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Husqvarna Holdings reported a significant 31% increase in revenue, reaching DKK635 million in Q1 2025, despite challenges in gross margins and cash flow. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, with the stock currently trading at DKK 8.1. The company’s stock performance was not directly linked to this earnings call, as the provided stock data pertains to HusCompagniet AS, which saw a 4.71% increase in its stock price.
Key Takeaways
- Revenue surged by 31% to DKK635 million.
- Gross margin declined from 23.3% to 19.5%.
- Swedish business sales nearly tripled.
- Negative free cash flow of DKK14 million.
- Strong growth in semi-detached segment by 36%.
Company Performance
Husqvarna Holdings demonstrated robust revenue growth in Q1 2025, driven by strong performance across its business segments. The semi-detached segment experienced a notable 36% increase, while the Swedish market showed exceptional growth, with sales nearly tripling. Despite these gains, the company faced challenges with declining gross margins and negative free cash flow.
Financial Highlights
- Revenue: DKK635 million, up 31% year-over-year.
- Gross profit: DKK124 million, up 10% year-over-year.
- Gross margin: Declined to 19.5% from 23.3%.
- EBITDA: DKK17 million, down from DKK21 million last year.
- EBIT: DKK6 million, compared to DKK9 million in Q1 last year.
- Free cash flow: Negative DKK14 million.
Outlook & Guidance
Husqvarna Holdings has set a revenue guidance of DKK2.8-3.1 billion for the full year 2025, with EBITDA expected to range between DKK110-160 million. InvestingPro analysts forecast significant sales growth for the current year and expect the company to return to profitability. The company anticipates delivering 2,200 houses in 2025, maintaining its focus on efficient project execution and strict financial discipline. For detailed analysis and forecasts, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
CEO Marcin Rau Nielsen expressed satisfaction with the company’s sales momentum, stating, "We are pleased to see a continuing pickup in the sale despite the noise abroad." CFO Alan Downinghansen emphasized the importance of financial discipline, saying, "Efficient project execution and strict financial discipline remain a key focus area for us."
Risks and Challenges
- Declining gross margins could impact profitability.
- Negative free cash flow may affect financial flexibility.
- Consumer confidence is declining, which could impact future sales.
- The company faces macroeconomic pressures, including high employment rates and steady core inflation.
- There is a cautious approach to workforce expansion due to market uncertainties.
Q&A
During the earnings call, analysts inquired about the sustainability of the sales momentum and the reasons behind the strong growth in the Swedish market. The management confirmed that the sales momentum was not due to one-off effects and emphasized their commitment to maintaining high customer satisfaction and efficient project execution.
Full transcript - HusCompagniet AS (HUSCO) Q1 2025:
Conference Moderator: Welcome to Husqampinil Holdings Financial Presentation for the First Three Months of ’20 ’20 ’5. Today’s call is being recorded. All participants will be in a listen only mode throughout the presentation and afterwards there will be a question and answer session. I will now turn the call over to speakers. Please begin.
Marcin Rau Nielsen, CEO, Fuscombeil: Thank you, and welcome to our presentation of Husqvarna Q1 results today. Thank you for taking the time to participate. My name is Marcin Rau Nielsen. I’m CEO of Fuscombeil and CFO, Alan Downinghansen, join me on this call. We will kick off the presentation with a few highlights and a view of the quarter.
After that, we will turn to the Q and A session. Please go to Slide two for a few comments on the market conditions. The first quarter of twenty twenty five has been eventful to say that at least on the global scene, we have seen political and macro turmoil, still the conditions in the Danish housebuilding market have been relatively stable. We are very pleased to see a continuing pickup in the sale despite of the noise abroad. The activity levels remains high, and we note good interest in the house building, leading to more meetings and signings.
Still the turmoil is causing real uncertainty among consumers. This is reflected in the continued decline in the consumer confidence in the beginning of twenty twenty five and gradual improvements the last couple of years. Even though our activity level is good, we, of course, hope that the trend will change again as soon as possible. When we look at the classic macro indicators, we are pleased that the employment rate remains very high. The core inflation is still steady in Denmark, while the tariff and the trade discussions on the global scene have lifted the long interest rate slightly.
We have actually seen a moderate decline in short interest rates in 2025. All in all, we still expect to continue the good momentum this year as the market rebound continues. Let’s go to Slide three, and Alan takes on the highlights for Q1.
Alan Downinghansen, CFO, Fuscombeil: Thank you, Martin. We maintained the momentum and delivered solid revenue growth in Q1 for the third quarter in a row. Activity was high in all three segments, and we are seeing a positive impact of the pickup in sales in recent quarters. Revenue increased by 31 to DKK635 million with higher contributions from the detached and semi detached businesses in Denmark. We are pleased to report that sales continue to increase in line with our expectations.
This will have a positive impact on revenue and earnings in the coming quarters. Our gross profit increased by 10% to DKK124 million, but the margin declined by almost four points to 19.5%. This was in line with our expectations and the 23.3% margin in Q1 last year was a tough comparison as we completed several successful projects, enjoyed a favorable product mix and benefited from lower than expected material costs back then. In Q1 this year, we had a different product mix in the semi detached business, and the share of projects on owned land was lower. At the same time, a good part of the high activity level was related to initiation of new projects and execution on the semi detached order backlog, which more than doubled during 2024.
This significant growth in our order book has entailed onboarding of almost 60 new employees. The majority have joined in our production facilities and we look forward to leveraging the added capacity in the coming months when our new colleagues are fully up to speed. On this backdrop, we were pleased to deliver a gross margin of 14.6% in the semi detached business. Also, we have seen an increase in material costs when comparing with last year, impacting the detached business as expected. All in all, the development has been in line with our expectations and operational performance has been solid with good efficiency on projects and costs maintained at a reasonable level across the business.
On that note, we have reclassified staff costs related to production employees at our factories in Esperg and Sweden. This cost component is now presented as part of cost of goods sold instead of SG and A. The change impacts gross profit in the semi detached and wooden houses segments and we have restated key figures for the comparison period and added a slide on the changes in the appendix to this presentation. The gross margin of 14.6% for semi detached mentioned before would be 27.8% prior to the reclassification. For the Wounded Houses segment, the margin of 47.9 this quarter would have been 52.9%.
Earnings were slightly lower in the quarter with EBITDA declining to DKK17 million from DKK21 million last year and the margin coming to 2.6% compared to 4.4%. This change mainly reflects the decline in gross margin and the earlier mentioned onboarding of new employees. We have increased SG and A to support future sales and growth and a share of our SG and A costs related to the production of elements at our Swedish factory has been allocated to the semi detached segment as of Q1. As the rebound continues, we are seizing opportunities to win market share and secure scale benefits. Earnings were also impacted by the timing of deliveries of projects in the semi detached business as a few large projects kicked off later in 2024 than initially planned.
EBIT was DKK6 million compared to DKK9 million in Q1 last year and in line with expectations. The quarter’s free cash flow was negative by DKK14 million and affected by an acquisition of 12 apartments in six housing units in Costa Park in Sweden at a foreclosure auction. Let us flip to Slide four and an overview of sales from Martin.
Marcin Rau Nielsen, CEO, Fuscombeil: Thanks, Alan. Q1 was another good quarter in terms of sales activity. Sales were up by 31% compared to the same period last year with three fifty six units sold in total and a strong performance from all three segments. We are coming from a very low level, but it’s positive that we are moving in the right direction. As Alan mentioned before, we are now beginning to see positive effects of this sale pickup.
Progress was solid in the Detached segment with 18% growth and very strong in semi detached with 36% growth, including a great order from for 96 units on Bonhomme in the quarter. Sales in the Swedish business almost tripled and we are close Swedish B2B contract for 15 units in Q1. We would like to highlight that the contract for 106 units with the Trilanda announced in October, still not, is included in the Simitat sales for now. The billing permits is pending, and we are looking forward to kicking off the project. The B2B pipeline is still looking good, and we have a great traction with a lot of larger investors expecting to sign more deals in 2025.
To support the good progress in B2B and meet the market demand, we have expanded our production footprint in Uzburg during Q2 with a new lease contract, and it means that we now add another 4,000 square meters right next to the existing factory. It will enable us to optimize and increase our manufacturing output of wood elements and roof cassettes. Please turn to Slide five and update on deliveries. We delivered 195 houses in the first quarter of twenty five. This was an increase of 17% and the second quarter in a row with higher deliveries year on year.
The progress were driven solely by the test business with a 34% increase in deliveries. Deliveries in the Semi Detest segments were down to 29 units from 38 units in the comparison period, and the decline was a result of timing of projects, deliveries and the effect of B2B projects being initiated later in 2024 than first planned. Our business in Sweden delivered 16 houses in Q1, was down from 19 houses last year. Let’s turn to Slide six and our order backlog. Based on the positive sales traction in recent quarters, we continue to build a stronger net order backlog, which has increased by 61% to DKK2.1 billion at the end of Q1.
All three segments contributed to the positive development with the SIMD test business standing out and more than doubling its order book. SIMD test now compromised 32% of the total floor order book with the detention accounting for 62% and the wooden houses for 6%. The net order backlog amounts to 71% of midpoint and our revenue guidance for 25% and a number of our B2B orders reach into 26% as well. Please turn to Slide seven for Alan’s comments on the outlook.
Alan Downinghansen, CFO, Fuscombeil: Thank you, Martin. We are confirming the 2025 outlook today on the back of a solid start to the year with good sales traction and a high activity level. The positive development is expected to drive higher revenue and earnings in the coming quarters. We still expect revenue to be within the range of DKK2.8 billion to DKK3.1 billion and EBITDA to improve to a range of DKK110 million to DKK160 million. Consecutively, EBIT is expected to be in the range of DKK70 million to DKK120 million, and we have assumed that we will deliver between 2,200 houses this year.
Despite the political and macroeconomic uncertainty, we remain optimistic and confident that we are on the right track to benefit from the market rebound in Detached and leverage our position in the semi detached segment to sign more contracts. Efficient project execution and strict financial discipline remain a key focus area to us, but we are making necessary investments in SG and A to support the continued expansion of our order book. Our leverage was 2.9 at the end of the quarter, and we still expect to stay within the covenants of our financing agreement in 2025. As previously mentioned, dividends are not expected to be reintroduced before our leverage is below two times net debt to EBITDA. Thank you for listening in.
Now please turn to the next slide for the Q and A session.
Conference Moderator: The first question is from the line of Sebastian Grave from Nordea. Please go ahead. Your line will now be unmuted.
Sebastian Grave, Analyst, Nordea: Thanks a lot, and thank you for taking my questions. And congratulations on a strong start to the spring selling season here, guys. First question is on the 80 units implied sales rate for detached sales in March. So it looks like one of the highest monthly sales numbers we have seen for a long time. And I know from history, there can be some lumpiness from month to month.
But my question here is really if there’s any sort of one off effect from larger land pieces becoming available or other things that we need to be aware of? Or this is simply just a reflection of underlying momentum? That will be my first question.
Alan Downinghansen, CFO, Fuscombeil: Thank you, Sebastian. And we are pleased to note the continuous ramp in Q1, and we can also confirm that the sales in March or, for that matter’s sake, in April is not reflecting any of the matters that you are addressing here. So it’s a Okay.
Marcin Rau Nielsen, CEO, Fuscombeil: It’s a
Alan Downinghansen, CFO, Fuscombeil: part of the continuous ramp and rebound.
Sebastian Grave, Analyst, Nordea: Well, that’s great to hear. Very nice. Thanks, Alan. And and and you touch upon yourself here, the April sales figures of of of 75 units. I mean, a tad below March, but I guess in light of the extreme uncertainty around liberation date, it’s a very decent number after all.
What is your read into this number? Is there any and I mean, could you comment around any seasonality around Easter or anything to be aware of?
Marcin Rau Nielsen, CEO, Fuscombeil: No. We we we not see seasonality that way. Easter in it has been you can see, spoken up to to us a a high sales period. But but from my perspective, it is more real estate attraction actually because we normally see that that April is at the same level as as the other months in in in the spring.
Alan Downinghansen, CFO, Fuscombeil: And and and adding to what Martin is saying, we continue to see increased activity levels, meeting activity, etcetera. So I’d say it’s more for more for fluctuation the way we look at it now.
Sebastian Grave, Analyst, Nordea: Okay. And and and and and would that would that does it mean that you sort of have not seen any change in in customer activity activity or dialogue post liberation day? Is that is that the way to to to read it?
Marcin Rau Nielsen, CEO, Fuscombeil: Yeah. I I would
Alan Downinghansen, CFO, Fuscombeil: say we we probably see some more fluctuations, but I would say, all we are still on the right trajectory. So I would say, I think the month of April was probably the most, what should we say, turbulent month since in this in in this year. And I would say we saw some some some fluctuations, but I’m we we continue to see increased meeting activity overall.
Sebastian Grave, Analyst, Nordea: That’s great to hear. And then just my final question. On the margin for the Detached business, 19.5% here in the quarter, is this the run rate we should look for going forward?
Alan Downinghansen, CFO, Fuscombeil: I would say the margin reflects, as we also mentioned, a decline compared to last year, which was in line with our expectations, yes.
Sebastian Grave, Analyst, Nordea: That’s great. Thank you.
Conference Moderator: The next question is from Christian Tornow from SEB. Please go ahead. Your line will now be unmuted.
Christian Tornow, Analyst, SEB: Yes. Thank you. A couple of questions from my side. So now that you have reclassified staff costs related to the production facilities, it becomes a bit easier to, I guess, talk about the expected development in FTEs. So we can see that in Q1 staff costs related to non production FTEs, if you can call it, that was 77.2%.
So my question is, have you ramped up your organization sufficiently now excluding the production sales workforce? Or is there still more production on a small increase to come on the SG and A staff cost?
Alan Downinghansen, CFO, Fuscombeil: So I would the way we look at it now that is that we try to ramp in line with our order book and our expectations for the future. So as we look at it right now, we are still having a foot on the speeder and brake at the same time, on the gas pedal and the brake at the same time. And I would say, we take it on a quarterly or even on a monthly basis and look at the situation and then we ramp as we see our momentum increases. So I wouldn’t put down a certain comment on that.
Christian Tornow, Analyst, SEB: Okay. So but when you then see the level of order growth that you’ve seen in the first four months here, does that then require you increase your workforce better for the rest of the year?
Marcin Rau Nielsen, CEO, Fuscombeil: In in Christian, in in some part of our of our business, we can see already now, for example, the simvastatin that we have to have some construction manager to manage the building process on sites. So, yeah, we can see some places that we will ramp up there. And but as Alan mentioned, it’s very important for us to be aware and then not go too fast ahead.
Christian Tornow, Analyst, SEB: Okay. That’s fine. That makes sense. Thank you. And then the next question goes to sort of the phasing of the Semi Detached project.
So in your comments, highlighted the fact that Q1 last year in Semi Detached, you had completion of project with good execution. And then in Q1 this year, you are more in the initial phase of these projects. And also that, I guess, reflects the percentage of completion accounting. So my question is with the current backlog, are you going to reach completion or close to completion on any major B2B projects in Cimitate to test? Or will that not come until next year?
Marcin Rau Nielsen, CEO, Fuscombeil: I I think it it would be wrong for us to make a comment on that. But as we have mentioned before, we have a we have a good pipeline that we’re working
Anders Breitzmann, Analyst, Danske Bank: on.
Christian Tornow, Analyst, SEB: Okay. Alright. Then then maybe just on on the b two b segment as well. So from your comments, it doesn’t seem that you have seen any sort of major reaction from customers through the macroeconomic uncertainty, but but also gets a difference in this psychology between the b to c and the b to b customers. So so perhaps more on the b to b customers specifically, I mean, in what way has the macroeconomic uncertainty changed the dialogue you have?
Marcin Rau Nielsen, CEO, Fuscombeil: The interest rate actually is is going the positive way also for for that kind of investors. So so we we not see that the dialogues is going the wrong way and no no at all.
Christian Tornow, Analyst, SEB: All right. Understood. Great. That was all for me. Thank you.
Conference Moderator: And before we take the next question, let me just remind And we’ll now continue with Anders Breitzmann from Danske Bank. Please go ahead. Your line will now be unmuted.
Anders Breitzmann, Analyst, Danske Bank: Yes. Thank you very much. And hello, Martin and Alan, and thank you for taking my questions. I have a few as well. We start with a question on the detached segment.
We’ve seen the ASP on a declining trend towards normalization. Should we expect this ASP in the three type segment to continue down for the following quarters? Or is it $2,700,000 a fair assumption for ASP going forward?
Alan Downinghansen, CFO, Fuscombeil: You can say that can fluctuate a bit, Johannes, depending on sales across regions, etcetera. So I would say what we are seeing is not an unusual fluctuation.
Anders Breitzmann, Analyst, Danske Bank: Okay. Yes, that is fair, of course. And then back to the question on the FCD side and the ramp up in the cemidipide segment. Obviously, you’re increasing capacity in the cemidipide segment. You’ve added some new colleagues as well.
How many additional colleagues would you theoretically need to hire in the Terminator type segment given you reach a full production capacity at the factories?
Alan Downinghansen, CFO, Fuscombeil: I understand your question, Anders, but we can’t go into those details, unfortunately.
Anders Breitzmann, Analyst, Danske Bank: Okay, okay. Yes, that’s reasonable. Then just a few questions on the Swedish business. Again, actually back to the gross margin here. So 48% in Q1, so obviously a high point and it has been bumpy and good reasons for it being bumpy as well.
But what kind of can we expect a normalized gross margin in this Swedish business? Should we see this in Q2 and onwards? Or what’s your comment there?
Alan Downinghansen, CFO, Fuscombeil: The Swedish business in Q1 was impacted by the sale of a number of land plots, a limited number of land plots, I would say, but with fairly good margins. So this is why we see the margin that we do in
Anders Breitzmann, Analyst, Danske Bank: the Swedish business for Q1. Okay. And you don’t expect do you expect any additional land plots or similar to have an effect going forward or?
Alan Downinghansen, CFO, Fuscombeil: We currently don’t anticipate any land plots producing or generating a margin like this when we look there when we look towards the end of the year.
Anders Breitzmann, Analyst, Danske Bank: Okay. Okay. And my final
Marcin Rau Nielsen, CEO, Fuscombeil: are very pleased that we actually is that we’re situated selling the land parts with very good margins despite the situation also there is in the housing market in Sweden. We actually are so focused on the margins also in the Swedish business.
Anders Breitzmann, Analyst, Danske Bank: All right. Thank you very much, Martin. So my final question here also in Sweden, and you’ve touched upon it a little bit in the presentation here. But can you just elaborate the inventory increase here in Q1 impacted by an acquisition of some units in Sweden. Can you maybe tell us your thought process here and what the plan is with this acquisition?
Alan Downinghansen, CFO, Fuscombeil: So this was a project which took over from a customer of ours, which went bankrupt, we took it over on a forced forced auction. And the ambition is to to finalize that project, that it would it would require some bit of capital. I I can’t be too detail about it, but we are not talking a a significant amount. And and then we’re gonna put up the the apartments for sale so she can pay.
Anders Breitzmann, Analyst, Danske Bank: Alright. So is there any timeline on this project?
Alan Downinghansen, CFO, Fuscombeil: Somewhere during this year, I expect that we can initiate the sale.
Anders Breitzmann, Analyst, Danske Bank: All right. That is perfect. Thank you very much for letting me answer here. Thank you.
Conference Moderator: The next question is from Sophie from Dowler and Pearson. This
Sophie, Analyst, Dowler and Pearson: is Sophie. I just have a question. I want to hear how many defect claims has house company received on houses in Denmark in the first quarter of this year?
Alan Downinghansen, CFO, Fuscombeil: How many what, sorry,
Sophie, Analyst, Dowler and Pearson: Defect claims on houses.
Alan Downinghansen, CFO, Fuscombeil: Okay. Unfortunately, this is not a number we can’t disclose.
Sophie, Analyst, Dowler and Pearson: Okay. Okay. Can you tell me a little about what is the reason for the increase in the number of defect claims for the last years in Denmark?
Alan Downinghansen, CFO, Fuscombeil: Actually, this is not a number we are disclosing.
Sophie, Analyst, Dowler and Pearson: Okay. So have you experienced an increase in claims, not by number, but in general?
Alan Downinghansen, CFO, Fuscombeil: No. No, we haven’t. And we deal with the claims that we have on a continuous basis.
Conference Moderator: Okay. Can you tell me a little about what is
Sophie, Analyst, Dowler and Pearson: the
Marcin Rau Nielsen, CEO, Fuscombeil: what can Sophie, it is also important. We have never had as high a customer satisfaction as we have now. So our very strong focus on delivering at the right time and high quality, it is very, very strong for us also now.
Sophie, Analyst, Dowler and Pearson: Okay. Great. That’s good to hear.
Conference Moderator: Can you tell me a
Sophie, Analyst, Dowler and Pearson: little about if there’s any new status of the arbitration case with your former mortuary subcontractor in Denmark Denglid?
Alan Downinghansen, CFO, Fuscombeil: This is not something we can comment on, Shavir.
Sophie, Analyst, Dowler and Pearson: Okay. But thank you for taking my questions.
Alan Downinghansen, CFO, Fuscombeil: Thank you. You’re welcome.
Conference Moderator: As there are no further questions on the conference call, I will hand it back to the speakers. Please go ahead.
Marcin Rau Nielsen, CEO, Fuscombeil: Yes. But then, Alan, I will say thank you again, all of you, for taking your interest in Husqvarna. If you have any follow-up questions, please reach out to us, have a nice day.
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