Electrolux AB

Welcome to Electrolux Group and the presentation of our Q1 report. I'm Ann-Sofie Jönsson, Head of IR. And with me today, I have Yannick Fierling, our CEO, and our CFO, Therese Friberg. After the presentation, we will open up for Q&A. For those of you who are viewing on the web, do feel free to place your questions in the chat throughout the presentation, and we'll pick them up afterwards. So welcome, and now over to you, Yannick.

Thank you very much, Anne-Sophie, and good day to all of you. I'm very happy to present the Q1 2025 Electronics Group Report. We are glad to report a solid organic growth of 7.9% here, which has been leading us to an operating margin of 1.4%, with a year-over-year improvement of 1.2 billion SEC. We have been improving in every single business area. And no need to say, I mean, we have been delivering these results in an environment which has been rapidly changing, which has been very volatile and uncertain. Moving to the global perspective, again, 7.9% organic growth, mainly driven by North America and Latin America. We had overall a favorable product mix in every single region. Unfortunately for Europe, as for the last quarters, the market was mainly replacement-driven. Looking at the operating margin, again, 1.4%, the main positive factor we had and the main positive contributor for this operating margin has been the efficiency and cost change we delivered in the first quarter at a level of 1.4 billion. The increase in sales and product mix have been more than offsetting the negativity we had on prices. The single big external factor we had to face was the devaluation of the Brazilian real in Latin America. And here, once again, we acted quickly by increasing prices in the first quarter. So in a nutshell, Latin America continued to perform well. We have been improving significantly the results in North America and in Europe. Deep diving into Europe, Asia-Pacific, Middle East and Africa. Again, the market was largely unchanged. The organic growth we had there was 1.2%. We're glad to say that we have been outperforming the market with the Electrox and the AEG brand. As I mentioned previously, quite a lot of pressure on prices, promotional. The market was mainly replacement driven. The kitchen channel remained very weak, but stable versus the last part of 2024. In terms of operating margin, once again, the main positive contributor has been the efficiency and the cost reduction we have been bringing in this first quarter. The higher volume and the product mix partly offset the negativity we had in terms of pricing. Europe was one of a single region where actually currency had a positive effect and we have been benefiting from a lower raw material cost. These two factors have been offsetting the impact we had to face in terms of labor cost. Lots of new land launches, lots of innovation which are consumer relevant in this market here and we decided to keep on investing on marketing and keep on accelerating actually the spending we had in this area. Just looking at the market, once again, the market was largely unchanged in Europe. But I would like to draw your attention on the evolution of the market. If you look at Q1 2025, in terms of volume, we have been 12% lower than in Q1 2019, previous to COVID. That's taking us back to the volume we had in 2014. So the subdued price pressure and subdued basically purchase power we have in this market have been pulling the customers to go towards lower price points. Moving to North America, we're glad to say that we have been growing by 12.2% in terms of organic growth. This growth has been fueled by major launches in the premium segment of laundry. We have been launching new products in refrigeration and in cooking as well. We should be putting that into perspective, and Q1 2024 was pretty weak for North America. However, we have been outperforming the market. Our mix was largely favorable, again, fueled by the strength we do have with Frigida Gallery and Frigida Pro. In terms of operating margin, we are certainly not where we wish to be. But again, I would like to underline the progress and the improvement we have been making in this market. We have been improving versus Q1 2024 operating margin by 1.2 billion SEC. One of the main drivers, again, besides mix, was cost saving and efficiency. We have been driving in North America. The increased volume was supported by marketing investments, and we had great innovation, again, which we have been launching in North America. Labor costs, inflation, and currency have been headwinds in these markets. Now moving into the North American market, and exactly like Europe, I mean, the North American market has been largely unchanged versus Q1 2024. However, what we have been observing is a clear deterioration in consumer confidence in these three first months. And we have to say that the market demand has been pretty resilient to this lack of consumer confidence. More to come. I mean, we will be facing additional tariffs moving forward. We will be compensating these tariffs by price increases here. And we are expecting demand to suffer from these inflationary tendencies. Latin America, strong performance, once again, 16.3% in terms of organic growth. However, I would like to draw your attention that this growth rate has been slowing down versus the previous quarters. I think the main reason why this slowed down is the inflationary tendency we had in Latin America with the devaluation. of the real in Brazil in end of 2024 and beginning of 2025, which has been forcing many of us, and Electrolux was one of them, to increase prices right away in Q1. What we have been observing as well in Latin America, and especially in Brazil, is an increased competitive pressure, mainly in the low-end segment, driven by Chinese competitors. However, strong mix, great product launches have been driving the results we see on these pages here. Cost reduction was once again a very positive factor in driving the operating margin we see in North America. We kept on investing on the marketing side of the equation in order to support the launches we had in the region. Cost reduction. And I've been mentioning cost reduction several times. We are heading to deliver the 3.5 to 4 billion SEC we are committing to deliver for 2025. And that's thanks to the cost excellence program we have been launching end of 2023. This cost excellence program is accelerating. We are designing for a better cost our product. We're sourcing components out of best-cost country sourcing, and we're gaining efficiency in every single factory we have around the world. And that's why we're glad to report out a saving of $1.4 billion in the first quarter. This saving will be positively impacting the operating margin of every single business area, among which, of course, North America. I mentioned several great innovations, all of them customer-focused in every single business area. I would like to point out the new Electrolux kitchen range we are launching right now in Europe. All the products will be connected with a great feature, which would be AI-assisted cooking. One of the brand pillars of Electrolux is human centricity. And a great illustration is certainly the seamless user interface we will have on these products. And all of them will have leading energy tag, sustaining basically the targets we have in terms of energy consumption. Speaking about sustainability, I mean, there is absolutely no doubt Electrux is a leader in terms of sustainability for home appliance manufacturers. And we have been yesterday once again recognized by Financial Times as one of the leaders. Actually, we were ranked 32 out of 500 companies leading in this area. We have very ambitious targets. I mean, 85 percent reduction between 2021 and 2030 in scope one and two and 42 reduction in the same period in scope three here, which is basically during the usage of the product. We made great progress in 2024. We have been reducing scope 1 and 2 by 36% between 2021 and 2024, and we have been reducing scope 3 by 31% in the same time period. Sustainability is one of the growing purchase drivers we see worldwide. And globally, as mentioned on this slide, two out of three consumers consider sustainability as an important factor when buying electrical appliances. So we are very proud to be leading in this field. With this positive note, I will hand it out to Therese.

Thank you, Yannick. And if we then take a look at the sales and EBIT bridge, we had an organic sales growth of 7.9%, which was generating a positive contribution to earnings in the quarter. And this was generated by a slightly positive price and mix combined. Driven by a negative impact in Europe, as we have mentioned, the market is very much replacement driven and also with a still high promotional activity in the market. North America, from a pricing perspective, we have seen stabilizing during 2024. So now in the first quarter, we essentially saw a flat price year over year in North America. While, as mentioned in Latin America, we have done price increases to offset the negative headwinds from currency. Mix across all the business areas once again in the quarter was positive, driven by really the strong product portfolio we have and also very strong consumer star ratings. This was supported by an increase in innovation and marketing, mainly in marketing to support the products on the market. We had as mentioned as well a positive cost efficiency of 1.4 billion Swedish krona in the quarter and we are well on our way to deliver on the full year target of 3.5 to 4 billion. And then to end with external factors was negative mainly with the currency headwind in Latin America but also some negative effects from labor inflation in the quarter. And then taking a look at the cash flow. Cash flow after investments was negative 3.1 billion in the quarter. We did see an improvement in EBIT year over year, and we also saw some slightly lower impact of investments in the quarter. But we had a higher seasonal outflow in operating working capital. And what we can say is that the cash flow right now is really back to what could be considered a normal seasonal cash flow, which means a strong outflow of working capital in the first quarter. Year over year, though, if we look at the end point in the first quarter of operating working capital in percent of annualized sales, we are down to a level of 4.6% now compared to 5.2% last year. And then if we look at the liquidity and the maturity profile, as of the end of March, we have a liquidity of 29.5 billion Swedish krona involving revolving credit facilities. And on top of this, we also have the loan of 200 million euro with EIB that we signed at the end of 2024 that we have still not drawn on, but we will do later in the year. And as you can see, we have a well-balanced maturity profile and we have no financial covenants. Despite the seasonally weak cash flow in the first quarter, we have stabilized the net debt to EBITDA at the same level as we had at the end of 2024 at 3.4 times. And of course, our focus is to maintain a solid investment grade rating. And with that, I hand back over to Yannick to go through the outlook.