Electrolux: strong operational recovery in Europe

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Electrolux-Q3-2014-Banner1According to the data published by Electrolux, in the third quarter of 2014 the Group’s operating income increased by almost 30% to SEK 1.4 billion compared with the same period in 2013, and cash flow after investments improved by SEK 600 million to SEK 1.6 billion. The main factor behind this result is the operational recovery in Europe. “Our operations in Europe – explains Keith McLoughlin, president and CEO of Electrolux – continue to recover as a result of strong focus on cost savings, production efficiency and product portfolio management. Despite continued difficult market conditions, with a recent weakening of leading indicators and consumer confidence in a number of countries across both Western and Eastern Europe, we have managed to significantly improve results. During the third quarter we achieved an operating income of SEK 484 million, with an operating margin of 5.5%, compared with SEK 111 million in the same period of 2013.
Our work to restore and secure long-term profitability in Europe includes cost reductions and a focus on improving the product mix, but also actions related to the manufacturing footprint program initiated ten years ago. As parts of the final stages in this program, consultations are initiated with employee representatives regarding the production in Mariestad, Sweden, and Schwanden, Switzerland. Decisions will be taken after the consultations”.
As regards to Latin America and Asia Pacific, the company achieved good performance, despite the challenging macro-economic conditions. In Q3, the operating income reached SEK 242 million for major appliances in Latin America e SEK 125 million for the same products in Asia Pacific. “Both Major Appliances Latin America and Major Appliances Asia/Pacific – said McLoughlin – have been facing challenging market conditions with slow demand in several markets. Although market demand in Brazil has stabilized following the very weak spring and summer, other parts of Latin America have continued to deteriorate. In Asia/Pacific, we have noted a weakening in demand in Australia, and also in the Chinese market. Under these conditions, it is very encouraging to see that both business areas have performed well and have been able to adapt to the new situation in a timely manner”.
In North America, sales and earnings remain at a good level: sales increased but transition costs for new energy requirements and lower sales of air-conditioners impacted earnings. Besides, in September Electrolux announced the acquisition of GE Appliances, in order to increase its presence in one of the largest appliances markets.

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