© Reuters. FILE PHOTO: The Electrolux logo is seen during the IFA Electronics show in Berlin, Germany September 4, 2014./File Photo
By Marie Mannes
STOCKHOLM (Reuters) -Electrolux said on Friday it expected consumer sentiment to stay weak in early 2024 as customers seek cheaper alternatives but the home appliance maker sees demand in major markets stabilising later throughout the year.
The Swedish group on Jan. 12 warned its fourth-quarter loss had widened to around 3.2 billion Swedish crowns ($308.48 million)from a year-earlier 2.0 billion due to high costs, especially in North America.
Its North America division has weighed on the company for some time due to delays in reaching full capacity at its new appliance factory, weak demand as well as intense price competition.
Chief Financial Officer Therese Friberg said the increased need for promotional activity had also made things difficult in North America.
Black Friday promotions, which fall in late November, had extended into a large part of December as well as the whole of November, she said.
Electrolux shareholder Martin Persson, a fund manager at Swedish insurer Lansforsakringar said like many investors he was very worried that the North American business continued to underperform.
“And the proof is in the pudding, they need to show it can become a viable business, but it seems like it’s very competitive right now,” he said.
The world’s second-biggest appliance maker expects demand for core appliances in 2024 to be relatively unchanged for all regions compared to 2023.
“Looking into the beginning of 2024, weak consumer sentiment is anticipated to continue with consumers shifting to lower price points and postponing purchases in discretionary categories,” CEO Jonas Samuelsson said.
“However, as inflationary pressure is subsiding and interest rates are expected to come down, we expect demand in major markets to stabilise in the course of the year.”
Shares in the company, which rose 4% at the market open before reversing course, were down nearly 1% at 1121 GMT.
Electrolux, which prices its products at the premium end of the market has struggled to compete with cheaper rivals such as China’s Midea. Market leader Whirlpool also warned its full-year results will miss expectations due to weak consumer demand.
Electrolux said it expected prices to remain level this year.
It added this was likely to be partly offset by growth in premium products within its kitchen and laundry ranges.
Electrolux, which also owns brands such as AEG and Frigidaire, proposed no dividend for the second year in a row, as expected.
The company reported an operating loss of 3.22 billion Swedish crowns against a year-earlier loss of 1.96 billion, in line with a preliminary reading of 3.2 billion.
Excluding non-recurring items, it posted an operating loss of 724 million after a loss of 612 million a year ago.
($1 = 10.3736 Swedish crowns)
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