By Dominic Chopping
STOCKHOLM–Electrolux AB is launching a cost-reduction program on the back of weaker-than-expected market demand and weak earnings in the third quarter, it said Monday.
The Swedish home-appliance manufacturer said demand for its core appliances in Europe and the U.S. so far in the third quarter has fallen at a significantly faster pace than in the second quarter, driven by the impact of high inflation on consumer purchases and low consumer confidence and high retailer inventory levels.
“In combination with supply chain imbalances…the third quarter earnings for the group are expected to decline significantly compared to the second quarter 2022,” it said.
With demand in 2023 expected to remain weak in Europe and North America, the groupwide cost cuts will address both variable and structural costs and should see a material positive earnings contribution in 2023, the company added.
Ricardo Cons, currently head of Latin America, has been appointed head of North America, where he will lead a turnaround in the region.
Information on cost cut targets and a potential restructuring costs will be outlined in the third-quarter report next month, Electrolux said.
“Given the current market environment, the board does not intend to initiate additional share buybacks before the AGM 2023,” it said.
Write to Dominic Chopping at dominic.chopping@wsj.com