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

[Foreign Language]

Thank you, Johan. I truly appreciate this opportunity. Dear shareholders, Board colleagues, Husqvarna colleagues, ladies and gentlemen, my name is Tom Johnstone, and I'm Chair of Husqvarna's Board of Directors. Last year, when we met in this format, I said that due to the vaccine rollout, I could see a light at the end of the tunnel, but we should be prepared for a few turns along the way. I think we can now see, looking back, there was more than a few turns along the way. But I really feel that we're now exiting this tunnel. But as we exit this tunnel, we must remain aware, both personally and professionally, because there'll be a lot of new variants coming along. We've been doing that within the Husqvarna Group during the last year, being very aware, but also, at the same time, seeing how we can increase the focus on bringing value to our customers and also value to you, our shareholders. And I'll talk about that a little bit later. But while we're exiting the COVID tunnel, we are faced with a new, much more alarming situation, the Russian invasion into Ukraine. We condemn that action, and we've been taking steps to protect our people within both countries and also our very important long-term customers. We have stopped all deliveries into Russia, and we've taken Russia away from being one of our strategic investment areas. Now we'll continue to monitor the situation, and we'll continue to take the necessary steps that we see to protect our people, but also to protect our partners. An added effect to the war is the impact it's having now on our supply chain, and also the higher costs we are facing in our business. Now it's a shame that once again that we are holding this AGM virtually because we really hope to be able to have a physical AGM this year. But I did not want to miss the opportunity to say a few words to you about the work that we did in the Board last year. Now I don't intend to go into a great deal of detail because it's already very well documented in our annual report. But I'm very happy to answer questions. So I'd just ask you, if you have questions, reach out to our Investor Relations team within Husqvarna, and I will take these questions and I'll happily answer them. Now before going to the Board work, I'd like to just take this opportunity to remind you of your Board members, the elected Board members. We have Daniel Nodhäll, Katarina Martinson, Lars Pettersson, Chris Robins, Bertrand Neuschwander, and the new member elected last year Ingrid Bonde. In addition, we have the union representatives, Tina Helmke Hallberg, Anders Köhler, Dan Byström and Daniel Tornberg. I want to take this opportunity to sincerely thank all the Board members for their hard work and their commitment and support during the year, not only to me but to the management as we've managed this challenging environment that we've been operating in. They've worked hard to bring their knowledge and experience to support Henric and to support the management team. And I think you can see that in our development. I also want to take this opportunity to welcome the newest member of our Board, Stefan Ranstrand. Stefan brings tremendous experience, 18 years from ABB and last 12 years as CEO of Tomra systems. His knowledge of technology, his knowledge of industry and manufacturing, and his international experience will be a great value for us in the Board and I know a great support to the management. Now let's take this opportunity to look back a little bit at the year 2021. Of course, it continued to be heavily impacted by the COVID-19 pandemic. But with that as a backdrop, we did tremendously well during the year. Yes, we were helped by the stay-at-home situation where most people stayed at home and bought more products. But at the same time, we emphasized the continued execution of our strategy. And I think the combination of these two resulted in our performance that you saw last year. We strengthened our position in many of our core product areas. We strengthened our position in many of our end markets; a really, really strong performance from the group. We had record sales, record sales growth, record operating margin, record operating profit and a very strong cash flow and a good work on our balance sheet. What that basically meant is we met all our financial targets during the year. We also launched a number of new products during the year, which I think are very important products, will help us grow and further develop our business going forward. Within the Husqvarna Forest & Garden Division, we launched the new CEORA, boundary wireless robotic mower, primarily for the commercial area. Gardena launched a new EcoLine of products, mainly made from recycled materials. And within the Construction division, we launched the K1 PACE power cutter, battery power cutter. All of these products are very important products for our future and show our commitment -- continued commitment to research and development. Now I will not go into more detail on the business or the financial performance because our President and CEO, Henric Andersson will probably talk a little bit about that. But this improving financial performance that we saw as a group enabled us as a Board to recommend to the Annual General Meeting to increase by 25% the dividend to SEK 3. Now a little bit about the work within the Board. During the year, we spent considerable time refining, reviewing our strategy and priorities that we have as a group. We really were working to build on the excellent work that had been done the year before when Henric took over as the new CEO. So it was about evolving that strategy that we worked on there. Clearly, our role as a Board is to help the group and help the management in developing the right strategy to strengthen Husqvarna going forward as well as, of course, monitoring and supporting the business operations there. It was a good work during the year and a continued work that we undertook there. And one of the outcomes of that was the fact that we resorted in changing the structure within the -- what was the Husqvarna division, it is now the Husqvarna Forest & Garden division. And they've now split the division into 3 business areas, very focused on their end -- specific end markets. The result of all that work was the updated strategy that was launched at our Capital Markets Day in December, along with our financial targets. These financial targets are really a step-up in performance for the group and are really focused on profitable growth going forward. It's about delivering profit. It's about delivering growth, but it's also about managing our financial assets and balance sheet. I am totally convinced that with a dedicated management team and a real commitment of Husqvarna employees around the world, under Henric's leadership, we will deliver on these targets. Now a key part of our strategy is to further enhance the customer experience in using our products, using our solutions and using our services. To do that, we must continue to prioritize investments in research and development, and that we have been doing during the last year. And I mentioned just some of the products that we brought to the marketplace there. We must really look to see how we can bring process solutions, which also support our sustainable agenda, and I'll come back to that a little bit later. They also will bring more solutions and services to our customers and especially products and services where they're connected to us. Today, we have over 2.8 million connected devices. And to be quite honest, we're still very much at the beginning of using that connectivity with our products and solutions to help us improve performance, lower cost of operation, lower environmental impact for our customers. That's an area we will continue to focus on going forward. I mentioned the sustainable strategy, it really is a key part of our business, a key part of our business model. It's got 3 legs to it. Firstly, reducing the CO2 emissions in our operations, but also in the use of our products. Secondly, bringing to the market new products, new circular products. And thirdly, empowering more and more people to make sustainable choices in the use of products and the use of services. We made very, very good progress in the first 2 of these during the last year. And the third item, empowering individuals has come into more focus during this year. One other key part of our strategy is to continue to see how we can widen the offer that we bring to our customers to deliver more value to our customers. We do that through research and development, but we also do that through acquisitions. And I think a key example of that is the number of acquisitions we have made during the last years within the Construction division to build our position within the floor care market, a very important new leg for our construction business and an area that's performing well. Last year, we made another step, but this time within the Gardena division, the acquisition of Orbit, a U.S. watering company will strengthen our position and give us a perfect platform to grow our watering business in North America. And then we bring together Orbit's knowledge and technology with Gardena's knowledge and technology. We will be able to bring even better products and solutions to our customers, not only in North America but worldwide. Now one key area to develop and deliver on that strategy clearly is people, it's talent development. You can have the best strategy in the world, but if you don't have the right people, in the right place, at the right time, you will not be successful. And that is a key area for us within Husqvarna. Now I know that predominantly, that is the work of management without a shadow of a doubt. Our role in the Board is to ensure that we have the right processes in place, the right systems in place and the right focus to ensure that we continue to develop our talent, not just in our offices, but in our factories and our operations around the world. I think we're making very good progress in that area. But as always, there is more to be done. So these are a few of the areas we worked on during the last year, managing the business through the challenging environment of the COVID pandemic and taking full advantage of the opportunities that brought, working to refine and review our strategies, to develop and support the new financial targets, also working on Sustainovate and on talent development as well as, of course, monitoring all the risks and opportunities in our business. And clearly, that is a key focus area for us now at this time with what is happening in the world just now. So quite a busy year last year, and this year promises to be equally as busy. Finally, it's a great honor for me to be Chair of Husqvarna. And I understand very clearly that our responsibility as a board is to deliver value to you, our shareholders. I think we've made some good progress during the last year, but as always, there's work to be done, and we've got more work we can do in that area. We intend in the coming years to deliver on our new financial targets through strong customer focus, strong technology leadership and on leveraging the skills, commitment and drive of all of our employees around the world. I want to close by thanking you, our shareholders, for your support during the last year, and I truly believe that next year, we will have a physical meeting. I also want to close by sincerely thanking Henric and his management team, but all the colleagues within the Husqvarna Group worldwide for their support, their commitment and truly for the excellent work they did during 2021. I look forward to seeing you physically next year and with that, I'd just say, stay safe. Take care, everyone. And back to you, Johan.

[Foreign Language]

[Foreign Language]

[Foreign Language]