STOCKHOLM (Reuters) - Husqvarna (HUSQb.ST), the world’s biggest maker of robotic lawn mowers, said on Tuesday cold weather delayed the start of the gardening season in its main markets which contributed to a bigger than expected fall in first-quarter profits.
Freezing temperatures on both sides of the north Atlantic came on top of a slowdown for Husqvarna’s Consumer Brands division, which had been flagged earlier, due to the scaling back of business with a large U.S. retailer.
But CEO Kai Warn told Reuters that despite the slow start to the year he still expected the group’s Husqvarna, Gardena and Construction divisions to increase profits this year on sales growth of more than 5 percent.
He was slightly more cautious than he had been in February on chances of reaching a 10-percent group operating target this year.
“It’s still our aim, it’s still likely we can reach it,” he said. “But the comfort factor we had is probably melting away in light of large raw material cost increases mainly at Consumer Brands, which is struggling to compensate for them.”
Husqvarna's shares were down 1.8 percent at 0942 GMT, underperforming the wider market in Stockholm .OMXSPI.
Husqvarna makes products for park and garden maintenance such as mowers, trimmers and chainsaws. The bulk of its sales happen towards the end of the first quarter and in the second quarter, the peak gardening season in Europe and North America.
“We now see that the season is in full swing. The question is whether it carries on through the rest of April and May. If so, we have a reasonable chance to catch up,” Warn said.
First-quarter operating profit was 1.37 billion crowns ($161 million) against 1.43 billion a year ago, which compared with a mean forecast in a Reuters poll of analysts for 1.38 billion.
Consumer Brands, which sells mowers and handheld outdoor tools for households mainly in the United States, swung to a loss on a 17-percent sales drop and higher commodity prices.
Warn said the weak start to the year meant the division would report an operating loss for the full year.
While traditional petrol-driven products still account for a large chunk of sales, the company is betting on growth for its battery-driven Automower and handheld tools. The company says its Automower is the world’s best-selling robot lawn mower.
Warn predicted sales growth of 20 percent or more in 2018 of battery driven tools, a slightly less optimistic guidance than previously following the slower-than-expected first quarter.
($1 = 8.5059 Swedish crowns)
Reporting by Anna Ringstrom; editing by Niklas Pollard and Jane Merriman