By Marie Mannes
STOCKHOLM (Reuters) – Electrolux’s operating loss nearly tripled in the first quarter on weak demand and poor performance in North America, but the loss was smaller than expected as raw material costs eased, sending shares up 6%.
The world’s second-biggest appliances maker reported on Friday an operating loss of 720 million crowns ($66.2 million) against a year-earlier of 256 million loss and a 761 million loss expected on average by analysts polled by LSEG.
Electrolux, which prices its products in many regions at the premium end of the market, has seen consumers opt for cheaper alternatives, but said on Friday that is saw consumer confidence indicators to be bottoming out.
The company has been struggling to compete with lower-price rivals such as China’s Midea as cash-strapped households turn to cheaper alternatives.
“The price pressure in North America and high promotional activity in other markets characterizing the latter part of 2023 continued in the first quarter.” CEO Jonas Samuelson said on Friday.
Martin Persson, fund manager at insurance group Lansforsakringar, an Electrolux shareholder, said that while losses slightly lagged consensus estimates, markets had probably braced for even worse.
“I think the expectations were extremely low,” he said.
The company has struggled particularly in North America over the years, where targeted cost cuts, production efficiencies has so far not borne any fruit.
The region, which is one of Electrolux’s biggest markets, also have been difficult for its peers, with biggest rival Whirlpool (NYSE:) this week said it was laying off around 1,000 salaried employees.
Electrolux repeated a “neutral” full-year market outlook for Europe, Asia-Pacific and North America, but raised the outlook for Latin America to “neutral/positive”.
The group late on Thursday announced that Samuelson, who has had the position for eight years, would step down next year, and that its board was launching a search for his successor.
“They elected a new chairman a month ago and now the CEO has decided to resign. So I think there are some exciting times ahead for Electrolux probably, with strategic options on the table,” Kepler Chevreux analyst Johan Eliason said.
Portfolio manager Persson said the new CEO could be slightly positive if they find the right person to take over.
