UPDATE 1-Husqvarna to cut costs after Q3 results miss

Fri Oct 26, 2012 3:03am EDT

Related Topics

* Operating income 182 mln SEK vs forecast 191 mln

* Says demand picture challenging in Europe, North America

* Says to cut costs next year

* Shares up 2.4 percent (Adds quotes, detail, shares, background)

STOCKHOLM, Oct 26 (Reuters) - Garden equipment maker Husqvarna said on Friday it would focus on cutting costs as global economic uncertainty and sagging demand is seen stretching into next year.

Third-quarter profit for the world's biggest maker of chainsaws, trimmers, lawn mowers and garden tractors came in below expectations as conditions were challenging in key markets on both sides of the Atlantic.

"Looking ahead, we see many of our trade partners managing their inventory levels conservatively, as the global economic uncertainty is expected to continue for 2013," Husqvarna Chief Executive Hans Linnarson said in a statement.

Husqvarna plans to launch new products next year and will take measures to improve efficiency by reducing its fixed cost base and boosting flexibility.

It said more details would be revealed during the fourth quarter.

Operating profit rose to 182 million Swedish crowns ($27.17 million) from a year-earlier 113 million to come in below an average forecast in a Reuters poll for 191 million crowns.

The weather, always vital for a producer of gardening tools, has been uniformly poor for Husqvarna this year.

A very rainy summer in key European markets caused a drop in second-quarter sales of watering products, which have high margins, adding to already weak consumer demand due to the euro zone crisis.

In the Europe & Asia/Pacific division, where Europe takes the lion's share, sales fell 10 percent in the third quarter. Husqvarna also said pre-season demand for seasonal products such as snow throwers was soft, as expected.

In North America, the worst drought for half a decade has led analysts to warn of slowing sales of lawn mowers and garden products. The group does not sell irrigation products there. Sales in the region fell 11 percent on the year.

At 0701 GMT, shares were up 2.4 percent. ($1=6.6998 Swedish crowns) (Reporting by Veronica Ek; Editing by Mike Nesbit)

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