Highlights of the third quarter of 2021
- Net sales amounted to SEK 30,929m (32,004) and organic sales was in line with last year. Market demand normalized at above pre-pandemic levels.
- Price and mix continued to increase, while global supply chain constraints resulted in difficulties in meeting underlying market demand.
- Operating income amounted to SEK 1,639m (3,220), corresponding to a margin of 5.3% (10.1).
- Strong price execution offset significant increase in headwind from external factors, but did not fully offset temporary higher costs for express logistics and electronic components. Additional list price increases were announced to be implemented after the third quarter.
- Income for the period amounted to SEK 1,143m (2,356) and earnings per share was SEK 3.98 (8.20).
- Operating cash flow after investments was SEK -198m (6,005).
President and CEO Jonas Samuelson’s comment
In the third quarter, we continued to see solid demand in most markets with normalization above pre-pandemic demand trends. Net sales were essentially flat in the quarter. Strong price realization and favorable mix, through an attractive product and brand offering, offset lower sales volumes. Supply chain constraints, mainly electronic component availability, impacted production output negatively, as we anticipated. We estimate the production impact to be approximately 10% in the quarter. Operating income amounted to SEK 1,639m, or 5.3% of net sales. Price once again more than offset external factors, predominantly accelerating raw material inflation and currency. However, the tight conditions for electronics and ocean freight also led to significant temporary cost increases, such as express logistics and spot buys, of about SEK 300m that could not be fully offset in the short term. In particular, our North American business area was affected since the congestion at important U.S. ports amplified the supply constraints. In addition to a negative impact on volumes and mix, the business area also faced higher costs, driven by the use of more express logistics and high production inefficiency caused by limited planning visibility. High absenteeism due to the coronavirus also constrained North American manufacturing.
We continue to have a tight collaboration with suppliers to mitigate global supply shortages, but we estimate that the fourth quarter will be even more challenging than the third quarter. Although we anticipate sequential improvements in 2022, we expect challenging conditions to remain in meeting continued strong demand.
Price is our main tool to compensate for cost inflation. In 2021 we are on track to fully offset headwind from external factors and inflationary cost increases on electronic components and logistics with price; just as we have done up until now for the last four-year period. Additional price increases were implemented in the quarter, as a response to the recent significantly higher cost inflation, mainly on raw material, as well as unfavorable currency effects. We are also in the process of announcing further price increases in our main markets as we are determined to offset accelerating cost headwind also in 2022. A strong product range, with additional significant launches currently ramping up, gives us confidence that consumer demand for our innovative product offering will remain healthy.
We maintain our 2021 full year regional market outlook, even though supply conditions remain volatile. We expect that limited availability of certain product categories will continue throughout the year, with regional variances, as underlying consumer demand normalizes above pre-pandemic levels.
Our aim is to achieve a climate neutral value chain by 2050. With product usage accounting for ~85% of the CO2 climate impact of an appliance, the focus is on increasing energy efficiency and inspiring consumers to live more sustainable lives. A great example is the laundry campaign ‘Make it Last’.
In the quarter, the EGM resolved on the proposed automatic share redemption of SEK 17 per share. Combined with the already approved ordinary dividend, this 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.
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, October 27. 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: 52992645#
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 October 27, 2021.