Electrolux, the Swedish home-appliance manufacturer, is set to announce its second-quarter results on Thursday. Here are the key details:
Net Profit Expectations
According to a FactSet poll, Electrolux is projected to report a net profit of 350 million Swedish kronor ($34.2 million) for the quarter, compared to SEK257 million in the same period last year. It’s worth mentioning that the company will allocate a SEK650 million provision in this quarter to settle a previously disclosed French antitrust case.
Expected Sales Increase
Sales are anticipated to experience a slight rise, with an expected value of SEK34.05 billion, compared to SEK33.75 billion in the previous year. This forecast was compiled by the company.
Key Points to Monitor
There are a few crucial factors to keep an eye on with Electrolux:
Cost Inflation
Electrolux anticipates negative external factors throughout the year, influenced by rising raw material costs, energy costs, trade tariffs, direct and indirect currency impact, and inflation in labor costs of over 2%. In the first quarter, the company managed to counterbalance the adverse impact on earnings by adjusting pricing, which offset the higher cost levels of products sold in the quarter and mitigated external challenges.
Profit Margins
During Q1, the adjusted operating margin dropped to 0.9% from 3.1% the previous year. This decline was primarily due to lower volumes resulting from weaker market demand and the lasting effects of increased cost levels. However, Electrolux’s cost reduction initiatives and North America turnaround program had a positive influence on earnings in the last quarter.
Guidance for the Future
Electrolux expects a negative demand trend for core appliances in most regions by 2023, with the exception of the Asia-Pacific, Middle East, and Africa, where neutral growth is predicted. Earnings this year will likely be affected by negative volume/mix, although pricing adjustments are expected to partially offset external factors. The company’s cost-reduction plan and North American turnaround program are projected to contribute positively to earnings, with an estimated range of SEK4 billion to SEK5 billion by the end of 2023. Capital expenditure for 2023 is expected to reach SEK6 billion to SEK7 billion.
