STOCKHOLM, Sept. 12, 2022 /PRNewswire/ -- Electrolux
is initiating a cost reduction program on the back of
weaker-than-expected market demand and weak earnings in the third
quarter. The cost measures are expected to result in a material
positive earnings contribution in 2023. Ricardo Cons, currently Head of Business Area
Latin America, has been appointed Head of Business Area North
America.
Market demand for core appliances in Europe and the US so far in the third quarter
is estimated to have decreased at a significantly accelerated pace
compared with the second quarter, driven by the impact of high
inflation on consumer durables purchases and low consumer
confidence. High retailer inventory levels have amplified the
impact of the slowdown in consumer demand.
In combination with supply chain imbalances resulting in
significant production inefficiencies and increased costs, the
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. This has been driven mainly by
Europe and North America. Business Area North America is
expected to report an operating loss in the third quarter exceeding
the loss in the second quarter.
Since market demand for 2023 is expected to continue to be weak
in both regions, the Board has today decided to initiate a
Group-wide cost reduction program addressing both variable and
structural costs. The program, which starts immediately, will focus
on reducing variable costs, with special attention to eliminating
cost inefficiencies in our supply chain and production. The
structural cost reductions will primarily take place in
Europe and North America and include prioritization and
efficiency measures leveraging recent organizational changes which
took effect July 1. The measures
include increasing productivity in operations as well as optimizing
the R&D portfolio, administration, sales and marketing
activities.
In business area North America,
the strategy to strengthen and broaden our product offering with
consumer experience innovations remains. However, the production
transformation with two new facilities and several new product
platforms, in combination with the particularly challenging supply
chain conditions in the region, require additional measures to
return to stability and profitability. A turnaround program will
therefore be conducted under the leadership of Ricardo Cons, who has been appointed new Head of
Business Area North America. Ricardo
Cons has successfully led the transformation of the
Electrolux business in Latin
America over the last six years. He succeeds Nolan Pike, who takes up a new position
continuing to report to Anna
Ohlsson-Leijon. A new leader of Electrolux Latin America is
anticipated to be appointed shortly.
The Group cost reduction program and the North American
turnaround program are expected to result in a material positive
earnings contribution from both Cost efficiency and Investments in
innovation and marketing in 2023. More information on cost
reduction targets for 2023, as well as a potential material
restructuring cost, will be communicated in the third quarter
interim report published on October
28.
The share buyback program initiated on May 2, 2022, was completed on September 2. Given the current market
environment, the Board does not intend to initiate additional share
buybacks before the AGM 2023.
Telephone conference
Electrolux will today hold a telephone conference at 10.00 CET,
with comments from Jonas Samuelson,
President and CEO, followed by a Q&A session.
- To only listen to the telephone conference, use the
link:
https://edge.media-server.com/mmc/p/pwgmft2a
OR
- To both listen to the telephone
conference and ask questions, use the link:
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 12-09-2022
08:45 CET.
For further information, please contact:
Sophie Arnius, Investor Relations, +46 70 590 80 72
Paul Palmstedt, Corporate Communications, +46 70 593 92 83
This information was brought to you by Cision
http://news.cision.com
https://news.cision.com/electrolux/r/cost-reduction-program-and-management-changes,c3629331
The following files are available for download:
https://mb.cision.com/Main/1853/3629331/1625597.pdf
|
Press release - Cost
reduction program and management changes - September 12
2022
|