Electrolux AB

Welcome to the presentation of Electrolux Q3 report. I'm Ann-Sofie Jönsson, Head of Investor Relations and Sustainability Reporting. I'm here with our CEO, Yannick Fallin, and our CFO, Therese Friberg. We will run through the presentation and after that, we will open up for the Q&A session. If you are viewing on the web, do feel free to put your questions in the chat throughout the presentation. And with that, I hand over to Jannick.

Thank you very much, Anne-Sophie. Good morning and good day to all of you. Very happy to be with you for this third quarter report. I will start with very general comments. I mean, growth is one of our strategical pillars, and I'm very glad to say that we have been growing once again in the third quarter. We have been increasing our net sales by 4.6%, mainly driven by North America. I'm also very glad to share that we have been growing our market share in the three regions here with our main brands, Electrolux, AEG and Frigidaire. We have been taking our operating margin to 2.8% with a good progress on cost reduction. We have been adding to the 2 billion we achieved in the first half of the year an additional 800 million SEC. And afterwards, I've been sharing with you in the last quarters the aim we have to get faster and more agile moving forward. And I'm very glad to announce some organizational changes which will be putting us closer to the end consumer. Moving to the results. As I said, I mean, we have been growing our net sales by 4.6%, mainly driven by North America, where we have been gaining in terms of shop floor spaces, and we have been expanding in key channels like the contract channels. In Europe, Asia Pacific, Middle East and Africa, we have been growing slightly in subdued market with quite a lot of price pressure. In Latin America, strong results once again here. Stable net sales on the back of a very strong and hot 2024. In terms of operating margin in the EBIT bridge, we had two positives, which were volume and mix, and these two positives were slightly offset by a negative price development. In terms of external factors, as you can expect, we were hit mainly by tariff and currency. We are very glad to say that we made progress once again in terms of cost reduction by adding 800 million SEC on the 2 billion we achieved in the first half of the year. Moving now to Europe, Asia-Pacific, Middle East and Africa. Again, we had a slight organic growth in this quarter. We have been gaining market share with our two main brands, Selectrox and AEG, more than offsetting the ramp down we have on the Zanussi brand. Zanussi was an entry price point brand and we are focusing today on core and premium brands. quite a lot of pressure again in prices, and we saw a negative price development. On the operating income side of the equation, positive in terms of volume and mix, but these positives were slightly offset by a negative price development. The region has been benefiting by a good effect on the cost reduction side of the equation. And we kept on investing in the marketing side of the equation. And that's pretty important because we launched major innovations, especially in the kitchen area under AEG and Electrolux. And we are glad to be able to fuel these major innovations through marketing money. In terms of external factors, we had a negative impact of currency, mainly driven by a weak Australian dollar. you Again, in terms of market development, this picture is very similar to the one I have been showing in the last quarters. We had a positive development in Western Europe of 1%. Western Europe represents 80% of the total volume for the region and a minus 1% for Eastern Europe flat. And here, once again, we are at minus 11% versus the third quarter 2019, back to levels we had in 2014. The construction market remains very subdued. I mean, we're hoping it to rebound in the coming months due to the lower interest rate, but we have not seen any sign of that in the third quarter. On the positive side of the equation, I just want to underline that we saw some sign of recovery in the region in the month of September. We have been working very hard in the last months to really improve the brand image we have, defining more precisely the consumer targets we have, and clearly define an identity card for our three brands, Electrox, AEG, and Frigidaire. And I'm very glad to share with you one of the latest campaigns. You have seen some just before we have been live. This campaign is called the Wash Life Balance, and it's featuring the product leadership we do have in care and government care. We have been also very proud to announce the launch of our new dishwasher, the AEG favorite dishwasher here, which has been focusing on fit, feel and finishing. It has leadership in terms of perceived quality, and we're also leading in terms of energy consumptions, noise level and water consumption here. Let me share with you a short video. Thank you. Moving now to North America, and we're glad to say that we have been growing significantly in North America. We're announcing a double-digit growth in the third quarter here, thanks to, again, a higher penetration in terms of shop flow space and an enhanced presence in some of the channels we do have, like the contract channel here. We're not buying market share. We're increasing the presence we do have in the different channels. We had a positive price impact. We were actually positive on the three dimensions, volume, mix and price in North America. As you all know, I mean, we are building our appliances in North America. We're one of the North American constructor. And the last, a tariff structure should certainly benefit the North American producers. Unfortunately, we have to say that we have not seen the expected price increase for imported goods coming from basically Asia in this third quarter. We have been leading price increase, and that's very important. I'm very proud to say that we have been covering the vast majority of the tariff impact for the price increase. So it's a competitive situation we have in front of us. We've in front of as well a pretty promotional time, which would be a black November in North America. However, I want to repeat that. I mean, the last tariff structure should be benefiting for North American producers. Negative impact as well from a currency side of the equation with a weak dollar in this quarter. The pressure about the picture about the market is very much unchanged versus last year. The market has been pretty resilient to the inflation we have seen in the market. Moving to Latin America here, almost flat organic growth in the region on the back of a very strong 2024 where we had a heat wave and where we're setting a significant level of air conditioning and refrigerator. Unfortunately, the summer is not very hot. in 2025 here, which has been increasing slightly the stock level we have in products like air conditioning. The competitive pressure in the regions remains pretty high. However, we're delivering once again 5.7% in terms of EBIT. We had a bad impact in terms of currency because of the Argentinian pesos and the Brazilian real. The Argentinian market is opening up, which means that we have a high level of imported products out of Asia. Cost reduction, we're glad to say that we're delivering once again 800 million in the third quarter, which is taking the total amount of 2.8 billion for year-to-date here, and we're still confident to reach between 3.5 and 4 billion cost reduction for the full year. This cost reduction is mainly driven by product redesign, a better sourcing in terms of components and suppliers, a higher level of efficiency in our factories and a full leverage of our global scale as Electrolux. Next slide is a slide we're very proud about. In 2016, Electrolux has been funding the food foundation here. And the aim of this food foundation is twice. The first one is to educate children and adults to eat in a more sustainable manner. But we're also helping adults in needs here by giving them cooking lessons given by a chef in the different regions. Year to date, we have been educating more than 300,000 children and adults through the food foundation. And the aim, the target we do have by 2030, is to have more than 1 million people benefiting from this foundation. With that, I'm passing it to Therese.

Thank you, Yannick. The organic sales growth that we had in the quarter of 4.6% generated a positive impact to earnings of 384 million. This was mainly derived from volume, but we also had a positive mixed contribution in the quarter. And this was, of course, offsetting the slight reduction that we did see in price. We are continuing to invest in innovation and marketing, as mentioned by Yannick, to really support the strong product portfolio we have in the market. Cost efficiency was a saving of 760 million in the quarter. And I would also like to mention here that in the quarter, we had the group common cost of 50 million SEC, which was 84 million below last year. And this is a result of cost containment, but also a result of some timing between the quarters. We have very significant negative external factors. Of course, as you all know, the negative impact from tariffs, but also quite significant negative impact from currency in the quarter, mainly related to the weakening of the Argentinian peso, but also the strengthening of the Thai baht versus the U.S. dollar and the Australian dollar. And the negative effect we have in acquisitions and divestments is related to the divestment of the water heater business in South Africa that we did last year. The operating cash flow was positive 600 million in the quarter, which was somewhat below last year. This is mainly a result of a larger negative impact in working capital compared to last year. And this is attributed to one seasonal effect related to receivables that are usually increasing in the third quarter, but this year increased even more substantially than a normal seasonality related to higher sales growth, but also quite a strong September month, as Janicke also touched upon earlier. As you also know, we came into the third quarter with quite high inventory levels from the second quarter, from volatile market during the first half and also from that the Brazilian retailers were destocking during the first half or specifically in the second quarter. And this in combination with weak or cooler weather in Latin America means that we're still sitting on some of that stock. As you know, we usually have a strong reduction of inventory in the fourth quarter according to our normal seasonality. And this is what we are looking for as well this year. CapEx we are having slightly lower than last year. And then looking at our balance sheet and liquidity, we have a solid liquidity and a well-balanced maturity profile. In the quarter, we amortized long-term debt of around 1 billion SEK, and we issued three new bonds of a total of 2.6 billion SEK under our EMTN program. And these will mature in 2029. And for the remainder of 2025, we have borrowings maturing of approximately 1.9 billion Swedish krona, which we will finance from our existing liquidity. We increased the financial net debt slightly in the quarter, but we still have a solid liquidity of 29.4 billion Swedish krona by the end of September, including revolving credit facilities. And of course, we don't have any financial covenants and our target to maintain a solid investment grade rating remains. And with that, I hand back over to Yannick.