Electrolux AB

Good morning and a warm welcome from a snowy Stockholm to Electros Group's first quarter 2024 results presentation. With me this morning, I have our CFO, Therese Rydberg, and Oskar Skjerngren from Investor Relations. As you will have seen, I announced yesterday that I intend to leave as CEO by the 1st of January 2025. This will be after nine years as CEO and over 16 years in the Electros group management team, which has been an extremely rewarding time for me. But I think that after this long time, it's the right time for me to hand over to a successor that will take this company forward for the coming years into the next phase. We have a clear strategy and we are delivering on a lot of our priorities in a challenging environment. And by announcing this already now, I wanted to give the board the chance to have ample time to find the right successor. And in the meantime, I will give everything to deliver on our targets and objectives for 2024 together with the group management team and the board. So with that, before I continue, I'd like to mention that this session is recorded and will be available on our website as an on-demand version. The first quarter continued as anticipated to be impacted by low consumer activity in many markets in combination with continued high price pressure in line with the levels that were established in the fourth quarter. This had a significant negative effect year on year on price and resulted in slightly lower volumes overall. Organic sales declined by 3.7%, driven by the negative price and lower volumes that were partially offset by a positive mix. Cumulative effect of high inflation, high interest rates, and geopolitical tensions continue to weigh on consumer sentiment, which remain weak in our major markets. Although consumer confidence indicators seem to have bottomed out, this is, with the exception of Latin America, not yet visible in demand on our main markets. Weak residential construction and remodeling activity continue to lead to weaker market demand in the important built-in kitchen category in Europe. Our ability to continue generating a positive mix in this challenging market environment shows that our focus to strengthen our position in the mid and premium categories continues to be effective. As expected, income for the group was negative in the first quarter, driven by a $1.2 billion SEC loss in North America, resulting mainly from heavy price pressure. Latin America delivered a record first quarter and are now above 6% EBIT on a rolling 12 basis. Europe-Asia delivered a profit despite weak demand and price pressure due to good mix and cost management. Our aggressive cost reduction actions are progressing to plan. The $0.6 billion in cost deficiencies in the quarter were mainly driven by previous actions, and the expanded cost reactions are mostly impacting the second half of the year. Therese will now walk us through the results for the quarter.

Yes. We had a negative organic contribution to earnings in the quarter driven by a negative effect from price and mix combined of 4.7 percentage points in the quarter with negative price in our main markets as we generally saw the fourth quarter price levels continuing into this quarter and in Europe a higher promotional activity. Mix continued to be positive both in Europe and North America despite consumers mixing down based on our strong product offering. Volume decline had a negative impact in the quarter. Cost was in total reduced by 0.5 billion SEC with cost efficiency and innovation and marketing combined. The cost reduction program is on track, and the year-over-year increase in innovation and marketing is due to timing effects between quarters during the year. External factors were slightly positive in the first quarter, driven by positive raw materials. This was offsetting currency headwinds and headwinds related to labor inflation. As last quarter, the external factors is including both the negative effects from currency and inflation, as well as the positive price effects related to Argentina and Egypt. In Egypt, which experienced a substantial devaluation in the quarter. Jonas will now give an update on the progress of the cost reduction.

Our simplification and expanded cost reduction measures are progressing according to plan, with an objective to deliver 4 to 5 billion in cost reductions through a combination of organizational simplification and focus, finalization of the Springfield ramp-up, and this is meaning that all of our re-engineered factories will be ramped up, and a strong focus on product cost enabled by modularization through supplier consolidation, low-cost country sourcing, and value engineering. The 0.6 billion in cost efficiencies in Q1 were, as mentioned, mainly driven by carryover of previous actions. And the new simplified organization structure was implemented in Q1, leading to fewer levels and increased focus throughout the company. Implementation of the 3,800 headcount reductions are progressing well and are mainly impacting financial performance in the second half of the year. Ramp up of our important cooking factory in Springfield, Tennessee is also progressing to plan, and is anticipated to be completed by the end of the year. Intense work on component cost and sourcing is progressing, with high potential savings in the second half of the year and into the coming years, driven by a high pace of activity as our main new product.