Electrolux loses 16% amid net losses, contracting margins, continued weakness in US 📉

Swedish home appliance company Electrolux (ELUXB.SE) shares loses today almost 16% after the company reported a net loss of SEK 235 million for Q3 2024 vs SEK 123 million gain in Q3 2023. What's even harder for Electrolux is that operating margin contracted from 1.8% to 1% in still high interest rates environment.

• Sales of SEK 33.3 billion came in almost in line with last year result of SEK 33.4 billion; organic growth was offset by f/x losses. However, EBIT results contracted by 42% to 349 million crowns. Analysts at Citi Research flagged a more than 25% miss in operating profit as potentially the most negative surprise. 
• Revenue from the North American business, felt by 0.3% YoY vs 0.2% rise expected; pressuring Electrolux pricing. A better-than-expected growth came in surprisingly in Europe and Latin America, and what's worth noting is that organic growth came in at 6.2% YoY cs 4.1% exp. 

CEO Samuelson commented that  'Although market conditions remained difficult in Europe and North America, we continued to make progress on our cost-cutting initiatives. Operating income, excluding non-recurring items, improved to SEK 717 million in the quarter, with operating cash flow of SEK 1.1 billion and a strong liquidity position'. Samuelson will step back since 1 January 2025 and will be replaced by Yannick Fierling. Margins on European market came in at 4.2% vs almost 2.1% exp, but Latin America margins came in at 6.5%, below 7.2% estimates. Cash flow came in SEK 1.05 billion vs appx. SEK 500 million projected by Citi.

• Electrolux downgraded its outlook on “external factors,” to neutral, citing raw material costs (which previously driven its margins). CAPEX for 2024 came in revised down to SEK 5 billion vs 5-6 billion expected earlier. Also, the company does not expect European market strength to persist, despite lower interest rates; it sees Europe as weaken and North America as neutral.
• The company expects pressure on both volumes and prices. Citi Research commented that: “We see double-digit % consensus downgrades for 2024; we’d see 2025 expectations under pressure too,”. Rising iron ore and steel prices as well as energy are the risks.

Electrolux (D1 chart)

Source: xStation5