Electrolux Limited by Supply Chain Constraints

Still playing catch-up with sky-high demand

By Alan Wolf, YSN

Electrolux North America eked out solid sales and profits in the first quarter, as a series of price hikes helped offset the impact of soaring inflation and limited inventory.

In Electrolux’s first-quarter financial report, released today, the company’s North American unit posted a 10.4 percent increase in net sales and a 53 percent jump in operating income year over year. The results include a $70 million settlement related to a case involving Commerce Department tariffs on washers imported from Mexico.

The vendor credited the positive results to a series of cost increases and a greater mix of higher-priced products. These helped counter the higher costs incurred by labor shortages, inflation, and supply chain constraints, with the latter compelling the company to increase its reliance on pricey airfreight and spot buys of electronics components.

The first-quarter gains came amid a 4 percent decline in U.S. factory shipments of core laundry and kitchen appliances industrywide, which Electrolux, and separately Whirlpool, attributed to inventory constraints.

CEO Samuelson: Supply constraints continue

Nevertheless, first-quarter unit volume was still 24 percent ahead of pre-pandemic levels for the same period in 2019, the manufacturer said.

In a statement, president/CEO Jonas Samuelson said that global supply pains persist, prompting Electrolux to lower its full-year outlook for North American wholesale volume, although tightness should ease somewhat in the back half. “We are collaborating closely with our suppliers to mitigate these constraints,” he stated, “but we estimate that the second quarter will be as challenging as the first quarter, with significant risks of disruptions relating to the resurgence of the coronavirus in China.”

Samuelson said the company’s outlook for the balance of the year is clouded by supply constraints, historically high inflation, pandemic uncertainty, and geopolitical tensions. On the last point, he described Russia’s invasion of Ukraine as a serious violation of international law and expressed Electolux’s concern for “the suffering that the invasion is causing our employees and the people of Ukraine.”

The Stockholm-based company halted operations in Russia, Belarus and Ukraine at the start of the war, but has resumed limited operations at its Ukrainian facilities located in the Western part of the country, and is supporting the International Red Cross in its humanitarian response to the crisis.