UPDATE 1-Husqvarna drops sales target, to focus on margin

Thu Feb 14, 2013 3:51am EST

* Says scraps 5 pct organic sales growth target

* Says margin has higher priority over medium term (Adds details, background)

STOCKHOLM Feb 14 (Reuters) - Garden equipment maker Husqvarna, which this week reported a bigger-than-expected quarterly loss, is to focus on improving profitability and drop a sales growth target, it said on Thursday.

The group, the world's biggest maker of chainsaws, trimmers, lawn mowers and garden tractors, on Wednesday reported a fourth quarter operating loss of 362 million crowns ($57.47 million), compared with market expectations for a loss of 125 million.

"The group will no longer have a financial target for sales growth," it said in a statement ahead of a capital markets day for investors.

The previous target was for organic sales growth, which strips out acquisitions, of 5 percent over a business cycle.

"Medium term, initiatives to improve the Group's operating margin will have higher priority than growth," it added.

Demand for Husqvarna's products is strongly tied to the weather and seasonality, with demand rising in the second quarter for spring and summer gardening periods. It has also expanded into robotic lawnmowers.

Its three other financial targets remained: to achieve an operating margin of more than 10 percent over the course of a business cycle, a seasonally adjusted net debt in relation to EBITDA capped at a multiple of 2.5 in the long term, and that the dividend normally above 40 percent of income for the year.

It said it aimed to strengthen the operating margin by reducing costs. It repeated that it aimed to invest around 1 billion crowns to cement its leading position in the global chainsaw market. ($1 = 6.2992 Swedish crowns) (Reporting by Niklas Pollard, editing by Patrick Lannin)

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