Electrolux warns on profits outlook amid low consumer confidence      

Electrolux  CEO Jonas Samuelson said the pandemic and component shortages had delayed the ramp-up of local production.

Sweden's Electrolux announced plans to cut costs and warned its profit would drop as high inflation and low consumer confidence squeezed demand for its home appliances, while large investments in North America had yet to pay off.

Demand for appliances in Europe and the US fell significantly in the third quarter, with high retailer stocks and supply chain imbalances increasing costs and inefficiencies, Electrolux said. "Third quarter earnings for the group are expected to decline significantly compared to the second quarter 2022 also excluding the one-time cost to exit the Russia market," the group said. 

In the April-June quarter, Electrolux booked a weaker-than-expected operating profit of 560 million Swedish crowns (€52.8m). Europe's biggest home appliances maker said cost cuts across Europe and North America would result in a material positive earnings contribution in 2023.

"The programme, which starts immediately, will focus on reducing variable costs, with special attention to eliminating cost inefficiencies in our supply chain and production," the company said. 

Pandemic

While Electrolux has invested heavily in its North American plants, chief executive Jonas Samuelson told analysts the pandemic and component shortages had delayed the ramp-up of local production.

"So far, focus has been almost exclusively on getting the output up at any cost .., Now we have to flip into much more of a cost productivity perspective, both in the supply chain side and in our own manufacturing."

In Europe, Mr Samuelson said, Electrolux expected customers to continue to delay purchases.

"For as long as we see consumer confidence at these very low levels in combination with very high general inflation...people will hold on to their wallets quite hard," he said.

Shares in Electrolux, whose brands include Frigidaire, are down 42% this year. 

Reuters