Profitable growth focus of the 2020 Strategy
The Husqvarna, Gardena and Construction divisions are all operating well above the Group’s target of an operating margin of 10 percent, which means that these divisions have a profitable growth agenda. The Consumer Brands Division remains in turnaround mode and will maintain margin improvement as its priority.
The long-term ambition and detailing of the Group’s strategy was set in 2014. The most distinctive change was the end-user-focused organization that was established in 2015. In the business plan of each division, the key initiatives to drive profitable growth or to improve margins have been detailed.
Customer segmentation is key
Knowing which end-user segments to target and how to effectively serve their needs and requirements determines success in the market. Understanding the different needs of end-user segments enables the Group to develop better offerings, a more balanced product mix, a differentiated channel approach, clear brand positioning and more targeted communication. The different brands play an important role as they are the direct link to end-users.
Business model differentiation
The key principle for defining the Group’s four divisions is business model differentiation. In essence, this means each division targets its unique group of end-users and builds operations on the success factors necessary in each of these end-user segments. The Husqvarna Division shall be the preferred choice for professionals and prosumers in forestry, lawn and garden. Gardena aims to be the leading brand in the passionate gardener segment where gardening is a lifestyle, while the role of the Consumer Brands Division is to be the best alternative in the broad mass consumer segment. The Construction Division aims to be the preferred choice for professionals in several niche construction and stone industry segments.
Investments to drive profitable growth
To enable profitable growth initiatives, the Group has implemented a set of additional measures in 2016 and 2017 to reduce costs and increase efficiency. Successfully executing these measures will release the funds needed to finance the profitable growth initiatives of the three divisions in profitable growth mode. For Consumer Brands, the measures are essential since efficiency improvements and cost reductions are prerequisites for its margin improvement.