Husqvarna this week reported sales and operating income for the Americas are lower than both the company’s own and current market expectations, citing production disturbances in Husqvarna's largest production facility in North America.
Husqvarna Group’s total sales and operating income, adjusted for exchange rate effects and items affecting comparability, increased by 6 percent and 7 percent respectively, compared to the first-quarter 2010.
Net sales in the first-quarter 2011 for the group were SEK 8.77 billion (about U.S. $1.39 billion) from SEK 9.08 billion in the first quarter of 2010. Adjusted for exchange rate effects, sales increased by 6 percent or by approximately SEK 490 million (U.S. $77.8 million). Operating income for the group was SEK 662 million (U.S. $105.2 million), from SEK 778 million a year ago. Adjusted for exchange rate effects and items affecting comparability, operating income increased by 7 percent or by approximately SEK 50 million (U.S. $7.9 million).
Net sales for Europe & Asia/Pacific were SEK 4,541 billion (U.S. $721.7 million) from SEK 4.46 billion in 1Q10. Operating income for Europe & Asia/Pacific was SEK 815 million (U.S. $129.5 million) from SEK 732 million in the year-ago period.
Net sales for the Americas were SEK 3,588 billion (U.S. $570.3 million) from SEK 4.03 billion in the first quarter 2010. Adjusted for exchange rate effects, sales were flat. Operating income for the Americas was SEK -94 million (U.S. $14.9 million) from SEK 81 million.
The production disturbances in North America have led to lower shipments and therefore negatively affected sales as well as significantly higher costs, the company said. The production disturbances were caused by an increase in material complexity that is associated with the combination of both the move of the production from Beatrice, Neb., into the production facility in Orangeburg, S.C., as well as a significantly higher number of products being launched.
Measures to resolve the situation and to minimize the impact for customers have been taken, Husqvarna said. The production increased gradually during the quarter, as did the associated cost for measures taken. The improvement work is continuing and production output is expected to continue to improve during the second quarter, however with higher manufacturing costs throughout the season.
The manufacturing facility in Orangeburg mainly produces ride-on lawn mowers for the North American market. Some production is also exported to Europe and worldwide.
Husqvarna has North American headquarters in Olathe, Kan.