Electrolux AB

Good day and thank you for standing by. Welcome to the Electrolux fourth quarter report 2024 webcast and conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Yannick Ferling, President and CEO. Please go ahead, sir.

Good day to all of you. My name is Yannick Ferling, and I'm happy to welcome you to my first earnings calls after I assumed the position as CEO of Electrex on January 1st. With me on the call, I have Therese Frickberg, CFO, and Oscar Stengren, Investor Relations. Before I continue, I would like to mention that this session is recorded and will be available on our website as an on-demand version. For a full year 2024, organic sales grew by 5.1%. The organic sales growth was driven by higher volume in all the group's business areas, primarily in Latin America. Price was negative, partly as a consequence of weak consumer demand in Europe and a higher share of replacement purchases. In the US, price pressure was particularly evident in refrigeration, a key category for business area in North America. Proportion activity increased. Despite changing market conditions, mix was favorable, supported by the attractive product offering, and aftermarket sales increased slightly. Operating income amounted to 1.1 billion SEK, corresponding to a margin of 0.8%. Operating income included a negative non-recruiting item of 566 million related to the divestment of a water heater business in South Africa. Excluding non-recruiting items, operating income amounted to 1.7 billion SEK, corresponding to a margin of 1.2%. Cost reduction efforts including organizational simplification and product cost reductions contributed to a positive earning effect from cost efficiency of 4 billion SEC. The negative impact from price was partly offset by higher volumes and a favorable mix. Investments in innovation and marketing increased to support a group strong product portfolio and long-term profitable growth. The impact from external factor was slightly negative, driven by currency headwinds and labor cost inflation, while lower raw material costs contributed positively. The board proposed that no payment of dividend would be made for 2024. So if we then move into the fourth quarter specifically, organic sales increased by 11.5%. The organic growth was a result of higher volumes and favorable mix in all the group's business areas. Growth was supported by the attractive product offering under the Electrolux, AEG, and Fritida brands, and focused on growth in higher value categories. Promotional activity was high. Although in North America, Black Friday promotions did not continue throughout December as they did the year before. In Europe, Demand was predominantly replacement-driven. Organic growth was strong in Latin America, mainly driven by Brazil, supported by increased consumer demand. Aftermarket sales grew year over year. Operating income amounted to 1.52 billion SEC, corresponding to a margin of 2.8%. Operating income was negatively impacted by 198 million SEC, related to the divestment of the water heater business in South Africa. Excluding non-recurring items, operating income was 1.249 billion SEC, up from negative 724 million last year, corresponding to a margin of 3.3%. The improvement was mainly driven by cost reduction activities, with a positive effect from cost efficiency of about 2 billion year-over-year SEC. the positive impact from higher sales volumes and mix more than offset negative price. In addition to the underlying earnings improvement in North America, the business areas operating profit included a positive impact of 185 million SEC from a divestment of all the group's potential legacy asbestos exposure in the U.S., which impacted cost efficiency positively. External factors had a negative effect on operating income, driven by significant currency headwinds in business areas Latin America and Europe, Asia Pacific, Middle East and Africa. Low raw material costs more than offset labor cost inflation. Investments in innovation and marketing increased likely to support the group's strong product range. Therese will now walk us through the results for the quarter.

Yes, thank you, Yannick. We had organic sales growth in the quarter, which also generated a positive organic contribution to earnings. And this was driven by a relatively neutral effect from price and mix, with a negative price in Europe as the promotional activity was high, but also as demand mainly was replacement driven. In North America, we have seen the price level stabilize throughout the year from the fourth quarter last year, where we could say that this fourth quarter was a rather normal, highly promotional fourth quarter. Sales mix continued to be positive also in this quarter for the group as a whole, but also for all business areas. And this was based on a strong product portfolio and high consumer star rating. Also, volume grew in all business areas in the quarter. Cost efficiency was positive by 2 billion sec in the quarter, and the cost reduction program has delivered according to plans, but the quarter also had a positive earnings impact of 185 million SEK from divesting the legacy assets of exposure in the US. External factors was negative in the fourth quarter as currency headwinds have further increased, which was more than offsetting the somewhat positive raw material. Let's now look at the full year bridge. For the full year, despite delivering organic sales growth, we had a negative organic contribution to earnings. And this was driven by a negative effect from price and mix combined of negative 2.4 percentage points for the full year and with a negative price in all business areas, with the largest decline in North America and in business areas, Europe, Middle East, and Africa. We had a positive mix in all business areas as mixed was also positive for the full year despite that consumers are mixing down based on our strong product portfolio. This was supported by an increase in innovation and marketing. And volume for the year was also positive in all business areas. Cost efficiency was in total reduced by 4 billion Swedish krona. And external factors was negative for the year despite the positive effect from raw material. due to the negative effects from currency throughout the year, but specifically in the second half. Also for the full year, external factors, including labor inflation, as well as the effects related to Argentina and Egypt. And Yannick will now give an update on the progress of the cost reduction.