Q2 2020 results presentationJuly 16, 2020

Henric Andersson, CEO

Glen Instone, CFO

Shaping

GREATexperiences

Q2 2020 results presentationJuly 16, 2020

Henric Andersson, CEO

Glen Instone, CFO

• Demand accelerated quickly as markets gradually reopened

• High customer interest in lawn and garden care equipment

• Good inventory management

• Strong financial position, net debt decreased by SEK 3.6bn

• Improved product mix

• Temporary cost avoidance and cost efficiencies

• Strong offering with new models for the season

NET SALES

13,482m (13,789)

GROWTH*

+3%

DIRECT OPERATING

CASH FLOW (H1)

2,330m (2,084)

ROBOTICS AND BATTERY

16% of group sales

EBIT

2,191M (2,125)

MARGIN

16.3% (15.4)

Record operating profit in Q2

SEK

*Adjusted for exit of Consumer Brands business and changes in exchange rates.Roundings - all items are stated in SEKm and, accordingly, rounding differences can occur.

2

Strong portfolio with high performers

and new introductions

EPOSAutomower® 305Watering solutions Watering Controls Hoses / reels

Pro battery Husqvarna AMCHand tools SmartGuardAquaBloom

3

Net sales decreased 2% in Q2,

adjusted for exits and FX

• Demand accelerated as markets

gradually reopened – strong growth

in June

• Good performance in key categories

• Consumer Brands exits of SEK 550m

Operating margin at 13.4% in Q2

and 8.0% for R12*

• Decreased volumes and production

rates – lower cost absorption in

factories

• Temporary cost avoidance activities

• Currency impact of SEK -25m in Q2

Husqvarna Division

8,6888,042

Q2 2019 Q2 2020

Net Sales

1,2171,078

Q2 2019 Q2 2020

EBIT

Q2 2020 (SEKm)

27,519 25,355

R12 Q2 2019 R12 Q2 2020

Net Sales

Rolling 12-months (SEKm)

2,353

2,032

R12 Q2 2019 R12 Q2 2020

EBIT*

13.4%

8.0%

14.0%

8.6%

-2%**

* Excluding items affecting comparability** Net sales growth adjusted for exits and FX

4

Net sales increased by 24% in Q2,

adjusted for exits and FX

• Strong growth as markets reopened

• Positive effect on consumers buying

patterns related to impact of Covid-19

• Particularly strong growth in watering

products and watering systems

Operating margin at 26.3% in Q2

and 13.5% R12

• Good leverage on volume growth

• Temporary cost avoidance activities

• Currency effect of SEK -40m in Q2

Record quarter for the Gardena Division – to some

extent driven by Covid-19 stay at home trend

3,373

4,011

Q2 2019 Q2 2020

Net Sales

703

1,054

Q2 2019 Q2 2020

EBIT

8,3139,058

R12 Q2 2019 R12 Q2 2020

Net Sales

867

1,224

R12 Q2 2019 R12 Q2 2020

EBIT*

Q2 2020 (SEKm)

Rolling 12-months (SEKm)

26.3%

13.5%

20.8%

10.4%

+24%**

* Excluding items affecting comparability** Net sales growth adjusted for exits and FX

5

Net sales decreased by 18% in Q2

adjusted for FX

• Clearly improved market situation in

May and June compared to the start

of the quarter

• Positive trend in all regions in line

with reopening of markets

Operating margin at 9.9% in Q2

and 11.0% R12

• Lowered volumes and

manufacturing levels

• Solid execution of temporary cost

reduction activities and lowered

inventory levels

• Good product mix

• Currency effects of SEK -5m in Q2

Construction Division

1,720

1,413

Q2 2019 Q2 2020

Net Sales

267

140

Q2 2019 Q2 2020

EBIT

6,058 6,026

R12 Q2 2019 R12 Q2 2020

Net Sales

751664

R12 Q2 2019 R12 Q2 2020

EBIT*

Q2 2020 (SEKm)

Rolling 12-months (SEKm)

9.9%

11.0%

15.5%

12.4%

-18%**

* Excluding items affecting comparability** Net sales growth adjusted for FX

6

2%

4%

6%

8%

10%

12%

1,000

2,000

3,000

4,000

2013 2014 2015 2016 2017 2018 2019 Rolling12M

Operating income* Operating margin*

Our profitability improvement trajectory

*Excluding items affecting comparability

SEKm Margin, %

9.2%

7

Consolidated income statement

• Gross margin +0.8 ppts* in Q2

– Improved product mix notably

Watering growth and Consumer

Brands exits

– Lower manufacturing volumes

– Negative FX

• SG&A

– Temporary cost avoidance

– Efficiencies

• Operating margin at 16.3% (15.4)

• Reduced net financial items -

lower interest rates and lower

debt levels in USD

• EPS up 4% in Q2

8

SEKm

Q2

2020

Q2

2019

Jan-June

2020

Jan-June

2019

Rolling 12

months

Net sales 13,482 13,789 25,690 27,440 40,526

Cost of goods sold -8,863 -9,176 -17,264 -18,724 -28,288

Gross income 4,619 4,613 8,426 8,716 12,238

Gross margin, % 34.3 33.5 32.8 31.8 30.2

Selling expenses -1,789 -1,952 -3,657 -3,861 -6,781

Administrative expenses -640 -550 -1,167 -1,092 -2,126

Other operating income/expense 2 14 14 6 205

Operating income* 2,191 2,125 3,616 3,811 3,719

Operating margin*, % 16.3 15.4 14.1 13.9 9.2

Items affecting comparability 0 0 0 -42 -183

Financial items, net -78 -153 -187 -313 -442

Income tax -547 -466 -870 -810 -654

Income for the period 1,567 1,506 2,559 2,646 2,441

EPS, after dilution, SEK 2.74 2.63 4.47 4.62 4.27

*Excluding items affecting comparability, note gross income is including items affecting comparability

Strong direct operating cash flow

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

Q1 Q2 Q3 Q4

SEKm

2020 2019 2018

9

27.8%

28.5%

20%

22%

24%

26%

28%

30%

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Q22020

Target level <= 25%

26.5%26.8%

Slowdown impacting our capital efficiency

– but positive development in quarter

10

Consolidated balance sheet

• Lower inventory levels compared

to last year. SEK ~1.5bn

improvement.

• Receivables increased related to

strong quarter end

• Net debt of SEK -7.7bn (-11.3)

– Cash from operations +4.4bn,

excl financial investments

– Cash flow from financing -0.2bn

– Currency effect +0.3bn

– Dividend paid -0.9bn

• Solid cash and short term

investments position of SEK

6,9bn. Undrawn RCF of SEK 5

bn.

11

SEKm

June 30

2020

June 30

2019

December 31

2019

Non-current assets 23,392 23,025 23,739

Inventories 8,766 10,275 10,858

Trade receivables 7,293 6,754 3,620

Other current assets 1,641 2,088 1,853

Cash and short term investments 6,926 2,116 1,911

Total assets 48,018 44,258 41,981

Total equity 19,353 17,395 17,283

Borrowings 11,418 9,411 10,025

Lease liabilities 1,535 1,690 1,761

Provisions for pensions 2,914 2,391 2,622

Other provisions 3,213 3,045 2,927

Trade payables 4,407 4,805 4,099

Other current liabilities 5,179 5,521 3,264

Total equity and liabilities 48,018 44,258 41,981

Net debt / EBITDA (based on average net debt)

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Q22013

Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4  Q2  Q4  Q2 Q4 Q2

Times

1.8x

2014 2015 2016 2017 2018 2019

Average net debt / rolling 12 months EBITDA, excl. items affecting comparability

2020

12

Effective COVID-19 strategy

Care for

our

people Secure

business

continuity

Contribute

to society

• Health and safety of our employees and

securing business continuity are our top

priorities

• Temporary cost avoidance activities –

gradual increase in paused strategic

Initiatives for strong start in 2021

• Continuing to closely monitor and ready to

act in the unfolding Covid-19 situation

13

Strategy execution

• New business strategy is the base for

long-term execution – certain areas

will be sharpened

• Continuing of transformation activities

and strategic initiatives

“Above industry growth and margins” Sustainovate

Operational & Commercial

excellence

Customer

experience

Robotics &

battery

Services &

solutions

A winning

core

14

Professional robotic lawn mowing

• Exploring robot as a service

concepts for professional green

space segment

• >150 pilot units in

Sweden & Germany

• EPOS – our new satellite-based

solution allows for mowing with

virtual boundaries

• >100 pilot units in core markets –

SE, DE, FR & U.S.

15

Co-founder of 18V consumer battery alliance

• One of the largest cross-brand battery alliances of

leading manufacturers worldwide

• One battery across brands and devices all

around the home

• 20 million compatible batteries already out in the

market

• For season 2021, Gardena is converting its

entire 18V range to the “Power for All” Alliance

battery system

Important part of the Group’s strategy for 18V consumer battery solutions

16

New sustainability targets – Sustainovate 2025

• Joined the Business

Ambition for 1.5°C

• Updated Carbon target

approved by Science

Based Targets Initiative

• Sustainovate Open

CARBON CIRCULAR PEOPLE

Reduce CO2emissions by –35% across our

value chain

Empower5 million

customers and colleagues to

make sustainable choices

Launch 50new circular innovations

17

Key management changes

Robert

McCutcheon

President of

North American

Husqvarna Division

Karin

Falk

President Construction

Division, part of Group

Management Team

18

Husqvarna Group – summary

A record quarter

– Demand accelerated quickly when markets gradually reopened

– High customer interest in lawn and garden care equipment

– Good effects from temporary cost avoidance activities

– Demand continued to stay strong at the start of Q3, although

we have passed the peak in the lawn & garden season

Effective Covid-19 strategy– Health and safety of our employees is our priority

– Manufacturing and warehouse sites in operation

– Strong cash flow and financial position

Execution of strategy– Gradually increase of strategic initiatives in second half

– Updated business strategy from 2019 is the base forlong-term execution, with sharpened components

19

www.husqvarnagroup.com