Electrolux, the Swedish home-appliance manufacturer, is set to eliminate approximately 3,000 jobs in response to ongoing weak consumer demand and intense competitive pressure. Despite its current efforts in the restructuring process, Electrolux acknowledges that more action is required to restore profit margins, as the consumer shift towards lower price points and increased promotional activity negates most of the SEK2.4 billion ($215 million) in cost savings.
The company’s newly announced plans aim to achieve net cost savings of SEK10 billion to SEK11 billion by 2024, compared to 2022. This target exceeds the previous goal of over SEK7 billion in cost reduction. However, these plans come with a restructuring charge of SEK2 billion to SEK2.5 billion in the fourth quarter of this year.
According to Chief Executive Jonas Samuelson, it will take some time for the implemented measures to generate their full earnings impact. Therefore, Electrolux does not anticipate immediate sequential improvement in underlying operating income for the fourth quarter.
In the third quarter, Electrolux recorded a net profit of SEK123 million, a significant turnaround from the previous year’s loss of SEK605 million. Nevertheless, this figure fell short of expectations, as a FactSet analyst poll had projected a net profit of SEK450 million.
Furthermore, sales experienced a decline of 5.2% to SEK33.43 billion during this period, lower than the anticipated SEK34.1 billion according to a company-compiled consensus.