Electrolux has reported a weaker-than-expected market demand and is initiating cost reductions.
Electrolux reports for Q3 their market demand for their core appliances in US and Europe is estimated to decreased at an accelerated rate compared with Q2. This is most likely from high inflation on consumer durables purchases and low consumer confidence. High retailer inventory levels have been impacted with the slower consumer demand too.
Supply chain imbalances from production inefficiencies and increased costs, their Q3 earnings are expected to decline significantly compared to Q2 and has been driven mainly by Europe and North America and excludes the cost to exit Russia. North America area 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 all regions, their board decided to make cost reduction program. The program focuses on reducing variable costs, with special attention to eliminating cost inefficiencies in supply chain and production. It also includes increasing productivity in operations, optimizing R&D, administration, sales and marketing.
In North America the company plans to strengthen and broaden product offering with consumer experience innovations. To return to stability and profitability 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.
The turnaround program will be run by Ricardo Cons, the new Head of Business for NA. Ricardo Cons has successfully led the transformation of the Electrolux business in Latin America over the last six years.
