STOCKHOLM: Electrolux shares plunged more than 15 per cent on Friday after the world's second-biggest appliances maker missed third-quarter earnings expectations on continuing U.S. losses and competition from China.
The Swedish company's North American arm was in the red for a 10th successive quarter, delivering a loss of 249 million Swedish crowns (US$23.6 million) as the business continues to hold back group earnings in the face of high costs, competition from market leader Whirlpool and underperformance at its U.S. factories.
Electrolux is also contending with competition from lower-priced rivals, such as China's Midea, which has proved increasingly attractive to consumers squeezed by high interest rates.
"The 27 per cent miss in operating profit will be seen as a clear negative surprise, with the weak North American performance in focus, more than offsetting good results in Europe," Citi analysts wrote.
Shares in Electrolux were down 15.1 per cent at 0822 GMT, taking their decline this year to more than 18 per cent.
Retiring CEO Jonas Samuelson, who will be replaced by sector veteran Yannick Fierling by the end of the year, was more upbeat.
"While market conditions remained challenging in Europe and North America, we continued to make progress on our cost initiatives," he said. "The market in Europe continued to be predominantly replacement driven and was relatively stable, with high promotional intensity."
The company reiterated, however, that weak price expectations and other factors are expected to have a negative impact on the fourth quarter.
Third-quarter operating profit excluding non-recurring items rose to 717 million crowns (US$67.8 million) from 314 million crowns a year earlier, against an 855 million crown mean forecast in an LSEG poll of analysts.
Including one-off costs, operating profit fell 43 per cent to 349 million crowns.
"Given the low level of earnings in 2024, we expect a cut to consensus expectations that would be material, while a cut to 2025 would be modest," JP Morgan said in a note.
As part of its move to cut costs, Electrolux said in 2023 that it would divest 10 billion crowns of non-core assets, but it now says the total is expected to be lower than previously announced owing to the challenging market conditions.
The company said on Friday that those challenges have prompted a decision not to divest its Italian Zanussi brand.