Preliminary results pinned to inventory markdowns
By Alan Wolf, YSN
Softened consumer demand and heightened promotional activity contributed to a fourth-quarter loss for Electrolux.
In a preliminary earnings report, the Stockholm-based manufacturer said the inventory reduction efforts, coupled with higher costs, led to operating income of SEK -0.6 billion, compared to SEK 1.6 billion during the year-ago period. Net sales for the three months declined 8% to about SEK 36 billion.
The pinch was particularly pronounced in North America, where the region reported an operating loss of SEK 1.2 billion following a similar loss in the third quarter. Also adding to the pain were one-time impacts from the termination of a U.S. pension plan, a company-wide cost cutting program and a turnaround initiative for the North American market under recently appointed region chief Ricardo Cons.
The latter two actions began gaining traction late in 2022 and are expected to contribute upwards of SEK 5 billion in earnings this year, the company said, while the transfer of pension obligations to a third party should yield a positive cash flow by mid-year.