Highlights of the second quarter of 2019
Net sales amounted to SEK 31,687m (31,354). Sales decline of 2.7%, driven by lower volumes.
Operating income amounted to SEK 1,619m (827), corresponding to a margin of 5.1% (2.6). The comparison period included non-recurring items of SEK -818m.
Price increases fully offset the headwinds from higher raw material costs, trade tariffs and currency as well as lower volumes. Mix improvements mitigated higher investments in marketing and R&D.
Operating cash flow after investments amounted to SEK 384m (1,805).
Income for the period increased to SEK 1,132m (517), and earnings per share was SEK 3.94 (1.80).
The Board has reconfirmed its plan to propose to the shareholders that the Professional Products business area is distributed to the shareholders with the aim to achieve listing on the Nasdaq Stockholm during the first quarter of 2020 or, at the latest, the second quarter of 2020.
President and CEO Jonas Samuelson’s comment
A strong focus on innovation to improve consumer experiences is our guiding compass and a key driver for profitable growth. It is therefore encouraging to see that we once again have a favorable earnings impact from improved mix by selling more high-margin products and we continue to invest in marketing to support the major launches we have this year. Concurrently, price increases continued to offset strong headwinds from higher raw material costs, trade tariffs and currency, and in this quarter also from volume decline. The lower volume was mainly caused by the U.S. private label sales drop. Underlying operating income was in line with last year.
The earnings for our operations in Europe and Professional Products were once again solid and operating income in Latin America increased significantly. In North America, positive price and mix offset higher costs from raw materials and trade tariffs but not fully the volume decline. The business area Asia-Pacific, Middle East and Africa was impacted by currency headwind and weak sales in Australia.
We re-confirm our market view for 2019 with the exception of Southeast Asia where we now estimate the demand in the region to be slightly positive.
Based on current trade tariff levels, we estimate the negative year-over-year impact from raw materials, trade tariffs and currency to be approximately SEK 1.4-1.6bn in 2019, compared to the previous estimate of approximately SEK 1.7-1.9bn. In the first half of 2019, price has fully offset this headwind and we expect that to be the case also for 2019 as a whole. The uncertainty on trade tariffs continues to impact our visibility.
The preparations for the intended separation and subsequent listing of the Professional Products business area are proceeding according to plan. As the previously announced reasons for the separation are still considered valid the Board has reconfirmed its plan to propose to the shareholders that the Professional Products business area is distributed to the shareholders with the aim to achieve listing on the Nasdaq Stockholm during the first quarter of 2020 or, at the latest, the second quarter of 2020.
Electrolux 100th year is a product launch intensive year and I believe our innovation power will continue to strengthen our competiveness. In addition to significant kitchen range launches in Europe and Asia-Pacific, we have sharpened our offering by being the first to bring Air Fry technology built in to the cooker to the North American market. Looking ahead, I am confident that we are well positioned to create value through our profitable growth strategy.