An attractive market
The addressable global market for forest and garden products in the regions and product segments where Husqvarna Group is active is estimated at SEK 150bn. In addition, there is an addressable market of around SEK 20bn for construction and stone products.
The overall forest and garden market is attractive and can be characterized as a mature market with stable growth. Average growth has kept pace with gross domestic product (GDP) at between two to three percent per year. Demand is driven mainly by general economic trends. Housing starts, employment levels, consumer purchasing power and confidence, as well as weather conditions are important. A large portion of demand is estimated to be driven by replacement needs.
Europe and the Americas, where a significant part of the world’s forest, park and garden areas are located, are the biggest markets. Combined, the two regions make up around 80 percent of the global market. The Asia/Pacific region, where the largest markets are Japan and China, accounts for the remaining 20 percent. Consumers in these markets generally show less interest in gardening and there is no widespread tradition of garden care among individuals.
Over the last ten years, Europe has demonstrated higher growth than North America, although the growth rate in North America is expected to increase in the next years. In Europe, growth has varied significantly between countries. Germany and Russia have performed well, while Southern Europe has decreased. In terms of volume, Asia/Pacific has been the fastest growing region.
Lawn mowers make up the largest product segment
The wheeled product segment, which includes ride-on and walk-behind lawn mowers, is the largest in terms of market value, followed by the handheld segment, mainly chainsaws and trimmers. The electric category, which includes corded and battery-powered products, is the smallest segment but it currently has the strongest growth rate in the market.
Construction market growing by about three percent
The long-term annual growth rate for the Group’s product offering for the construction and stone industries is around 3 percent for construction industry products and slightly higher for stone industry products. Demand normally correlates strongly with activity in the construction industry, which is characterized by substantial cyclical variations.
Customers and distribution
The Group sells forest, park and garden products to more than 25,000 dealers and leading retailers worldwide that sell them to end-customers. Dealers sell primarily products in the high-price segments to professional users and prosumers (demanding consumers) and offer product service. Retailers sell products in the low and medium-price ranges, mainly to consumers. In terms of value, the market is split approximately 50/50 between the two channels, with the retail channel dominating in North America and the dealer channel in the rest of the world.
Construction and stone industry products are sold directly to end-customers such as sawing and drilling contractors and quarry operators, to rental companies that rent the equipment to end-customers, or to dealers who sell to professional construction end-customers.
Market demand in 2014
Global demand for forest and garden products developed positively in 2014. The market in Europe was supported by an early spring resulting in strong demand in the first half of the year. The North American market had almost the opposite conditions. The winter was long, resulting in a late spring and start to the gardening season, while a long summer with favorable growing conditions late in the year supported demand in the second half of the year. From a macro perspective the U.S. forest and garden market was supported by continued recovery in the overall economy.
For construction and stone industry products, overall demand was good, especially driven by North and Latin America, while demand in Europe had a mixed development.
Forest and garden products, which represent the majority of the Group’s total sales, are highly seasonal due to end-customer buying patterns. The majority of equipment is sold during the spring and summer months when most lawn care and gardening activities take place. Because the main markets are located in the Northern hemisphere, sales are highest towards the end of the first quarter and during the second quarter. The third quarter is generally the end of the garden season, given average weather patterns. The season for watering products is normally even shorter and often ends after the second quarter. Demand for forestry products tends to be somewhat higher during the second half of the year.