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. 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 of Electrolux has 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 the company 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. 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 Electrolux 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.
Swedish home appliances maker Electrolux AB’s net profit plunged 81% to 257 million Swedish kronor ($25 million) in the second quarter of the year, due to supply chain disruptions, Barrons reported citing AFP. Supply chain disruptions adversely affected the availability of essential components and production schedules, and also increased the costs of airfreight for the companyThe irregular deliveries of multiple components, mainly electronics, continued to significantly impact our volumes, cause severe production inefficiencies and increase costs for airfreight,” he said.
By contrast, second-quarter sales increased by 11 percent to 33.7 billion kronor, as higher selling prices offset the supply crunch.
Electrolux said it was still unable to meet demand, especially in its laundry and premium cooking segments.
“We continue to collaborate closely with our suppliers to mitigate these supply chain constraints and expect sequential improvements from mid-2022,” Samuelson said, noting the risk of further disruptions still loomed.
FSK’s third edition gathered online leading experts from across the food ecosystem – scientists, kitchen producers, food tech start-ups, and a chef. Among them is Petra Janney, founder of sustainability consultancy firm Hatcher, who said companies should put the right choices in front of consumers. In the process, companies can create “irresistible offerings” based on shared experiences for families and friends. «Eating sustainably is not a sacrifice: it’s an opportunity to learn something new, to try something delicious, and to create an unforgettable moment with loved ones» – Janney said.
«There are so many innovators showing that with the right amount of knowledge, right amount of nudging, we can really make a difference that’s meaningful for the planet and for our future – said Electrolux CEO Jonas Samuelson -. If today has shown anything, it’s really the power of partnership in the food ecosystem.» At this year’s EuroCucina in Milan (June 7-12), Electrolux will unveil GRO – a visionary concept aimed at reinventing the kitchen and enabling people to enjoy food in a way that is sustainable for our health and the planet.
Electrolux published its 2021 report, which recorded a sales growth of 14.3% resulted in a net sales of Sek 126 billions. Operating income, excluding non-recurring items, reached Sek 7.5 billions corresponding to a margin of 6.0%. Combined with a strong capital turnover-rate of 5.3%, the company said it met or exceeded all its financial targets, delivering a return on net assets of 28.5%.
According to a new report by by Research and Markets, the global small domestic appliance (SDA) market is forecast to reach $581.6bn (€508.5bn) by 2030, registering a CAGR of 13.0% from 2021 to 2030.
The main drivers for growth include growing demand from an increasingly urbanised population, increased personal disposable income, and affordable credit facilities. Another significant factor in the upward trend is a surge in innovation in home appliances, encouraging consumers to replace their old models with new “smarter” versions.
According to Research and Markets’ report, the COVID-19 pandemic has also positively impacted the overall growth of the small domestic appliances market.
It says that during the lockdown period, people were choosing to invest in their homes, including the replacement of their old appliances with smart and advanced models.
In addition, due to an increased focus on health, small domestic appliances that promote greater levels of hygiene also saw an uptick.
Europe gained significant share in the global small domestic appliances market in 2020 and is expected to sustain its share during the forecast period, the report said.
A considerable growth rate is anticipated for new, advanced and smart residential and commercial appliances for the residential and commercial segment. In addition, there has been a huge increase in demand from the major countries in Europe such as France, Spain, the UK and Russia.
Increasing preference for a hassle-free lifestyle and growing industrial application of air purifiers and vacuum cleaners are all supporting the growth of small domestic appliances in the region, the report stated. Product innovation and quick adoption for the technologically advanced appliances are further adding to the growth of the small domestic appliances market in Europe.
At the same time, high prices and high popularity of both residential and commercial small domestic appliance brands has led to the advent of counterfeit brands, the report said. These are generally prevalent in the developing economies where customers are highly price-sensitive, Research and Markets commented. This factor is said to restrict the sale of the existing original small domestic appliances brands in these regions.
The major players operating in the market, according to Research and Markets, include Koninklijke Philips N.V., The Whirlpool Corporation, LG Electronics Inc., Bosch, Electrolux AB, Panasonic Corporation, Spectrum Brands Holdings, Inc., The Middleby Corporation, Morphy Richards, and Samsung Electronics Co. Ltd.