Electrolux AB

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Welcome to the presentation of our fourth quarter results. I'm Ann-Sofie Jönsson, Head of Investor Relations and Sustainability Reporting here at Electrolux Group. With me today, I have our CEO, Yannick Fallin, and our CFO, Therese Fryberg. We will go through the presentation And after that, we will open up for a Q&A session, both for those on the conference call as well as for you on the webcast. Please enter your questions throughout the whole session if you're viewing on the web. We will pick them up afterwards. With that, I hand over to you, Yannick.

Thank you very much, Sophie, and good day to all of you. Very glad to be with you for the Q4 report. I will start, if you allow me, with some highlights about 2025. We are happy to report that the organic sales has been at the level of 131 billion SEC, which represents an organic sales growth of 3.9%, very close to the 4% we have been communicating about in the Captain Market update mid-term. The improvement in the operating income was at the level of 3.7 billion SEC, which represents 2.8% on net sales, which is again an improvement of 0.8 points versus last year. These 3.7 billion SEC were supported by a high cost reduction, a level of about 4 billion SEC, driven mainly by procurement and value engineering. We had one of the strongest quarter ever in Electrorax in the fourth quarter in terms of cash flow, delivering 5.2 billion SEC, bringing the entire year at the level of 2 billion SEC, which is taking our financial position in terms of leverage at the level of 3.0. With that, I would like to go into the fourth quarter. I'm sorry the slide is not changing. Technically, which was working of course nicely this morning. It was like that. OK, right now it's working. Apologies for this technical issue. Very good. Let me deep dive into the fourth quarter here. First, we're glad to report out that we have been gaining market share once again in Europe, Asia Pacific, Middle East, and Africa, and Brazil. We have been delivering a flat market share in North America. Very high level of price pressure in the free region. The operating income has been positively impacted by cost reduction at the level of 1.2 billion. We have been delivering on efficiency in engineering, in procurement, and on the conversion side of the equation. On the headwind side of the equation, unfortunately, we had to face a high level of cost due to US tariffs and the currency, the dollar depreciation. Let's move now to Europe, Asia-Pacific, and Middle East and Africa. First, as I said, I mean, we're happy to say that, once again, we have been growing market share with Electrox and AG. We have been gaining more market share with Electrox and AG than we have been losing by ramping down. with Zanussi. Very high level of pressure in this region as well. I mean, we have been going into Black Friday. We have more and more pressure from the Asian competitors, but we have been managing to grow organically by 3.6% in the quarter, which is pretty remarkable, especially when you think that the market has been going down by 1%. We had a positive mix effect helped by volume, significant volume increase here, and the region has been benefiting by a high level of cost efficiency as well. We have been producing major innovations in Europe here, and we thought it was wise to fuel this innovation with a higher level of marketing spending. The negative news is certainly on the volume side of the equation. Can we change to the next slide, please? Sorry for that once again. Thank you very much. I mean, the negative news is, of course, about the market level. The market has been losing once again 1%. We have been down 1% in Western Europe, and we have been up 2% in Eastern Europe. But Western Europe representing more than 80% of the volume. Overall, the market has been once again down. We're now at the level of 2016. We're 10% below the fourth quarter of 2019. It is a 10 years low in terms of volume. And the market remains subdued. Of course, we have positive signals. from interest rates and the construction side of the equation, but it will take time to have these positive signals materializing in additional volume for home appliances. Moving to North America now, I mean, the quarter has been very challenging. Of course, we knew Black Friday was highly promotional, but certainly, I mean, we did not expect the level of competitive pressure we have seen in the market. And I think entering into the promotional season here, we had no choice. but to reduce the price increases we had implemented throughout the year 2025. And that's explaining why we're delivering a negative EBIT in the fourth quarter. So very high level of price pressure in North America, which has been forcing us to step down for the price increase we had implemented throughout the year. The good news is that after the promotional pressure here, prices have been bouncing back to last year level. But still, significant negative external factors are driving our results down. And these factors are simply the U.S. tariff as well as the depreciation of the U.S. dollar. Tariffs are what they are, 15% to 20% for imported goods out of Southeast Asia, 55% to 60% out of China. So if the industry is reacting rationally here and we will see price increase in the coming weeks, in the coming months, we should be benefiting from that being a North American producer. The market has been pretty resilient when you look at this picture here. The market has been going up in the fourth quarter by 1%, mainly driven by laundry. But still, consumer sentiment is pretty low, and price increase could have an impact moving forward on the demand. Moving now to Latin America, and I'm glad – to if my pointer is willing to change the slide. And I'm glad to say that, I mean, we had another strong quarter in Latin America. I can just ask somebody to change the slide. Thank you very much. We had another strong quarter in Latin America gaining value market share in Brazil. The entire region in terms of volume has been growing. We saw Brazil slightly slowing down. Okay, sorry for that. Brazil slightly slowing down in terms of increase, but still a good quarter in the region. We had a very strong Black Friday, which is a promotional pressure, but the team has been doing pretty well, and we were helped finally at the end of the quarter by a heat wave, which has been present in the region. Our position remains very strong in the region. I just want to underline one point, which is explaining part of the 11.5% in terms of EBIT. We were helped and supported by a one-time high level of supply rebates at the end of the quarter in this region. These rebates have not been material for the group, but certainly has been relevant for LATAM. Let me show you a short video on how we have been communicating during Black Friday in the region.