STOCKHOLM (dpa-AFX) - Shares of Electrolux AB were gaining around 6 percent in the morning trading in Stockholm after the Swedish home appliance major reported Friday sharply narrower loss in its second quarter, and swing to an operating profit with strong growth in net sales.
The company further said it now targets cost savings of approximately 4 billion Swedish kronor in 2024, excluding investments in Innovation and marketing.
Looking ahead, the company said it aims to leverage further on the leaner and more simplified organization, continue to execute on its cost-reduction targets, and focus on main brands as consumer demand in its main markets starts to recover. These are the key priorities to continue restoring margins and return to profitable growth, it said.
President and CEO Jonas Samuelson said, 'Price was negative during the first half of 2024, with price pressure in North America reflecting the lower price levels established in late 2023, and high promotional activity in other markets. As previously communicated, we expect price to be negative for full year 2024, also impacting the second half negatively. However, we anticipate the promotional intensity in North America to continue to stabilize sequentially throughout the year.'
Under its divestment initiatives of non-core assets, the company on Thursday agreed to divest the water heater business in South Africa for an enterprise value of around 1.4 billion kronor.
In its second quarter, loss amounted to 80 million Swedish kronor, narrower than last year's loss of 648 million kronor. Loss per share was 0.30 krona, compared to prior year's loss of 2.40 kronor per share.
Operating income amounted to 419 million kronor, compared to loss of 124 million kronor a year earlier. Operating margin was 1.2 percent, compared to last year's negative margin of 0.4 percent. Excluding non-recurring items, prior year's earnings were 519 million kronor. The company noted that higher volumes and improved mix partly offset negative price.
Group operating income improved by more than 1 billion kronor sequentially, with a significant reduction of the loss in North America.
In the quarter, Latin America continued to deliver strong results, while earnings in Europe, Asia-Pacific, Middle East and Africa declined with subdued consumer spending in Europe.
Net sales in the second quarter amounted to 33.82 billion kronor, higher than last year's 32.65 billion kronor. Organic sales increased 6.8 percent driven by higher volumes in all business areas while price was negative.
The company noted that consumer demand in its main markets remained mixed in the second quarter, while its products were well received by consumers. The firm outperformed the market in Europe and North America.
Latin America developed strongly with a high organic sales growth and a rolling 12-months operating margin of 7 percent.
In Stockholm, Electrolux shares were trading at 95.74 kronor, up 5.93 percent.
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