into robotics and the investments into some of these new areas. But we think it's more important for long-term shareholder value that we actually act with speed and that we are decisive with our investments because this is a dynamic market. There are other players entering, et cetera, et cetera, and it's important that we actually act with speed here. And that's why we're are -- we want to spend more money, simply put, in the short term. And that pushes the EBIT target out a little bit.

So it's a long-term thinking. How much -- Glen, how much success in robotics do you need in order to meet these financial targets?

That is a key driver to our sales development and margin development. So just if we continue with the trend we have and the commitment to doubling our robotics business, that in itself will give us a couple of percentage points of growth. So it's extremely important.

Extremely important. Now you're talking about investments as well, huge investments in front of you. IT, R&D, go-to-market you said pretty sizable investments. Could you quantify a little bit more?

We will quantify as and when we take decisions. But if I start off with some of the decisions we've taken to date, you know that from a transformational strategic investment perspective, we previously talked about SEK 400 million to SEK 500 million per annum. And then in Q4 last year, when we actually increased some of the ambitions, we said we'd add another SEK 250 million. So we're into some sort of SEK 650 million to SEK 750 million of annual transformational investments. So I think that's a good guidance to have going forward.

And for M&As, you said some SEK 12 billion to SEK 13 billion.

Of firepower.

Firepower.

That means if something becomes available, we would have that accessible without too much problem.

So you were talking about risks in the supply chain. You're talking here about higher raw material costs and increased transportation costs, semiconductor shortages. Now you've been talking a lot about that. Lately, you've been mitigating that fairly well, but how much negative effect can we anticipate from that going forward? What do you say, Henric?

I mean throughout the entire pandemic, there have been numerous disruptions. I mean just changing in nature a little bit over time. And I must say I'm extremely proud of how we as an organization have dealt with it. So we have mostly had a lot of small disruptions rather than any big ones. But I don't see that the risk level is any different. And we will carry a big risk with us all the way in through 2022. And touch on wood, so far, so good. But it's very unpredictable.

And you said in a TV show I was watching, [indiscernible]. You were talking about compensating for raw materials and additional logistics costs with price increases?

Yes. That's a commitment we have made that we will compensate both the raw material and the logistic costs with price increases here in 2022.

Okay. So now it's time for you to ask questions. For those of you in the room, soon, I'll just talk to you online first. I think you've already seen the question field that you have in the bottom of your video. [Operator Instructions] And for those of you in the room, I'll get help from Johan. Welcome back.

Thank you. Excellent. So if you have any questions, let's start here in the room. [Operator Instructions] I think we had the first hand up there, Johan.

This is Johan Eliason at Kepler Cheuvreux. I understand that robotics is really important for your growth and margin target. And I think the professional opportunity in my eyes is especially important for you going forward. In your presentation here, you mentioned sort of robotics is important, and then you have aftermarket and services. If you look at the professional business, isn't services a big driver of profitability in that segment? And I was just wondering how you see the professional business developing? I mean we see successful equipment companies generating up to 1/3 from their revenues from aftermarket and services. Do you think that will be the situation for you as well in the professional robotics business? And will the service and aftermarket drive margins to the 30% and above the target?

I mean aftermarket is very important and is generally speaking more profitable also in our business, of course. I'm not sure if we are seeing the potential getting it all the way up to 30%, as you're saying, in the short term, but it is a very important part of the pro business. And we also see that when it comes to pro robotics. Potentially there, we might also consider different business models. If we sell robotics more as a service, for instance, then we also make sure that we get 100% of parts, et cetera, service captive, which is also a good opportunity, of course. So it's important, but I'm a little bit skeptical to 30% in the near term.

Great. I think we had a question here in the front. Karri, I think you were up with your hand before? Okay.

You're reading my mind. Karri Rinta, Handelsbanken. If I look at the penetration numbers for robotics, it seems that Germany has played quite a significant role in that doubling from SEK 3 billion to SEK 6 billion that you have seen in the last 5 years. So then looking ahead for the next doubling for SEK 6 billion to SEK 12 billion, where do you see that? I mean more specifically, of that SEK 12 billion in 5 years, how much of that needs to come from the U.S. and how much of that needs to come from professional in ballpark numbers for you to get to that level?

I mean if I start conceptually, then you can maybe put more color to it, Glen. The good thing is that we don't place all the eggs in the same basket here. Yes, U.S. is important, but also the U.K., and also in the bigger scheme of things, also to an extent, Australia, when it comes to the new markets. But we also have quite some way to go in some of the established markets to really get the penetration level up. And then on top of that, we have the professional opportunity. So I think what's good here is that we don't place all the eggs in the same basket. But to concretely answer the question on the U.S., I would say that that's a minority of what we need to see to reach the target. It's not the majority. But I don't know, Glen, if you want to add more color to it?

What I would add, Karri, would be markets like Germany where we see penetration increase from 25% to maybe 40%, 45%. Of course, it's still not at the levels of the mature markets like Sweden, Norway, Switzerland. So we can still increase the penetration despite that being such an important market for us. So we got high penetration markets that we can increase further and the extremely high penetration markets where we actually have the repeat purchase opportunity now, people buying the robotic for a second time. So quite different, I would say, go-to-market strategies depending on the market penetration and majority.

And professional of that SEK 12 billion?

I don't think we will quote a figure on professional. I think we're sure of the opportunity there. Of course, it's going to grow with a far higher CAGR growth than we see on the residential business, but we won't give an absolute figure or you'll chase us for years to come.

Excellent. Do we have any other questions? I think we have 1 here at the front, please, Gustav?

Gustav Hagéus with SEB. Regarding your growth targets then, so doubling robotic sales from 13% that brings about 2.5 percentage points CAGR growth to the group, suggesting then that the remaining part should add equal to 2.5. Do you think that, that is a little bit -- is that on the conservative side given all the megatrends that you're pointing out now? And on the robotics side, you're currently running a market that is growing around 15%, right? And then you're adding on the professional business now. So are you then assuming that the residential or private side should materially slow down then on robotics to reach that doubling or 15% CAGR, that would be interesting?

If I start with first one, I think it's also important to keep in mind that there's quite some uncertainty in terms of how market demand will play out for the entire industry over the next coming years because we have had this boost during the stay-at-home time. And the question is what of demand will now be lower for a period of time? Because some purchases, if you have made them in 2020-2021, will you continue to buy in '22 or '23? So there's some uncertainty in the underlying demand, I would say. That's one element into how we look at this. So depending on how you look at that, the target is either fairly ambitious or it is conservative. I don't know if you want to add to that, Glen, or if you want to take the second...

No, I would say, Gustav, of course, we talk. Previously, we mentioned 15% CAGRs we feel the market grows by, and that's our midterm guidance, and that feels okay around about that level. But of course, on the residential side, we have also where it doesn't always grow with that. We've had high single-digit growth in the robotics market in the past 5 years in certain years, we can say that. So we know we're going to have little peaks and troughs as well in the growth of the market. We do feel there's a significant market opportunity in residential, but it might be a little bit slower going forward, only because of the penetration levels we've achieved. But absolutely then we can go up towards more like the previous guidance when we add the professional opportunity, which will be with a high CAGR, we're convinced for that.

Johan, we have an online question here on the same topic on robotics. This question is, how does the profitability of robotic and battery products compares with other products?

Robotics is EBIT margin accretive, no doubt about that for this group, and we want to make sure that continues. When it comes to battery, there's actually 2 answers. It's on the pro end, where the application is strong. It is actually a similar margin on the pro battery opportunity. When it comes to the consumer, battery products, and today, that is a lower margin, but that also comes with scale. There's a scale disadvantage today, particularly on the R&D side. So as we grow in residential consumer battery products, hopefully, we can bring that up to a more normalized level versus its petrol rather.

So you actually answered the B question, which was how do you expect it to evolve, but you already answered that. Okay, Johan.

Excellent. Do we have anything further here on the floor? I think we have there from Christer.

Christer Magnergård from DNB Markets. You talked about strategic initiatives. And earlier, in the past, you've had roughly SEK 400 million per year, which you have been able to offset by increased cost efficiency and cost savings. The SEK 650 million to SEK 700 million you talk about now, what is the net effect compared to the cost efficiency number that you normally have?

Twelve months ago, Chris, I would have said it's a net-0 game. I think the only thing I throw in now is, as part of our efficiency program, which is basically cost out in the factories, cost out in our supply chain with suppliers and, also efficiency through our sales units. Logistics is the big dynamic now that has been going the other way. So if I exclude logistics, we're probably not too far away when we put in logistics as a new dynamic into the play when it comes to efficiency programs. That's why we've had to bring in the pricing dynamic. So I start to sort of think of 4 buckets now. We have transformational investments, savings, pricing, raw materials and logistics. And we need to look at all 4 of them in a balance these days. I'm still convinced, looking at all 4 together, we have a positive net.

Great. I think we have 1 question here in the front with Björn.

Björn Enarson, Danske Bank. Interesting that you're stressing M&As and that you are ready to take on M&As in all the divisions now. In the terms of the Husqvarna division, what are you actively looking for? Is it the geographical expansion or new technologies? Or if you can add some color on that? And if whether you have a pipeline or if your lack of pipeline or if multiples are aggressive or not, et cetera? If you can shed some light on that, it will be positive.

Should we leave that for the divisional president?

Thanks. I think it's quite broad the answer actually, Björn, at this point in time. Of course, M&A from a Husqvarna division perspective can take, I guess, 3 dynamics; can it be a product expansion, can it be a technology advancement, or something to really take us forward, or can it be a geographic expansion? And that geographic expansion could also be distribution channels as we look to really penetrate. So I think it's going to be a broad answer I give you there for now. And hopefully, leaves the menu pretty broad as well.

Mia, did you have anything online?

Yes. So we have an online question here. This is a question that often pops up. And we're going to come back to this when we have the divisional deep dives with the construction -- Karin Falk as well. But Henric, let's take this one for you. What are the business synergies between the construction business and Gardena, Husqvarna, the group? So this person would want to hear a bit more the strategic importance of the construction division during the next 5 years in the group?

If you zoom out, we think that the construction division is important in a sense that it's not weather dependent, which is good for the group. And of course, we have a lot of synergies in terms of back-end product development, et cetera, et cetera. But I think there's 1 more fundamental thing, and that is that there are some core capabilities that we truly share, which is dealing with certain kinds of products of certain size of certain nature that is very similar and that means that there's such a natural fit to what the Husqvarna divisions are doing. So I think the construction division -- at least Karin can give her view on it later, but if I speak from my own experience, working in the construction division, we felt it was a very natural fit, not just because of the synergies, but because of the core capabilities that we all share.

So Karin will give her answer later on this. But if I interpret your answer correctly, the construction division is not on the selling list?

No.

No. Okay. Johan?

Good to hear. I think we had one here in the front as well. Please state your name and company.

It's Markus [indiscernible] from Germany. We run our own family office and are long-term shareholders. I'm very impressed by the dynamics and opportunities and I have the feel that you're stepping into a good growth mode and have a lot of challenges. And I may be speaking against my own interest, but the question is the dividend policy. Is it really realistic or advisable, as you have so much opportunity and so much to tackle in these times. Should you not strengthen the balance sheet and keep the money rather than paying out 40% of net income? Why not reduce it for 2, 3 years to 20%, 25%? If I were a sole owner 100% of this company, why pay out so much if you have so much opportunity? You want to be [indiscernible]. Is there some Swedish guideline or tradition or -- I'm not against paying dividends, but looking at this specific case, I would like to pose this question.

Glen?

I guess that's for me. It's a great question, by the way. And I actually really appreciate you pushing us now on this. We've been fairly consistent over time -- we've been very consistent over time, actually, in paying a dividend of minimum 40%. When we look ahead at our planning, we still see that this plays out okay. There's no issue there. So we feel there's a lot of inconsistency. We've paid out even when the business didn't perform so well, we were paying out 50% dividend, and we still managed that. So as we go forward, I think we should also be willing to adapt, if different needs arise. But at least when we look at our modeling, then the 40% dividend policy still stacks up.

Thank you. I think we had 1 question also just behind, Christer.

Christer Magnergård from DNB, again. I think me as a robot owner, I have a boundary solution. The EPOS technology is, of course, a very, very attractive technology for us consumers as well. Now we have Segway on the market with the solution for consumers. Of course, we don't know how that works, but still. What are your thoughts when it comes to the boundary-free solutions for consumers?

I mean we, of course, see the immediate benefits of that as well. And I mean that's the main priority of ours, to make sure that we also offer that in the consumer segment. So clearly something that we have in our plans and in our road maps.

How far is it?

The only thing I know is that we will not be able to do something big here in 2022.

Okay. Any further questions on the floor? We have one there. Johan, let's take that one.

It's Johan here again at Kepler Cheuvreux. Coming back to robotics, which is obviously a hot topic these days. Now you talk about you're happy with this 15% market growth, but it will be tough comps. You mentioned that some markets penetration you are reaching is 45%, 50%, and you are looking into the renewal market. But really, I mean, if you look at the penetration in the number of gardens in the world with robots, what sort of penetration are we talking about then? Is it 1%, 5%, 10% of all potential gardens that would have this today?

It's a very low number. I think in the specific markets where that sort of penetration number is the highest, it would be something like 30%, that's the extreme top, what we see in markets like here in the Nordics. But in the U.S., it's below a single-digit number.

I think it's fair to say an average about 10% would be credible to use, on average.

So a lot of potential for...

A lot of potential. Absolutely.

Great. Do you have anything further online?

Yes. We have an online question here. On the system side, what is the current situation with your ERP system? Do you have a leading product like Salesforce or SAP, or do you have a cloud-based system? And what about subscription management systems?

You're looking at me? I mean today, we have a mix. So we have several different systems, some older, but also some systems that are newer. So I think we have a variety. That's the main answer. But we also have a layer that we have put on top of our ERP when it comes to services to make sure that we can do a lot of these kinds of things in terms of subscription, et cetera.

Yes. For the subscription, actually, are you going to offer like leasing models for robotic mowers or chainsaws or whatever?

We're doing that in quite a few countries. And actually, in some countries, actually, we do it in-house, where we are the financial institution. But in most countries, we do it together with partners.

Excellent. We have a couple of minutes left, should we take at least 1 more question here? Yes, we have one there in the back. Please go ahead.

[ Daniel Johansson from Technical Advisors. ] Can we perhaps talk a little bit about the 62% of your nonelectric offering? What's going to happen with that when electric is penetrating even more? Is there a cost to reduce that capacity? What's going to happen to margins down the line in a couple of years or so, do you think on that? And secondly, how to think about the age of the installed base, for lack of a better word, when it comes to all your products, given that we've had quite a boom over the past couple of years?

Yes. If we start with electrification. If we reach our ambition in 2025, that 2/3 of our motorized offering is electrified. That would mean that 20% of the total group revenue will be based upon petrol products, which is quite a difference, of course, from what we looked like in the past. Today, we are about 40%, I would say. And as I alluded to a little bit earlier, where we are the most vertically integrated here is in handheld products. And there, we have taken the proactive steps already to outsource a big portion of it and to consolidate a portion of it. But of course, as this continues, we will continuously have to develop, and we will continuously have to adjust our manufacturing operations. I mean that's what we have done along the years, and we will continue to do that.

Excellent. Do you have a final question there, Mia?

Yes. We have a final question here on online channels and online sales. How large your share of total sales may come from your own online channels during the next 5 years, is the question.

We haven't set a specific target for that. And the reason is that the channel is a means to an end. Our focus is on the consumer -- the customer and to provide different ways for the customer to shop going forward. So setting a target for a channel to us is a little bit counterintuitive. The important thing for us is to build out the capability to make sure that we provide that option. And that's what Glen talked about before. I mean the 15 markets in the Husqvarna division, the 4 or was it 5 -- 14 and 5, sorry, in the Gardena division and that we continue to develop this at a high pace.

So the B question of this is, what about margins for online sales?

I mean, generally speaking, I mean margins are higher, but your cost to serve is also higher. But I would say, generally speaking, today, it's fairly comparable.

Okay. Anything else from the floor? No?

I think we are running a little bit out of time on the Q&A. Yes.

Oh, you think so! Okay. Thank you very much, Johan. Thank you from the floor, and thank you very much for you participating online as well with the questions. And thank you, Erik, Henric and Glen. Give them a hand.

Thank you.

So now it's time for the product exhibition. And obviously, for those of you participating online, you have a break for 1 hour. So I'll meet you here again at 11:30 for divisional deep dives. You go into a coffee break or something, and 11:30 for divisional deep dives. And for those of you... [Break]

Welcome back, everyone. If you could please be seated, we're going to start with the second part of our program. Please be seated. Thank you. Welcome back for the second part of this Capital Markets Day and also warmly welcome back to those of you following us online. You've been waiting a little bit. We've been running late. I heard you had very many questions out in the exhibition area. You're welcome to visit the exhibition area again when we finish this program and after lunch. So now it's time for divisional deep dives. We're going to dig into each division separately. And I'm joined now here by the divisional presidents. Welcome, Pär Åström, President of Gardena Division; and Glenn Instone with a different hat this time for Acting President for the Husqvarna Division; and Karin Falk, your President of the Construction division.

Thank you.

Welcome to all of you. Now you're sitting here as a group, we'll dive into your divisions just in a second. But could you just elaborate a little bit on the benefits and strengths of being a group? What do you say, Glen?

We share a lot actually -- as divisions, we share a lot of sourcing synergies. We share a lot of supply chain capabilities, particularly in warehousing. We even shared some manufacturing facilities as well as back-office functions. So we share a lot between the 3 divisions.

Karin, anything else?

Well, I could only agree with Glen here. I mean there is a lot of things that we benefit from the group. I mean, 1 very big thing is, of course, our strong Husqvarna brand. And also the infrastructure, as you say, Glen, with the back offices, I mean, the global reach, a lot in the technology area when it comes to both the 2-stroke engines, but also, of course, the battery development. So numerous of things.

So the question already came up in the first session about construction being a part of the core business of the group. How do you see that? We heard Henric's reply, but what is yours?

Yes, I think it fits very well. I mean, we -- I mean, Henric talked a lot about this core capabilities that we have in the Husqvarna Group and that we share. But also I think all of us would agree that we also have the independency that we need for things that are different. So I think it fits very well.

Pär, how do Gardena -- benefit from the group?

I think especially when it comes to new technology development, where we as a group can combine resources and efforts to quickly gain critical mass and knowledge in new technology fields. I mean, for Gardena, the group's robotics capability has been really important for our growth journey. And we collaborate a lot also when it comes to communication protocols around smart systems and I mean artificial intelligence.

So not least technological scale, but you're also unique divisions. What about your uniqueness, Pär? What would you say Gardena's uniqueness is?

Gardena's uniqueness is that we have our own distinct target customer segment, and it's a consumer segment. It's the passionate gardener. And we are entirely focused on this consumer segment making us a true consumer brand, whereas I -- both -- the other divisions have also pro target customers.

That's a big difference. So consumer brand professional, of course, Glen, as well as consumer?

I would say it's our global reach and our product breadth. Nobody has the breadth of product we have.

And Karin, what would you say is construction's uniqueness?

It's a little bit the same. We have a very broad range within our segments within the light construction equipment industry. And also, I would say, our deep knowledge in our application areas.

So this -- that's for the group and for your own uniqueness. Now we'll dive into each of your divisions. So a little bit more on Gardena or a lot more about Gardena, Pär. You were actually here yesterday when we were hosting, finishing or closing a deal.

Yes. We closed the Orbit deal yesterday night at around 11 p.m., so very fresh, but very happy to achieve that.

So let's say more about that and other things in Gardena. It's your turn.

Sure. Realize your gardening dreams. That is Gardena's brand purpose. And those people that are passionate about gardening out there, you will know that these dreams, they vary from year-to-year and season to season. My dream this year has been to bring fruit and life back to a very old retired apple tree. And that's exactly when Gardena needs to be there, with inspiration, with the knowledge and of course, the right tools to help those passionate gardeners. And like I said, Gardena is focused on the customer segment of passionate gardeners. And the passionate gardener is someone who does not only like to have a beautiful garden. They actually love the process of creating one. And of course, to shape a great customer experience for these people. We also need to be passionate about gardening and knowledgeable about gardening and we need to have passionate employees, and we have 3,600 of them. We also have some true positions of strength, some real leadership positions. And if I'm going to call out the most important one, it would be that we are a gardening super brand. And we take great pride in tracking our brand performance and seeing that as a gardening brand, we have the best awareness levels and also the highest preference levels. And of course, that creates opportunity to shape leadership market positions. And after the Orbit acquisition, we are the global #1 in residential watering. And we're also the global #1 in the smart watering space, and I'll talk more about this later. But we also have other leadership positions within the gardening space. We're a leader in hand tools, in robotics and also in electrical gardening tools. We want to meet the consumer where they are, and therefore, we have invested and built capabilities around omnichannel. And we think, today, we have a very proven capability within this field, giving us an advantage in the competitive landscape. And we also want to lead our industry forward and define what gardening of the future looks like. And lately, we have started to pioneer what sustainable gardening is, and I'll come back to these topics. So these leadership positions, of course, needs to translate into financial performance, and we are very proud about our financial track record. We've had a good profitable growth journey since the creation of the division in 2015. And if you look for the Gardena branded performance here, and we call out that the Gardena branded growth rate has actually been 13% year-over-year on average. And that's an organic growth rate. And to explain this profitable growth journey, I would like to talk about 3 growth levers and 2 profitability levers. First of all, being a market leader with fairly big market shares in the segments where we play, it's not enough for us to just take share from others if we want to grow fast. We need to actually grow the whole market. And then, of course, innovation becomes very important to fuel the market growth. Secondly, our strongest positions have been in our home countries in Central Europe. And we've seen an opportunity to build on emerging positions around the world and really fuel the growth of what we call focused countries. And that is -- has also been very successful and explains part of this journey. And last, but not least, there's been a tailwind for us in the recent stay home trend, and I think we've been able to capture that opportunity and fuel the interest for gardening this last years. On the profit lever side, of course, it's partly about mix, constantly trying to mix up the gross margin by focusing on profit pools on one hand and also by bringing new products into the business with higher margins than the previous ones. And then, of course, the capability to grow with costs under control so that we gain leverage. Looking ahead, our strategy is focused on 3 strategic priorities. It's about accelerating our geographic expansion. It's about capitalizing on our omnichannel capability and really build the omnichannel experience for those consumers out there. And then it is continued to lead our industry when it comes to innovation. And I will talk through these areas one by one. So let's start with geo expansion, and our business dream, our business vision is to be the leading gardening brand around the world. And we've had one big white space in terms of trying to reach that business vision, and we have not really had any presence in the U.S. market. And that's why we are so happy that we have been able to acquire Orbit, which, first of all, and immediately gives us a strong stand-alone opportunity to act in the U.S. gardening market. And it also gives us, longer term, a platform upon which we can build and scale a Gardena branded business. And especially Orbit's go-to-market capability strengths and also their infrastructure with a nationwide distribution capability are things we appreciate. And of course B-hyve, the leadership position in smart watering technology. The organic growth journey has to continue, however. And the last years, we have established a recipe for how to grow our positions outside of our core markets. And of course, first of all, every market needs to have a strategy anchored in consumer understanding and also our position in the competitive landscape. But then what we do is that we cluster our markets into different categories, where we give the local management a frame condition, which they need to operate under. And we talk about strategic focus markets, focused markets, core markets and other markets. And these clusters have different frame conditions, look at the strategic focus markets. And these are the markets we really invest behind for growth. It is larger gardening markets where we believe we need to have a stronger position, we should have a stronger position in the future than what we do today. And we target 4 of them since yesterday. U.K., France, Russia and now also the U.S. is a strategic focus market. The frame conditions we set for these markets is that the overarching objective is to get to the #1 position in gardening. And that means that the most important key performance metric in our business reviews is market share development. The consequence of that, of course, is that in these 4 markets, we need to be prepared to sacrifice profitability improvement for growth. It also means that we need to stay committed to these markets for some time. If you want to build a gardening super brand, you need to be persistent over time. And we actually demand that these markets, they invest heavily in brand and marketing. And actually, what we are targeting to do is to run them at 2 to 3x the division average rate. And then, of course, we want to immediately build an omnichannel presence and capability in these markets. And since we have a good off-line capability, that means that we are accelerating the online sales and marketing approaches in these markets. And that brings us to how we are thinking about omnichannel. And our target is to serve and create good customer experiences for the passionate gardeners. And that means that we need to be where they are and where they are interacting with their area of passion, which is gardening. And they, of course, do that today also when they are not gardening, online. We've had strong off-line capabilities, but we've had to build online capabilities, both within the area of marketing and within the area of sales and also within the area of operations. And I think we have come quite far in our journey. Today, 25% of the division's sale is transacted online. And the key capabilities that we have built is that, first of all, we've had to change a little bit our mindset. We've had to become even more consumer oriented. It's not just about the point of sale. It is also about when they seek inspiration for their projects or when they try to figure out how to do their projects and realize their dreams. And then, of course, we need to be where they also seek to buy the product. And this requires also a more data-driven capability in mindset. We need to be more real time in our campaign planning and adjustments. We've had to bring in people that have done this before to accelerate our learning journey. And we've actually created a center of excellence e-commence team, which now is helping all markets around the world to develop their online business. And then, of course, we had to rethink how we do marketing. Online, we have a different opportunity to tell our brand story and also our product stories, and therefore, we have changed how we work and develop content so that we, today, produce a lot of own content, and we tell our product stories in different layers. And then finally, we have had to make our product e-commerce ready. And that, of course, means to adapt how many units we sell in 1 package, the packaging for that unit, but also the product itself. I think a good example is a lot of the Gardena tools have long handled. They're sticky tools in one way or the other. And then, of course, that's not convenient for online shipping. So we've added a lot of telescopic functionality to our handles. And that's one example of how we make products e-commercial. So that brings us to innovation. The centerpiece of our innovation journey the last years has been the development of the smart garden. And let's take a look at what we have achieved. [Presentation]

So 2 years ago, I was also on the Capital Markets Day stage, and I was very proud that we -- I could state that we had more than 100,000 connected devices in Gardena, and today, I can say that we have more than 2 million. And I think that shows the growth potential of gardening technology. You may ask what's the value of a smart device in a garden beyond the growth, of course. And I think for us, to make it simple, it's twofold. We are a gardening super brand, and we need to constantly find new ways to engage the consumer. And we know that a smart garden user actually engages with a smart app at least every second day on average. So that gives us many opportunities to shape the great customer experience. It also offers us the opportunity to add value to the product they have bought during the product life cycle. And I think another good example of that is that this year, in June, we launched water by weather functionality in the app. And since then, we have actually shut off smart garden systems when the weather forecast says it's going to rain. And we have saved in the Gardena smart system, 330 million liters of water as a consequence. Of course, looking at the Orbit B-Hyve numbers, they are even more impressive, both when it comes to connected devices and water savings using the same functionality. And I think that also shows the potential in the U.S. market for gardening technology, which we want to tap into with the Orbit acquisition. But our innovation efforts are not only about smart. Actually, for us, it's very important to have a high drumbeat of product launches and innovations brought to market. And one of our key objectives within the product management area is how much of our sales is generated by products which are recently launched and the metric we look at is it launched within 2 years, the last 2 years. And today, the year-to-date number here is that 28% of the division sales is launched by products that are not -- is generated by products which are not older than 2 years. Lately, our product development efforts have been very focused on defining what we call sustainable gardening. And I think you could see out in the exhibition area the EcoLine product, which we are launching made out of post-consumer recycled plastic. And what we want to do here is we want to provide a full range of gardening product that is made out of sustainable materials. And we want it to be with the same features that the traditional Gardena product has. So well designed and high quality. And I can tell you, it's not that easy to make a 25-year warranty product out of old yogurt packaging. And we're very excited about this launch. Then we're also launching our new range of metering products this coming season so that passion gardeners can control and monitor how much water they use in the gardens. We have been awarded the Red Dot award for our new sustainable direct-to-consumer packaging. And I think also the power for all alliance shows our commitment to sustainability, where it's not only a great convenience for a consumer to have 1 battery for devices around the home. It also reduces the electronic waste in our homes and in our lives. So to sum up, we want to continue our profitable growth journey. And we will do so clearly focused on these 3 strategic priorities where we accelerate our geographic expansion, now also adding U.S. to our strategic focus countries. We want to leverage on our built omnichannel capabilities and shape a great experience independent of where we interact with our passion gardener consumer. And last but not least, we want to continue to lead the evolution in our industry and define what the future of gardening looks like. Thank you.

Thank you very much, Pär. Welcome back to this sitting area. Now this film, I like this one. Your garden won't notice when you're gone. It really talks to me since I'm not a garden person, so I can just do it through the mobile. Sounds great. Talking about acquisitions, Orbit, you finalized that SEK 4.1 billion, very good moves as the analysts. I read somewhere big strategic, and to the U.S. market without paying too much. That's a good thing. And you seem to have a plan for expanding Gardena. But U.S., isn't that a very tricky market? What would you say are the key success factors?

Well, we think it's a different market. It's for sure, a big gardening market. But we think that to be successful, we need different capabilities than potentially what we have developed here in Europe. And that's why we've decided that if we're going to make it in the U.S., we have to make it also with the support of an acquisition. So what we have found is a very capable and passionate team that can help us be successful in the U.S. We believe that it's easier to bring the Gardena spirit to them then to bring the knowledge of key success factors to be successful in the U.S. to the Gardena team.

So that's the way you're going to do it. So how much revenues and how quick will you generate for Gardena in the U.S.?

Well, I think it's a twofold story. First of all, it's about the acquired business, the Orbit and the B-Hyve business, where we see a really attractive stand-alone case, and we want to accelerate their profitable growth journey as a first step. Then, of course, we will not miss the chance to immediately start to also now focus on Gardena in the U.S., where the first step will be to make sure that we participate in building the U.S. robotics market, launching also Gardena robotics.

So that's the way to do it. You're moving Gardena through Orbit, no numbers here? No?

No, I think it's too early to say. We closed yesterday night.

Okay. You get a little bit more time to answer that question. You said in your presentation that you will prioritize growth over profitability for how long?

For strategic focus markets. It doesn't mean that we're doing it for the entire division. And it doesn't mean that we are -- actually, we're prioritizing profitability improvements -- growth over profitability improvements. But we, of course, have a hard time accepting lower profitability.

So profitability, but growth over that. Okay. Online channel, you're good now 25%. It's pretty good of your business. In next year, in 5 years, where would you be?

Like Henric said, for us, what's important is that we are where the consumers are. And we think that they will want to interact with their hobby, gardening, their area of passion in different ways, both from person to person and also from time to time. And what we've tried to do is build capabilities that puts us in a good position to really serve them multichannel, omni-channel. And we've reached that stage where we think the -- we've come so far that we think it's an advantage for us compared to competition.

So 25%, it is a bit more than the other divisions. What can you teach them?

I don't know if it's for us to teach them, but we, of course, collaborate around our planning. We also have the movement within the group between divisions of key people. And I think there is opportunity to help each other here. Absolutely.

So we'll have some more questions for you after all the presentations. Thank you, Pär. Glen, next up, Husqvarna division.

Thank you. So it's now good afternoon, and switching hats. I'm here to talk a Husqvarna division. In the delights of leading the division since the middle of the year. So it's a pretty large division, and we start off with the size of the market opportunity, SEK 150 billion. I should say quickly that excludes the professional opportunity that we talked about earlier. So this is really where we're playing today, not excluding that large SEK 100 billion market opportunity. Sales of roughly SEK 28.5 billion, giving us, give or take, a 20% market share. So we still got some way to go as well actually some opportunities. Really pleased, and I mentioned it this morning as well that we've increased the operating margin within the division, now over 13%, coming from below 8% when we actually folded in the consumer branded business back in 2018. So a strong growth since '18. Truly global presence, over 130 countries, either through own sales companies or through distributors. Sales growth impressive, 9% CAGR. And actually having around 7,500 to 8,000 dedicated and passionate employees in the division. So how has the performance been particularly since we formed the division back in '15? Actually, as I mentioned, the sales growth has been some 9%. That's actually excluding the consumer branded exits, that has been around about SEK 4 billion. So the SEK 4.5 billion we talked this morning, SEK 4 billion sits in the Husqvarna division. So if we don't exclude that, it's about 2 percentage points growth. It's a fairly bold move to exit all of that business. But at the same time, the blue line coming up is really the result of that focus and execution, walking away from the noncore and focusing on the core. And it had approximately a 90 basis points margin improvement on the division, that exited business. That's enabled us to really focus our attention on the prioritized segments. We clearly see we can get value and be paid for in very simple terms for innovation, for new products. And when we do that, we see the mix benefit coming through. As Henric talked about this morning and just as Pär has talked about in the Gardena context, the brand focus is particularly important. The majority of the division is Husqvarna branded. We have a small -- a small amount of the sales that actually take part in Japan, that is under the Zenoah brand, extremely important in Japan, but the vast majority of the sales in the division are with the Husqvarna brand. What we've also done during this period from '15 through to current days actually increased the customer centricity, put the customer at the center of what we're doing. Somewhat starting internally, how we organize, but really then looking externally at how the customers want us. We want to meet them where they want to play, and we want to be more appropriate and applicable to them. There is a -- as I mentioned also this morning, we do feel there's some tailwind with us from the recent stay-at-home trend when it comes to the COVID stay-at-home trend, but also an increased interest in our products. So when we look at the strategy for the division and the really strategic priorities that we have, it goes without saying that we want to have a continued market leadership position when it comes to residential robotics. We also see a huge opportunity on the professional side, both in robotics to really disrupt that professional turf care space but also in the broader professional opportunity when it comes to true professionals and green space professionals. And last but certainly not least, of course, we are in a transformational process. The petrol to battery shift is going to be equally as important for this division as it is for the group. So driving that electrification is going to be critical for us. So let's start with the residential robotics. When we met here in 2019, we talked about a SEK 7 billion market. We now talk about a SEK 9 billion market, both were per and the Gardena division play and the Husqvarna division play, a SEK 9 billion market opportunity. We're a clear global market leader. We do have a clear market leadership position. Where we have a strong penetration and strong awareness, then of course, we have that installed base. We have that recurring revenue opportunity going forward. But also, we have a lot of parts in particularly accessory business where we can tap into even more. And we can speak to those end users using the Husqvarna Automower Connect app. Where we have markets which we are less penetrated but maybe there is an awareness, of course, we can continue that penetration journey. Taking them where the Swedish market sits with a penetration of over 60%, how can we make France, for example, a similar penetration. So a significant opportunity. And last but not least, those focused markets that we see, U.S., it is the largest garden market in the world. So of course, it is a focus market for us. U.K., one of the largest garden markets in Europe and Australia, 3 target and focus markets for us to really penetrate with robotics. And how should we do this? We believe this Husqvarna Automower is a seeing is believing product. We need to have people using the product. We need to have testimonial sites. When you see this product in use, just as we've seen in the mature markets, if a neighbor has one, you want one. So we've got to have more and more product out there for people to see. So that will be the very clear strategy, how we're going to build it up. It'll be much more targeted in these focus markets, how we're going to do it, more targeted marketing opportunities and activity online. And that really enables us to reach that density point where we then see the growth. I think it's important as a market leader that we continue to raise the bar. We have more competition than ever. As Henric said, we take that as a compliment. People want to come into our playground. And that's good. So we need to continue raising the bar with our innovation. And as a market leader, we're going to bring even more innovation to the marketplace. For the next season, we will have AIM, Automower Intelligent Mapping. And basically, that will map your garden through sensors as it is moving around your garden. That will then go into the cloud and ultimately into your Automower Connect app. You can then decide where you want the Automower to work. So through sensor technology, it can decide and you can decide where you want the Automower to be working, your garden, your decision. We were first to market with boundary wire free technology. I know we took a little bit of extra time outside because you saw that beautiful CRO product. We can continue to expand that. But we came with EPOS technology, some 18 -- 2 years ago, we launched that at Capital Markets Day in '19. And now, of course, we bring even more. So we're going to continue to improve the boundary wire free experience. First to market, I'm going to continue that. And last but certainly not least, for those who are Automower owners, having the Automower Connect app becomes a must-have app for -- at least for me and hopefully for you, too, there's going to be a lot more user flexibility and interface in the new Automower Connect app that will be launched next season. So we raised the bar when it comes to our offering. When it comes to the professional opportunity, a huge market, SEK 100 billion baseline opportunity. Wow, what should we do? There's a huge opportunity. But as Erik talked about, and as Henric talked about, as electrification accelerates, we have the product. Nobody has this product, like we do. Nobody has this. So we have the product, and now we need to create the opportunity to create the connection to the distribution channels and create the connection to the end users here. And there's 4 distinct, let me say, segments that we've decided to look at. Sports, representing around 15%, Golf, about 25% of the opportunity, facility Management about 20% and landscapers around about 40%. So some huge opportunities there, large segments that we can look into. But when it comes to the professional opportunity, why don't we look at what at least listen to what our customers have to say. [Presentation]

For the German guests in the room. So how do we take this great opportunity, SEK 100 billion market with best-in-class products? What is our value proposition? We believe we have the market-leading offering. We have the products. We have the solutions, not just the product, but how we can actually sell as a service, how we can do leasing, how we can do more financing solutions. But how we're going to actually enhance our go-to-market opportunity. And we're going to do that actually by adding a lot more people, the capability need and the direct selling opportunity is significant. Our competitors with the more traditional machines have those connections. We're creating those connections now by adding more and more people, creating our direct connection to the customer groups. And last but not least, the dealer is extremely important in this relationship, whether that's an installation, whether it's aftermarket capability through parts and accessories, or whether that's through simple advice and support. But the Pro dealership development to support these end customer groups is going to be important going forward. From a broader professional offering, we need to be even more customer-centric. And by that, I mean we have 2 distinct customer groups when it comes to our Pro business. We have 3 professionals. The guys and girls walking in the forest or in the trees in the green spaces, in the cities, the arborists. And we have what we call green space professionals who are taking care of large green spaces. Quite distinct customer groups, and we have an organization built around those distinct customer groups. Our product range is the broadest. I said that earlier when Mia asked me a question, and we need to continue driving that to make sure we have the broadest offering, and we're very proud of that. With any professional business, and there's some questions this morning from the audience, of course, there is a significant aftermarket opportunity with the Pro business. So we need to continue to capitalize on this continue to grow, and we really feel there's an opportunity here. We have, we produced and we started producing some years ago, our own saw chain. We also produce our own bars when it comes to chain saws. That cutting capability is critical. That is what defines us. That is what makes us better than the rest. So the cutting ability is what is critically important. So we'll continue to drive that opportunity. Hopefully, you saw outside in the product demonstrations, the battery offering that we have. It's pretty broad. As we said this morning, we need to have the best opportunity, the best offering in different of power supply. We need to have the best application, best-cutting ability, and that's what we bring. We will continue to drive the electrification in this industry. The figures that Erik talked about the 38% on a group level. In the Husqvarna setting, it's 29%. So we actually have even more opportunity. So we'll continue to drive that. Best-in-class applications, as I said, and we need to continue bringing more and more products to the marketplace. So when it comes to the go-to-market strategy shift and now I'm really reaching broad. We've got residential customers, maybe a lot of you in the room to true Pro customers, the people you heard in the movie there. From a Pro end, we need to create that direct sales opportunity. More feet on the ground, more direct selling capability. On the residential end, as Pär was describing with the Gardena divisions opportunity and their journey, we need to create even more direct customer contact. And that is where the digital opportunity is. And we're continuing. I mentioned this morning, 14 markets where we have direct e-com sites for the Husqvarna division. And we're going to continue to drive that. And that marketing opportunity and selling opportunity is significant. In the middle is our traditional dealer network. That doesn't mean they get squeezed. Actually, I say they become more important than ever because the customer touch point, be it a professional customer or a residential customer, the customer touch point is more and more critical. We need to create an excellent experience regardless of when you touch -- whether you touch the products online, or touch them via our dealer network and the dealer is going to be critical in installation, in training, in aftermarket capability, both for the Pros and for the residential customers. So there are an integrated part of our division strategy. So to recap the real strategic direction for the division, continued market leadership in residential robotics, either through existing penetrated markets, growing markets or new markets. We can and will expand into professional robotics. We are seeing that. It starts to become a notable figure in our figures, and we'll continue to transform that turf care industry and also expand the professional offering per se for the 3 professionals and for the green space professionals. And last but not least, continue to drive the electrification journey. Thank you.

Thank you very much, Glen. So Glen, the customers, only German customers?

It was a nice testimonial film, knowing we had some guests coming in from Germany. No, we actually are selling this product now in numerous countries.

So not only German customer?

Not only German customers.

So now you're talking about residential movers and professionals, of course. You were doing this last slide here, like the dealers are very important. And for the residential, even more online digital work and for the professionals, more direct sales, more people on the ground. What else is different with the professional segment now?

I think the selling method where the professionals can take a lot longer as well. So quite often with professionals, it can be a 2-year cycle. You might have to get into a tender process. You might need to send in a lot of people to show how products are installed and going to be maintained. So it can actually be a slower buildup to the actual sale, but once you get the sale then there's a lot more recurring revenue opportunity.

So it takes a bit of a longer time, but there is a lot to go for in that market, of course. Now looking forward, how much growth would you say will be coming from the residential robotics compared to the professional?

It's a good question. When we talk about the doubling of the robotics business, whether it's coming from Pär or myself, we still feel, of course, the significant growth opportunity. On the residential side, then it is still a double-digit growth. But of course, the growth potential on robotics -- on professional robotics coming from a much lower base will be much higher. So that is probably going to be close to a doubling for some time.

So the revenues of the group now, it's like professional 1/3?

Just over 1/3, just over 35%, yes.

But as you say, assume to grow above residential?

The Pro growth should be larger than the residential growth across the group, yes.

But it might take some time, you said as well. We talked a lot about exits here, you're proud of the exits you've done in the group. How much would you say that those have contributed to the financials?

Well, we took away SEK 4 billion in the division. So that's a negative in that respect. But actually to the margin, it increased the margin by about -- around 90 basis points in the division. So pretty empty top line when you just think of it in that context.

So online sales, Pär was talking about good performance there of 25%. Where are you at in your division?

I'm trailing Pär, unfortunately. So we are around about high single digit, much more to go. But it's also hard to fully track because a lot of our dealers are selling online. So a lot of our channel partners are actually selling online and we don't see that transparency. So a little bit to go to catch Pär.

High single digit up to 25%. It's a little bit more than a little bit, I would say. So how do you see the progress?

No, I think it's exactly, as Henric said this morning and Pär said when he answered this, this is about being present where our customers want to shop. This is also the omnichannel experience for the division. And it's equal. So I don't think we have a particular target there. We just want to make sure that we are present where they want to shop.

So we'll come back to you as well, Glen. Karin, now it's up to you on Construction.

Great, but I will actually start with the film. [Presentation]

So hello, everyone. I have been leading the division now for a year, and I really look forward to share our plans and future opportunities we do today. We operate globally on over 100 markets and in the light construction equipment industry. And we have leading positions in many exciting segments. With revenue for the last 12 months of SEK 6.8 billion, on an addressable market of roughly SEK 45 billion. The light construction equipment industry remains fragmented with many smaller specialized players, where we are a large global actor with a broader range and a really strong business partnerships. So we are without doubt on a very exciting market with great potential for future growth, both organically and via acquisitions. We have a leading position due to 4 main reasons. First of all, our broad premium offer. We provide our customers with the most high-performing premium solutions, which actually contribute to their profitability and also to their productivity. They are easy to use, high focus on safety and with a highly appreciated ergonomics. This is very tightly connected to our second success factor, which is our leading innovation position. We continuously push the boundaries for customer experience, sustainability and productivity. And thirdly, I would like to point out our long-lasting and strong relationship with our customers and also partners. We are driven by the belief that if we can make our customers more successful and profitable, we will be successful too. And last, our ability to grow both organically under the acquisitions. So going forward, we will continue our M&A journey and we build actually around the customer needs in order to become an even better solution provider for our customers. And I think the recent -- the most recent acquisition of Blastrac is a really good example of this, where we're actually become leaders in the surface preparation market. So let's turn to the financials. And as you can see, we have had a really strong track record of net sales growth with a CAGR of 10% for the last 5 years, where half of the growth approximately comes from acquisitions. So since 2016, we have accelerated our growth with several acquisitions. But as you can see also since 2016, we have a slight dip in our EBIT. And the main reason for that is that some of the businesses that we have acquired have a slightly lower EBIT than our divisional average. But we have a clear plan to step-by-step improve this. But as you know, it takes time to realize synergies after acquisitions. So for instance, we believe that it will take us another couple of years to bring Blastrac for fully integrated up to our divisional average. So we have accelerated our sales and EBIT growth with acquisitions and almost maintained our EBIT percentage despite that we have 1.5 percentage versus 2016 then coming from our acquisitions, amortizations. You can also see that we have not had a stay home effect in the construction industry. So 2020 is affected by the COVID situation. But we have come back strong, and we can also see demand recovery in all different markets, regions and segments. So -- but who do we serve? And what do they need? This is a picture of our end customers in our main segments. They are professionals focused on performance. And our most important job is to make them succeed. They earn their living through the uptime and performance and productivity of our solutions. That's why we need to be close to them to understand their pains and problems and also be available whenever or wherever they might be. But we also serve the rental companies, the dealers, the distributors and also our end customers' customers. So that means that we have several stakeholders to take into account for everything we do. And that's why we organized the way we are to be really close and agile to the ones who depend on us. It's our customers who define who we are and also who we need to be. But let's talk about our strategic priorities. First of all, as you heard several times today that we are really focusing on expanding our offering within services and solutions. This will contribute to even more loyal customers, but also recurring revenues from the aftermarket, from Diamond Tools and services. Secondly, we will continue our focus on electrification and battery innovations in order to provide even more sustainable solutions and also a better user experience. And the third priority is, of course, to continue our growth agenda. And our ambition is to become a larger player with a broad offering to really be able to give the best support to our customers. But let's take a look on the different priorities one by one. Starting here then. And our focusing on expanding services and solutions is actually driven by our belief that we would like to be our customers' best business partner. And today, approximately 45% of our revenue comes from the aftermarket Diamond Tools and services. And this is a business that we actually plan to develop even further. We have a large opportunity to improve further with the penetration in the highly fragmented diamond tools market. We develop and manufacture Diamond Tools ourselves, all the way from raw materials and diamonds to finished blades and bids. And Diamond Tools are profitable. And over the lifetime of the equipment, the Diamond Tools actually represent a higher value than the equipment itself. But apart from Diamond Tools, we're also focusing on building total solutions for our customers, but also to increase the share of connected products. We see several business opportunities for connected products. For example, remote updates possibility to see when a consumable is worn out or when an equipment is due for service, just to mention a few. We also see that we have further potential to develop our service contract and the penetration even further. And all these services will give our customers enhanced uptime and productivity and also, of course, an increased aftermarket for us. Our second priority is to take leadership within electrification and sustainability. And we are committed to run our business. with focus and responsibility for future generations. And our largest impact is actually from reducing our carbon footprint, not only in our own operation, but also for products in use. And we already today have more than 40% of our equipment electrified. And now the battery range is accelerated. We have an ambition to become a leader in battery applications within our area. And we already today have our 36-volt system, which I'm sure you saw some of it out there in the exhibition for those who did go there. But now we have also our newly launched 94-volt PACE system, and this is a system for higher power and energy efficient -- energy demanding applications. So we have invested heavily in this area. And the PACE power cutter that some of you saw in the exhibition is actually the first out on this PACE platform. But we are excited to say that we have a very strong range coming out here for that to be launched during next year and the years to come. Our third strategic priority is to continue our successful growth journey. The strategy that we have is to strengthen our core within concrete sawing and drilling. It is to further build our second area, which is concrete surfaces and floors but is also to capture adjacent opportunities. The Construction division is built on acquisitions. And during the last 7 years, we have actually managed to execute 8 successful acquisitions, which has enabled us to build our second core area, which is concrete, surfaces and floors. And we are building around the customer needs in order to become a total solution provider within the segment. So we have built the best and broadest range within the industry within the surface preparation area, covering the entire process from soil compaction up to a finished treated concrete floor. And we have also consolidated and migrated most of the acquisitions under our strong Husqvarna brand. But we see even further opportunity within this area for the future. And that is, I think, highlighted in a good way by our recent acquisition of Blastrac. So our ambition is to continue to grow. In order to become an even better solution provider for our customers. So to summarize, we have high-performing premium solutions that are highly appreciated by our customers. We have a large share of recurring revenues that we plan to grow even further. We are an innovation leader with deep knowledge and understanding of our customers and users' needs. We have a well-proven growth strategy that we continue to execute on. And we have passionate employees with deep knowledge and strong customer focus. But what is most important of all is actually to be the best business partner for our customers and to continue to create great customer experiences for those who shape urban environments. Thank you.

Thank you very much Karin. Welcome back to the sitting area. Now just a couple of questions before I let you lose here in the room and online. Services, you're really good at this, 45% of your business is recurring revenues. What would you say are the key success factors?

Well, I think one -- to answer one is, of course, our end-to-end focus within Diamond Tools and also our deep knowledge of how Diamond Tools and equipment fits together to optimize that. It's also our focus, I think, on really serving the customer throughout their whole life cycle just to mention a few. But also, we have more opportunities here.

Even though 45% is a good number, but even more opportunities. So electrification, new battery products, you were showing us some power cutter there. What's the customer's response so far?

Yes. For those who have tested the product, I think they are quite enthusiastic. I mean, if you look at this product, it's low vibration, super good ergonomy. Of course, you don't have the exhaust fumes. And I mean it's also very easy to use. And I think perhaps the most important also with really high power.

Yes. Well, that is and then you were talking about M&A, successful M&A your 8, last year you said.

During the last 7 years.

Sorry, the last 7 years. You've done quite fast integration. You've built like a second quarter end business with key success factors in this M&A job.

Well, I think that it's our strong focus. As I said, I mean, it's really to strengthen our core within the concrete sawing and drilling and then to further build what we have built now the concrete surfaces and floors and to capture the adjacent possibilities and we were really focused on this to -- are always up to date and have that as a natural part of everything we do. But I think one of the success factors is with this planning, we really work on the integration and how to create synergies in the sense that it makes sense for the customer to build around the customer needs to be able to provide a broad range for our customers and to have that in mind all the time.

And looking ahead, what more acquisitions do you see? Is it any particular geographic area or?

Well, I think you can say that since we have the focus we have, we are always looking at that. And I also mentioned that it is a fragmented market, so there are opportunities, I mean both from a product and geographical dimension. So I don't think I will comment on anything more there, but exciting times.

Okay. So let's open up for questions from the floor. Again, Johan, please help me out there. And for those of you online, you know how to do this. So yes, write your questions in the question field and they'll end up here in my iPad. I think we'll start on the floor, right?

Excellent. I think we also have Henric on.

Henric back on stage for the Q&A session. Welcome back, Henric.

Thank you. Perfect. Great. So do we have any questions here from the floor in Stockholm. I see a number of hands here, should we start with Karri, Handelsbanken?

Yes. Karri, Handelsbanken. I wanted to ask about electrification because one could argue that -- with that, you can maybe outsource more and be less vertically integrated. And if so, the pretty big cost item that you have in your cost structure, which is the factory overheads, should come down over time. Could that be so? And a follow-up, why haven't we seen it yet? Have we not come to a certain tipping point in terms of outsourcing. So what kind of expectations should we have -- how the electrification will impact your structural cost maybe is the easiest way to ask the question?

Maybe if I start, and you can add, Glen. I think we have taking the first big step, which is the onetime cost we took last year. A big portion of that was to make our handheld value chain more competitive. And a big portion of that was the whole electrification. And as I mentioned a little bit in the morning, to make sure that we address the engine component manufacturing. Because from an assembly perspective, it's not such a big difference. But from an engine component manufacturing, of course, that's where the big difference is. And that's where the focus has been. So we have taken one big step. And executing on our plan. And if we reach our ambitions, which, of course, is clearly what we aspire to do, 20% of what we will be selling in '25 will still be petrol. So it's a matter of how do we manage that in a proactive, smart way a little bit at the time. So we don't need to have these big steps, hopefully. Anything you want to add there, Glen?

I think you covered it, but you're right, Karin. We do have an extremely vertically integrated supply chain when it comes to petrol handheld products. And we took the first step with the -- some of the restructuring we announced last year. But now we do talk more subassemblies coming into our system. And that's the reality. So I think it will be iterative as we go forward.

Thank you very much. Did we have any other question there? I think the second line.

Gustav here with SEB. I have a question on Orbit and integration. I appreciate that you were up late last night and -- but are there any structural reasons the way you see it for you to start selling robotic lawnmowers on the Gardena brand already next year in the U.S.

Well, with the Gardena perspective, having a leadership position in robotics in Europe, of course, we've also how to look at where are the future opportunities and the U.S. market is a big future opportunity. We want to take part in it. And we think that it's a good way to also put the Gardena brand into the right spot of the minds of the consumers because with robotics, we can actually launch an innovative, high-quality garden technology solution and frame the brand as a garden technology brand with a price premium. And what we've learned when we go into new markets is that it's really important to build the brand position we aspire to get to from the start. And we think the robotic is a good product to do that.

Over the next year. You will launch robotics in next year, you think that...

We will increase our focus on selling robotics in the '22 season in the U.S., yes. It's very close to '22 season.

We had another question there, I think, from Christer?

Christer Magnergård from DNB. A question on the profitability for Construction. You said that 45% of sales come from services after markets and Diamond Tools. I would guess that, that's a high-margin business. If I look at all our other companies, at least high teens probably, which means that the rest of the business, equipment business is, well, mid-single-digit margins. Is this correct? Why is that so? And what can you do to improve it?

Well, I wouldn't really say that, that is the case, but I don't think we comment on individual profitabilities on the different segments. Or what do you say, Henric?

No, I think you can't just look at the equipment as equipment. I mean there's a big difference here between the different segments where they have very different profitability. But you're not totally off that, I mean, of course, with higher profitability on the aftermarket, that means that the equipment side need to be lower. But there's a big spend here. And I think that's more back to us to claim even more of a premium position versus a lot of small individual local competitors that have a tendency to operate fairly tight margins.

Go ahead, Christer.

Very, very short question to -- when it comes to robotic lawnmower markets. Did I understand that correct that you have roughly 60% plus global market share.

In residential?

Yes.

Seems reasonable, yes.

Great. Thank you very much. We have another question just the line behind there with Johan Eliason.

Johan Eliason, Kepler Cheuvreux. One thing that struck me when -- in the construction division, you highlighted your acquisition agenda that basically meant your margin has been impacted by PPAs by 150 basis points. And just talking about your new EBIT margin target. And I guess we will see some PPAs coming from Orbit as well in the bigger scale. We had another company yesterday redefining their margin target from EBIT to EBITDA. Are you definitely looking at the EBIT margin target, including PPAs and restructuring, et cetera? I just want get that confirmed.

Our EBIT margin targets include the PPAs, yes. Could it be a possibility to look at alternative measures going forward as we increase our M&A activity? Absolutely. But today, the target includes the PPAs of Karin's business and Pär's recent acquisition.

Excellent. Thank you very much. We have another question here in the front line, Björn.

Björn, Danske Bank. Question on the dealers and you are talking a lot about the dependence on the dealers on the robotic launch on the professional side. Are you having the dealers with you? Or is this business as usual for them? Or is it a lot of investment in that segment?

The dealers are with us by and large. We have 25,000 servicing dealers globally. So it's pretty broad. And some, of course, are more professional than others depending on how they are -- where they're located, how their assortment is. But from a true professional aspect, of course, it's not the 25,000, the ones will really serve those professional end customers. So we're really working with those. I don't want to use the word classification, but we do have different classifications. We need to continue working with them. We do more training with them. They have more service technicians in-house, have more installation capability. So we need to continue that.

Some years ago, you did a lot of efforts to increase the density of dealers in North America. And if you can remind us of the subregions in the U.S. maybe where density is higher or lower and white spots, I guess, there are a lot of white spots in North America, but some color.

You see a lot of dealers, of course, on the East Coast, the Northeast is extremely dense all the way down the East Coast, really, where we see a lot of density. And then we see some density on the West Coast when you get to California, et cetera. But that's where you would see it down that Eastern Seaboard ultimately, where we have a strong density of dealers.

Great. So checking with Mia, do we have any online questions?

No. No online questions for the moment, but feel free to type in.

Okay. So while we are waiting for any further online questions, do you have anything more here on the floor in Stockholm? Yes, we have one there, Johan.

Johan [indiscernible]. Glen, I think this one is for you. You're talking about turf care and cutting the turf is one way to take care of it, but watering it in the professional segment. Any comments on that? Any ambitions?

I can maybe look a little bit to my colleague at my left as well. Now at this point in time, that's not in or on our radar, but of course, there's huge opportunities there. So it's a bit early for me to answer that question.

Maybe we can send the question to Pär as well. You're doing consumer business, but.

Yes. I mean our strategy is to be focused on the passionate gardener and I mean, the Orbit business has a smaller professional side to it. And I think that's maybe an area where we will need to launch something more before we have a firm view.

Excellent. Any further questions here on the floor? Yes, we have another here in the front with Björn.

Yes. On robotics, again and the U.S. launch, which have had different turns throughout the years. I mean, first, it was targeted to certain areas, and then it was a little bit broader when it came out, and now you're targeting a few small areas, again, has the Orbit acquisition in any way have -- will have any implication on the Husqvarna launch in the U.S.?

I actually really welcome the Orbit acquisition when I look at it with my Husqvarna division hat on because I don't think it's a coincidence where we've been hugely successful in countries. We've had both brands playing. The Husqvarna brand and the Gardena brand. So I actually think it's a huge complement now to have the Gardena team with the robotic lawnmower as well as Husqvarna. So I think it's great.

Great. Excellent. Any further questions here from the floor in Stockholm? We don't see any hands on at the moment.

Okay. Thank you very much, Johan. No more online. Just a last question then for you, Henric. Now you've talked us through all your plans, your strategic plans for going forward and obviously, lots of possibilities, huge markets and -- what are the major challenges would you say in the plan?

Yes, that's, of course, a good question. I think we are probably the biggest limitation ourselves. I mean how fast can we drive this? How fast can we leverage on all these opportunities that are out there waiting for us to grab them or to create them. So I think we are probably at risk, and it comes back a little bit to how we always need to manage the short-term priorities and the short-term performance versus the building for the midterm. So I think we are probably our biggest risk.

That means you have it all in your hands, so to say?

To some degree, yes.

Okay. It's time for your closing remarks, Henric.

Sure. I promise to keep this brief. You have been sitting through a long day. Most of us don't ever sit through these long days anymore other than the ones that are participating online, you know exactly how this feels. So I promise to keep you this short. I just want to reiterate some of the key messages that we have tried to convey today. One is that we have built a much stronger Husqvarna Group over the last few years, and we have tried to share a little bit more details around that, that the sales composition is very different today with different prospects as to growth and profit in the future that the business now is much more of a premium and pro with 90% of revenues behind the Husqvarna and Gardena brands, that's quite different than what we were 5 years ago. And how we're doing this -- making this transformation towards more sustainable solutions, smart solutions, autonomous solutions and electrical solutions that we have really moved here in the last few years and that the plan is that we will continue to move that and if anything, to accelerate it. Another thing is that we -- there are quite a few trends out there, transformational trends that will affect all of us as a society, as a company and as individuals. And we believe that the Husqvarna Group is remarkably well positioned for the future that we are making this transformation, we are being proactive. We are trying to be part of shaping the future instead of sitting in the rear seats somewhere or in the back seat. We are grabbing the steering wheel. We are trying to shape the future and to be in the forefront of this. That's something that I hope that we have been able to convey today. And given the performance we have had recently and the financial position that we have, we think it's time to take another step to lean further forward to accelerate our strategy, our strategy that is actually working and delivering and paying dividends and to develop our ambitions going forward. And some of these that we mentioned here today to bring more color to our journey going ahead is to double our robotics sales in the next 5 years. It is to make sure that we electrify the company. So 2/3 of all our products with a motor or engine will be electrified in 5 years, to continue to build that core business that we have that defines us today that is super important to us, but to continue to grow it in very specific ways to create additional value, while we are building out the segments of the future and how we aim to double the number of connected devices in 5 years. Not important per se, but we think it's such a critical enabler for how you can create customer value going forward, how you can create digital services going forward that on one hand, can create incremental recurring revenue streams, but maybe even more importantly, to create more intimate customer relationships. Because sometimes I say this to provoke a little bit, if we make a really good product, which we do, by the way, if we sell it to our customer, and it doesn't break down for 5, 10 years, and then the customer comes back to buy something, what kind of a relationship is that. But with services, with connected devices with more direct marketing, you can create a much, much more intimate customer relationship and that is very, very important for us going forward. And then it kind of all comes together here a little bit. And of course, the challenge is always when you dial up your ambitions. It's easy to talk about the more operational ones. We want to double sales of this, et cetera. But then we also need to set some financial targets. And here, it's always how do you find the balance between what is sufficiently ambitious with what we know that we are going to deliver. And it is to find that balance. And I think that's a little bit what we have tried to put some color on today as well that maybe from an EBIT perspective, our jump-off point is a little bit lower than what it looks like right now, given the positive benefits we have had from COVID, et cetera. And we also have these investments that we will make because we are going to be forward leading. We're going to really go after that robotics business. We're going to go after that Pro business going forward. And we will go after the -- all the digital services, et cetera, which requires investments. And to then find this balance also when it comes to the EBIT target between where to optimize on short term -- what could be short-term possible to deliver with what is wise to do to make sure that we set the company up for the right trajectory for the future. That's how we ended up with setting the targets the way we did. So I believe we have been able to at least put some color on that today. And I hope that you all leave with those messages, but maybe even more importantly, I hope you leave with a feeling, a conviction that this is something we are extremely passionate about. All of us, the people at the product stations, everyone on stage, we really believe in this that we are really creating a company fit for the future and that we really can deliver on the targets that we are setting here. So that's something that I think is probably more important than anything that you all live with that feeling, that we are really behind this, you are really passionate about the opportunities that we have here in the Husqvarna Group going forward. With that, I would like to take the opportunity to -- from my side, thank you all for joining today. I know how it is. We all have busy schedules, the fact that you have taken the time to be here today, something that we truly appreciate. Thank you all for that. And also the ones that who've been watching online. So from my side, thank you.

Thank you very much, Henric. We can feel the passion. Yes, give them a hand. So I'd like to thank you as well. Thank you, Henric. Thank you to all the presenters, and thank you in the room, and thank you also online. Now just a little info about lunch. You have lunch served outside. It's a mingle lunch. So you can either eat it inside here to talk away or you can go back to the exhibition if you have further questions in the exhibition or you can even take away, your lunch. So yes, that concludes the agenda for today. Thank you very much for joining.