Husqvarna Sprints on Cost-Out and Portfolio Pruning Amid Soft Consumer Demand
Q2 2026 shows resilient margins via tariff refunds and accelerated savings, but organic sales slip 4% as the group pivots its portfolio toward growth areas.
HUSQ-B.ST · Earnings Call · 2026-07-17
Husqvarna's second quarter of 2026 was a study in contrasts: the top line wilted under geopolitical uncertainty and poor early-season weather, yet the group delivered a margin improvement and a burst of strategic actions that signal a company in motion. CEO Glen Instone framed the quarter as one of execution rather than growth: “Following a very strong start to the year with a strong sell-in to our trade partners and very successful product launches, Q2 has been somewhat difficult. That has been really geopolitical uncertainties and a weaker consumer sentiment has certainly weighed on consumer demand.” — Glen Instone, Chief Executive Officer · 2026-07-17 North America provided a bright spot, with all three divisions growing — a continuation from Q1 and a meaningful counterweight to Europe's weakness. Growth in North America remains a key strategic theme, and it is now showing up across wheeled and handheld products in the Forest & Garden division, plus a record aftermarket quarter in Construction.
## The Cost-Out Engine Accelerates
The real story this quarter is the aggressive acceleration of the group's cost program. Management added SEK 385 million of savings in Q2, bringing the year-to-date total to SEK 630 million, and raised the ambition to deliver SEK 3 billion of savings by 2028 — a full two years ahead of the original 2030 timeline. CFO Terry Burke described the drivers: “Cost savings program. We continue in a very good way with our cost savings program, SEK 385 million in the quarter. There's a couple of areas that we really seem to be doing very well in, and that is in sourcing and Design-to-Value.” — Terry Burke, Chief Financial Officer · 2026-07-17 This is not just talk: the group cut its logistics supplier base by two-thirds, consolidated warehouses, and is shifting labor-intensive manufacturing from Germany to the Czech Republic in its Gardena division. Strong savings are being reinvested into the business, but the acceleration is also a defensive move against escalating input costs.
## Portfolio Pruning and Strategic Reviews
Underpinning the cost-out is a clear portfolio rationalization. Husqvarna announced its intention to exit the stone diamond tools business in Construction, a move that will be EBITDA-margin accretive once complete. More striking is the upgrade of the Powered Garden business in Gardena from a turnaround case to a formal strategic review. CEO Glen Instone was blunt about the group's willingness to make hard calls: This strategic review of Powered Garden signals that management is no longer willing to tolerate a business that continues to decline at double-digit rates and dilutes margins. The exit from stone diamond tools similarly removes a low-return drag, reinforcing the message that capital and management attention are being concentrated on higher-growth, higher-margin areas. ## Tariff Refunds and Middle East Inflation: A Balancing Act The quarter featured a notable SEK 240 million tariff refund, booked in COGS, which provided a significant tailwind to reported EBITDA. This is part of a broader industry theme, as company-specific Tariff refunds have become a recurring topic in the market. CFO Terry Burke was cautious about the sustainability of this benefit: “We have received the majority of the claim, and I think it's really uncertain as to what more will come. I wouldn't factor in too much more of a tariff refund.” — Terry Burke, Chief Financial Officer · 2026-07-17 In stark contrast, inflationary pressures from the Middle East conflict are building — SEK 65–70 million hit in Q2, with a full-year expectation of SEK 300–350 million, roughly split between raw materials and logistics. Management intends to offset these through price increases, which have been modest so far but are being implemented in targeted markets. ## Cash Flow and Balance Sheet Resilience The group's cash flow performance was a standout, with free operating cash flow of SEK 3.9 billion in the quarter and SEK 2.8 billion year-to-date. This allowed Husqvarna to reduce borrowings by over SEK 1 billion and cut net debt to SEK 11.8 billion, bringing the net debt/EBITDA ratio down to 2.0x. Terry Burke highlighted the importance of this:We've took some very firm decisions on cost out during the second quarter, supplier consolidation around logistics, closing down warehouses, moving manufacturing and being very clear on our strategic portfolio management.
Inventory remains slightly elevated (up 4% currency-adjusted), a consequence of the weaker sales, but the group is committed to working it down in H2. ## Robotics: Growth but Margin Pressure The robotics story is nuanced. Husqvarna-branded robotics grew in Q2, though at a slower pace than the double-digit growth of Q1. The CEO confirmed: “we saw a growth in Q2 in Husqvarna-branded robotics. It wasn't at the level of Q1, but we did see a growth.” — Glen Instone, Chief Executive Officer · 2026-07-17 However, margins for the overall Automower business are slightly down due to price adjustments on older SKUs and cost pressure on new technology. This is a recurring theme: in the prior quarter, management noted the price erosion and the shift to boundary-wire-free, acknowledging that the entry segment remains margin-dilutive. The company is addressing this through cost-out initiatives specific to robotics, but the strategic review of Powered Garden suggests they are weighing whether the Gardena-branded robotics portfolio deserves the same capital. Looking ahead, Husqvarna's Q3 will be watched closely for signs of a consumer rebound in Europe and further inventory normalization. The cost-out program provides a buffer, and the portfolio moves are a clear attempt to reposition the group for profitability over volume. Whether the 2028 savings target is achieved will depend on the execution of the very decisions announced today — and on the broader macro outlook that remains uncertain.I was particularly pleased about cash flow in the quarter. Cash is extremely important to this business.