AB Electrolux (publ)

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.

Thank you very much, Therese. I will now move to the outlook and the summary. During the quarter, the market demand in Europe increased slightly. Consumer demand continued to be predominantly replacement-driven. In Asia Pacific, consumer demand is estimated to have decreased slightly year over year. Promotional activity and competitive pressure increased across markets. Geopolitical uncertainty negatively impacted consumer sentiment in Europe. This contributed to consumers continuing to shift to lower price points and postponing discretionary purchases. Demand for built-in kitchen products in Europe remains subdued. In a longer perspective, it is important to remember that the European market is on a 10-year low. For full year 2025, we reiterate our neutral market outlook for core appliances in Europe and Asia-Pacific. During the quarter, consumer demand in North America remained resilient. Industry market price adjustments did not reflect the implemented U.S. tariff structure, and competitive pressure and promotional activity remained high. Demand continued to be mainly replacement-driven, and consumers continued to prefer lower price points. For the full-year demand outlook, economic uncertainties and inflation concerns risk having a dampened effect on consumer demand. Consequently, we maintain our outlook of neutral to negative market demand. Consumer demand is estimated to have increased in Latin America in the third quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the third quarter of 2024, mainly due to inflationary pressure and higher interest rates affecting consumer spending. These factors contributed to retail continuing to reduce inventories. For a full year, we reiterate our outlook of neutral market demand for core appliances in the region. Moving now to the outlook. We still expect the impact from volume, price and mix to be positive for the year. Previously, price was estimated to be a main positive driver. Now the main driver is estimated to be growth in focus category because of the market dynamics in the third quarter and especially the challenging prices environment in North America. We reiterate that we expect investments, innovation and marketing for a full year 2025 to increase. New product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on reducing costs remain high, and we stick to the outlook of 3.5 to 4 billion in earning contribution from cost efficiency in the full year 2025, with product cost out being the main driver for the cost reduction. External factors are expected to be significantly negative for a full year. The cost inflation related to increased tariff is including an external factor in our EBIT bridge. Currency remains a headwind and the impact from raw material costs expected to be slightly positive for the year. For the full year, we are lowering our outlook for capital expenditure from 4 to 5 billion to approximately 3.5 to 4 billion. Investments to strengthen our competitiveness for innovation and manufacturing efficiency are essential to support growth and improving efficiency. But also, we are looking at being as efficient as possible we can and scrutinizing our priorities. These resulted in a lower CAPEX outlook. Moving now to the strategy, and I think we have been hammering. That's our five strategic pillars, and we're improving on all of them here. In terms of North America, we have been increasing our market share. We have been increasing the penetration level we have in key channels. We have been increasing the number of shop floor spaces we have thanks to innovation, like the stone-baked pizza feature we presented earlier. last month. In terms of growth, we are growing in a challenging market. We're growing in core and premium segments with our brands like Electrux and in AEG. We keep a very strong position in Latin America. The organic growth has been at the same level as last year, but again, it was on the back of a very strong 2024. We've been launching very strong innovations in kitchen in Europe, in North America with a big kitchen bake oven, and we have product leadership in Latin America. We made progress in terms of cost reduction, adding again 800 million on the 2 billion we have been achieving in the first half of the year. And last but not least, The environment is changing. We are in a very unstable market right now where we need to react very fast. We need to be better in terms of speed and agility. And that's why we're driving organizational changes, increasing customer centricity. The first announcements we're making today is we will be splitting Europe, Middle East and Africa and APAC in two different regions, two commercial regions. Once we'll be focusing on Europe, Middle East and Africa, and the other one will be focusing on APAC. As a result, Anna Olsson will be leaving the company. Leandro Jashosha, who is currently leading the LATAM region, will be moving to Europe and he will be heading the region Patrick Minogue will be replacing Ricardo Kohns, who decided to retire from the company, pursuing a family journey he has been starting. And Eduardo Melo will be replacing Leandro Xochia at the head of Latin America. We're sure that with these organizational changes, we will be increasing speed, agility, and be more consumer-centric moving forward. That's concluding this presentation, and we'll be happy to take any questions.

Great. Thank you, Yannick and Therese. With that, we will move over to the participants on the telephone conference. So, Sara, you could please go ahead and open up for questions.

Thank you. If you would like to ask a question over the phone lines, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, you can press star 1 1 again. Alternatively, if you wish to ask questions via the webcast, please type it into the box and click Submit. We will now take our first question from the phone lines. And this is from Gustav Ageas from SEB. Please go ahead.

Thank you. Good morning. Congrats on a good result. If I may start on a comment on the U.S. market share gains. And as you mentioned, you take shelf space in the quarter. It appears as if you've had now four quarters in a row with some market share gains in the U.S., obviously superseding a period where you've lost some market shares. So interesting to hear, now that you're starting to meet a little bit tougher comps in terms of market shares in the US, if you see this trend potentially continuing into Q4 and into next year. And if you could shed some light on who you're taking shelf space from, maybe not the name, but if it's domestic or non-domestic players, or if it's private label, or how you view that dynamic in the trade, that'd be interesting to hear. Thanks.

Thanks for the question, Gustav. I think we're taking a share, I would say, across. And I think it's mainly due to and thanks to the innovation we have been launching, mainly in kitchen. Let's not forget as well that we have been ramping up Springfield in the last months here. We have been launching through this ramp up a new series of cooking products, for instance, which are feeding brands like Frigidaire, Galerie and Pauw. We have been launching the great innovation, which is the Pizzastone Bake Oven in North America here, which has been getting an excellent reception in the market. We have some new products as well in the food preservation side of the equation. So it is really a cross market share here. We have been entering, and I want to make sure everybody understands we are not buying market share, but we have been entering into new channels like the contract channels here. And we have been really gaining shop floor spaces with our main customers. I mean, Lowe's, Home Depot's and Best Buy and others are here in the last months. So it's not one specific competitor we're taking share from, but it's a wide range of competitors.

And the second part of that question, as you look into it, it appears as if comps on the market share gains in the US is a little bit tougher to meet now as you enter 2024 into 2026. Should we expect this trend to continue with some recovery of the market shares also as you enter 2026?

Yeah, I think I would like to make two points going into the volume side of the equation first. I want to insist on that. I mean, that was our commitment. We have been leading price increase in North America in the last month. And that has certainly not been easy. And I think we're very fortunate to have all these innovations in order to compensate basically for this price increase. Because we're producing, as you know, in North America, we're among the three producers in North America. And the last tariff structure introduced at the beginning of the summer was certainly privileging or benefiting North American producers. So we were expecting a higher level of price increase for imported goods, especially coming out of Asia. Unfortunately, I have to say today that we did not see that. happening. I think we're entering into a promotional season in North America now with Black November. However, what I want to underline as well is that, I mean, mid-term, there is absolutely no doubt that, I mean, North American producers will be benefiting from the current tariff structure here and that import products will be handicapped significantly and will have to increase prices. So we did not see that in the third quarter. We're entering into, of course, a promotional period, which is Black November here, but there is also no doubt In our mind, the current tariff structure should be benefiting basically North American producers amongst who we are. We're not giving up on prices, not at all. Here, we're just expecting the market to be rational in North America as well.

And I guess a little bit more overall, of course, some of the effects that Yannick talked about with gaining additional shop floor and gaining traction within the contract channel. Of course, this is not something that is just happening on and off. But we believe that those types of changes are structural changes that has come gradually during this year, which, of course, also should continue to be a positive going forward.

Thanks, Therese.

Thank you. And if I may ask one question on Europe, too. It's interesting to hear that you see some improvement in September in terms of market volume, if I understood you correctly. Companies tend not to raise these types of monthly data towards the end of the quarter if they haven't seen a similar pattern going into September. To the month that we're in now, is there any reason to assume that that logic would not apply to you, that October would not follow the September trend? Appreciate it.

I think that's a great question. Unfortunately, in all fairness, I mean, if you look at food 2025, I mean, we have not been going through normal type of patterns in most of the regions, but especially in Europe. Indeed, I mean, and I think we're happy to say that. I mean, September, and we have been mentioning has been a positive month here for us. And I think all we wish is is that it will be continuing in the fourth quarter. But I mean, the level of unpredictability and uncertainty we do have in the market today in Europe is pretty high. So I would say it's difficult to say. Certainly, I mean, we're entering as well into a Black November type of market in Europe. But we are confident that with the product we have been introducing, the innovation we have been producing, with the plan we have in place, and I think the quality of the people we have facing the end consumer, I mean, we will be doing the right thing for what we can control. But unfortunately, I mean, level of uncertainty is pretty high in the market.

I appreciate that. But the question was specifically in October. It's generally easy to assume that the trend reversed again in October.

I think I cannot give you any trend, of course, for October right now. But certainly, I mean, the fact that September was a positive month is certainly a good indication for us.

And this is also an important point when thinking about cash flow, because as you've seen, we had a weaker cash flow this quarter compared to last year, where a large part of this is really related to that we are tying up quite a lot more in receivables this year compared to last year. And this is really driven by that the September month was a very strong month in sales, and hence we're tying up larger amount in receivables. So we don't see any changes in terms either in receivables or in payables. So it's important to understand that effect from a cash flow perspective.

That's a good clarification. Thank you.

Thank you. Well, I'll take the next question from the phone lines. And this is from John Kim from Deutsche Bank. Please go ahead.

Hi, good morning. Thanks for the opportunity. Two questions, if I may. Can you comment on what you're seeing in North America in terms of any potential inventory overhangs? My understanding is that some of your foreign competitors put extra inventory into the market ahead of anticipated tariff increases. I'm just wondering how that's absorbing.

John, thanks for your question here. And I will just be repeating the answer I gave last quarter, which is, again, a very transparent answer. I mean, the fact that, I mean, we may have some of our competitors preloading in order to avoid tariff seems to be logical. However, we did not observe tariff. this phenomenon ourselves here. And I think this phenomenon was not reported to us by our team, basically, in North America. So unfortunately, I mean, again, logical, but I mean, it is something we cannot confirm.

Okay. And I was wondering if you could give us a little bit more color on the reorganization, particularly on the split on what looks like a MIA Asia pack into different regions. Thanks.

Yeah, absolutely. I think, again, the aim we have in terms of organizational setup is really to get closer to the end consumer from the top to about to reverse basically the organizational pyramid here and have the entire organization supporting what we'll be delivering to the market. Having the Asian organization below the European region, I mean, has been adding one layer. What we want to do here is to be able to respond in a faster manner, in a more agile manner to the needs our customers do have as well in the Asia Pacific region. And that's why we have been carving out this commercial region. We will have the head of this commercial region, which will be reporting directly to myself, the CEO here. And I think with this setup, we're convinced that, I mean, we would be able to support, again, the region in a better manner.

And maybe from one clarification from an external reporting, we will still hold it together from a back-end perspective across Europe, Middle East, Africa and Asia-Pacific. So it will really be a commercial region. So externally, we will continue to have the same segment reporting as today.

Thanks, Tess. Okay. Thanks for the clarification.

Thank you. Next question today is from Akash Gupta, JP Morgan. Please go ahead.

Yes, hi, good morning. Thanks for your time. I have a few as well. The first one is on, again, going back on North America. One of your North American competitors mentioned earlier this week that They produce about 80% of their appliances in the region. And if I may ask, what's the share of your local production in North America, and how does that compare with industry average, if we have that figure?

Okay, thanks for the question. Without giving any precise number here, what I can tell you, however, is that we have five factories in North America, three in the U.S., and two in Mexico who are U.S. MCA here. So the vast majority of our products are produced in North America. And again, IUSMCA compliant. So we are among the three major North American producers for appliances here. And certainly, as I said previously, long term. And if the industry is behaving rationally, we should be benefiting from the latest tariff structure here. Unfortunately, that's not what we saw in the third quarter here because we did not see a price increase from import finished goods here. Now, in all fairness, I mean, the full tariff structure would be implemented beginning of October. So it would be interesting to witness what will be the movements in the coming quarter, knowing again that we have Black November in front of us.

And I think what we have said is that with the competitor you are referring to, we have a relatively similar footprint. So that we have been clearly.

Thank you. My second one is on the cost savings. You had $2.8 billion in the first nine months. 800 million in third quarter and your target is 3.5 to 4 billion that would imply 700 to 1.2 billion in Q4. But I think in Q4 you have a very tough comp because last year half of the savings came in Q4 alone. So any indication like where are we trending towards this in this 3.5 to 4 billion range for cost savings this year?

A couple of stuff, Kashi. The first one, I mean, we explained that. I mean, it's very difficult to compare the $4 billion we delivered last year with the $3.5 to $4 billion we're delivering this year. Because last year, I mean, the saving was for a big part coming from restructuring we have been doing in the past. But 3.5 to 4 billion we're delivering in 2025 are much more coming from product redesign, better component sourcing, higher efficiency in terms of factory and better leverage of our global scale here. All what I can tell you today is that we are confident to deliver between 3.5 and 4 billion for 2025.

my last one is on free cash flow and so again i mean you don't provide bridge like your some of your competitors but um when we look at this change in um capex outlook which you have cut and today um would that change your internal assumptions for full year free cash flow or are there any other element like working capital or something else that might offset. So any commentary on your own expectations for free cash flow? Does that change after the capex?

No, I would say that those are disconnected. So with the CapEx refocus that we've done, of course, we continuously do prioritization and reprioritization. And with the focus that we have on cost reduction, actually, that is also spilling over on the CapEx reduction. So, of course, when we're looking at cost, we're also looking at how we buy equipment and so forth. So We're not doing the CapEx reduction really to offset other negatives in our cash flow. Those are disconnected.

That's very important to underline. Until I said it, I mean, we are not delaying any launches. We're not delaying any programs. We're not delaying any footprint or whatever here. What we have been doing is, I mean, we have been using our CapEx in a better manner in 2025 here. And as you know, we have been hiring about a year ago now a new CPU. And I think we have been really focusing on buying better CapEx. cheaper from best cost countries in 2025. And that's reflected in the cost saving we're having, but also on how we are purchasing equipment and tooling.

That's fair, but in theory, if your capex is going down and keeping everything else equal, your free cash flow should be better than before. So my question was that, is this the case that now we should expect keeping everything as equally battery-free cash flow or is there anything that might be offset this benefit that you may get from lower

I guess it depends on the time frame you are looking at. Of course, as we have been transparent about, we are not having a strong cash flow this quarter as we did last year. And of course, also year to date, we have a weaker cash flow than last year. But the reductions we're doing in capex are not to compensate for the negative effects that we have been seeing in working capital. Of course, as we also said earlier, one part of that is really temporary or seasonal, that we had a strong September with the receivables being negative then in the quarter, more negative than last year and more negative than a usual seasonality. Of course, inventory, we have also been clear with that it is on a higher level already when we came in to the second quarter. And we are usually having a seasonality where we have large inventory reductions towards the end of the year. And this is what we are expecting as well this year. Maybe one additional point that we didn't touch upon. Again, this is not related to the CapEx, but if you look at the full free cash flow for the year, we have talked about earlier in the second quarter that the impact of tariffs is also impacting the working capital level. Since the terms of when you are having to pay for tariffs compared to when you're able to then reclaim them from price increases from the retailers, there is a time gap. So, of course, we've been clear with that. Structurally, we have had a negative impact from that in our cash flow in the year.

Thank you, Therese and Yannick. Thank you.

Thank you. Just before we take our next question, we will please ask participants to limit themselves to two questions. Thank you. We will now move to the next question. And this is from Johan Eliasson from SB1 Markets. Please go ahead.

Bonjour, Janik, Therese, Nan, Sophie. Thanks for taking my question. I was wondering, once again, North America, you say you are taking market share there. The brand you have in North America, Frigidaire, is typically a mass market brand, which historically has sort of gained share when the consumers become more... price conscious. Is that part of what we've seen over there? And could you also update me on how the progress is developing, you know, moving your price points on the brand towards the higher price points like the Frigidaire Gallery issue that you have been focused on over the past few years? Would you say that you have been able in general to move up the brand a bit on the pricing ladder? Thank you.

Thank you very much for your question. And yeah, absolutely. I mean, for the first questions, we are not targeting opening price point with Frigidaire. And that's exactly how we have been mixing up with Galerie and Pro. And in all fairness, the entire strategy developed for the last years, as well with factories like Springfield or Anderson, have been to mix up. and have a higher offer in terms of products for Galerie and Pro. I just want to give you very concrete examples. I mean, back command on oven ranges are usually low end. I mean, most of the products we do have now, a big part of it out of Springfield has front commands here, which is more mid to high end segments here. I could give you Similar example on the Anderson side of the equation, the pizza stone baked oven is again a feature which is a big innovation and we're pricing for this innovation as well in North America. So, no, I mean, we're not fighting really for opening price points on Frigidaire. We're not buying market share. What we're really doing is, I mean, we're occupying new shop floor spaces by entering Frigidaire. new retailers by expanding in channels like the contract channels here. And we are mixing up actually our products here. We should not forget about the Electrolux brand as well in North America, which is a strong brand for front loader, for instance here. And it is a premium brand. So not at all. I mean, we certainly have a philosophy in North America, which is to mix up our product by offering better product and innovations moving forward.

And I guess important to mention, as Yannick also said earlier, we are improving volume, price and mix in this quarter. And with the combination we're seeing of where we are taking share with what retailers and with what products, we don't really see that we are gaining share is not really a result of, as you're saying, what we've seen before. Historically, when the market is trading down, we are absorbing that type of volume. That's not what we see in the quarter.

And clearly, I won't repeat it, we have been leading price increase in a price pressure market in North America in Q3.

Excellent. And on the, can you say anything about the product category where you are sort of gaining more or less? I think historically the hot products were your most profitable products in North America, but you've lost out on that segment because of the sales issue. But can you say that is the hot product gaining more share or is it sort of broad range over your different categories?

I think we're gaining market share almost in every single product category. We're not going into detail. I mean, there are a couple, of course, where we're losing market share here and where we need to act here. And we have plans in place, you know, to increase it. But I mean, on the vast majority of the product ranges, we are gaining market share here. So I don't think we should be pointing out one specific range or whatever. It is an overboard market share gain.

Excellent. And then just one final minor in the cash flow to Therese. Other non-cash items have a negative delta of around 500 million. What's that related to? It was positive 399 last year's Q3, and now it's negative 104. I was just wondering what that was.

With the LTI program that is included in the EBIT, we usually have a small negative every quarter. as long as we continue to of course increase the provision of the of the long-term incentive program last year it's related to the divestment of of south africa where technically that's where where the change of the goodwill was was booked in last year's cash flow okay thank you very much thanks johan thank you well i'll take the next question

And this is from Martin Wilkie at Citi. Please go ahead.

Yeah, good morning. Thank you, Martin. Thank you for taking the question. I wanted to come back to North America. So it sounds like you are making good progress relative to the market, but obviously the absolute level of profit is still quite subdued. When we think going forward about the levers to get that higher, is it a market volume question or is this all around price cost? I mean, is it effectively that the price increases linked to the tariffs and so forth has not yet come through. And I guess related to that is any sort of self-help story. I mean, a lot of what you've done and other facilities, I guess, are already completed, but is there a self-help element also to getting that margin higher? Thank you.

Thanks, Martin, for the question. I mean, the first thing I would like to underline, if you allow me, is that, I mean, we are plotting in black for the second quarter in a row in North America in a market, again, which has been pretty price pressured. I mean, North America is the first priority. The turnaround of North America is our first priority. And I think we have been making progress throughout the last quarter. Certainly, I mean, we have short-term actions, mid-term actions, and longer-term actions to take the regions where we believe it should be belonging 6% EBIT longer term. I think the big challenge, the main challenge we had in the third quarter is the one I've been mentioning. We have been making progress in terms of volume, mix, and price. However, we were not able to price to extend. We wished simply because, I mean, the tariff structure did not impact the the imported goods at the logical or rational level. Now, I mean, moving forward, certainly, I mean, we're entering into a black November where price pressure will certainly not go down. So the tariff structure would be entirely implemented started 1st of October. So if there is some rationale in North America in terms of pricing, we should be benefiting. We should be benefiting mid to long term out of the current tariff structure here as being a North American producer. So I think, again, I mean, we did not see, unfortunately, the level of rational we would have expected in terms of price increase for important goods in Q3. I mean, challenging month of November with the promotional pressure we'll have. But logically, logically, I mean, moving forward, we should be benefiting from the current tariff structures in North America, producing in North America.

Thank you. That's very helpful.

Thank you. And your next question is from Uma Samlin, Bank of America. Please go ahead.

Hi, good morning, everyone. Thank you very much for taking my question. I have a follow-up on North America, if I may. So if we look at the AHA data on the units for North America, it seems to be flat for the quarter. You are getting some share, and it seems like your domestic competitor have said similar things. So who is losing share there? So is there anything you can comment on that? Because given the, you know, you said like the imports have sort of similar pricing points. They have not been increasing prices. So what is the reason that it seems like the domestic, you and the domestic peers are getting a share? So, you know, is there any comment you can give there? Thank you.

Thanks. Tough question you're asking. I mean, first of all, we're very proud to have gained or to have increased our net sales by a double-digit amount in the third quarter. And again, I want to repeat, we have not been buying market share. We have been gaining market share here. And indeed, I mean, one of the local producers has been saying the same thing. Unfortunately, we don't buy competitive data in North America. I wish I could answer to what you're asking, but we have the same level of information you do have. So we have AHAM data and we have our data relative to AHAM. So it's very difficult for us to comment beyond what you just have been mentioning with competitors reporting out as well. There are three reports in North America. So I'm unfortunately not able to give you more details about who is losing in which product category.

Thank you very much. That's very helpful. So my second question is on Europe. It seems like the competitive pressure in Europe is still fairly strong, but you are seeing some improvement in sentiment. Do you see any increased competition from your Asian peers here in Europe? Do you expect the pricing to bottom out potentially towards the end of the year or into next year?

Thanks for the question. Great question here. In all fairness, I mean, Asian penetration in Europe is not something new. I mean, Asians have been entering into Europe now several years ago. Certainly, I mean, what I said previously is that the cost difference to manufacture a product in Asia or to manufacture a product in North America and Europe has never been as big because of commodity prices, because of energy cost. So cost difference is really, really big. We opted very courageously in Europe a few years ago to step out of entry price points as Electrax. So we have been ramping down the Zanussi band, and we have been focusing on Electrox and AG. And we're proud to say today that we're winning more market share on Electrox and AG, core and premium, than we're losing on the Zanussi side of the equation here. So we are not exposed to the entrance on entry price point. However, what I need to underline is that, I mean, you're partly right. We see the market... moving down into lower price points in Europe, we see cost pressure being more and more intense here. I think we feel slightly protected from that because of the consumer segments we are targeting in Europe. But I mean, there is no doubt about that. The market has been moving to lower price points recently, and we see a significant level of price pressure.

That's super helpful. Thank you very much.

Thank you. And the next question is from Bjorn Ennarsson from Danske Bank. Please go ahead.

Thank you. First question on the US again. And if you can give us a call on the factory load in the plants and what kind of absorption you have a fixed cost now when you gain some volumes, but still volumes are, I assume, quite low. And second question is a little bit on Europe. If you can give some regional comments within Europe where you're seeing these slightly positive trends. Thank you.

Thank you very much for your question. I mean, as I mentioned previously, I mean, the most subdued market versus, I mean, the past years, I mean, I mentioned 2019 is certainly Europe. I mean, we are back at the level of 2014. And as I said in the previous course, I mean, usually this industry in Europe had an organic growth of 2% to 3% a year. So if you put 2014, 2025, we're really missing 20 to 30 percent. The market is missing 20 to 30 percent of the volume we should have expected logically out of the region here. And as a consequence here, the factories overall which are suffering the most from underutilization are the European factories. That's where everybody is suffering today in terms of factory loading. I would say North America, I mean, a few good news. First, I mean, the Springfield factory, we were suffering end of last year in terms of ramp up and additional cost. The ramp up was basically inducing. I mean, Springfield has been reaching what I would be calling a cruising altitude. So the factory is there. And I think we don't have the same factory capacity or utilization issues we do see in Europe. I think certainly we still have space because we just built this factory. So I think we have space in front of us here. But I mean, factory utilization rate is not the main handicap we may have in North America or the major challenge we do have in North America.

And all the actions to deal with plant load in Europe, or how are you dealing with that? I think... Apart from what you have done by some divestments, et cetera.

Absolutely. I mean, first, I mean, we're gaining market share in the corn and premium segment. So we're fighting for volume. And I think in the EBIT Bridge, as I said during the presentation, I mean, we have been positive in volume and mix. And unfortunately, I mean, this advantage was... slightly offset by the price pressure we see on the market. So we are really fighting. We're fighting on the daily days. Our team is fighting. It's doing a great job on the market, you know, basically to win versus our competitors in Europe. I mean, what would be helping us the most is simply to get back to a normal type of growth in Europe. And I think when I say a normal type of growth, I'm not speaking about the 20% to 30% we were expecting a few years ago, but, I mean, getting back to 2% to 3% growth in this region here. And what would be helping Electrolux the most because of the strength we do have in kitchen channels, is basically that the construction market will bounce back. And we believe it has been reaching bottom here. We're observing that interest rates are lower. So we're really hoping that, I mean, this market will be bouncing back, I mean, in the coming months. But I mean, right now, we don't have a clear sign of it.

And as you know, with the cost efficiency that we're having this year, it's mainly related to product cost efficiency. But we have two years behind us where, of course, we have taken down our staff and our workers in the factories drastically over the last two years prior to this one to cope with the factory utilization.

Thank you. Very helpful.

Thank you. We will now take the next question. This is from Timothy Lee from Barclays. Please go ahead.

Hi. Thanks for taking my questions. Can you hear me clearly?

Yes. Yes, absolutely. Good morning.

Cool. Thank you very much for the questions. I have two questions on Europe. The first one is regarding the trend that you have seen in September, which is some improvement. Can I ask about the historical pattern within the first quarter, whether September is usually a strong month in the quarter or not? And so this time is is more like a seasonal pattern or is really some, you know, improvement in terms of, you know, your overall business. That's the first question. And the second question is about the margin improvement in Europe on the quarter-on-quarter basis. What's the key drive for that? Is this just from mainly for the cost efficiency program or there's any something, some factors that drive the quarter-on-quarter improvement and how sustainable the improvement will be? Thank you.

Thanks for your question. The communication was not very good, so I hope I would be answering your questions correctly. About the month of September, first of all, I mean, we cannot speak about a pattern because, I mean, that was basically a month and we have seen really quite a lot of instability in Europe in the past month. And I think, in all fairness, unexpected moves as well. So I think I've been in this business for 25 years in all fairness. I mean, it has been in the last years and months a pretty unstable situation and a situation which is very difficult to predict. However, again, as Therese and myself stated, I mean, we had some positive signals in the month of September. And I think the only wish we have is to get back to a certain level of normality again. moving forward in this region.

And I guess if the question was more the historical pattern, I think what we can say historically, of course, we had September, October, November are really the high season months in our industry. Then, of course, as you know, in the last few years, quite many years now, has been very volatile and not really following a normal seasonal pattern. And also, of course, with a very, very subdued kitchen industry, retail channel in Europe, which is usually the boost as well in these three months. That's not really what we have been seeing being strong in the market in the last few years. So that's why we have not really had a normal seasonality. So, of course, is September strong because we're coming back to, you know, that more positive momentum? I guess it's too early to say because it has been going up and up and down. But historically, of course, September, October, November are the high season months.

In terms of sales and in terms of margin, if you can just take your question on margin here, as I mentioned previously, I mean, we are not targeting entry price points. Our war, our objective is not cost. I mean, we want to introduce consumer-relevant innovations here, and we're extremely proud to have a high consumer C-star rating across the three regions here to win awards, like seven Steve Awards in Germany, in London, which never anybody has been reaching before. So we're really trying to get an extract margin out of innovation and the quality of the products we do have over there, trying to escape the price pressure and cost pressure you may find in the entry price point. However, I mean, price pressure is big. Price pressure is big in every single quartile here. And certainly, I mean, reducing cost is one of our strategical pillars, and it is of prime importance to be cost-conscious here. in every single line of our P&L and that's what we're driving with a lot of intensity.

Okay, great. We will take one question from the webinar, which is from Swedbank, from Timothy Becker. And that is if we can elaborate on the goal of maintaining a solid investment rating. And if we are okay with the rating or if we have a goal to improve that. And if you could elaborate on that, yes.

Yes, of course, Amina, as we stated in the call, our aim is really to maintain a solid investment grade rating quarter over quarter. I mean, compared to last year, we are improving on our net debt to EBITDA ratio and quarter over quarter compared to the second quarter, we are stable. And of course, we're doing everything we can to remain solid investment grade rated.

Our focus remains delivering the year-end result on the profit side of the equation.

Great. We have one more question on the call that I think we will try to take before we close off.

Thank you. Final question is from John Kim from Deutsche Bank. Please go ahead.

Hi. Thanks for the opportunity to follow up. I'm just wondering if you'd comment a bit on wage inflation. What sort of percentages are you experiencing? What's the cadence to it? Are there large upcoming negotiations with any unionized union organizations?

No, I would say nothing extraordinary that we can mention.

Okay. And while I have the floor, is there anything you'd call out in the August developments around U.S. tariffs that we should be mindful of, whether it's the metal content or the reciprocals?

You want to answer this one? You want me to take it? Nothing special. Of course, as I mentioned previously, John, the latest tariff structure should certainly be benefiting the local producers here. The full tariff structure is implemented starting beginning of October. And again, all what we're hoping as a North American producer is to see a rational price increase for imported goods starting as soon as possible. That's what I would say.

Excellent.

Thank you.

Thank you, John. And thank you, everyone who has listened. With that, we will end this call. And I would like to remind you that we will have a capital market update on the 4th of December that will also be live webcasted. So thank you for viewing and listening in today.

Thank you very much.