Episod 334 - Husqvarna Group vd Glen Instone om nya strategin mot lönsam tillväxt, AI, kinesisk konkurrens och Garden Doctor

"I need to be functioning in financing for bar today to a solution." "I need to be functioning for bar today to a solution." That's really what will hopefully set me apart and set us apart that we try to start to drive much more of a momentum. Long-term listeners know that this is actually the second time that Husqvarna is joining this podcast. How long time do you think it will take to make this kind of internal turnaround? It's going to take 12 to 24 months, would be my sort of broad guidance here. As mentioned, we've got 13 business portfolio units. We've got clearly have three that are in the turnaround case. They're going to need, I mentioned in December 2025, we need 24 months. We're getting closer to that end point. We're clearly making some changes. We announced a strategic review of one of the portfolio units as recently as July this year. We'll come back with the outcome of that in the next six months or so. It's getting closer and closer to answer you. I think we need to know the 18 months from where we are. I'm hoping within the 18 months as well we've really accelerated our cost-out program. We launched a very large cost-out program a year ago. We talked about a four billion-sec savings, which is factor two to anything we've done before. It is very aggressive, but it's much needed to make this competitive, but also to make sure we have the investment muscle going forward to invest in our great brands, our great products, to continue investing in innovation. Would you say that this new path also has gained momentum inside the organisation? Definitely. We have a very clear strategy, which if you go around the organisation and walk the corridors, people know exactly what it is. They know they're part of it, and they know the importance of the different components within it. So it's a very simplistic strategy for good reason, so people can really understand it. So again, we'll need a couple more years to really see this through, but I'm hoping by 2028 we can really look back and say we've achieved X, Y, Z, very much what we said we would do in this cycle. You have a background in financial management and the CFO role. How does your experience influence your decision regarding capital allocation and the margin expansion in a challenging market environment, which we will talk more about later on in the podcast? I think in one more decisive, we've got to be decisive. My background at least helps with that. We cannot be, you know, considering decisions for too long. I think in many cases it's good to take a good enough approach and execute, rather than try to get the perfect approach and not execute. So it's about being decisive, I would say. I think having the background to have, I can be fairly decisive in terms of what we need to do from a financial perspective. But it is key that we get back to growth. This group has been doing a lot of cutting and will continue to streamline the portfolio. But we must get this group back to growth and I believe we operate in a fairly attractive market as well. It's a market that is, of course, yes, it's impacted by weather and different cyclicality, but over time it is a growing market. We've got to grow within that market. And we've got to continue having a margin expansion. The margin of this group has not been where it should have been for a number of years now. And we've got to get it back to where it should be. And point A, the first point in time, is getting us back up of 10% operating margin. And one driver should be lazyness as well, because it's not fun to cut your grass. Some people feel it's fun. Personally, I would like to find other things to do. But having the robotic and autonomous products we have now, of course, is a great innovation without a doubt. So I'm with you. I would rather do something else, rather than cutting my grass. But of course, even in the professional setting, instead of cutting the large green spaces, it's more important that those skilled people are working on the more intricate tasks to really enhance the user experience. Or the customer experience in a golf setting, for example. So they can be working on many different things. So I think that really stands across the whole portfolio already. But looking back, what has been the driving force for the revenue decline? What a growth decline. Yeah, you know, we had a very strong tailwind during the COVID years. When we all stayed at home, we weren't spending money on vacation, maybe less money on restaurants. So we started spending a lot more money in our gardens, our extended home. I'm sure we can even reflect back and say, we used to spend X on a garden furniture, and now we're spending three X, because we started spending a lot more. And we saw the same in our industry that people were wanting to spend in the gardens. We came out of that COVID time, and then we went into a lot of supply chain challenges. So I think we went through some very turbulent years, but ultimately we had some tailwinds in those years. And then in 2023, 24/25, we've clearly seen a normalization. And we're seeing some geopolitical tensions. We're seeing some reduced consumer sentiment as a result of that. And in some cases, we've maybe had some weather that hasn't been completely favorable. But I think it's all drove a negative consumer sentiment over time that has made people a bit more cautious around how they're spending. So went from spending a lot to being a little bit more cautious on how they're spending. And I think that's the main driver behind the revenue decline that we've had in recent years. So the numbers that we get from here on, they're showing that the consumers are actually opening their wallet. So hopefully that will be some tailwind going forward. We certainly hope so. I hope so too. Give us a brief introduction to who's calling out. What do you do? Yeah. So you mentioned it in the intro as well. We were founded in 1689. 37-year-old company who seems to have reinvented itself a number of times in that but in those three four centuries we started off in the weapons industry making guns and we moved into products like bicycles, sewing machines, motorcycles, then ultimately into what we call outdoor power equipment and light construction equipment. So we operate in those two industries outdoor power equipment and light construction. We have three divisions. We have one we call Husvana Foresting Garden. It's around 60% of our revenues and really working in the foresting garden industry with lawn mowers, chainsaws, tractors, handheld equipment, trimmers, brush goters, blowers. Then we have really working with the Husvana brand by the way. Then we have the Gardina division which is around 25% of our revenues. It came about through an acquisition in 2006-2007. Very very strong brand particularly in the German speaking countries. Synonymous with irrigation with watering products. It's also very strong in not just watering but also the non mechanized hand tools. So second doors for the garden for example. It's a very very strong and then the third division representing around 15% of our revenues is Husvana construction division again using the Husvana brand. So we take the brand strand there across two of our divisions and actually partially into the garden, the division for that matter. But really working with light construction, light demolition, sewing and drilling, diamond tools, complexion placement. So quite different applications put all in the light construction space. That's your two main brands at Husvana and Gardina. How would you say that your customers perceive those brands? So we have what we call personas, what we try and really classify our customer groups. And there's many personas by the way that we're targeting. But the typical Husvana user would tend to be someone who has an affinity to say an affinity with products being used in the professional domain. And then they would like to use those products themselves. So the see them being used by professionals in the street, in the forest and say okay, I've got an affinity to those products and we'd like to use them. So we call them pro grade experts. So like the pros, the ones that want to work with the same equipment as the pros. So that's really what we feel there's a strong connection there. And that could be a user with a lot of land what we call a landowner customer. So we might even have a small forest themselves. Again, look to the professionals, I use the same equipment. Or it could be someone working in a suburban space, some of the fairly small garden, but have also seen those products in action. And the very, in those cases, the quite tech savvy is very into the technology changes. Or it could be someone who's working in the very large green spaces, working in large parks, golf courses, municipality setting, but again, a very keen to sort of have that connection with professional users. In the more gardener setting, the typical persona is someone who is much more passionate about the garden. It likes to be in the garden, getting the hands dirty in the soil, but really making the flower beds look beautiful, but they're very, very passionate about the garden. So quite different personas, we really try to then target those customers with with our two brands. So I mean, a lot of people on not at least financial Twitter, they love automation. Doesn't matter if it's the lamp, sorry, if it's the garden. I think about gardener, but I mean, my mother-in-law, she says, "No, I cannot come down to Stockholm from the north to Sweden for that long of a time in the summer because I need to water my plants." And I used to think you should be able to have gardeners and products in order for them to do that for you, and maybe have an app as well, so you can follow it. What can you do for those customers that loves automation? But don't necessarily know that you have those products, or my mother-in-law, who should have your products. So you're absolutely right, Nicholas, we want to make the lives of our customers easier, whether that's to spend more time in other tasks, or to be able to travel away from their properties, and make sure that they can turn on the cutting or the watering, or if it may be at home. We want to help them with that. We clearly do it now with our cutting, with robotic lawn mowers, that you can have schedules, you can start it from wherever you are in the world, you can start it off, you can stop it as well. But we also have the same features with our smart irrigation, so we can have smart watering controllers, smart valves. So we are starting to make much more smart equipment, that's really going to help your mother-in-law, hopefully, with her pain point, and then she can visit you much more often. I mean, this smart equipment, is there any other smart equipment that you could add to your portfolio? I mean, the garden is not your vacuum cleaner, of course, but you have the robot mover. Would it be possible in the future to also do a vacuum cleaner inside? Anything's possible, but that's not the target area as far as what we try to say is, today we are cutting in a smart way. Beyond cutting in a smart way, I think there's a lot of caring in the garden, so if you think about the robotic lawn mower, it's pretty much taking every inch of your garden at some point in the day, so it's taking a lot of data points. Those data points could be that you need more watering in certain parts, it could be that there is some disease in the grass, it could be that there is certain flowers need attention, it could even go beyond caring and say it's actually cleaning and take away some of the smaller the smaller debris, if you like, in the garden, so we would like to have a cut, care, clean philosophy in a connected domain, whether that's in the garden, it's really been a garden doctor if I call it that, or in the much larger green spaces where you could be cutting, caring, or also cleaning, so in a golf course setting would be quite an easy way to sort of picture that. So there's many more things we feel we can connect and use the data collection from to really solve pain points of our end customers. We're going to move on in the podcast, but we need to stay here for just a minute, tell us more about the data, that's the goal of our time and the garden doctor, I love it. In my garden, some strange things grow here and there on the grass, I would love to have your lawn mover and to, in the app, also tell me what I should be, what I should do in order for my grass to feel, to grow better and to feel better, I guess it can't feel. Tell us more about that. As you say, we are the sensor, the marauding sensor in the garden or in the larger green spaces, so we're capturing a lot of that data that's needed. What we then need to do, of course, is connect in other applications and connect in other things that's going to help, if you like, in that respect. So we can help you if strange things are growing or we can help you with disease control or if there's a lot of moss growing in your garden, maybe we need to advise on what should be done or again, if it's very, very dry and the moisture levels are too low, because what tends to happen to most people's gardens, you either over water or under water, you rarely get it spot on, we can't get it spot on because we have a sensor, a sensor machine floating around, who can really pick up those data points. So now we need to take all that data and commercialize it, make sure that we really start to add a value to you as an end user, but also that we can connect all the different sort of applications into one consistent ecosystem. So in that one consistent ecosystem, I guess that you can connect the Husqvarna products with the gardener products. Watch this space, that is very much our intention, yes, but in essence, of course, we can connect the two, but that is what we're working on right now to make sure that we can give you, as an end user, you can connect both of those. That's great. That's really great. If it cuts the grass and thinks that it's too dry and just start the watering system, that's amazing. I will get it. That's really good. I'm just thinking about the time that I can save. Can you, if you see the most gross in my garden, can you also in the future maybe help me to advise on which company or companies that I should contact for that? In one word, yes. Of course, there's a lot of applications even out there, and today that would advise on that. What we're going to do is bring that into our sort of advisory system or ecosystem to make sure that we're giving you that information firsthand, and then it pops up on your telephone and gives you that information, and you can act on that. Because then I know that the companies that you advise on are good companies and they might give you a rev share as well. That could be a business model we look at, yes. That's good. You talked about the divisions just a couple of minutes ago. Can you walk us through the different divisions. Which one is the largest one? Which one is the most profitable one? And which one is growing the fastest? So largest, most profitable, and when growing the fastest. Largest Husvana Forest in Garden. Most profitable from a margin perspective is Husvana construction. And growing today, the fastest is Husvana construction, actually. Of course, hopefully I give different answers at the end of the year. But at this point in time, then it is Husvana Forest in Garden, Husvana construction, Husvana construction. And construction, that is the one division that you have recently made a divestment, right? We made a small divestment. It is the diamond tool business within our stone part of that business that we have decided to discontinue. So we're discontinuing that. It's going to have an impact of around 250 million second sales to us. But again, it was very low margin back to what I said earlier, where I was spending our time. It was low margin. And we wanted to spend more time on the profitable parts of that division. So clear, a clear example of actually the operating model working. So the connected and smart gadgets, do we see that trend as well when it comes to construction? We do, actually. So we have a product called the auto grinder that we launched. It's great. So it is a self-operating floor grinder in the best way to put it. But if you think about this in a construction space, in a warehouse or in a room that you're building, and then it's grinding the floors, it's creating a lot of dust. It's not the best environment to be in as a person. You know, we're a very dusty environment. Of course, what we do, we have equipment that extracts that dust. But again, it's a fairly monotonous task. So if you can set that auto grinder away during the night or when you're working on another task, it's just much better. So that's exactly what we've taken a lot of the thinking of the robotic lawnmower into the auto grinder. And that's a lot of the same philosophies. So what do the customers say about this new product? Because you launched this last year, right? We did end of last year. So we started shipping literally for the 26 season. They love it. They really enjoy this product because it's really helping them. A fairly boring task that we're doing that needed to be done, that now is to really solve and help them with that. I guess that you do hire their productivity. I mean, if there's nobody living nearby and hearing the sound at night, of course, but it's very, very quiet as well these machines actually. They're not too noisy. Perfect. How is we're going to talk more about the new products that you shipped last year? That was one of them. How is your geographic mix distributed across the globe? The largest geography for us is Europe. It's 55 to 60 percent of our avenues followed by North America on 30 percent. And then around 15 percent, I would say rest of the world, which is really the Pacific and Latin America sort of. Sometimes we call them the emerging markets, but I think they're growing very, very quickly. So it's around 15 percent. And where do you grow the fastest? In recent years, our growth has still, I would say, has been European. So Europe has become a bigger part of our business. North America has had slower growth in recent years, but we've stopped that trend this year. We're seeing a good growth in North America in 2026. But from a pure percentage perspective, of course, we've had some very strong growth in the so-called emerging markets. In this summer, we had a heat wave in Europe above 40 degrees, 45 degrees in Spain in Portugal. How is that affecting your sales? Because on the one hand, I guess, that the grass is not maybe growing that fast, but on the other hand, I would not want to be outside doing the grass cutting in that kind of decrease. No, of course, we have seen drought conditions in many countries. That's public information that we see, as you say, 40, 45 degrees in some southern European countries. And then that's been there, so we've had very little rainfall. At the same time, we've got a very broad portfolio. So if it hasn't been maybe the best conditions for cutting, it's been very good conditions for watering. Yes. So the portfolio, of course, is very important to us. And we see a strong demand in the drought countries for watering products within reason. But again, we talked about smart products earlier. What's important is we have smart watering products that again are watering when it needs watering, because we would such a scarce resource that want to use watering the right way. And we really believe with our water controllers and sensors, we can really offer smart watering in the right way. So you know, over watering or underwater, it's the right amount of water. That is a very, very interesting point. Is there any political regulation giving you some tailwind because we're not going to overuse? We should not overuse water. You know, I think for many years now we've talked about this is a scarce resource. And we're a big advocate of UNICEF as an example with our Gardina brand. And we want to make sure that we protect this scarce resource. And therefore, you plies in the right way with our technology. So we just want to work hand in hand with that. In some markets, they could even be even support from some local governments around using water timers. You know, where you literally put it on for one hour per day or if it may be, rather than putting it on for several hours. So in some markets, we even see that as a sort of support from local government that there could be a rebate locally to use these smart products. And then we've got to make sure we've got these smart products available in those markets. Do you have any business in your home country? We do. So my home country is UK and we've got pretty big business there. It's the largest long care market in Europe. And we have business there. Absolutely. Perfect. If I want this smart automated system when it comes to watering my garden, do you have any inspirational videos and so forth on who's called a Gardina YouTube channel or in social media? We do. So the for the nerds, the my godina app is fantastic where you can literally connect Gardina branded robotic moa's and watering systems. The the Automoa app, which is fantastic under the Huswana brand, which I'm sure many people have if they own Huskwana Automoa. Again, we'll tell you about cutting it a smart way and then watch this space in terms of how we work going for between the two brands and the two technologies of watering and cutting. So I can get some statistics or numbers, maybe a graph. You can. There's a lot of fancy data on that in those applications that I'm sure will help. That sounds great. How large is your total addressable market? Yeah, it's around officially we say 270 billion sec and that's we say 160 that is sort of the foresting garden applicable market around 70 is the Gardina applicable market around 40 billion sec is the construction of a applicable market. In essence, it is probably bigger than that. The only reason I had that is as we get more and more into the professional cutting domain, like the golf courses in the large green spaces that we haven't really had the product for in the past, this opens up to opens up a whole new addressable market. So officially we talk to 70, but I think over time now as we start developing the products and solutions, we will probably start to talk about the addressable market being way way above 300 billion because that new market is probably 100 billion sec on its own. So we're starting to open the dollar new addressable market is my point. Yeah, and I guess the new smarter connected products also can have higher margins than the products of yesterday. I think I think and I hope the less price sensitive. I think they're adding a true value proposition for customers, you know, solving a pain point whether it's that your mother in law can travel here more often, but ultimately doing something which we couldn't do in the past. And I think people will be much more willing to pay for that. So I do firmly believe that the margins can be better. And at the same time, once you get a customer into that ecosystem, smart system, connected system, then you can sell more applications on top. So it's not a one-time finished product sale when I sell you a product and hope you come back in a few years. We now speak daily or weekly and we can sell more and more, more after market parts, more applications. So I really believe we can have more recurring revenues going forward as well. Recurring revenues are good investors love them. I recently bought a couple of surveillance cameras and I did my research as good as I can. And I felt like I didn't want Chinese producers. For some reason, maybe I'm older and it felt like I could pay a premium for Western companies and Western producers. Do you see that when it comes to loan movers as well? I mean, you talk about the data. It's going to be connected. It's going to be on your wife and so forth. Do you see any trend like people are willing to pay more for a product that they feel is more secure? I would say in the world, broadly, there is a hunger for data, I think we'll agree to that. But there's also a concern as to how that data has been used, I think that's your point. What is happening to this data, surveilling the surveillance monitoring your home? And of course, the robotic lawnmower is doing something similar. It is capturing a lot of data around your home. Some have cameras and some have cameras and a lot of our new machines do have a vision camera on that as well. So it's capturing a lot of data. We're very, very proud of our data system. We're capturing this, of course. It is stored in Europe, which is very important. We hope that can add a value to people like yourself who say I've got a concern around maybe how data has been used in other countries. We can clearly say we're storing this in European domain, and it's a very, very safe European domain. Good. I think you've already answered this question, but is the residential or consumer of the professional and market larger for you? Today, it is the residential market, it's the biggest part of our group, but we do believe going forward that the professional market offers a larger growth opportunity. So if I was to meet you again in 12 or 24 months time, I'm really hoping that I can say the professional part of our business is growing to be a bigger proportion. So short term, it's the residential market is the biggest, but over the longer term, I feel the biggest market opportunities on professional. And talking about opportunity, what are the main long term growth drivers? Yeah, it's, firstly, it's what I class as a differentiator for a husband or group, it is after market. So that is going to be a clear growth. Today, it represents around 9 billion zek of our sales or 20% of our revenues. We want that to grow actually to some 12 billion zek in the coming 2030 period. So that's going to be the biggest growth driver, I would say, if I was called out one, then beyond that, of course, it's our more strategic parts of the portfolio of robotic lawnmowers, both in a residential setting where we feel the penetration levels, the awareness levels will increase drastically. And therefore, the penetrations, how many lawns have a robotic lawnmower? So that will drive a growth in that segment. We then see the robotic lawnmowers really going into the professional domain. Golf is a great example, but also municipalities, soccer field, sports fields. So that will be a big growth area. And over time, I expect the growth in professional robotics to actually be a bigger growth rate than residential robotics, because it's coming from much lower base. Watering is another key area for us. And then I would, if I'm really going to pinpoint a part of our construction division, it will be our sawing and drilling business portfolio unit. Again, we feel we can grow at a strong, strong rate. Tell us more about the anatomy of the aftermarket. What is that composed of? So today, it's the traditional parts ultimately of parts and accessories attached to what would be a finished product. And it represents, I mentioned there about 20% of our revenues. We feel like we're much more, we don't feel we have maybe the right share of wallet that we could have within that area. But that's the traditional parts. What we then feel we can grow the aftermarket with is much more value add services, whether that's leasing, whether that's more recurring revenues through way of subscription services. So these are sort of new add-on parts that we're starting to develop, but we've got a lot of work we can do with the traditional parts of aftermarket and really add the new parts of aftermarket to make this a much bigger part of this group. Is there any possibility to take the data from your loan movers and to connect them maybe through an MCP or something within or to your AI chatbot in order to chat with your AI about your garden? Would that be a thing in the future? I don't see why not. I think that technology is there. We're using AI a lot to help with aftermarket actually because you get a lot of the same questions. You know, if something is not working, maybe as it should do. I'm not giving the right brand experience. We can give a lot of that data. And then if we look at that in reverse, of course, we can be providing a lot more advice to customers to enhance their brand experience. So in short, yes, that is definitely possibility. That sounds great. What are the most exciting trends that you are currently observing in the market? I think it's very much what we've been speaking about in this podcast. It's the automation robotization trends that we see. Of course, the longer-term trends we've had has been the petrol to battery transition. That's been happening when we see it in other industries. But I think to really excite us going forward, it is that robotization trend that we started to see in automation trends. So the petrol to electrification, how far have you come in that journey? How large portion of your revenue comes from electric versus petrol? Yeah, I think we have an official start. I need to double check this one, but I think we're about 46% of our mechanized products are now electric and battery. So anything that has a mechanical component that was potentially in the past as a petrol driven or gas driven product is now mechanized or now working with a battery or electric equivalent. So we're not far off 50% there. We're pretty much moving at that sort of 50/50 point. And we see that trend will continue. But in certain applications, it's much slower. And a good example of that is maybe with some of the things that have happened in the US in the past couple of years with a different administration that we've seen a slow down of the petrol to battery shift. Maybe even a move back towards some of the larger petrol driven products. And then you have some applications like chainsaws in the professional space that maybe people are still what if they're in the forest for eight hours a day. It's still easier and more efficient to use a gas driven product. For small cutting, it's no brainer to use the battery equivalent. But for some of the larger more professional applications, it's still maybe more effective to use the petrol equivalent. There are some competitors out there. How would you say that you differentiate yourself from your competitors? This was actually one of the first things I thought about when I stepped into this role. How do we differentiate and how should we differentiate going forward? And I really look at two, maybe three key topics here. Aftermarket, unless we have a world class aftermarket, then it's hard to command a premium position. So that's a very strong belief I have. And I believe we do that, but we can be even better. The brand is key. You cannot build a brand overnight. That's never to be complacent or arrogant about that. But of course, we need to continue investing in the brand. But to have a 337-year-old brand is something we're very proud about. And so we want to continue to improve on enhance. And last but not least is really the innovation. We've got to continue raising the bar and innovation. Now that's probably the most difficult of the three versus the competition because other people can innovate. Of course, we need to make sure we're always at the forefront of innovation. So aftermarket brand innovation. How much do you talk about your Swedish heritage for 337 years? I mean, I would be proud as a sweet. I would think that, yeah, I'm going to use who's corner. Volvo has been talking a lot about this Swedish heritage. And also, when it comes to the connected parts and maybe an MCP in the future, that would be great. That would be the final push for me to gardenize my garden. How much do you talk about the heritage? We do. So we're very proud of first and foremost of our Swedish heritage and we use it as part of our brand language for the Husband brand. It's clearly part of that and it's clearly where we talk and we talk about being close to nature and really try to connect those parts. At the same time, we're in an international company. We've got to balance that with how is that perceived in, I don't know, a market like the US or New Zealand or just throwing out different countries there. So we've got to balance that, but we're very, very proud of our Swedish roots and we do use it as part of our brand languages, we call it. Perfect. If you're going to a holiday home, you can also sometimes see the Husqvarna oven, this huge massive oven from way, way, way back. And I was in Croatia this summer, Croatia in Italy and a couple of other countries. Then I saw the Husqvarna brand as well because I collect like Pokemon, I collect. listed companies in the public domain, and who's one of the brands that I saw in Croatia on a building that made me proud. That's great. Great to hear. That's great. Who's one that has been the pioneer in robotic loan movers, how does the growth and margin profile of the new generation of wire-free robots compare to older models and realize the greatest margin potential moving forward in the consumer or professional segment? Yeah, I don't see a margin profile change because of the technology ultimately. I think what we're doing, either as a company or as even end users, we're being more demanding. We want to have the best technology at the same price. So that's what we've got to continue working our cost out, but we've got to continue driving the offering the technology up. So we've had to accelerate our technology offer into boundary wire-free solutions, and by that, of course, how we're working with vision technology, how we're working with LiDAR, how we're working with RTK real-time kinematic technology. And we'll continue to do that, but there should not be a big margin profile difference between a boundary wire solution and a boundary wire-free. But you're getting much better technology for the same price. And then to answer the second part of your question, where I see the margin growth opportunity between the residential and professional setting, I see professional will grow at a high rate going forward, and I believe it's probably less price sensitive as a general business area, and therefore I see more opportunity here. So the professional robotics is where I would see a larger opportunity going forward from margin expansion. What are customers willing to pay more for? Do you see, is there anything, I mean, this is connected, this is new LiDAR, this is something else, and I can cash out for that. Is there any parts of your product offering that you see clearly that the customers are willing to pay extra? I think it's the quality. I really do. People want the product to work. And of course, every product you buy should work, but we need to prove the uptime, that Husvana products are the ones that are working the most often, and having the least failure rates. And I do believe customers are willing to pay for that. They do not want the product being stuck at their summer house as an example. That's very much a residential consumer mindset that they want to pay for the product to work. But equally in the professional setting, people want to pay for productivity for uptime for working, because that's when if products are working, people are normally earning money. So I think it's really uptime in the broadest setting that I believe people are willing to pay for. Do you see that a lot of customers, consumers that have your products in their main home sort of say, do you see that they also buy your products to their holiday homes? Because if you know that the lawnmower works home and you have a holiday home, you have a grass that needs to be cut and you aren't there as often as home. You need the flowers to grow and so forth as well, can you clearly see that if you have customers that are satisfied with your products, that they also buy them to the holiday homes? Yes, that's very clear, particularly here in Sweden, of course, we see that very, very often, because we can see that people have multiple machines and they're at two very different locations. In some cases, people have multiple machines at one location, of course, depending on the size of the home, but ultimately, we, to answer you, yes, people really find this as a value proposition or attractive value proposition to have something in the holiday home. Well, that's great. Over the past few years, we've seen increased competition from Asian low-cost players, particularly from China. What is your mode that allows you to defend your price premium and margins? Yes, that mode, of course, is super important to us, and it's having the right technology, the perceived technology leadership. We must have that, but it's also then to be supported with a strong aftermarket that we mentioned earlier in the podcast. That's going to be critical, people are willing to pay a premium because they know they get the best aftermarket support and to make sure we keep shouting about this wonderful brand. So innovation, aftermarket brand. And the garden doctor. The garden doctor, yes, let's keep that with us and watch this space because we want to be that garden doctor and provide all the right advice. I mean, the garden doctor is amazing because I know if I'm going to tell somebody to come home and look at my grass and all the crazy things that are growing in my garden, they will debit me. So if my lawnmower just tells me, you know, buddy, you should get rid of that, that is this and that. That's great. How large a share of your revenues currently comes from software services and fleet management you've been talking about, and this one in the aftermarket, more of the data and the data collection, the data ocean that you have and tells more about your plan to grow these recurring revenues. So it's a number we haven't really disclosed just purely based on the question you have. The broader aftermarket is 20%, but of course that's including a lot of traditional parts and accessories. But from a sort of services, fleet management, it's a low single digit number today, clearly with a huge growth potential, we must continue to grow that. Do you get a lot of feedback from your customers if they ask you to, I would like that data or can you do this or can you do that? Do you work a lot with the feedback from customers? Feedback is key to us. Yes, we have a lot of either direct feedback from end users or we work with what we call customer council type structures where we maybe have more some of our dealers who are selling our products and services and getting feedback. Or we have even more, I would call them more professional council users in the more golf space setting. So we're looking for feedback all the time to really enhance what we're developing. You've been talking about the transition from petrol to battery and how that changes product or architecture. But how is it changing the anatomy of the aftermarket because when you talk about cars, you always hear that electric cars, they come with less demand for spare parts and so forth. How is this shift to electric affecting the spare parts and margins in the aftermarket? Of course, you would expect that there's less mechanical where parts as you go from petrol to battery, which is the case. But then you get a lot more value added opportunities with this. As we become more connected, that's irrelevant whether it's petrol or battery for that matter. But as we become more connected, you can do more preventative, proactive maintenance. If you're blades are getting low, if you're told, I don't think people are going to complain about replacing them. Or your battery is starting to work at a lower level. So I think there's more preventative opportunities going forward. And therefore, I think we can add more value going forward. So it's not just a mechanical replacement part, change out. But it's actually that we get into more preventative forward looking part replacement. When it comes to professional customers, do you work with the telematics? And you say you connected the products, I mean, the printer at my job. It's always a new tool name, I'm not sure what we call it in English. But it always lies just right next to the printer when it's empty. Because it tells, hey, I'm soon empty. This is another one, for your professional users, I guess it's quite annoying if you're in the forest and you need to change something, which the product already knew that you were going to change. You need to change in the future. So what we have in his phone, a group, we have what we call an uptime center. And it's basically measuring the uptime of the products. And again, back to one of our early answers, that is what, to me, is adding value. Because the uptime should be maximized and downtime minimized, of course. But that is basically an extension of the fleet management system. So the fleet management system is something that our channel partners are using. So if someone is installing 20 different robotic motors at different sites or they've got multiple chainsaws in use, they can actually see when the products are working or not. And therefore can get out to them much quicker if there is an issue or prepare certain parts if there's going to be an issue. So yeah, we have an uptime center that we can monitor data globally. And then we also offer that more in a, if you like, a local perspective to our channel partners that we call a fleet management system. And me as a non-professional user, can I get in my app saying, we're not going to send this new spare part, of course, but you should think about changing it. You can, so in the automobile app, you can see that, you know, how much time the machine has been running. And we would recommend a change of plates, for example. So fairly simplistic, but real value add to say, okay. Okay, if I'm being advised, then I'll do that. And then you can order those directly from the app, by the way. - Great, your revenues have declined each year since 2022. You talk about this rough period and are currently down 16 spot 8% from the peak on the rolling 12 month basis. However, your gross margin has actually expanded from 27% to 30 spot 3%. Can you walk us through that dynamic? I mean, you did a divestment just recently. I guess there was some low margin there as well. It took us through this dynamic. - Yeah, it's been, I think the word you use is spot on. It's been very dynamic in recent years. So first and foremost, we've had a lot of new pressures. You mentioned earlier in the podcast around some of the more tariffs and maybe these type of things that we didn't even talk about five or six years ago. And now it's normal. And because of those, we've had to add more price increases. So when we get certain supply chain challenges, whether that's through what's happening in the Middle East now, of course you start to see inflationary pressure, we've got to pass on price increases, which is unfortunate, in many cases, something we have to do. So price is definitely one of the parts within that sort of margin improvement. The other is mix, that we're really working with improving our mix and that's a big part of the operating model. And then the other piece is cost out. We work a lot with cost out and we'll continue to do so. So there are the three main parts of our gross margin mark. - You recently launched new financial targets around the theme, transforming to profitable growth. Tell us more about the new financial targets. - Yeah, as recently as December 2025, we launched new financial targets and we launched what we believe are credible financial targets and minimum financial targets as well. By that, we have a growth target that we haven't been growing in recent years. We must get this company back to growth. So we have a growth target of three to five percent, organic growth. We believe that's applicable now. So if it's not something that is applicable in five years time, it's applicable now and we should be growing more than we've been showing in recent years. Then more of a midterm target is the profitability target. So we changed the EBIT margin target to 10 percent, above 10 percent. We need to get to 10 percent and then we'll revisit that one. But of course, we've been operating in six point something percent, which is clearly not okay. So we need to get back to 10 percent. That is applicable in the midterm. Midterm, I say sort of two to three years cycle. So 2028 is where we'll be targeting that for. And then the longer term, one of the three is actually the return on capital employed. We're down in seven point something percent. We need to be above 15. That is something we believe is applicable for 2030. So we've got something which is applicable here and now, the sales growth, the margin midterm, and the return on capital employed longer term. - And how do you work with that given the seasonal inventory buildups you always have to manage? - Yeah. We're always gonna have seasonal imagery buildups and so we should, but something which you wanna do, always going into our largest sort of preparation quarter of quarter one. But we must work much more with our asset base beyond just, you know, the here and now of inventory. We're a clearly, we're a seasonal business and we're never gonna shy away from that. And therefore, I believe we have far too much fixed cost tied up in the company. So we will look a lot at our fixed cost base, our manufacturing footprint, our logistics footprint. So there are areas that we feel we can drastically reduce our asset base without affecting our service levels. In fact, we wanna improve our service levels through using more third parties, but not having our own assets tied up. So we will look to address our manufacturing footprint during this cycle as well. - You have set the EBIT margin target of over 10% across a business cycle. What will it take in terms of volume recovery versus cost savings to consistently reach that upper end of the target? - Without a doubt, the biggest part of that improvement to above 10% is gonna go through cost improvement. And that's why we set the full billion-sec cost out target. We wanna achieve three billion of that by 2028. That's an accelerated timeframe. 'Cause that's very much in our hands. We can do this, we can adjust the cost and that's what we must do. Of course, we also hope and work with volume improvement targets as well to coincide with our sales improvement financial metric. So that will also help us improve, but to answer you, it is the cost out. That is the biggest contributor to that 10% margin walk. - Sorry now, but to go back to the garden doctor, what can you do to help me to not forget to water my flowers inside when I sit on financial Twitter or trying to do my research for the podcast with you? Is it possible in the future to get sensors inside and within the app as well? You know, not just to tell me, hey, because you need to remember to water your plants, but also to tell me how they, I'm not sure about the English word, not feel, but if I need to do to add some extra, because-- - The moisture level is low, so we actually have that equipment today. We do, so we have drip feed technology, if you like, you just, it's very small drips going in. And a lot of people are using this today. So you can set this up when it will just, it will drip feed into the plant and keep your plants alive, if you have an extended vacation or you're spending too much time on financial Twitter. - I really need it, I will get it. But except from the drip feed, is it possible in the future to also get, maybe not on older plants, of course, but to get some sensors in order to have that in your app? - I don't see why not. We have that on a, let me say a large scale, and we should be looking to see how we can do it on a more local scale. So I don't see why not. - You know, people love automation and they love data and they love all of this. So I, maybe not all the customers, but you know, you know, this, of course, better than me, but there are some nerds and I would really love it, looking forward to it. You recently announced this continuation of the Stone Diamond Tools business within the construction division, we talked about it earlier in the podcast. Do you see that there are any needs for more divestments going forward? - There is, we will continue to look at the portfolio. And make the adjustments as needed. What we announced in July this year is we would do a strategic review of our Gardina powered garden business portfolio unit. So that is something which we are reviewing right now, and we will, you know, come back in due course as to what we see, that means. But we are looking at every possibility there to turn it around, but if we can't turn it around, then we need to look at other possibilities. So in essence, we will continue to look, we will continue to cut the parts of the portfolio where we don't feel we can make it successful. - What does the expected mix between organic and acquired growth look like? - So in the financial targets, it's very much based on organic growth targets. Anything that will come through inorganic acquisition would be icing on the cake if I can call it that. - And if you acquire a company, what's the one thing that you want through that acquisition? Is it customers technology or anything else? - It could be any of those I think, you know, if we look at technology, or sorry, look at an acquisition, we would basically say, does it give us a technology we don't have? Does it give us a product segment we don't have? Or does it give us a channel access? We don't have all we can get quicker through through an M&A. So it could be technology, product or channel? Retail or inventory levels and consumer purchasing power have fluctuated significantly over the past few years. How do you view the inventory balance among your retail partners ahead of upcoming seasons? I mean, now it's September 1st, (laughs) but. - No, we talked about this in the quarter two financial report and we said there were, on average, we were normalized with some pockets of high inventory and some product segments in some retailers. So I would probably maintain that guidance that we are normalized and normalizing. So I don't see that we've got any big concerning high entries out there, apart from one or two pockets. - To a balanced? - Yeah, sounds great. Whose quality of construction is closely tied to a global building activity? Are you seeing any clear signs of recovery in the Nordics and the rest of Europe? - So we've definitely seen recovery in the US. We've talked about that in the second half of 2025 in the first half of '26. And then we said Europe's been somewhat subdued. Nordics is probably one of the markets that is a little bit of a standout performing better compared to the rest of Europe. But I think the, when I look at the construction space, anything which is sort of residential is under pressure. And if I look to the European sort of construction space, non-residential also under somewhat pressure. And it's probably the more infrastructure parts of construction that is seeing some of the more higher growth rates. And I do believe a lot of that's down to data centers and things like that. So it's the infrastructure building where we see more of the growth. But residential and non-residential seem to still have some headwinds there. You just recently talked about tariffs. Props is your largest market overall, but the US is your largest single country market if I'm correct. How are you impacted by those tariffs, trade barriers and quite unpredictable trade policies? Yeah. No, we took a lot of tariff burden last year into the P&L of the group. Thank you, some 375 million SEC in 2025. And we have to continue working with them. But it seems that changing a lot, we've got to keep on top of this. You know, it's different sections that come into the law of the tariff bills. We need to continue offsetting them as much as we can. In some cases, we need pass-through pricing increases because of our supply chain headwinds. But we need to keep abreast of the tariff movements. But without a doubt, would a world be better without tariffs? Of course it would. In the end of the day, everybody is pretty much exposed to tariffs, so. Yeah. Yeah. Looking ahead, what do you consider to be the biggest risks facing this corner? The boring side of the corner. No, but I actually, we've got to continue to enhance our development cycles. We've been in a very calm playground, if I call it that, for many, many years. Now the playground is much busier. And it's got a lot of very fit children in our playground now. And we've got to be as fit as them as well. So we've got to really enhance our development cycles. We've got to move from maybe developing in three-year cycles to 12-month cycles. It's quite different. So this is a big cultural change we're making. But that is the thing that really keeps me awake at night, if I say that, that we've got to be able to be faster with our development cycles. But to change from 36 months to 12 months, we're changing pretty much all of our ways of working in the group. And we've got some fantastic products, we've got fantastic engineers, we're passionate about it. But we're now going to go faster, faster, faster, faster. And never set, never settle, because if we go from 36 months to 24 months, it's still not fast enough. Go from 24 to 12, maybe that's not going to be fast enough. So we've got to continue to be fitter and fitter and fitter to survive in that playground. I do follow all the keynotes from Apple every year. I may change my iPhone every second year, maybe some time, every third year, the maximum is four years, that was very nice to get a new one. But every second year, I want a new phone. Anyway, as a consumer, even though I'm not buying a new phone every year, I do follow the keynotes and see what comes every year within the new versions of the phone. Or how long do your customers own the long mover, and I mean, you say that maybe we should have the upgrade cycle every year. But how many years do you typically own the mover before you replace it? Well, I can talk about myself actually, so why machines I'm running at eight years old? That's good. That's good. You might be saying what the CEO is not running the latest technology, because the working has shown you well, but I will think about upgrading soon. That is a great way to say that your products actually work. Yes. They work for a very long time. When they become connected and everything, I want a new one. But even if you don't want a new one, you can see that the who's corner mover, they work for an extended period of time. Absolutely. So extremely proud of that. And I'm proof that we've got these machines running a long time, and that's probably the sort of cycles we used to talk about seven to eight years. But the technology is moving so fast that we started to see people are wanting to change. But changing ultimately, you want to keep short, crash short. That's what we're doing today, keeping short, crash short. And as long as you're getting a fantastic look and feel, then I think you're fairly happy in which I am. But I think as the technology is shifting, you start to be able to do different things. So it's much easier to create zones. If you change your garden with a boundary wire-free solution, you can create a new zone, you're not having to put in a new cable. That's easier. As an end customer, I can see the value I had for that. You can also, actually, and I'm a British guy, so we like to stripe the lawn. So now, with systematic cutting, you can put patterns in the lawn, stripe the lawn. You know, whether that's crisscross squares, stripes, whatever you want. You can start to have against some customer features at the truly value. And I think people are willing to change because of those features. Yes. Do you know any Swedish? Oh, you're brutal. That's great. That's great. Sounds great. You know, in Sweden, we used to call it Wilhover once needs, maybe I don't need to change the lawn mover, but all of those new things, yeah, I do need to change it. Yeah. Maybe the stripes. That's great. Last year, you introduced AI vision technology for robotic movers, the Gardina aqua precise, smart watering system, and who's called out the grinder, which you talked about earlier in the podcast for the construction industry, the customers in the construction industry has been very happy about this launch. Could you tell us more about these innovations and how you work with R&D? Yes, absolutely. So the AI vision that we launch for robotic lawn movers is basically the vision enabled support. So our primary navigation tool for robotic lawn movers as being what we call RTK, looking at a GPS in the sky and then making sure I'm positioning and working within that. But the secondary piece we brought was AI vision, so it's basically using then the camera and navigating, and then it starts to use the camera to detect obstacles or to see where the edge of the garden is. So am I going from grass to asphalt? I can detect that. I know that's clearly the edge, and I start to train myself around that. So that's basically what we're doing with AI vision technology, and we continue to, every day it works, it gets better because it's getting more and more images and it's working and working and learning and learning. So that's amazing that we have millions of images if you're working within that. The Guardian Aquaprecise, it's a solar-operated machine and I would call it contour-enabled. And by that I mean, instead of just you set your water sprinkler and you do a 10m square or 10m circle or 10m radius, whatever, you can now do this with contours. You can say okay, I just want to go 2m there, but it's very close to the edge of my garden, no point watering the asphalt, but then in that part I need to be going 10m. So you can really set the contour of the lawn using the Guardian Aquaprecise system. And it's very, very good. It's, again, you operate it from the telephone, so it's Bluetooth-enabled and we're working with more Wi-Fi-enabled technology as well around that going forward. So that's, again, a big value add to the end customers and something I personally have I use as well. And then the last but not least, the Husvarna Auto Grindr in our construction lineup is using a lot of the same technology that we took from robotic lawnmowers and basically it's a self-operated floor grinder. So it works very well in confined spaces. It works very well in large spaces, whether you're doing a warehouse or you're doing a new room. So it's basically, again, grinding that floor to make it super shiny and prepared. And of course that environment normally is quite dusty, so it's very good to have that autonomous technology working within that as opposed to having a human being, so I didn't amongst that. So, yeah. So very well received, great technologies and something we need to continue pushing the bar upwards with. And critique about the automatic lawnmowers as being the hedgehogs. But I mean, when you have cameras and all the other technology that you do have in order to see obstacles, is that the same risk today as it has been in the past? No, I think I'm glad you raised that. That's exactly right what you say. So we can see when it's a hedgehog or see when it is a child's toy or see wherever a hose pipe been left out or a rake being left out and you start to really train the machine that, okay, we see this, we stop, we slow down or we go around it. But because of the sensors we have, of course, we will slowly approach them and stop and turn away and go backwards. Can you tell us anything about what's cooking in the R&D lab? Maybe not the most secretive stuff but maybe the trends or what you're cooking the most. No, I would say in the R&D labs we're looking at things much more in connected ecosystem perspective of how we can put more and more things. into these ecosystems and make the difference. So that's what I expect we're going to start bringing more of in the coming cycle, more and more applications into our ecosystems. - Your shareholder list features long-term owners like Investor and Loonberg for a token. A lot of my old listeners know them very well. What expectations do they place on USSEO regarding the balance between growth investments and dividend payouts? Because yeah, you've said I mean growth time, back to growth. - Yeah, first and foremost, our main shareholders, our two main owners are extremely supportive and they're extremely supportive of the long-term view. So of course, the ask for growth is very, very important from them. Dividends, we've been trying to keep at a fairly stable level. Even in the tough years, we've been continuing to pay a dividend, hopefully to create confidence not just our two main owners, but to the rest of the shareholders. But I would just say it's a long-term view and we continue to run the business in the long-term view. That's what's important. - We've been talking about this a lot in the podcast, but just to wrap it all up, if you were in a room with an investor who was hesitating to buy whose corner stock today, looking back at them as your past, what are the maybe three key reasons for why the company will create higher shareholder value over the next three to five years than historically? - Yeah, I think we've got a proven track record of innovation leadership and will continue to drive the innovation as a key differentiator. That's one. The other point I've raised several times today is the aftermarket need, but also the aftermarket potential. So the one just having to be good, but by being good, we believe we can really grow our aftermarket business. And aftermarket comes with higher margins than our traditional business. So it's a bit margin-accredive. And then ultimately, that will get this business back into a true growth engine. - I've noticed who's calling a robotic move or working in the rules of the tool roundabout in Stockholm when you come out of the Nora Lincoln. Are there any other iconic or interesting locations around the world where we can find your products? I've been reading some about golf in your annual reports, but besides the roundabout in the rules of the tool, do you have any other interesting facts to share? - The one I'm extremely proud about, and it's very fresh because I came from there just a couple of days ago, was our products were mowing the bell-free at the Husqvarna British masters. And I did say Husqvarna British masters. We were the title sponsor this year as part of the DP World Tour. So an iconic golf course for those golf fans listening in the Bravazon is the course. And it was all of our ways were cut with Husqvarna robotic lawnmowers. It was 16 machines in operation there last week. I saw them firsthand. And the weather was pretty bad. We actually had some pretty heavy rain. Traditional machines would have been too heavy to be running on that terrain. So very proud actually our machines were out in some cases twice per night. 'Cause that's the best time to be cutting, of course, and the ton of them's running during the day. So we had our machines running. So very, very proud of that. Got many courses around the world. By the way, we were running our machines and many famous people who were using Husqvarna robotic lawnmowers, but very, very proud of our machines being used last week at the Husqvarna British masters. Congratulations, good to hear you. Do you follow the skin in the game principles? You're a chef. I mean, do you actively buy shares in the company and do you have the skin in the game? Yes, I think it's very important not just myself, but the whole management team have skin in the game. We all have shares in the company. That's part of actually one of our clear policies that we wanna have that. Very public information. I'm holding around 106,000 shares in the group and I'll continue to purchase shares in the group. We are going to visit your main factor in Husqvarna. We're going to take customers going down there to see their reality. What can we expect to see on the factory floor? Great you going to see the reality there. I'm hoping your main takeaway from your visit is the automation that we're doing. There's a lot of robots working. I know we've gone down from a fairly manual side of process to a very lean automated production lines. So I'm really hoping that you take away when you visit the Husqvarna factory. Sounds great. Last question, where will Husqvarna group be in five years from now, do you think? Well, I really hope we're looking back in five years time and saying we've achieved all of our financial targets. We are a clear market leader in the areas I mentioned and this company is growing like we said. Perfect plan. Thank you very much for coming to the podcast and telling us more about Husqvarna. Thank you very much. Thank you very much.