STOCKHOLM, July 29 - Electrolux said on Wednesday that its operating profit excluding non-recurring items for the April-June period rose to 1.2 billion Swedish crowns, up from 797 million a year earlier, supported by 2% organic sales growth. The result outstripped analysts' average projection of 617 million crowns, according to a poll provided by the company.
The Swedish appliance manufacturer, whose portfolio includes brands such as Frigidaire and AEG, said it is confronting weaker conditions in North America. The region, which the group described as a key market, accounts for roughly a third of Electrolux's sales and has been a particular challenge as the company seeks to return the business to operating profitability.
Electrolux has faced persistent headwinds from soft consumer demand and price competition. To address its financial position and strategic priorities, the company executed a steeply discounted 9 billion Swedish crown rights issue in June. Management said the proceeds are intended to support a planned tie-up with Chinese rival Midea in North America, to fund a global business restructuring and to deleverage the balance sheet.
The company reiterated that its reported operating profit excludes one-off items. In reporting the quarterly figures, Electrolux also provided the currency conversion used in its release: 1 US dollar equals 9.6759 Swedish crowns.
Analysts' consensus expectations, as supplied to the company, pointed to an operating profit considerably below the outturn. Electrolux's ability to exceed those forecasts comes amid ongoing efforts to stabilise margins and reshape operations in markets that have proved difficult, particularly North America, where the push to return the business to the black remains a central strategic objective.
Summary
Electrolux posted an operating profit excluding non-recurring items of 1.2 billion crowns in Q2, above the analyst average forecast of 617 million, with organic sales up 2%. The company signalled weaker conditions in North America and completed a 9 billion crown rights issue in June to fund a tie-up with Midea in the region, restructure the business and reduce leverage.
Key points
- Operating profit excluding non-recurring items rose to 1.2 billion Swedish crowns in Q2 from 797 million a year earlier.
- Organic sales grew 2% in the April-June period; analysts had forecast an operating profit of 617 million crowns on average.
- North America, representing about one-third of sales, showed weakening conditions; a June 9 billion crown rights issue was completed to support a tie-up with Midea, restructuring and deleveraging.
Risks and uncertainties
- Continued weakness in North America could impede the company’s ability to return that regional business to operating profitability - impacting the consumer appliances sector.
- Execution risk around the planned tie-up with Midea in North America and the broader global restructuring could affect financial outcomes and balance sheet deleveraging plans.
- Reliance on proceeds from a steeply discounted rights issue highlights near-term financing sensitivity and potential dilution concerns for investors in the stock market sector.