Highlights of the second quarter of 2021
- Net sales increased to SEK 30,303m (23,476) corresponding to an organic sales growth of 39.1% supported by strong market demand in all business areas. Last year’s second quarter was severely impacted by the pandemic.
- Operating income increased to SEK 1,983m (-62), corresponding to a margin of 6.5% (-0.3). Strong price execution and favorable product mix were important drivers.
- Income for the period amounted to SEK 1,383m (-141) and earnings per share was SEK 4.81 (-0.49).
- Operating cash flow after investments was SEK 1,456m (122).
- The Board has decided on an adjusted dividend policy of approximately 50% of annual income and proposed an automatic share redemption of SEK 17 per share, as well as announced an intention to resolve on share buybacks over time.
President and CEO Jonas Samuelson’s comment
In the second quarter, we continued to benefit from a favorable market, strong price momentum and demand for our innovative products. Operating income amounted to SEK 1,983m, corresponding to a margin of 6.5%, and organic sales growth was 39.1%. A year ago, restrictions relating to the coronavirus pandemic resulted in significant volume drops, which we partly mitigated through temporary cost actions. Compared to second quarter of 2019, organic sales growth was 16.4%.
Strong demand together with global supply shortages, especially of electronic components, continued to be successfully addressed through my colleagues’ hard work and tight collaboration with our suppliers. However, production efficiency and demand mix matching were negatively impacted by irregular deliveries. The market for electronic components is expected to be somewhat more constrained in the third quarter and, hence, we anticipate challenges to fully meet the market’s product mix requirements. We continue to have a close dialogue with our suppliers to mitigate these supply challenges as we expect the situation to remain uncertain for an extended period of time.
We continue to fully offset the headwind from external factors, electronic components and logistics through price and we expect that to be the case for the full year as well. We have announced and started implementing additional price increases, taking effect gradually throughout the rest of the year. This as costs for raw materials, electronic components and logistics are increasing further, resulting in increased pressure on cost efficiency and external cost factors.
We maintain our 2021 full year regional market outlook, even though visibility remains limited due to the ongoing pandemic. Market demand is expected to begin to normalize during the second half of 2021, but with significant regional variances driven by pandemic developments and impacts from stimulus programs. The global supply challenges experienced in the first half are expected to have a higher impact in the second half of the year.
With improved profitability and high capital efficiency, Electrolux financial position and balance sheet are very strong. The significant reengineering and product innovation programs are progressing well. I am therefore pleased that the Board has decided that we can combine continued ambitious growth investments with increased distribution of the value created to our shareholders. As first steps this will be done through adjusting the dividend policy to approximately 50% of income, and a proposed automatic share redemption of SEK 17 per share in the second half of 2021. Combined with the ordinary dividend already approved by the AGM, this would mean a total cash distribution of SEK 25 per share to be paid out in 2021. Going forward, the Board’s intention is to complement ordinary dividends with ongoing share buybacks, initially through utilizing the existing mandate to repurchase up to 9.4 million shares until the 2022 AGM.
I am confident that our strategy ensures we remain well positioned to deliver long-term shareholder value even in rapidly changing market conditions.
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, July 20. Jonas Samuelson, President and CEO and Therese Friberg, CFO will comment on the report.
Details for participation by telephone are as follows:
Participants in Sweden: +46 8 566 426 51
Participants in UK/Europe: +44 3333 000 804
Participants in US: +1 631 9131 422
Pin code: 67236691#
Slide presentation for download:
Link to webcast:
For further information, please contact:
Sophie Arnius, Head of Investor Relations +46 70 590 80 72
Åsa Öhman, Electrolux Press Hotline, +46 8 657 65 07
This is information that AB Electrolux is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 0800 CET on July 20, 2021.