Husqvarna AB: Interim Report January – June 2014

Regulatory News:

Husqvarna AB (STO:HUSQB)

Kai WArn, Presidentand CEO:

“Husqvarna Group has delivered a strong first half of the year. Operating income for the second quarter increased by 35% to SEK 1,384m (1,022) and the margin rose to 12.5% (10.0). As in the first quarter, the positive development was driven by a combination of strong demand and impact from the Accelerated Improvement Program.

From a market demand perspective, Europe benefitted from positive weather conditions in the second quarter, while North America was challenged by a late spring and high trade inventory situation entering the quarter. Still, operating profit for Americas increased 41% to SEK 220m and the operating margin rose to 5.0% (3.7), mainly driven by cost reductions, productivity and mix improvements. For Europe & Asia/Pacific the operating income rose 38% to SEK 1,101m and the operating margin recovered to 19.1% (15.5), primarily as a result of higher sales volume and a good development within the core brands Husqvarna and Gardena and in prioritized product areas such as robotic lawn mowers and watering equipment. Construction had yet another strong quarter with operating income increasing 21%, driven by continued profitable growth across most markets.

A large share of the result improvement is attributable to activities in our Accelerated Improvement Program. The positive signs in the first quarter have all trended into the second quarter; the reduction of direct material costs is sustained and we are driving favorable mix by prioritizing our premium brands and product leadership areas, as well as growth in the dealer channel, especially in the U.S.

In June we announced a new organization which gradually will be implemented and fully effective by January 1, 2015. The new organization will follow the brand dimension for three forest and garden divisions with global profit and loss responsibility; Husqvarna, Gardena and Consumer Brands. The Construction division will continue in its current form. Group functions will also be established in order to secure Group wide synergies and scale benefits, such as in sourcing, logistics and technology. In addition to providing better accountability and increased speed in decision making, the new organization will facilitate increased focus on key differences essential for market leadership in the different customer segments targeted by each division.

Keeping the momentum in the Accelerated Improvement Program remains key. From a demand perspective the third quarter may be more challenging in terms of comparison with prior year, as 2013 benefitted from a favorable garden season.”

Second quarter

Net sales increased to SEK 11,045m (10,227). Adjusted for exchange rate effects, net sales increased 7%.

Operating income increased 35% to SEK 1,384m (1,022), including total negative impact from changes in exchange rates of SEK -3m, compared to the second quarter 2013.

Sales and operating income were higher for all business areas.

Earnings per share increased to SEK 1.70 (1.15).

Operating cash flow increased to SEK 2,282 (1,915).

The net debt/equity ratio improved to 0.60 (0.75).

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Husqvarna Group

Husqvarna Group is the world’s largest producer of outdoor power products including robotic lawn mowers, garden tractors, chainsaws and trimmers. The Group is also the European leader in consumer watering products and one of the world leaders in cutting equipment and diamond tools for the construction and stone industries. The Group’s products and solutions are sold via dealers and retailers to both consumers and professional users in more than 100 countries. Net sales in 2013 amounted to SEK 30 billion, and the Group had 14,000 employees on average in more than 40 countries.

This interim report comprises information which Husqvarna is required to disclose under the Securities Markets Act and/or the Financial Instruments Trading Act. It was released for publication at 08:00 CET on July 16, 2014.