By Marie Mannes and Anna Ringstrom
STOCKHOLM – Sweden’s Electrolux on Thursday predicted lower sales volumes in 2023 due to weak consumer confidence and said it may not be able to fully pass on higher energy and labour costs, sending its shares sharply lower.
Europe’s biggest appliance maker said it expected slowing demand this year across Europe, North America and Latin America.
“Consumer sentiment is anticipated to continue to be negatively impacted by a high inflation and interest rate environment,” said Chief Executive Jonas Samuelson.
Samuelson saw “a challenge” in fully offsetting the impact of negative external factors on pricing in 2023, he said.
Electrolux warned on Jan. 11 that continued high costs and weak demand would lead to an estimated fourth-quarter operating loss of around 2.0 billion Swedish crowns ($194.14 million).
Despite heavy investment in North American plants, the company has struggled to become profitable in the region as its ramp-up has been delayed by supply chain constraints and high raw material costs.
While constraints are starting to ease, North America has hurt Electrolux’s results in past quarters. In contrast its biggest rival Whirlpool forecast this week a full-year profit above Wall Street estimates.
In September, Electrolux axed the head of its North America area and replaced him with former Latin America head Ricardo Cons, who was tasked with leading a new turnaround program. The company also initiated a company-wide cost reduction program.
Samuelson reiterated guidance that the changes would result in a year-over-year earnings contribution of 4 billion-5 billion crowns.
The maker of brands such as Frigidaire and Anova said it would not pay a dividend this year, a decision which took analysts by surprise.
For 2023, the negative impact of external factors “is a surprise given the market and us were expecting positive contribution from lower raw material costs”, JPMorgan said.
Electrolux said that while it did predict benefits from lower raw material costs, these would be reduced as most raw materials it will use in 2023 were bought at 2022 rates.
Shares in the group fell as much as 11% in early trade and were down around 10% at 1024 GMT, hitting the bottom of the Pan-European Stoxx 600 index.
Electrolux reported an operating loss of 1.96 billion crowns against 882 million crowns a year earlier. It flagged in September that it expected demand to remain weak in both Europe and North America in 2023.
($1 = 10.3021 Swedish crowns)