Husqvarna AB
STO:HUSQ B
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Hello, everyone, and welcome to the presentation of Husqvarna Group's report for the full year of 2020. My name is Johan Andersson, responsible for Investor Relations at Husqvarna Group, and I will be the moderator here today. On the call, we have Henric Andersson, our President and CEO; and our CFO, Glen Instone. Henric and Glen will present the report. And afterwards, we will open up for questions. Let me also remind you that this session is recorded and will be later published on our homepage. So with that, I hand over to Henric.
Thank you, Johan, and good morning, everyone, and also a warm welcome from my side, and thank you very much for joining us this morning. Looking at the quarter and looking at the year. I think we, all in all, have managed to effectively navigate through a challenging year in a very good way. We have ultimately reached all our financial targets: 6% in growth; 10.7%, operating margin; 24.4%, capital efficiency. And this is ultimately the result of many years of dedicated work of executing our strategy, transforming and strengthening the group. We have, during the year, advanced our market positions. Yes, it has been a strong market. But in that strong market, we have taken market share. And we have secured a very good momentum going into 2021. And I'm very proud of the entire team and the way we have managed to deliver the results in the midst of a pandemic. Looking at the quarter. Our net sales are up 13% adjusted. The growth was particularly strong in robotics, battery and also handheld products. And I would say that in the quarter, both the Husqvarna and Gardena Divisions benefited from an extended season. As you might all recall, I mean, we -- many of us were still mowing our lawns in October, which is normally not always the case. We also benefited from a COVID-related stay-at-home trend. But I think it's also important to note that we have taken market shares in a strong market. So it's not just because of external factors here. Sales for the year are up 6% adjusted, which is also indicating that we, during the year, have had a shift in sales volumes between quarters. I mean we're up 13% in the quarter, 6% for the year. So it's important when we, throughout 2021 compared to prior year, remember that COVID for various reasons really reshifted volumes around between quarters in a somewhat artificial way. Moving on to the operating income up to the right. We improved it by SEK 181 million in the quarter. And we are up 15% for the full year. And this is largely due to the leverage we have on our growth, favorable mix and also good cost control. Another strength, moving down to the left on the slide here, is that we have improved our direct operating cash flow. We ultimately generated SEK 6.1 billion in the year versus SEK 3.8 billion prior year. And our financial position is strong with net debt decreasing by 43%. And our Board will propose a SEK 2.40 per share dividend. Finally, down to the right, as you recall, we have the strategic KPI. We have several of them, but we have picked one for these presentations, which is how we grow our robotics and battery as share of total sales. And as you can see, this one is up again. When we started this -- earlier this year, it was at 15%. Now we're at 17%, indicating that we have had strong double-digit growth for these categories during the year. If we then move on again and try to put the quarter and the year a little bit into context, I think it's important to stress that our 2020 performance is largely the result from us executing a strategy to build a stronger Husqvarna Group. We have, over the years, decisively invested into attractive segments. And equally decisive, we have exited segments that are less attractive to us. And this has ultimately shifted up our profitability. And it has enabled us to reach the 10% margin target. And it should also allow us to operate above this level going forward. So just with that brief introduction, a strong quarter, a strong year, reaching all the targets and putting it a little bit into context that this is the result of hard, diligent work for several years. I would like to hand over to Glen to go through our divisions and some of the numbers a bit more in detail here.
Thank you, Henric, and welcome to you all. I hope you're staying safe and healthy in these times. So if I drill a little deep into the divisional views right now, as Henric alluded to, a very strong Q4, particularly for the Husqvarna Division, where we had a sales growth of 19%, adjusting for currency. The real strong growth came from the core categories, notably handheld products, both gas-powered and battery-powered as well as the associated accessories. And also, we saw a growth in robotic products. The gardening season was somewhat extended this year into Q4. As Henric said, of course, we were mowing our lawns much later than normal. And that warmer weather certainly supported a favorable sales development. It's very -- we're very pleased to say that the division delivered a positive margin in the quarter from a loss-making Q4 in 2019 to a positive Q4 in 2020. So we're very pleased with that. Zooming out to the full year, then the division actually had a sales growth of 5%. And that is adjusted for both currency and also the consumer brand exits. For the Husqvarna Division, those exits represent approximately SEK 1.9 billion. Periodization changes due to COVID, the most notable in the Husqvarna Division, and I'll come back to that in a coming slide. But mainly worth pointing out that the second half of the year, we actually had a sales growth of 23% in the division versus a sales decline in the first half of the year of minus 4%. Full year EBIT, pleasing to say, increased with some SEK 250 million, resulting in a margin above 10%, which means we have all 3 of our divisions operating above 10% now to 10.1% versus prior year, 8.8%. So a great performance from the Husqvarna Division. Moving on to the Gardena Division. And it's a very easy division to talk about, looking at the figures you see there. Q4 is by far the most seasonally smallest quarter for the Gardena Division, representing about 8% to 10% of annual sales. The division managed a 13% sales increase in the fourth quarter, very strong growth actually in the categories of watering and hand tools. And certainly, you could say we saw a prolonged gardening season supporting that growth into Q4. It is a loss-making quarter for the division, but pleased to say that we reduced the loss by some SEK 50 million from roughly SEK 350 million to roughly SEK 295 million. Zooming out to the full year, then I think the best word to describe the performance is it's been a truly stellar year for the division with a 17% sales growth. And that is adjusting for FX and also adjusting for approximately SEK 300 million in exited consumer brand business. Actually, all the regions showed a positive development during 2020 and as mentioned earlier, standout performance in both categories of watering and hand tools. The EBIT margin there, on the bottom right-hand side, we actually surpassed 15% to 15.2% versus the prior year at 10.2%. So in absolute terms, an increase in earnings of approximately 70%. Moving over to the Construction Division. The division, I would say, is most negatively impacted by the effects of COVID-19. However, Q4 ended at minus 2%. We did see a growth in Europe and a decline in North America. The margin was lower in the fourth quarter at 8.9% versus 10.5%, which is mainly the result of negative FX effect, the stronger Swedish crown versus a weaker U.S. dollar. And that's approximately SEK 30 million, which is most of the delta there in the fourth quarter for the division. We also took some legal integration costs associated with the recent Blastrac acquisition. That was approximately SEK 10 million in the quarter. Full year sales actually declined with some 6%. However, I do want to point out that H1 was minus 12% and H2 was plus 1%. So we have seen a clear recovery in the second half of the year for the Construction Division, and we're pleased to see that. Margin has deteriorated from 13.2% full year down to 10.8%. FX is contributing with approximately SEK 20 million of that. And of course, we see a headwind from the reduced volumes impacting the absorption rates in our factories. Pleased to say that we did complete the acquisition of Blastrac during the quarter. And that will bring on approximately SEK 600 million of annual sales. And we take with that approximately 380 full-time employees. And Henric will talk a little bit more about that acquisition and the complementary play it will have for our group going forward. Moving over, maybe zooming out to the full income statement for the group and give a bit more flavor on the different lines. I think we've talked sufficiently on the net sales that we had a plus 13% there in the fourth quarter. But if we zoom then into the gross margin and what's really driving the movement there from 23.5% up to 26.1%. FX was negative in the quarter. When I look at the gross margin impact, it's approximately SEK 140 million, about a 2.3% margin hit coming from FX, so an even stronger underlying gross margin improvement. Very small impact from strategic initiatives in the gross margin in the quarter. But really, we saw a continued positive price development, generating roughly 1% in the quarter. And then we had a tailwind from raw materials of approximately SEK 50 million in the quarter, 0.7%. And that really leaves close to 3 percentage points of improvement coming from the improved mix, the strong efficiency programs that we've been driving, and to some extent, the cost avoidance that we've been driving throughout the course of the year. On the SG&A side, in the quarter, we moved down in absolute terms from just over SEK 2 billion to just below SEK 1.9 billion in spend. Positive leverage effect from the sales improvement, generating an SG&A rate of 28.1%. Where I called out a negative effect from FX in the gross margin, we actually have a positive effect from translation in SG&A that's just over SEK 100 million. So it's a net SEK 40 million in the quarter, negative SEK 140 million gross margin and a positive SEK 100 million in the SG&A. If we take away that, then it still leaves a combination of about 1.5% of improvement that is coming from our cost savings and our volume benefits into the gross SG&A line. Just -- I'll stay on the quarter for a little bit there. We did, of course, in Q3 call out that we would have one-time costs associated with the efficiency program of approximately SEK 880 million. We've booked just over SEK 800 million in Q4 and the remainder will come in the first half of 2021. The finance net was lower in the quarter due to lower net debt levels and lower interest rates, of course. And that rate that you see of approximately SEK 74 million would seem a reasonable proxy going forward, so we could gauge on SEK 75 million to SEK 100 million per quarter, so SEK 300 million to SEK 400 million going forward, full year. The tax rate was about 30% in the quarter, and I'll come back to that in the full year context, which I think makes more sense. So in the full year context, we were up 6%, as Henric said, which was great to see. And then if we look at really what's driving, we see an SG&A going up from 29 -- sorry, the gross margin percentage going from 29.9% up to 31.2%. We had a negative FX of approximately SEK 220 million in there, representing a negative 0.5%. These strategic investments into SG&A were relatively small at SEK 50 million with a positive price development in the full year of just less than SEK 300 million, representing 0.7% margin improvement. We had a tailwind from raw materials and tariffs of approximately SEK 200 million, representing approximately 0.5%, the residual of that being the improvement from the mix on the volume and the efficiency programs at just over SEK 200 million. Same for SG&A on the full year that we had a positive effect coming from FX, approximately SEK 140 million or 0.3%. And then the strategic investments in the SG&A were about SEK 100 million on the full year. Taking both GP and SG&A SIs, it was SEK 150 million or 0.3%. And then you really see the benefit of the efficiency programs and the cost avoidance coming through into both selling and administration costs. The tax rate full year, we came in with a full year tax rate of 25%. And we think that's more or less in line with what we've been guiding at 23%, plus or minus 2%. And that seems a reasonable guidance going forward as well. So summing it all up, earnings per share, in line with prior year despite that large item affecting comparability that we booked to some SEK 815 million. Moving on, I just want to put a little bit of flavor on to the quarters and the periodization effect that COVID had to the group. I think it's fair to say in the gray bars here representing really the average of a 5-year period from 2015 to 2019 and the blue bars representing 2020. And what's important is we had a higher sales, and I think it's really the sales in Q3 that stands out in 2020, which is really the catch-up effect from H1, so much higher sales. And then we saw the leverage of that higher sales coming into the earnings in Q3. On an average year, we've actually seen over 90% of our operating income coming in the first half year, whereas 2020, we saw approximately 80% of our earnings coming in the first half year. So a much stronger second half, largely the result of that stronger demand, the carryover effect from the lower demand in H1 due to COVID. And I think it's important we take this with us into the 2021 phasing and happy to take some questions on that later in the presentation. Good. Moving over to cash flow, if we can, Johan, please. I'm pleased to say we had a great cash flow performance. We really prepared for the worst and hoped for the best. We -- and we really managed our cash flow in a really strong way. What I mean by that is when COVID hit, of course, we took additional financing. But really from a direct operating cash flow perspective, we've managed very well from an inventory perspective, from a receivables perspective and also from a payrolls perspective. Most of the positive effect, actually, of course, we have over SEK 700 million coming from EBITDA. We have SEK 200 million coming from reduced CapEx. And the rest of the improvement actually largely comes from an increased payables year-over-year. And what is worth pointing out is at the end of the year, we did accelerate our production rates. So inventory went up versus what we were showing at the end of Q3. And that then fed through into increased payables, which also support it. So we did increase the inventory levels, we had the offset in payables. Okay. Moving forward, if we can, Johan? Capital efficiency, we did it. We got down to below 25%, which we're really pleased with. Of course, a large benefit coming from increased sales. We should accept that. But also we had some support there coming from the continued work that we've done with the working capital. If we equate this into actual days, which we often do internally, it's actually an over 12-day improvement we've seen during the course of the year. So we're really pleased that we've done this. And of course, now we need to continue with step change improvements going forward in our working capital. Moving ahead, add a little bit of flavor on the balance sheet. I'm pleased to say that we've continued to consolidate our improved inventory position. You will see on the balance sheet that we actually show a SEK 1.1 billion improvement on inventories. However, approximately SEK 900 million of that is attributable to FX, so only SEK 200 million in real improvement year-on-year. That's really, as I mentioned, we did press the accelerator in the fourth quarter at more preproduction ready for 2021 season. And it's actually our sixth consecutive quarter of inventory improvement versus the prior year. Receivables are at a lower level despite the higher sales. We're pleased with that. The past due, also very solid. We've improved the past due position by some SEK 400 million. You'll see this in the annual report, where approximately SEK 200 million of past due only versus over SEK 650 million prior year. I mentioned the improvement on the payables, which is really the result of the increased production levels in the fourth quarter. Moving over to net debt before I hand back to Henric. Again, a solid improvement on our net debt to EBITDA, now down to SEK 1.2 billion. Net debt improved by some 43%, major increase or improvement coming from the cash flow from operations. Of course, then we had an improved cash flow from financing, a small effect coming from the pension effect, the discount rates there and the pensions and a small positive effect actually coming overall from currency. And we did, as you know, pay a dividend in the fourth quarter in 2020 relating to year 2019, representing SEK 1.3 billion. As Henric mentioned, the Board will propose a dividend of SEK 2.40 for the year 2020. And the plan is to pay that in 2 tranches, i.e., 1 after AGM in April and 2/3 payable in October. At that, I would like to pass back to Henric.
Thank you very much, Glen. And now we will shift gears a little bit, leave the numbers behind us for a little bit and look ahead. And as you know, Sustainovate is our program, where we combine our commitment to sustainability on one hand with our innovation capability on the other. And back in 2016, we set a bold ambition for 2020. And now at year-end, we shall close the books on the Sustainovate 2020 program. And we have ultimately achieved 4 out of our 5 targets: carbon, team, safety and community. We also made good progress on the remaining one. But due to COVID-19 implications, we experienced a slight delay in completing our supplier order program. Especially rewarding to see is, which you can see on that chart to the right, is that we have managed to decouple business growth from CO2, which is something that we are very proud of. Possibly even more important than reaching our targets is that we have managed to really integrate sustainability deeper into our business over this time frame and also to engage our organization on this very important topic. But since we then close the books on the 2020 program, we are now embarking on the next leg on that journey, which is our Sustainovate 2025. And we have just kicked this off with a new set of ambitious targets. We will continue to focus on carbon, of course. And what we do is that when we set our targets on carbon, of course, we look at our entire value chain, which is important to mention also products in use because that is where we have the biggest impact, so to speak. So we're looking at it end-to-end. And we have set a target that is in line with a 1.5-degree scenario. And the target is also officially approved by the Science Based Targets initiative. So a continued focus on carbon. But then you can see 2 new kinds of targets, so to speak, that's quite different from the first leg of the journey. And it's about circularity and it's about people. And circularity is going to become more and more important. And the -- it's simply important that we've reduced the demand of larger materials or material in general by sharing more, by preparing more, by recycling, et cetera. And we want to again connect our passion for resource, more customer experiences with our passion for innovation. So our target here is to launch 50 new circular innovations by 2025. Then the people dimension. I mean in the end of the day, our sustainable future is all in the hands of people. And we want to play a bigger role in empowering people to make sustainable choices. And we have set a target here of 5 million people. So that is our new Sustainovate 2025 program. It's an integral part of our strategy and who we are and something that is very, very important to us. If we move on, Glen mentioned our program here to, on one hand, accelerate our growth initiatives and, on the other hand, improve our efficiency, something that we launched here in conjunction with our Q3 report. And high level, we can say that everything here is on track. But let me give a little bit more flavor to it. One key thing is, of course, that given our strong financial position, we now want to lean a little bit further forward. We want to step up these strategic investments. And as we then said at the Q3 report was that we will increase by SEK 250 million a year, which is about another 50% in terms of strategic investments. And we target those on -- to the core value creation drivers of our business, like robotics, battery, pro products or watering products. And we do it primarily either in the go-to-market dimension in terms of our brands and our commercial activities or in the product development dimension. So this is very important to us, and we now have concrete plans in place. And we will step this up already in the year of 2021. The other side of this program, as we announced, is also how we increase our competitiveness in our supply chain, particularly when it comes to handheld products. But that is bigger than that. And here, we have a number of priorities. But if we focus on handheld, for instance, it's about increasing capacity of battery products. It's about moving assembly closer to our customers to make sure that we increase our customer service. It's about increasing automation. And it's about streamlining manufacturing of engine components. So there are many aspects to it. And if you look at the content, it's not a formal restructuring program. It's -- there's also a forward-leaning aspect of this, when we invest more and become more forward-leaning. We also announced a further decentralized organizational structure. And that is fully implemented and it's fully operational. All in all, all of this will amount to a saving of SEK 500 million annually, when fully implemented in 2023. And of course, there's a net effect, together with the increased investments of SEK 250 million. And as I said at the beginning, the program is progressing according to plan. So if we then shift gears again, as you know, we are approaching the 2021 big peak season for lawn and gardening products. And as usual, we have a pipeline of new, exciting product introductions. It looks like we ended up on Blastrac here on the slide, which was a little bit of surprise. But let's talk about the product introductions first. And we have a lot of good things coming here for consumers. We are launching new robotic mowers, both in the Husqvarna and the Gardena brands. We are expanding our smart systems with new sensors and new applications. We are enhancing our watering systems for Gardena with new hose reels, et cetera, so a lot of interesting things there. For the professional markets or core segments, we have a lot of interesting things as well. You remember, EPOS, the professional robotic mower with virtual boundary wires. We had a pilot launch in 2020. Now it's a full-scale launch in 2021. And of course, we have the CEORA, which is an entirely new platform targeting the professional space, up to 50,000 square meters, you can have systematic mowing. You have the EPOS technology with the virtual boundary wires, et cetera. Here, we clearly have the ambition to transform the professional market just like we have been transforming the consumer segment before. We're launching new professional chainsaw in the 90cc class. We are enhancing our power cutters in the Construction Division. And in terms of floor grinders, we are transitioning the HTC brand into Husqvarna. So a lot of exciting things here. And if we then go back to Blastrac and tie that a little bit to the thing with floor grinders here. At the end of last year, we completed the acquisition of Blastrac. Blastrac is the market leader of the complementary surface preparation methods. As you know, we have, for a period of time, I would say, 4, 5 years, built a second core in our construction business -- in our Construction Division and centered around concrete surfaces and floors. And here, floor grinders are one of the most important products. And these products are used to either level a concrete floor or take the surface off, so to speak, so you can install a new surface. And here, Blastrac comes into play, which is the market leader of alternative methods to floor grinders. You can shot blast, you can scarify, you can scrape and a few others as well. And Blastrac is clearly the market leader in this segment. So by combining this, we basically become the market leader in all these different segments, and we can we can offer the right solution for any kind of job out there. So we are very excited about this acquisition. So then if you go to the last and final slide here. Let me summarize a little bit the main messages this morning before we open up for questions. All in all, we have delivered a strong fourth quarter and a strong full year of 2020. We have strengthened our market positions in a good market. And we have really improved our financial performance, ultimately achieving all our financial targets. At the same time, I think it's important to put all of this into this bigger context. We have, for a number of years, purposely built a stronger Husqvarna Group by investing into attractive segments and exited others. So on one hand, shift up the profitability of the group, so we sustainably can operate above the 10%, while on the other hand, we have also positioned us right for a successful future. So I think it's important to put the quarter and the year into this a little bit bigger context. Looking into 2021. There's, of course, a degree of uncertainty with COVID and things like that. But ultimately, we are well positioned. We have good momentum. And we can also see that the trade inventory levels are lower than normal. And ultimately, we're off to a good start in 2021 as well. So we are looking forward to 2021. And then I think, yes, maybe let's end on that note. Thank you for your time, and we are now happy to answer any questions. So I hand it back over to you, Johan, I guess.
Thank you very much, Henric and Glen. So with that, we will start the Q&A session. So please, operator, do we have any questions in the line?
[Operator Instructions] The first is from the line of Christer Magnergård of DNB Markets.
First question is on just FX and the raw material guidance for 2021, if you can provide us with anything on that and also which division that would be hit the hardest from these effects.
Absolutely. So we expect, especially with the relatively strong Swedish crown versus the U.S. dollar, which is where most of the headwind come from right now, we're expecting somewhere between SEK 300 million and SEK 400 million of FX headwind for the coming year. And then we also see a headwind coming from raw materials, particularly coming from the base metals, of course, oil impacting plastics and lumber pricing. So we think around about SEK 150 million on raw materials headwind. And actually, probably more of that will come in the second half of the year, given that we've had a strong tailwind this year in the second half of the year. When it comes to divisions, we think all 3 divisions will actually be impacted by this. But the most impacted in absolute terms will come from Construction Division, given that they have a larger exposure of products going from eurozone into U.S., particularly Swedish crown into U.S. So Construction is impacted the most.
A follow-up on Construction. You mentioned in the report that the division had a negative impact from the COVID restrictions in Q4. Given that we have seen even more restrictions in Q1, would we see a larger effect on that division here in the beginning of the year?
I don't necessarily think so, Christer. I think that Q4 was marginally down and we know why it was down. I don't think it was necessarily COVID-related. We had some shifting of orders between quarters. So the second half of the year being positive gives us a strong momentum into 2021. And as things hopefully start reopening and also, of course, have the U.S. presidential election situation in North America, which has had some impact we feel, we're pretty confident there should be positive signs into '21 for Construction.
Great. Then on robotic numbers, what kind of growth did you see for the market in 2020? And how much did you grow and if you can talk about market shares?
We always talk about robotics and battery combined. And we did grow that segment by double digits. And we believe we grow a little bit more than the market, meaning that we took some shares.
And for '21, can we expect a similar trend as well?
I mean it's very difficult to predict next year, of course. But we come into 2021 feeling that we are winning in 2020 and we are adding quite a few interesting new products into the mix. So we are pretty optimistic for 2021.
I think it's worth adding, Christer, to that -- just to add, Christer, on that, I think when it comes to robotics, of course, the 2 key months when we were restricted by COVID of March and April, that's when a lot of the installations are taking place and people weren't going into homes to install, meaning third-party installs. So we were impacted in the 2 key lawn mowing months. So therefore, we should have a reasonable comp for '21 in the main 2 months.
Then the final question on working capital. The positive effects from the release in working capital from exiting consumer brands, is that all in the numbers now? Or do we still have some more release left?
No. It's pretty much through -- it was such a small amount of exited sales in the third quarter that I feel it's more or less through. So the exits from '18, of course, were well and truly through. And the working capital that was supporting those exits in '19 and '20, which has been about SEK 2.6 billion of exits, putting the 2 years together, that should have fell through. So that benefit is in the working capital figure now.
And our next question comes from the line of Gustav Hagéus of SEB.
A few questions, if I may. Firstly, Glen, I didn't fully hear the raw material headwind guidance. Was that SEK 100 million to SEK 150 million? If you could confirm that. And secondly, does that include also...
Yes.
Yes. Okay. Perfect. And does that also include freight costs from Asia and other places? Or is that on top of that? And if you could quantify that, that would be helpful.
It's -- that does not include the increased freight burden. Increased freight burden would be outside of that. But of course, we did have increased freight burdens also during the course of 2020. So yes, it's high at the moment. But we've also run 9, 10 months of increased freight during 2020 as well.
Okay. So the year-over-year impact is very limited, you think, at current spot price?
I think Q1 will be year-on-year impact. And then the rest of the year, we should have year-on-year benefit at the current outlook.
Perfect. And could you also -- I'm sorry if I missed it, but the temporary cost avoidance that you saw from 2020, how much was that? And is that -- is any of that carrying into 2021? Or what's the bridge year-over-year there as you see it?
The cost avoidance that we took during the course of the year was approximately SEK 300 million. And we've purposely called out cost avoidance so that they don't come over as being structural savings. We really put the brakes on. It was SEK 50 million in the fourth quarter, by the way, just for that purpose. We expect, of course, we're still in COVID times, so it's not like we just suddenly release the SEK 300 million. But assuming we start to normalize, then we'd expect to carry over savings of approximately SEK 100 million and reverse around, what, SEK 200 million. But the more delayed we are getting back to normality, then, of course, the more of those savings we'll take with us, notably things like travel. But conferences, they will be the main savings. But then, of course, we should start again with a lot of the customer-facing spend that maybe we paused during 2020.
Great. That's very clear. And lastly, in terms of expanding Gardena geographically, if you could talk a little bit if you have plans for that this year. And if you could perhaps quantify a little bit of where you see points of sales for Gardena products going year-over-year or over the few next years, that would be helpful.
I mean Gardena has, as part of its strategy, of course, to expand geographically. And that's something that we are working on and something that we also want to step up. But at the same time, we -- and I should say that we have a good development there also in 2020. But I think we also need to be a little bit cautious in factoring that in too quickly, I mean, that we are ramping that up now. It takes a while until you develop a new market. But that's clearly an ambition. We had good traction in 2020. We will continue in 2021. And we hope that in the years to come that we will be able to even step it up further. So I think that is kind of the bigger picture when it comes to the Gardena effort there. And if I understand you right, when it comes to the point of sale, I mean, we have had basically a strong year for Gardena throughout. And we would say that the inventory levels now are lower than normal in the trade. And that right now, we are more in the phase of the year where we, together with the trade partners, are filling up and preparing for the next season to come but from a lower level of trade inventory than before.
Our next question comes from the line of Johan Enarson at Danske Bank.
Okay. It's Björn Enarson. Sorry, all the headwinds that you are mentioning, I mean, raw material and increased spending on growing the business and FX and freight, et cetera, are your ambition to offset those through price and mix in total or some of it? Or what are your expectations?
Yes. It's very much our ambition to offset -- at least offset it. And we'd expect a net increase. Of course, pricing was very positive during 2020. And I think we stuck our neck out a little bit to say that. We'll continue that into 2021. And then of course, the strong mix that we expect from the range we have and the volume increases should offset those headwinds that we've talked about. And of course, Björn, something we don't necessarily talk about and quantify is we do have an internal efficiency program we run. And whilst we don't quantify that, of course, that program will continue.
Great. And that takes us to your financial targets. When presented, it was -- it sounded a little bit like a target for 2020, especially on the margin side. What do you think about that? I mean are you planning to get back to the market in terms of that during the year? Or do you have any comments on growth and margin targets?
I mean in the end of the day, I mean, our target is to grow 2% faster than the market. And our target is to be above 10% from an operating margin perspective. And I mean that is clearly our target. And that's where we're going to be. Whether it's time to revise the targets or not, that's ultimately a question for our Board. But our target is clearly to grow faster than the market and to continue to be above 10%.
Our next question comes from the line of Karri Rinta of Handelsbanken.
Yes. Firstly, I was a bit curious about the U.S. market. And what did you do in 2020 in terms of if we look at your go-to-market strategy and the way you operate in the U.S.? And if you have some specifics that you can share about what you plan to do going forward, both in terms of go-to-market as well as the way you're operated and your structure in the U.S. That's my first question.
Okay. Maybe I start and feel free to chime in, Glen. Most of the things that we've seen in 2020 was more of the same, so to speak. We try to become better in all aspects of the business. We try to drive good price, try to drive good mix, et cetera. I think the more -- the bigger shifts in the go-to-market is still ahead of us. And that was part of the program we launched here in conjunction with the Q3, where we basically say that we will focus much harder on the professional side of the business, the handheld side of the business and on building that robotics market. And that we will start to pivot the business more towards those segments. But I would say that most of those changes are still ahead of us, where we really start to focus and invest in those segments. I don't know, Glen, if you have more color to add here.
I think you described it well, Henric. I think, of course, Björn -- sorry, Karri, I think we needed to recall that the exits that we took in North America, they were quite large, SEK 1.9 billion of exits belonged in North America, which is very much the plan. So we are strategically, of course, exiting the segments that we talked about and putting more focus on the core -- the profitable core.
And maybe to say that, I think we're very happy with how we have executed these big exits because it's not a given that you do that in this controlled way. We have really exited SEK 4.5 billion or so in total over 3 years, the majority of that in the U.S. And be able to do that, still be relevant to your customers and year-over-year increase your profitability, I think we have executed this pretty well. But I think the forward-leaning activities and pivoting the business furthermore to handheld and robotics, that's still, to a large degree, ahead of us here in front of us, I should say.
All right. And my second question was actually related to that. So you're saying that most of this pivoting is still ahead of you. And I think you mentioned earlier that this is not a restructuring program as such. But once you are sort of well on your way in terms of where you want to be in terms of this, so what kind of implications should we expect on your manufacturing road map -- not road map but your manufacturing footprint. and maybe your outsourcing rate and so forth? Ultimately, how should we think about your fixed costs in a few years' time, especially those related to manufacturing operations?
I think we have taken some of those decisions already, I mean, where we exited the lawn mower business. We did some. Part of that -- this is part of the handheld optimization. And particularly when it comes to the engine component manufacturing, where we either could outsource, let's call it, the noncritical components and/or consolidating where we are making the core components, so to speak. So elements of this is already, let's say, at least financially behind us, even though some of the execution on the handheld side is still left to be done. Then we are more thinking about it as what we're going to do more of how do we start to redeploy funding and resources towards truly driving the right mix, to drive the handheld business, to drive the robotics business? So that is the plan. We do not have in the cards any other restructuring measures. There's nothing planned. At the same time, just to be clear, we will never shy away from taking the necessary actions to make the group successful. We will continuously evaluate segments and markets. And if we see that we are better off focusing in one segment than another, we will never shy away from taking the right actions. But there's nothing planned other than what we have announced.
And we have one final question in the queue. That's from the line of Carl-Oscar Bredengen of Berenberg.
I just wanted to check a little bit on the market because you state that you have been taking market share this year. And obviously, it's been an outstanding year for you as well as we can see with a lot of the other [ DIY ] producers and anyone in the home gardening and improvement segment. Can you talk a little bit about the drivers of the market in general? Because previously you've been stating that this is approximately a EUR 20 billion market or SEK 200 million -- or SEK 200 billion market and then you have some 15% market share of this. Can you talk a little bit about where you see your current market share of the wider market? And that's my first question really.
As you can imagine, it's hard to talk about market shares in total since we are in so many different segments and we don't quite have competitors that goes across. So it becomes very difficult to talk about it in general. But I would say that the total market has, if we talk about the lawn and garden side of the business, has -- from a consumer perspective, benefited from a stay-at-home trend this year. And we hope that quite a lot of that will stick over time, that people maintain their interest for gardening. So the market has, in that sense, been growing in 2020. I think in the professional segment, that has not been the case because the stay-at-home trend actually had an opposite effect in the pro segment of our business. Then from a weather perspective, I think that the extended season, meaning that we were mowing lawns in October benefited the market as such that the market grew well a little bit. Then what makes it difficult is, of course, this timing element that we talked about before. The industry got hit by COVID in its peak season. And really, the main trade partners were shut down or closed in the peak of the season. And then that kind of shifted volumes out. So it becomes a little bit difficult to isolate the effects of the different things. But I think in general, when you look at the year, you can see it has been a strong market in 2020 in general. And that we, in the core categories, have taken shares in that strong market. However, I think it's important that you all remember, when we look at everybody's reporting here in the second half of the year with big percentages, that, that's still in the quarters that was fairly small. And there is an artificial push-out of volumes from H1 to H2 due to COVID. So it's hard to predict. But in the end of the day, a stronger market than normal in 2020 and we managed to take shares in it.
Okay. And if we're looking at Q1 so far, how are the sort of January comps compared to year-over-year? You mentioned that you've got hit the hardest, obviously, in the peak month in terms of March and April with installations. But if we look now on January isolated and trying to look at the comps for Q1 this year, are we off to a better start? Are you seeing any change in demand? Is there any pent-up demand for gardening products that people didn't buy last year, so they want to get ahead of the season? Or how should we look on the beginning of the quarter on a year-over-year basis?
Well, I think it's safe to say that we're off to a good start. But it doesn't have so much to do with the consumer sentiment, so to speak, I don't think. At this time of the year, it's more that our trade partners are preparing for the upcoming season and the trade inventories are lower than normal. And I think everybody is anticipating a good season. So it's more preparation rather than a tell where the consumer is at this point in time. But long and the short of it is that we're off to a good start.
Okay. And just one last question, so you mentioned in terms of the strategy, as you mentioned a little bit earlier, in North America and your go-to strategy, we did hear a lot about the iRobot Terra launch. And there were sort of some expectations that their strong push into the market by offering a robotic lawn mower would give the U.S. consumer a more broader mind to, how to say it, to embracing robotic lawn mowers, assuming that a relatively household product like iRobot would come out and take a stand and say that, "This is a product that works and that we've anticipated that should have a positive read-across for you." We haven't really heard anything about the iRobot Terra since. And according to various sources, it seems to be a discontinued product for the time being and we don't hear anything about the launch. Is this a reflection of consumers not really embracing the product category or simply that you guys beat it or beat them to it with delivering the first boundary-less robotic lawn mower? Can you talk a little bit about, understand it's difficult to talk directly about your competitors, but how the adoption strategy for robotics in the U.S. are in relation to this?
As you say, it's hard for us to speculate in how they reason around this. But our firm belief is that there is a huge robotic opportunity in the U.S. The market is -- all markets are slightly different, but there's also a lot of commonalities. We believe there's a huge opportunity for robotics in the U.S. At the same time, we shouldn't underestimate the time to transform a new market. I mean it took us well over 10, 15 years on the first market in Sweden, starting in 1995, until that became a -- almost like a commodity, something that everybody knows what it is, everybody wants one kind of a deal. And then of course, as we have built more and more markets in Europe, we -- it has taken time. But each time, it takes a little bit less time. We become -- we learn, we get faster. And I think also with how society develops with, I mean, communication and digital tools and social media and so on makes things -- transformations go faster. So I think what I'm trying to say is that there is an opportunity in the U.S. We are committed to develop and transform that market. But I think we all need to have a little bit of respect for that. It takes a while to change the perceptions of consumers in a market and to basically build a whole new category.
And as there are no further questions on the line at this time, I'll hand back to our speakers for the closing comments.
So thank you very much for everyone joining the call today and to listen in to our full year report. And if you have any further questions or comments, just reach out to the Investor Relations team. And if not before, we will talk to you then on the 22nd of April, when we report the first quarter of 2021. So thank you very much for today.