Electrolux: operating margin of 6.7% in the third quarter

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As communicated by Jonas Samuelson (Electrolux president and CEO), the company continued to deliver earnings improvement in the third quarter 2017, achieving an operating margin of 6.7%. “Profitability increased across our business areas – said Samuelson – with four business areas reaching an operating margin above 7%. The favorable earnings trend was supported by product mix improvements and accelerated cost efficiency despite organic sales decline, mainly related to North America. In EMEA, the positive product mix development continued and our premium brands gained market share. Operating income improved and the margin increased to 7.9% in the quarter with strong cost efficiency work offsetting the increased raw material costs and currency headwinds. The European appliance market remains solid, with demand growth in several markets in Western and Eastern Europe, while the UK and the Middle East and Africa continue to be weak. We expect the total European market to be positive and reconfirm our outlook of around 1% growth in 2017”.

Jonas Samuelson, Electrolux president and CEO.

“In North America – added Samuelson – our margin was stable at 7.5%. This was a result of product portfolio management and good operational performance with increased cost efficiencies. Our sales, however, were impacted by continued price pressure and the underlying decline in private labels. In the quarter we executed the strategically important launch of the new Frigidaire product range, which has received very positive reactions from retail and consumers. However, in the quarter, the transition was impacted by temporary supply chain challenges, which also affected our sales volumes. The market for appliances in North America remains favorable and we anticipate demand to be positive for the remainder of the year. We confirm our full year growth outlook to be about 3-4%”. Besides, the CEO explained that in Latin America, demand continued to recover and market volumes in Brazil, Argentina and Chile improved significantly. Latin America delivered organic sales growth for the first time since the second quarter of 2015 and earnings continued to improve on the back of strong cost efficiencies. “We have also announced – said Samuelson – the acquisition of the rights to the nationally well-known brand Continental with a long standing history in Brazil. This will enable further growth in this important market for Electrolux”.