Electrolux expects significantly lower earnings for third quarter and full year 2001
(ELUX) Electrolux’s operating income for the third quarter and the full year 2001, excluding items affecting comparability, is expected to be significantly lower than in the preceding year.
This reflects a change of the outlook in the Group’s half-yearly report, which stated that operating income for the full year 2001, excluding items affecting comparability, was expected to be somewhat lower than in the preceding year.
The change is traceable mainly to higher costs for phasing in a new generation of refrigerators within the American operation, continued destocking at the retail level in the United States, and a continued weak earnings trend for the Components product line.
Last week’s tragic events in the United States further underline uncertainty regarding American household’s purchases of the Group’s product categories, as well as future consumer confidence. This is in addition to a market which already shows an unfavorable trend for price and mix.
Production of the new generation of refrigerators in the two factories in the United States is currently close to plan in terms of daily output, but costs remain unacceptably high. The products have been very well received by the market and the situation in the refrigerator division is expected to be normalized during year. The previously anticipated decline in operating income versus the second half of last year of USD 20-25 million (approx. SEK 200-250 M) has been revised upward to USD 45-50 million (approx. SEK 450-500 M).
Destocking at the retail level is also expected to negatively impact income with USD
20-30 million (approx. 200-300 M) during the second half of the year.
The weak trend for the Components product line is attributable to weaker demand and increased price pressure within the compressor product area, particularly in the United States as well as within certain types of motors. Action within this product line to date has focused on capacity adjustments and reduction of inventories, but structural changes are also being planned.
Several of the Group’s operations have performed well this year, with positive trends for sales and operating income. This applies to major appliances in Europe, parts of Professional Indoor Products, and Professional Outdoor Products.
In response to the weak earnings trend for the Group as a whole, efforts are being focused on implementing the cost-cutting activities decided during the fourth quarter of 2000. As previously announced, a substantial portion of the capital gain of SEK 3,200 M on the sale of the Leisure Appliances operation will be used to finance efficiency measures.
Electrolux is the world’s largest producer of powered appliances for kitchen, cleaning and outdoor use, such as refrigerators, washing machines, cookers, vacuum cleaners, chain saws, lawn mowers, and garden tractors. In 2000, Group sales were SEK 124.5 billion and the Group had 87,000 employees. Every year, customers in more than 150 countries buy more than 55 million Group products for both consumer and professional use. The Electrolux Group includes famous appliance brands such as AEG, Electrolux, Zanussi, Frigidaire, Eureka, and Husqvarna.
A telephone conference will be held at 3.p.m.CET . The Electrolux Press Hotline is available at + 46 657 65 07.
Factors affecting forward-looking statements
Certain statements in this news release including any discussion of management’s expectations for future periods constitutes “forward-looking” statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Such statements include, among others, the financial goals or targets of Electrolux for future periods and future business and financial plans. Actual results may differ materially from these goals and targets due to a variety of factors. These factors include, but may not be limited to the following; the success in developing new products and marketing initiatives, progress in achieving operational and capital efficiency goals, the ability to successfully restructure existing business, the success in identifying growth opportunities and acquisition candidates, and the integration of these opportunities with existing businesses, progress in achieving structural and supply-chain reorganization goals, competitive pressures to reduce prices, significant loss of business from major retailers, consumer demand, effects of current fluctuations and the effect of local economies on product demand.