A steadily growing market

The global forest and garden market is growing steadily. Over the last five years, its market value is estimated to have increased around three percent per year.

The addressable market for forest and garden products in regions and segments where Husqvarna Group is active is estimated to be SEK 185bn. The addressable market for construction and stone industry products is around SEK 25bn with an estimated long-term growth rate of three percent.

The overall forest and garden market is attractive and can be characterized as mature with stable growth. Average growth has kept pace with gross domestic product (GDP) development at between 2 to 3 percent per year. Demand is driven mainly by general economic trends. Housing starts, employment levels, consumer purchasing power and consumer confidence are important indicators. New technology and product innovation are also important drivers of demand. Weather conditions may be important in a given year as they can impact the season and thus affect demand both positively and negatively. In addition 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 85 percent of the market in terms of value. Consumers in many of the larger markets outside of Europe and North America, such as China and Brazil, generally show less interest in gardening and there is a limited tradition of garden care among individuals, which explains the relatively small size of these markets. Demand in these markets is driven mainly by commercial end-users.

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, of which the largest categories are 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 as new innovations and technology are being introduced into the market. Growth in electric products is being driven by battery-powered products such as robotic lawn mowers and handheld products such as trimmers, hedge cutters and chainsaws.

Construction market growing by about 3 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 products and slightly higher for stone 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, which in turn sell them to end-users. Dealers primarily sell products in the high performance segments to professional users and prosumers (demanding consumers) and offer product service, while retailers sell products in the low- to medium-price ranges, mainly targeting the consumer segments. The online channel, which is used both by dealers and retailers, is gaining in importance, but its share still represents less than 10 percent of the total market. Construction and stone industry products are sold directly to end-users such as sawing and drilling contractors and quarry operators, to rental companies that lease the equipment to end-users and to dealers who sell to professional construction end-users.

Market demand in 2016

Demand for forest and garden products developed positively in Europe during 2016, driven by growing demand for robotic lawn mowers and other battery-powered products. North America, on the other hand, experienced a year with unfavorable weather conditions for forest and garden products during the peak season. For construction industry products, demand increased in North America and was stable in Europe while it declined in the rest of the world. Demand for stone industry products decreased globally.

Seasonality

Forest and garden products, which represent almost 90 percent of the Group’s total sales, are highly seasonal due to end-user buying patterns. Most equipment is sold during the 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.  

 

Net sales seasonality

Average distribution per quarter 2012-2016, %.

Operating income, seasonality

Average distribution per quarter 2012-2016, %.