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. The addressable market for the construction and stone products is around SEK 20bn.
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 development (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 consumer confidence are important indicators. Weather conditions may be important in a given year, as they can impact the season and thus affect demand both positively and negatively. A large portion of demand is estimated to be driven by replacement needs.
Europe and North America, 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 in terms of value. The Asia/Pacific region accounts for around 20 percent. Consumers in many of these markets generally show less interest in gardening and there is no widespread tradition of garden care among individuals. Brazil, Russia and China are considered to be some of the emerging markets with the most attractive potential.
Lawn mowers are the largest product segment, electric the fastest growing
The wheeled product segment, which includes ride-on mowers and walk-behind lawn mowers, is the largest in terms of market value followed by the handheld segment, which includes mainly chainsaws and trimmers. The electric category, which covers corded and battery-powered products, is a relatively small segment but it is currently showing the strongest growth rate in the market. Growth in electric products is being driven primarily by battery-powered products. As batteries improve in terms of product performance, more users are turning to this source of power.
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 three 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 mainly sell products in the high performance segments to professional users and prosumers (demanding consumers) and offer product service. Retailers sell products in the low to medium-price ranges, mainly targeting the consumer segments. 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, and to dealers who sell to professional construction end-customers.
Market demand in 2015
Global demand for forest and garden products developed positively in 2015. Demand in Europe was in particular supported by warm late summer weather conditions, which was favorable for the sale of watering products. North America experienced another long winter, resulting in a delayed spring and late start to the gardening season. From a macro perspective the US forest and garden market was supported by continued recovery in the overall economy. For construction and stone industry products, demand was favorable in North America, while demand in Europe and the rest of the world showed more uneven development.
Forest and garden products, which represent the majority of the Group’s total sales, are highly seasonal due to end-customer buying patterns. Most equipment is sold during spring and summer when the majority of 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 generally marks 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. For construction products, demand is fairly evenly distributed over the year.
Market data refer to 2014 and are estimates made by the Group.