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Husqvarna cools on 2019 margin after chill dents lawn mower demand

FILE PHOTO: A sign alerts visitors about a presence of Husqvarna robotic lawn mower at work in the Humlegarden park in Stockholm

STOCKHOLM (Reuters) - Husqvarna <HUSQb.ST>, the world's biggest maker of garden power tools such as robotic lawn mowers, blamed cold weather for a fall in second-quarter sales and said the dip in demand meant it would probably not achieve its margin target this year.

The company's shares hit six-week lows after the announcement and were down 3% at 0900 GMT.

The Swedish group does the bulk of its business toward the end of the first quarter and in the second - ahead of and during peak gardening season in the northern hemisphere.

Sales shrank 3% from a year ago, adjusted for the closure of one division, as retailers saw little need to stock up on lawn mowers.

"The grass didn't grow during April, really, if you look at the main markets," CEO Kai Warn said in an interview.

"Traffic to trade partners was slow at the beginning of the quarter as a consequence of relatively cold weather," he said, adding that had particularly affected demand for lawn mowing equipment in both Europe and North America.

Still, profits grew in the quarter, helped by an ongoing restructuring program and higher prices.

Operating profit was up 10% from a year ago at 2.13 billion crowns ($228 million). Analysts had on average forecast a profit of 2.15 billion crowns, according to Refinitiv estimates.

The operating margin widened to 15.4% from 14.6% but Warn dampened expectations Husqvarna might reach its long-standing full-year target of 10%.

The group, whose products range from trimmers to chainsaws, and which is gearing up for a capital markets day in September, had earlier guided for a full-year margin of 9.6-10.0%.

"The weak start to the quarter, although it changed and we ended the quarter at a normalized pace, impacts the full-year margin expectations. We are probably going to be in the lower part of that interval," Warn said.

Chief Financial Officer Glen Instone told Reuters U.S. import tariff related costs in 2019 would probably be at the lower end of the 400-500 million crown range indicated earlier, and that he expected to pass on those costs entirely to customers.


(Reporting by Anna Ringstrom; editing by Niklas Pollard and Kirsten Donovan)