Electrolux collapses in Stockholm, quarter in the red and reorganisation with capital increase

(Il Sole 24 Ore Radiocor) - Red quarterly accounts and the announcement of a series ofrestructuring measures, including a capital increase, sent Electrolux plummeting on the Stockholm Stock Exchange, plunging more than 24%. Loss-making results and falling sales in the first quarter took the market by surprise, and it also reacted badly to the 9 billion kroner (about 830 million euros) capital increase announced on Thursday as part of a series of reorganisation initiatives, which will have more immediate costs than benefits.

In the January-March period Electrolux's revenues decreased by 9% to 29.5 billion kroner, the operating result was negative 266 million compared to a profit of 452 million last year, and the net result was also negative at -470 million compared to a profit of 42 million. Operating profit excluding non-recurring items decreased by 56% to EUR 198 million from EUR 452 million. Operating cash flow after investments was negative EUR 4.6 billion from EUR -3.1 billion. The figures came inbelow analysts' forecasts, which expected a net profit of 138.2 million kroner and sales of 30.64 billion kroner. Electrolux said that while it had strengthened its market position in Europe and Brazil, it reported an organic sales decline of 11.6 percent in North America, due to worsening market conditions, higher costs due to US tariffs and a significant slowdown in demand.

Looking to the future, the company confirmed its forecast for 2026, despite the additional costs due to the extension of tariffs on US imports on products containing steel and aluminium as of 6 April. Electrolux emphasises that it is on track to meet its cost efficiency target, estimated at SEK 3.5 to 4 billion. The group revised the market outlook for North America to 'negative' from 'stable', while for Europe the outlook remains 'neutral' and for Brazil it moves from 'neutral to positive'.

Grappling with weak consumer demand and competition from lower-priced rivals, the group is accelerating its reorganisation. On Thursday after the close of the session, Electrolux announced a partnership with the Chinese group Midea in the North American market. A 50-50 JV in 'Food Preservation', the sale of 65% of Electrolux's plants in Mexico, and the 50-50 operation of the Swedish group's plant in South Carolina through a JV that is 55% owned by Electrolux are planned. The partnership is expected to have a positive effect on sales and costs. In the immediate term, it will have anegative impact of about 2.4 billion kroner in the second quarter, due to the costs of laying off about 1,600 employees in 2026 and asset write-downs.

The 9 billion capital increase is "fully subscribed" and "supported by Electrolux's main investor, Investor Ab" and will be used "to support the partnership with Midea, to improve the group's efficiency" over the next two years, which is expected to result in aheadcount reduction of about 3,000 people globally, with a negative impact of 2.2 billion kroner (including the costs of the recently announced plant closures in Chile and Hungary). Another 4-5 billion will be used to 'strengthen the group's balance sheet and give it the financial flexibility and resilience needed for today's difficult and competitive market environment'.