April 24, 2013 / 6:31 AM / 4 years ago

UPDATE 1-Husqvarna says cautious on Europe after profit miss

2 Min Read

* Q1 operating profit 688 mln SEK vs poll forecast 803 mln

* Says Q1 profit hit by weather, strong Swedish crown

* Says European demand outlook remains cautious (Adds details, background)

STOCKHOLM, April 24 (Reuters) - Garden equipment maker Husqvarna predicted its key European market would remain tough after cold spring weather led to a sharp fall in first-quarter earnings, the company said on Wednesday.

The company reported an operating profit of 688 million Swedish crowns ($104 million), down from 930 million in the same quarter of 2012 and below the 803 million crown mean forecast in a Reuters poll.

"Husqvarna's first quarter results were impacted by unfavourable weather conditions and continued macroeconomic slowdown in Europe", Chief Executive Hans Linnarson said in a statement.

Earnings were also hit by the strong Swedish crown, which accounted for more than half of the decline in operating income, he added.

In Europe, where the world's biggest maker of chainsaws, trimmers, lawn mowers and garden tractors gets around half of its revenues, demand was expected to stay subdued as consumers hold back on spending due to the macroeconomic slowdown.

"We have a continued cautious outlook for demand in Europe, while the outlook for North America remains more positive," the company said.

Demand for Husqvarna's products is strongly tied to the weather and seasonality, with demand typically rising in the second quarter for spring and summer gardening periods.

Earlier this year, Husqvarna appointed a new chief executive to start July 1. It also dropped its sales growth target to focus on improving profitability. The operating margin weakened to 7.6 percent in the first quarter from a year-ago 9.5 percent.

$1 = 6.6191 Swedish crowns Reporting by Veronica Ek; Editing by Alistair Scrutton

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