Electrolux Group is expected to layoff approximately 3,000 positions, resulting in a restructuring charge in the fourth quarter of 2023 of SEK 2-2.5bn, which will be reported as a non-recurring item.
The impact is due to weak market demand with consumers mixing down to lower price points has been accompanied by increasing price pressure in most markets globally.
Moreover, the results are due to post-pandemic supply-chain constraints, significantly lower freight rates, a strong US dollar vs. Asian currencies, and large cost inflation discrepancies between Europe and North America on one hand and in certain parts of Asia on the other, resulting in high promotional activity with increased pressure on margins.
Electrolux is stepping up its cost-reduction efforts to restore margins. The Group will reorganize into three regional business areas and two global product lines reporting to the CEO, leveraging the Group’s global scale with fewer layers, resulting in increased focus and reduced costs.
President & CEO Jonas Samuelson said, “We are therefore accelerating structural cost reductions and execution of product cost measures. Hence, the cost reduction target for 2024 vs 2022 is increased to SEK 10-11bn, compared to the previous target of over SEK 7bn.”
“The new target comprises net cost reductions from Cost efficiency and Investments in innovation and marketing, combined. For 2023 the target is to reach cost reductions of approximately SEK 6bn, year-over-year, compared to the previous target of at least SEK 5bn”, Jonas Samuelson added.
They will focus and now shift to manufacturing productivity and material cost reduction through intensified sourcing and cost engineering initiatives. The new product line setup will enable faster execution of product cost savings.
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