Electrolux Q1 2021 Interim report: Delivering strong profitable growth
Highlights of the first quarter of 2021
- Net sales increased to SEK 29,026m (26,578) corresponding to an organic sales growth of 22.8%. This was driven by significant volume growth and higher prices as well as product mix improvements. In general, market demand continued to be strong.
- Operating income increased to SEK 2,297m (122), corresponding to a margin of 7.9% (0.5). The organic sales growth contribution was the key driver. Increased costs for external factors, mainly raw materials, were fully offset by higher prices.
- Significant sales and earnings improvements across all business areas.
- Income for the period amounted to SEK 1,556m (-86) and earnings per share was SEK 5.41 (-0.30).
- Operating cash flow after investments was SEK -161m (-2,938).
President and CEO Jonas Samuelson’s comment
It is now over a year since the coronavirus pandemic hit with full force globally and impacted the way we live our lives. The changes in consumer behavior and spending patterns brought by the pandemic continued in the first quarter of 2021. Consumers continued to spend more time at home using their appliances more intensively and allocating a larger share of their household budgets to home improvement projects, both benefitting our sales. The significant volume growth and positive price and mix development resulted in an organic sales growth of 22.8%. The high organic growth was the main driver for the increase in earnings, even though improved cost efficiency also contributed. Operating income amounted to SEK 2,297m, or 7.9% of net sales.
Consumers keep putting more emphasis on high-quality appliances that enhance their user experience. This, together with our innovation power, has continued to improve demand for our more highly featured products, which resulted in a favorable product and brand mix. A strong focus on innovation to improve consumer experiences is a key driver for profitable growth and we therefore increased our investments in innovation and marketing in the quarter; just as we plan to do for the full-year.
Despite producing at almost full capacity in the first quarter, we were not able to fully meet the strong market demand across all product categories. The supply chain remained strained in many areas, especially for electronic components, certain plastics and logistics, and the situation can deteriorate further driven by the rebound in industrial activity globally. My colleagues have worked hard, and with good result, to secure supply. However, low buffers of input material impacted our production planning visibility in the quarter. This resulted in some production inefficiencies, supply-demand mismatches, and higher logistic costs that we fully managed to offset with continuous cost improvements. We continue to have a close dialogue with our suppliers, particularly of electronic components, to ensure sufficient supply for the coming months to limit the impact on production volumes and mix.
We started the year by implementing already announced price increases. In the quarter, price fully offset the headwind from external factors, mainly raw material, and we expect that to be the case for the rest of 2021. In light of recent negative development on raw material prices, we have in key markets announced another set of price increases.
Even though visibility remains limited due to the ongoing pandemic, we continue to expect demand for the first half of 2021 to exceed normal seasonal levels across our main markets, driven by increased home-improvement spending by consumers and retailers’ inventory replenishment. However, capacity and electronic component availability will remain constraining factors into the second half. We estimate that market demand will begin to normalize during the second half of 2021, assuming that consumer spending patterns start to normalize by mid-year. All in all, we expect market demand growth to be positive for the full year for most of our main markets, with the exception of Latin America where we anticipate demand to be neutral given the recent macro turbulence and worsening of the pandemic situation in Brazil.
Sustainability is increasingly important for consumers. We view sustainability leadership as a competitive advantage and continue to honor our ambitious climate targets. One of our key achievements in 2020 is the 70% reduction of CO2 emissions from our operations compared to 2015: well in line with our 2025 target of 80%.
As the pandemic continues, we are ready to respond in an agile manner. I am confident that our strategy ensures we remain well positioned to deliver long-term shareholder value even in rapidly changing market conditions.
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, April 28. Jonas Samuelson, President and CEO and Therese Friberg, CFO will comment on the report.
Details for participation by telephone are as follows:
Participants in Sweden: +46 8 566 426 51
Participants in UK/Europe: +44 3333 000 804
Participants in US: +1 631 9131 422
Pin code: 87590350#
Slide presentation for download:
Link to webcast:
For further information, please contact:
Sophie Arnius, Head of Investor Relations +46 70 590 80 72
Åsa Öhman, Electrolux Press Hotline, +46 8 657 65 07
This is information that AB Electrolux is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 0800 CET on April 28, 2021.
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing experiences for millions of people, always striving to be at the forefront of sustainability in society through our solutions and operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120 markets every year. In 2020 Electrolux had sales of SEK 116 billion and employed 48,000 people around the world. For more information go to www.electroluxgroup.com