STOCKHOLM - Electrolux Group, a leading global appliance company, disclosed its preliminary financial results for the fourth quarter of 2023, revealing an estimated operating loss of approximately SEK -0.7 billion, excluding non-recurring items. The company has attributed a significant portion of this loss to its North American business area, which faced an estimated deficit of around SEK -1.4 billion.
The Group's net sales for the quarter are projected to be around SEK 35.6 billion, marking a slight organic decline of 1%. Including non-recurring items, the operating loss for Electrolux Group is expected to reach approximately SEK -3.2 billion. Despite these losses, the company reported strong cash flow generation, anticipating an operating cash flow after investments for the full year 2023 of approximately SEK 3 billion.
Electrolux attributed the North American losses primarily to increased price competition and subdued demand during key sales periods, including Black Friday. The company also noted that the cost of production in North America remained high compared to some Asian regions, influenced by currency fluctuations, raw material costs, and inflationary pressures. This discrepancy has led to lower market prices, especially in the refrigeration category, which is vital for the North American segment.
The transition of cooking manufacturing in Springfield has also impacted earnings negatively. The legacy factory's closure during the quarter incurred additional costs and affected product availability. The new Springfield factory's ramp-up is expected to be completed by the end of 2024, improving volumes and cost efficiency.
Electrolux has been executing a Group-wide cost reduction and North American turnaround program, which has progressed well in the quarter. However, the savings for the full year fell short of the approximated SEK 6 billion target due to the Springfield transition's temporary effects.
The fourth quarter's income will also be affected by a write-down related to US tax credits, amounting to approximately SEK 1.2 billion, although this will not impact cash flow.
The net negative impact from non-recurring items, totaling roughly SEK 2.5 billion, includes an impairment of assets due to the formation of a new business area encompassing Europe, Asia-Pacific, Middle East & Africa, which resulted in an approximate SEK -0.2 billion loss.
This article is based on a press release statement from Electrolux Group.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.