Electrolux AB

Good morning and a warm welcome to the second quarter 2024 results presentation. My name is Jonas Emerson and with me today I have Therese Friedberg, our CFO, and Oscar Skjerngren from Investor Relations. 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. In the second quarter, sales grew 7% organically with volume growth in all business areas. Market demand was mixed with strong growth in Brazil, Some catch up in North America from the week selling in Q1 and continued negative development in Europe. Mix continued to be positive, supported by a strong product offering in mid and premium segments, despite the negative market demand mix pressure. Pricing continues to be quite negative year over year, but was sequentially relatively stable in most markets. We're happy to report that EBIT improved sequentially by more than 1 billion SEC to 419 million SEC. mainly driven by significantly reduced losses in North America and a strong result in Latin America. The strong Latin results mean that we're now at 7% EBIT margin for the last 12 months, reflecting our strong and updated product offer combined with market recovery from the previously depressed levels in Latin America. The organic contribution year on year was negative due to the significantly lower net prices but was to a substantial degree offset by the positive product mix and volume development. This was accelerated by increased go-to-market investments in the quarter. Cost efficiency contributed positively, but as guided previously, the main impact is anticipated in the second half of the year. We also announced yesterday that we have concluded the investments of our water heater business in South Africa as part of our strategic focus and simplification, and we are progressing on our other investments. Therese will now walk us through the results for the quarters.

Despite having an organic sales growth in the quarter, we had a negative organic contribution to earnings. This was driven by a negative effect from price and mix combined of 2.8 percentage points in the quarter with negative price mainly in Europe and in North America. We generally saw the first quarter price levels in North America stabilize into this quarter. while there was a somewhat higher promotional activity in Europe with a large part of the market volume that was sold under replacement sales. MIX continued to be positive across the group based on a strong product portfolio and high consumer star ratings. This was also supported by an increase in innovation and marketing investment in the quarter. Volume grew in all business areas, but mainly on the back of strong growth in Latin America. Cost efficiency was positive by 0.3 billion Swedish krona. The cost reduction program is on track for the first half, and Jonas will go into some more details on the next page. External factors was positive in the first quarter, driven by positive raw material. This was offsetting currency headwinds and headwinds related to labor inflation. And similar as last quarter, the external factors is including both the negative effect from currency and inflation, as well as the positive price effects related to Argentina and Egypt. Jonas will now give an update on the progress of the cost reduction.

We have updated our cost efficiency target from 4 to 5 billion SEC to approximately 4 billion SEC in 2024 versus 2023. This is as headwinds from logistics costs are affecting our ability to fully reach our previous targets. We will achieve these efficiencies through organizational simplification with headcount reductions of approximately 3,800. We will finalize the Springfield ramp-up, and we are increasing sourcing from local countries and continue the consolidation of our supplier base and number of components. We delivered 0.8 billion in cost efficiency in H1 2024, and the new organization has been successfully implemented. Notification of staff affected by the savings program is proceeding according to plan. with about 70% of affected staff notified at this point. As a consequence of the lead times involved in both product and staff costs, the incremental savings from cost reduction activities are mainly weighted to the second half of 2024 as guided previously. And inside the second half, more will come in Q4. Going forward, we will drive to achieve annual product cost reductions mid-term at a similar rate as in 2023 and 2024. This will be achieved by driving low-cost country sourcing and supplier consolidation as a continuous process. We're stepping up cost engineering activities structurally in material and components reviews on existing products. And we're further accelerating modularization and reduced complexity to leverage GA. Let's have a look at our cash flow on liquidity here.