Electrolux: the operating income increased by 8% in the third quarter

Keith McLoughlin, president and CEO of Electrolux
Keith McLoughlin, president and Ceo of Electrolux

Keith McLoughlin, president and Ceo of Electrolux, has recently commented the data of the third quarter 2015. The operating income of the company amounted to SEK 1.5 billion, an increase of 8% year-over-year. “Our largest business areas, Major Appliances EMEA and Major Appliances North America, which together comprise 65% of the Group’s sales, achieved good organic growth and strong improvement in earnings – explained McLoughlin -. Professional products continued to perform well. The weak macro-economic environment in Brazil had a negative impact on Major Appliances Latin America. The Group had a strong cash generation of SEK 3.2 billion in the quarter”. Considering the different geographical areas, demand for appliances continued to improve in almost all markets in Europe. “In Western Europe – said the Ceo – there has been positive growth for seven consecutive quarters. In this market, Major Appliances EMEA continued to actively manage the product portfolio and gained market share in profitable segments such as built-in kitchen. Our ongoing cost savings programs continued to contribute to earnings. We expect the total European market to grow by 1-2% in 2015, including deterioration in demand in Russia and Ukraine”.
As regards to Major Appliances North America, this business area reached good organic growth in the quarter and volumes increased in almost all categories within core appliances. “Profitability within food preservation is now being restored – explained McLoughlin -. Earnings in this segment have in previous quarters been impacted by the transition of the product ranges, following the new energy requirements imposed in the second half of 2014. Actions are underway to ramp up the cooking plant in Memphis, which has been slower than anticipated. The US market for appliances continued to be solid and we now expect growth in the range of 4-6% for the full year”.
Within Latin America, the market environment in Brazil continued to be challenging. “Demand for appliances weakened significantly in the quarter – said Keith McLoughlin – which affected sales volumes and earnings. To mitigate the weak market we have taken cost reduction actions, and we also implemented price increases to compensate for currency headwinds. The decline in operating income in Brazil was to some extent mitigated by stronger financial performance in Argentina and Chile. The macro-economic outlook in Brazil remains weak”. “Our operations in Major Appliances Asia/Pacific were impacted by lower sales in China – added the Ceo -, as we are reducing the business scope in the Chinese market, while profitability in Australia and Southeast Asia remained good. Professional products continued to perform well and the business area achieved its highest operating margin ever in a quarter”.
As regards to the GE Appliances acquisition, the Ceo said that the company continues to explore the possibility of a reasonable settlement with the U.S. Department of Justice. “At the same time – he explained – we are also preparing to defend ourselves in court in November and we are confident of the merits of our case. We believe that the appliance industry is more competitive than ever and we remain confident that the acquisition will enhance our ability to deliver even more innovative products at a better value to consumers, builders and retailers”.