Highlights of the third quarter of 2019
- Net sales amounted to SEK 32,520m (30,444). Sales growth of 1.0%, driven by price/mix improvements.
- Operating income amounted to SEK 1,189m (1,756), corresponding to a margin of 3.7% (5.8).
- Operating income includes non-recurring items of SEK -412m (0) relating to restructuring charges for efficiency measures and outsourcing projects across the Group, recovery of overpaid sales tax in Brazil and a legal settlement in the U.S. Excluding these items, operating income amounted to SEK 1,601m (1,756), corresponding to a margin of 4.9% (5.8).
- Price increases continued to fully offset the headwinds from higher raw material costs, trade tariffs and currency. Manufacturing transition costs in North America and higher marketing investments impacted earnings negatively, while mix improvements across business areas contributed positively.
- Operating cash flow after investments amounted to SEK 2,594m (1,352).
- Income for the period decreased to SEK 739m (1,162), and earnings per share was SEK 2.57 (4.04).
President and CEO Jonas Samuelson’s comment
Innovation and operational excellence are key pillars to drive profitable growth. In the quarter, we further strengthened our platform for the future by launching ground breaking products and initiating additional efficiency measures.
Once again our ability to innovate contributed to sales growth and earnings. I am particularly pleased that all business areas have improved their mix which shows that consumers find our offering attractive. The new kitchen range launched in Europe during the quarter has been very well received. It is currently rated at 4.9 stars out of 5 in consumer reviews and has started to contribute to our European value market share growth in the focus area Built-in kitchen.
In the quarter we initiated global streamlining measures following the major strategic overview announced earlier this year. This includes the intention to spin-off the Professional Products business area and the sharpening of our consumer business through regionally focused business areas and a global consumer experience function. The efficiency activities are expected to generate annual savings of about SEK 500m, with full effect from 2022. This is on top of the previously announced cost savings from our re-engineering program and the total annual costs savings for the consumer business are now expected to be approximately SEK 3.5bn, with full effect from 2024.
The execution of our re-engineering program totalling SEK 8bn continues and with the latest investment in our plant in Nyíregyháza, Hungary, all initiatives under the program have now been announced. In the quarter we started production in the new Anderson facility, U.S., the first investment included in the program, and also the biggest step we have ever taken in terms of automation. Consolidating the U.S. refrigeration/freezer production into one new facility is both very complex and resource intense. This quarter included high manufacturing transition costs. The transition continues and we expect operating income in the fourth quarter to be impacted by approximately USD -25m.
We re-confirm our market view for 2019.
Based on current trade tariff levels, we estimate the negative year-over-year impact from raw materials, trade tariffs and currency to be approximately SEK 1.6bn in 2019, compared to the previous estimate of approximately SEK 1.4-1.6bn. The net increase is driven by a more unfavourable currency impact, while raw materials and trade tariffs combined are expected to have a less negative impact compared to our view a quarter ago. For the first nine months of 2019, price has fully offset this headwind and we expect that to also be the case for the full year.
Looking ahead, I am confident that we are well positioned to create shareholder value.
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, October 25. 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: 42021216#
Slide presentation for download:
Link to webcast:
For further information, please contact:
Sophie Arnius, Head of Investor Relations +46 70 590 80 72
Daniel Frykholm, 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 25, 2019.