Investing.com -- Shares of Husqvarna Group dropped on Wednesday following the company’s profit warning, which was prompted by challenging market conditions.

At 6:02 am (1002 GMT), Husqvarna was trading 5.5% lower at SEK 63.04.

“Challenging market conditions and restrained consumer spending continue to have an impact on the Group's sales and operating result in the third quarter,” the company said in a statement.

This downturn has led to reductions in inventory levels by retail partners and servicing dealers, which, coupled with other factors, is expected to result in an about 5% fall in organic sales compared to the previous year.

Additionally, the company anticipates a break-even operating income result, with margins affected by lower capacity utilization and increased promotional activities.

These issues are compounded by reduced consumer confidence and spending, reflecting a broader trend of economic uncertainty in the market.

“Cash flow is expected to remain strong, partly driven by reductions in the Group's inventory levels,” the company said.

This is attributed to the company’s efforts to reduce its inventory levels, which has boosted cash reserves.

Husqvarna Group has accelerated its cost savings programs. The company is implementing several mitigating activities aimed at reducing operational costs and improving financial resilience.

A detailed account of these measures will be provided in the full third-quarter report.

“"The current market situation is weak and has a substantial effect on our business, thus we continue to focus on our mitigating activities,” said Husqvarna Group’s CEO, Pavel Hajman.

Jefferies, in a note, said that they anticipate the weak preliminary results for Q3 could lead to negative double-digit EPS revisions to consensus estimates for FY-24E.

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