STOCKHOLM -Electrolux, Europe’s biggest appliance maker, reported a fourth-quarter loss on Wednesday, citing weaker demand from both consumers and its retailers, and high costs.
The Swedish group warned weak performance particularly in North America lead to an estimated group operating loss of 2.0 billion crowns ($191 million), against a year-earlier profit of 900 million, as organic sales fell 8%.
Electrolux, which competes with Whirlpool, Samsung and LG, is scheduled to publish its full fourth-quarter earnings report on Feb. 2.
“The year-over-year earnings decline was primarily a consequence of weaker consumer demand and inventory reductions at both retailers and Electrolux in combination with an elevated cost level,” it said in a statement.
“Inventory reduction activities at retailers in the fourth quarter across regions were larger than expected contributing to a weak market,” it said, adding that the largest impact was in North America.
Losses at the North America unit, which has been restructuring to improve production and performance, totalled 1.2 billion crowns excluding non-recurring items.
Analysts at JPMorgan said the profit warning highlighted weak fundamentals with a demand outlook unlikely to get better in 2023.
“2023 will see savings from raw materials (cost) normalisation but weak demand brings a higher likelihood of passing savings to consumers to stimulate demand,” they said in a note to clients.
Electrolux’ shares were down 4% at 1449 GMT, still up around 8% for the year.
Last week, analysts at BofA raised their rating on Electrolux on expectations the North America unit would after production hiccups in 2022 improve in 2023 helped by factory ramp-ups, new product launches and easing costs.
($1 = 10.4885 Swedish crowns)