Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Electrolux AB (ELUXY, Financial) reported a 7% organic sales growth in Q2 2024, with volume growth in all business areas.
- EBIT improved sequentially by more than SEK1 billion to SEK419 million, driven by reduced losses in North America and strong results in Latin America.
- The company achieved SEK0.8 billion in cost efficiency in H1 2024, with a new organization successfully implemented.
- Electrolux AB (ELUXY) has a solid liquidity of SEK32.8 billion, including revolving credit facilities.
- Positive external factors were driven by lower raw material costs, contributing to improved financial performance.
Negative Points
- Despite organic sales growth, Electrolux AB (ELUXY) had a negative organic contribution to earnings due to lower net prices.
- Pricing continues to be negative year over year, particularly in Europe and North America.
- The company faces significant cost discrepancies between production in North America and Asia, impacting profitability.
- Cash flow after investments for the first half was negative SEK1.5 billion, although improved from the previous year.
- The divestment of the water heater business in South Africa resulted in an anticipated loss of SEK0.6 billion.
Q & A Highlights
Q: Can you update us on the ongoing petition with the Department of Commerce in the US regarding price dumping?
A: This issue pertains to alleged dumping of refrigerators produced in Thailand. The Commerce Department has initiated an antidumping review, which could take five to seven months. While important for ensuring a level playing field, this is not a major category for us in North America.
Q: Regarding your market outlook in Europe, does the change reflect the year so far, or are there signs of incremental worsening into the second half?
A: We expect the housing market to bottom out and interest rates to come down, positively impacting demand. However, the change in guidance reflects a delay in recovery, particularly in the built-in kitchen segment, which remains subdued.
Q: How are US volumes connected to the Springfield facility ramp-up and competitive dynamics?
A: The Springfield facility's stable and predictable output positively impacted us in the quarter. However, the main story is our competitive product offering, reflected in strong consumer star ratings. We expect this to continue being a positive factor, although we still have work to do in reducing costs and fully ramping up Springfield.
Q: Can you clarify the profitability in Latin America and the outlook for H2 EBIT considering various cost factors?
A: Latin America's profitability is largely driven by strong performance in Brazil, not pricing tailwinds in Argentina. For H2, we expect significant cost reductions despite increased investments in marketing and innovation. However, market softness in Europe and negative year-over-year net pricing in North America remain headwinds.
Q: Why did you sell the water heater business in South Africa at a loss, and what does this imply for other divestments?
A: The water heater business faced margin pressure and a weaker currency, contributing to the loss on sale. This does not strongly read across to other divestments, although Egypt faces its own geopolitical challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
