STOCKHOLM, Oct. 28, 2022 /PRNewswire/ --
Highlights of the third quarter of 2022
- Net sales increased to SEK
35,244m (30,929), corresponding to an organic sales growth
of 1.2%. Strong price execution and mix improvements were partly
offset by significantly lower volumes driven by weaker market
demand.
- Operating income amounted to SEK
-385m (1,639), corresponding to a margin of -1.1%
(5.3).
- Operating income includes a negative non-recurring item of
SEK 350m, related to the exit from
the Russian market, impacting business area Europe. Excluding this non-recurring item,
operating income amounted to SEK
-35m, corresponding to a margin of -0.1% (5.3). In addition
to the weaker market environment, supply chain imbalances resulted
in a significantly elevated cost level, mainly in business area
North America that reported a loss
of SEK 1.2bn.
- A Group-wide cost reduction and North
America turnaround program was initiated in the quarter and
is expected to have a SEK 4-5bn
positive earnings contribution in 2023. The program is expected to
lead to a restructuring charge of SEK
1.2-1.5bn in the fourth quarter of 2022.
- Income for the period amounted to SEK
-605m (1,143) and earnings per share were SEK -2.23 (3.98).
- Operating cash flow after investments was SEK -1,483m (-198), mainly a result of the
reported loss.
President and CEO Jonas
Samuelson's comment
In the third quarter, the weaker market environment in
combination with supply chain imbalances resulted in significantly
lower volumes and operational inefficiencies that led to breakeven
earnings, excluding the one-time cost to exit the Russian market.
Price once again offset significant cost inflation, predominantly
in raw materials and logistics. The year-over-year earnings decline
was primarily driven by business area North America, that reported a substantial
loss, but also by our European operations. Both of our other
business areas, Latin America and
Asia-Pacific, Middle East and Africa, increased earnings through successful
product launch execution and good cost management.
High general inflation and low consumer confidence resulted in
market demand declining in the quarter with the exception of
Asia-Pacific, Middle East and Africa, where demand was solid. In
Europe and the U.S., deteriorating
consumer sentiment resulted in an accelerated demand decrease
compared with the second quarter. The impact of the slowdown in
consumer demand was further amplified by high retailer inventory
levels. Consumer sentiment is also next year assessed to be
negatively impacted by inflation and higher interest rates. Hence,
market demand in both Europe and
North America for the full-year of
2023 is expected to further deteriorate, i.e. be negative
year-over-year.
Against this background, a Group-wide cost reduction and
North America turnaround program
was initiated in the quarter. We are also reviewing our production
capacity needs given current market situation.
Cost reduction and North
America turnaround program
The program is for the full-year of 2023 expected to result in a
positive year-over-year earnings contribution of SEK 4-5bn from both Cost efficiency and reduced
Investments in innovation and marketing. The activities implemented
under the program will gradually contribute to earnings over the
course of 2023 and into 2024. Total cost reduction from the program
is estimated to be in excess of SEK
7bn. The majority of the targeted cost savings will be
realized in business area North
America. The program is expected to lead to a restructuring
charge in the fourth quarter of 2022 in the range of SEK 1.2-1.5bn, which will be reported as a
non-recurring item. 3,500-4,000 positions will be affected by the
program. For the sake of clarity, the cost reduction from the
program includes and replaces the previously communicated benefits
from the SEK 8bn global
re-engineering investments.
The Group-wide cost reduction element of the program will
primarily focus on three areas.
One area is to eliminate cost inefficiencies in our supply chain
and production by adapting sales and production plans to what can
be supplied in a stable manner and to right-size the workforce in
our factories.
Another area is to leverage the organizational changes which
took effect on July 1 this year.
Through these changes, we have created stronger global
organizations for operations, sales, admin, R&D and IT, which
is also enabling efficiency gains.
Finally, we are optimizing our R&D and marketing
investments. This includes leveraging recent global investment
programs in R&D and prioritizing the highest ROI-opportunities
as well as centralizing marketing and brand building
activities.
Regarding business area North
America, I am obviously very disappointed with our
performance. The production transformation with the two new
facilities Anderson and Springfield including several new product
platforms, in combination with the particularly challenging supply
chain conditions, require additional measures to return to
stability and profitability. In addition to the three areas
mentioned above for the whole Group, key activities for the
North America turnaround are to
stabilize and improve operational planning and to significantly
improve cost efficiency in Anderson and Springfield to ensure cost
competitiveness in these new production facilities. We remain
highly confident in the consumer appeal of the new product ranges,
which also the sales execution in the quarter resulting in
year-over-year market share gains proves.
Providing resource efficient products is at the core of our
strategy and recently consumers have become more aware of both
consumption and price of energy. Our new European built-in fridge
freezer range is much more energy efficient and hence delivers
significant electricity cost benefits to consumers as well as up to
20% less CO2 emissions in the user phase than the
previous range.
Although we are experiencing a challenging time, I am confident
that Electrolux remains well positioned to create value and we will
continue to invest in consumer experience innovations.
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, October 28. Jonas
Samuelson, President and CEO and Therese Friberg, CFO will comment on the
report.
Details for participation by telephone
Sweden: +46 8 56 64 26 51
International/UK: +44 33 33 00 08 04
U.S.: +1 63 19 13 14 22
Pin/Passcode: 70461836#
Slide presentation for download
www.electroluxgroup.com/ir
Link to webcast
https://edge.media-server.com/mmc/p/2nrdyeek
For further information, please contact:
Sophie Arnius, Head of Investor Relations
+46 70 590 80 72
Electrolux Press Hotline,
+46 8 657 65 07
This is information that AB Electrolux is obliged to make public
pursuant to the EU Market Abuse Regulation. The information was
submitted for publication, through the agency of the contact person
set out above, on 28-10-2022
08:00 CET.
The following files are available for download:
https://mb.cision.com/Main/1853/3657011/1645038.pdf
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Interim Report Q3
2022
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