In an exciting year at Husqvarna Group, clearly impacted by a challenging macroeconomic situation, we have delivered solid development in many of our strategic value-creating areas. During the year we have also seen a number of successful product launches and impressive performance in our sustainability focus areas – Carbon, Circular and People – ensuring that we are well positioned to meet the future needs of our customers.
In his CEO statement, Husqvarna Group’s Pavel Hajman talks about the company’s transformational journey and progress in key strategic areas.
Husqvarna Group is on a transformational journey to future-proof the company and its customer offering. Where is this journey going, and why?
A number of global trends are changing society at large, and we are continuing to adapt with them. Above all, the global need to transition to a net-zero carbon future will re-shape every company that aims to remain relevant. This forms the foundation of our transformational journey. We want to capture opportunities in a world that is electrifying at a rapid pace and where the use of autonomous, connected and smart products and solutions are increasing day by day. By constantly re-inventing ourselves, and by identifying and capturing market opportunities, we are continuing to future-proof the Husqvarna Group.
At the core of these efforts lies your overall strategy of ‘Sustainable value creation’. What do these words mean to you, and for Husqvarna Group as a company?
Sustainable value creation describes our ambition to consistently deliver returns to our shareholders, while contributing to a more sustainable society. It serves as our strategic north star and focuses on how we can deliver innovative products and solutions that create great customer experiences. At the heart of our strategy lies Sustainovate, our sustainability framework with ambitious targets for carbon reduction, for circular innovations, and for inspiring people to make sustainable choices. Closely connected to Sustainovate are our core areas for value creation, namely, robotic mowers, battery-powered products, professional solutions and watering products. Our strategy, and our ability to innovate toward more sustainable products and solutions, is our way of driving long-term profitability and gaining a competitive edge, regardless of
current market conditions. We must of course adapt to short-term fluctuations in the economy, but never compromise on the long-term agenda.
2023 has, in many ways, been a challenging year, not least due to macroeconomic turbulence. How have you addressed these challenges to create a stronger company?
We have clearly been impacted by the challenging macroeconomic situation and the effect this has on our customers. In some areas, our customers have been more cautious in terms of spending, which affected volumes and sales. At the same time, our retail partners have worked to reduce their inventory levels. In total, our organic sales declined by 5 percent for the year. However, despite lower volumes we improved our operating margin to 9.3 percent (9.0). The improvement was driven by our cost savings, price increases and lower logistics costs. We expanded our Group cost-savings program in the third quarter to SEK 1.2bn, with full effect to be reached by 2025. Importantly, our efficiency measures and operational focus allowed us to complete the year with strong cash flow generation of SEK 6.5bn (–0.6). Overall, we improved the operating margin in all three divisions and we are committed to continue to build a stronger Group. We stay focused and continue our transformational journey. For example, while we have seen a decline in petrol-powered products, we grew our battery-powered and robotic mower business in 2023.
Looking at the targets set by your Sustainovate framework, how have you delivered on this transformational journey in 2023?
Across the board, we have had strong and solid development toward our 2025 Sustainovate targets. Our 2025 Carbon target is to reduce absolute emissions from our entire value chain by –35 percent compared to 2015, and here we are actually ahead of target. As of year-end we have reduced our absolute emissions by –44 percent. Our target in the Circularity area is to launch 50 circular innovations by 2025, and this year alone we launched 17 circular innovations in the market. In total, we have now reached 27 launched circular innovations. Regarding our People target, we have inspired 2.4 million people to make a more sustainable choice when buying one of our products and are on track to reach our target of 5 million people. These are all accomplishments to be celebrated. Our progress is a sign that we are meeting customer needs, and that we are well-positioned for a future in which sustainability is business critical.
In addition to your financial and Sustainovate targets, you have operational ambitions. One of them is to reach robotic mower sales of SEK 12bn by 2026. How has progress been in relation to this aim?
Net sales of robotic mowers increased to SEK 8.1bn (6.3), an increase of 29 percent compared to last year. We achieved strong growth in both the residential and professional market segments. This is thanks, not least, to several successful product launches, such as Husqvarna Automower® NERA, our first boundary-wire free robotic mower for residential gardens. We are also expanding our offering of solutions for the professional market, where we aim to transform commercial turf care from a manual task into a fully automated one. We are making great inroads here already, one example being the Husqvarna solutions in place to deliver perfect conditions at around 50 of the top 100 golf courses in the U.S.
You also aim to have two thirds of your motorized products sales electrified by 2026. How will you reach this goal?
Electrification is key in our overall transformation journey and of course a key contributor to our sustainability efforts. Reaching our goal here is dependent on a continued high pace of innovation, both inhouse and through partnerships and alliances. In 2020, we co-founded the POWER FOR ALL ALLIANCE together with Bosch. The alliance is one of the world’s largest cross-brand 18V battery systems and we have continued to launch products using the battery in both the Gardena and the Husqvarna Forest & Garden divisions. In the Construction Division, we have also expanded the battery-powered assortment with, for example, new products on our 94V Husqvarna PACE battery platform. Across the Group, the share of electrified solutions grew to 42 percent of our motorized product sales. Progress was driven by strong growth in battery-powered products as well as robotic mowers. However, realizing this ambition will also come down to exploring products using alternative fuels, developing new engine technologies and exiting petrol-powered products where relevant for our business. In 2023 and 2024, we are proactively exiting low-margin petrol-powered consumer wheeled business totalling SEK 2bn in sales.
Adding this together, how have you delivered on your strategy in 2023?
While this year’s result was impacted by the general economic decline and weak markets, the long-term execution of our strategy is solid. We have further expanded our offering in the robotics and battery segments, we have increased our number of connected devices by 25 percent (to 4.5 million) and our three divisions are constantly working to enhance the customer experience. We have achieved growth in our smart watering category as well as improved the profitability for our Orbit business. We are developing our business models to meet the changing demand for solutions as a service and other new ways of owning and using our products. Overall, we have shown strong delivery capability, thanks to all the great people working to make this a reality every day.
At Husqvarna Group, every colleague is described as an integral part of the company’s overall success. How do you create an outstanding company to work for and how do you develop your culture?
I would like to take this opportunity to thank the entire team for their dedication and efforts this year. Together, we are on a journey to transform our business and our industry. A strong company culture is crucial for executing our strategy, creating lasting value, and attracting and retaining great talent. It unites us and ensures we are all aligned and work together toward our shared long-term ambitions. This year, we unveiled our updated culture story, a collective effort involving the entire company. Together, we have shared insights on strengths and areas for improvement. Currently, we are actively bringing our culture to life through global team workshops and leadership activities, emphasizing its ongoing significance for years ahead. We are committed to enhancing our learning mindset and curiosity through training, leadership programs, diversity & inclusion initiatives, and regular employee well-being assessments via the "Our Voice" survey.
Looking ahead, what will be important focus areas in the coming years?
In the short term, it is important that we adapt to the current uncertain market environment. However, this must be achieved without compromising on our long-term agenda. All the signs point to a rapid acceleration in our industry toward more sustainable solutions. This is where our future lies, not least as Husqvarna Group’s success is based on shaping green spaces and urban environments of tomorrow. We must therefore aim for a net-zero carbon future, and I look forward to leading our company on that journey together with my great colleagues and teams by offering electrified, automated, and efficient solutions to our customers. To further accelerate our strategic transformation, we will increase investments in our key sustainable value creation levers: robotic mowers, battery, smart watering, and professional solutions. This is how we ensure Husqvarna Group remains a successful company in the years to come.
Pavel Hajman
CEO
This CEO message is featured in our 2023 Annual and Sustainability Report.
Read the full report here: Annual and Sustainability Report 2023