Electrolux runs in Stockholm, second quarter above expectations

(Il Sole 24 Ore Radiocor) - Electrolux posted a bright session on the Stockholm Stock Exchange on the back of better-than-expected quarterly accounts and renewed efforts to cut costs, albeit accompanied by a lower outlook for demand in Europe and Asia Pacific over the year. The appliance maker's share price gained around eight points, one of the best performers in the Stoxx Europe 600 index. Electrolux reported second-quarter operating profit of 419 million kronor (around 36 million euros), after a loss of 124 million kronor last year, far exceeding the 94 million profit forecast by analysts.

The margin was 1.2% from -0.4%. Furthermore, the net loss for the quarter narrowed to EUR 80m from EUR 648m. Sales increased by 6.8% organically to 33.8 billion kroner. The revenue growth was driven by 'higher volumes in all business areas, while the price effect was negative. Despite difficult market conditions, the mix improved, supported by the new module platforms and the attractive product offering,' the company explained. The group's operating profit 'improved by more than 1 billion kroner compared to Q1 2024, with a significant reduction in the loss in North America.

Latin America developed strongly with high organic sales growth and a 12-month operating margin of 7%," adds Electrolux. Europe, on the other hand, continues to be weak due to the performance of the built-in kitchen segment. Market conditions in the second quarter remained similar to those in recent quarters and were affected by "the cumulative effect of high inflation and high interest rates, which continued to weigh on consumer confidence," the company further explained. The exception is Brazil, where improving consumer confidence is supporting demand.

"In general, inflation has been more persistent than expected and continues to weigh on discretionary spending. This has slightly delayed the expected improvement in demand, especially in Europe," said CEO Jonas Samuelson, quoted in a communiqué. Electrolux has therefore revised its outlook for market demand in the Europe, Asia Pacific region for the full year 2024 from 'neutral' to 'negative'. The market outlook for North America remains neutral, while for Latin America it is now positive compared to the previous 'neutral/positive' level. The price effect, which was negative during the first half of 2024 as a reflection of pricing pressures in North America and high promotional activity in other markets, 'will be negative for the full year 2024, with a negative impact on the second half as well', the company finally points out.

"We continue to implement our cost-cutting initiatives, the beneficial effects of which should be clearly felt in the second half of the year," added the ceo, who also heralded an increase in investments in innovation and marketing in the second half of 2024. In view of 'the recent increase in ocean freight rates and taking into account the headwinds on logistics costs, we are now targeting cost savings of around SEK 4 billion in 2024, excluding investments in innovation and marketing,' the ceo added. In October 2023, Electrolux announced a plan to accelerate cost reductions between 2024 and 2022 to SEK 10-11 billion from the previously planned SEK 7 billion.