AB Electrolux (publ)

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Welcome to Electrolux Group and the presentation of our Q1 report. I'm Ann-Sofie Jönsson, Head of Investor Relations and Sustainability Reporting. I'm here with our CEO, Jannick Föland, and Therese Friberg, our CFO. We will run through the presentation, and after that, we will open up for the Q&A. With that, I hand over to Jannick.

Thank you very much, Anne-Sophie, and good morning, good day to all of you. Very glad to be with you for this Q1 2026 report. We have been making some significant announcements last night. 2025 was the year of progress and strategic building. We are now executing this strategy. We have been announcing a series of initiatives I would like to remind you this morning. The first one is about a partnership we announced in the North American region with MIDEA. This partnership will be driving growth, We'll be driving better profit thanks to saving and share of CapEx. And certainly it will represent a very strong platform to move forward in this region. We have been announcing as well that we'll be optimizing our footprint and gaining efficiency across our organization. We are planning to expand in terms of product and geography moving forward. In order to finance these major initiatives and strengthen our balance sheet, we have been announcing a fully underwritten rights issue. Let me now deep dive into Q1. We had to face two very different realities. The first one was about Europe, Middle East and Africa, APAC and Latin America, where we have been delivering in this first quarter strong results, results which were significantly better than last year. On the other hand, North America has been declining significantly. The market has been down more than 10%. The food preservation business unit has been down more than 14% from a market perspective. In terms of operating margin, we have been delivering 198 million SEC, excluding non-recurring items. In the operating income, we have been including minus 463 million SEC due to the closure of our factory in Chile, in Santiago. We have been delivering in this first quarter 700 million SEC in terms of cost reduction, which is placing us well to deliver the year-end target, which is between 3.5 and 4 billion SEC. Let me now deep dive into Europe, Middle East and Africa, and APAC. strong quarter for this region. We have been once again gaining market share with our main brands, Electrolux and AG in a market which has been flat in this first quarter. We have been growing organically by 3.6%, delivering 4.1% of EBIT. This EBIT has been supported by strong delivery in terms of cost reduction. And yes, we have been investing in marketing in order to fuel all the innovation we have been launching in this first quarter. As I mentioned previously, the market was once again flat in this first quarter. Actually, it was flat in Western Europe, which represents 80% of the volume, and it was up 1% in Eastern Europe, with 20% of the volume in the market. The market was mainly replacement-driven. Once again, but if you look at this curve, it has been the lowest quarter in the 12 last year. We're in a 12 year low volume figure in Europe here. So if you take into account that a normal organic growth in this industry is 2 to 3 percent, we are down between 20 and 30 percent versus where we should be today. Now, as I said, we have been investing in marketing. We are dusting the Electrolux brand, and I'm very proud to show you one of our latest commercials.

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Now moving into North America, and as I mentioned in my introduction, the market has been significantly down in this first quarter, over 10% down. Food preservation has been over 14% down. It has been the weakest quarter in terms of market in the last 10 years. And that's why we are having an operating profit which is pretty low in this first quarter. The market was down, and on the top of that, we had very significant external factors, mainly driven by tariff. We had two internal issues, a change in accounting estimates for consumer rebates and a voluntary recall of a limited number of Frigidaire gas ranges, which have been affecting the results by 0.3 billion SEC. Looking at the market, and I mentioned that, minus 10% in this first quarter. If you're looking at the volume trend over the last 10 years, you will notice that that has been the most challenging quarter over the last 10 years. The decline has been more significant than the decline we have been observing after 2022, so post-COVID. Moving into Latin America, strong quarter in Latin America. Again, we have been growing organically more than 8%, delivering and a bit excluding non-recruiting items of 8%. Again, strong market in a market where we have been observing a significant level of price erosion. We have been announcing the closure of a plant in Chile, and this closure has been inducing a non-recurring item of 463 million sec in this quarter in our margin. Moving now into cost reduction, once again, I mean, our objective at year-end is to deliver between 3.5 and 4 billion SEC. We have been delivering 700 million SEC in this first quarter. We value engineering, best-cost country sourcing, and by having an additional productivity in our factory. So good results, again, in this first quarter, which is aligned with the objective, ambitious objective we do have at year-end to deliver between 3.5 and 4 billion SEC. With that, I'm passing it to Thérèse.

Yes, thank you, Yannick. And then taking a look at the sales and the EBIT bridge in a little bit more detail. We had essentially a flat organic growth in the quarter where we did see volume growth, as Yannick mentioned, in Latin America and in Europe, Middle East, Africa and Asia-Pacific. But this was offset by volume decline in North America and also price pressure across the markets. So if we look at the organic contribution to EBIT, this was actually the negative as the pressure on price was more than offsetting the positive volume we had. Investments in innovation and marketing essentially was flat year over year. And we did see continued strong and stable cost efficiency coming through to the bottom line. But you can also see that year over year, the external factors are still quite a large negative headwinds, as we are having continued high tariffs in North America mainly. And then looking at the operating cash flow. So operating cash flow after investments for the quarter was negative 4.6 billion and also lower than last year. And this was partly related to the reduced EBIT year over year. And then we also have a seasonal buildup in the operating working capital. But on top of that, we also have a somewhat higher build-up in inventory, specifically in North America, related to the very weak market in North America, weaker than we expected going into the quarter, and some small build-up related to the Anderson transition of production that you probably heard about yesterday. And then taking a look at our liquidity and maturity profile, we still have a high liquidity with 27.6 billion Swedish krona in liquidity, including revolving credit facilities. And we have a well-balanced maturity profile. We have no financial covenants, as you know, and we have the ambition to have a solid investment grade rating. And to have a solid investment grade rating, of course, the main components will continue to be to improve our operating performance and also to generate cash flow. But, of course, you heard about yesterday the announced rights issue of, fully underwritten rights issue of 9 billion, that partly will be used to drive the additional strategic initiatives Yannick mentioned earlier, but also partly will to strengthen the balance sheet going forward. And the net debt DBDA by the end of the quarter was 3.8 times. And if we would be adjusting for the rights issue of 9 billion, this number would have been 2.8 times. And with that, I hand back over to Janic.

Moving now into the market and business outlook. Following the downturn in the U.S. home appliance market in the first quarter, the market outlook for North America in 2026 is revised from neutral to negative to negative. Geopolitical uncertainty is forcing to continue in North America, but under the assumption that the current tariff structure stays, general market pricing should logically adjust to reflect associated tariff costs. Should these materialize, it may adversely impact consumer demand and market growth. The Brazilian home appliance market developed positively in the first quarter, and although growth rates may slow somewhat throughout the year, the market outlook for Brazil in 2026 has changed from neutral to positive. The market demand in Europe is unchanged, with geopolitical and macroeconomical uncertainty waiting on consumer sentiment. Also, consumers continued postponing discretionary purchases, and demand for built-in kitchen products remained subdued. In a larger perspective, it is important to remember that the European market is on the 12-year low. Therefore, the market outlook for Europe remains neutral. Moving to a business outlook. Our business outlook for 2026 remains overall unchanged, despite expecting that additional costs related to extended U.S. Section 232 import tariff on products that contain steel and aluminum applicable since April 6th. Sizable price increases with 5 to 20 percent have been announced in North America, and it is our ambition to increase prices in order to offset the negative impact from tariffs. Volume, price, and mix is expected to be positive in 2026, driven by volume growth and a favorable product mix. We expect investments in innovation and marketing for a full year to increase. The new product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on cost saving and to improve efficiency throughout the group is critical for our competitiveness and we anticipate between 3.5 and 4 million earnings contribution from cost efficiency in 2026. External factors are expected to significantly negatively impact the year, mainly due to higher tariff costs from extended U.S. Section 232 import tariff. This cost inflation is reflected in external factors in our EBIT bridge. All material costs are also estimated to be negative. For the full year capital expenditure, we're expecting to reach about 4 billion SEC. Again, I just want to summarize our Q1 performance. And as I said, as an introduction, we have really two very different realities. On one side, EMEA, APAC, and Latin America, where we have been performing well, where we have been growing, 3.6% in Europe in a flat market, 8% in Latin America, in Brazil. But we have been observing as well a very notable decline in North America, over 10%, the worst and strongest decline we have seen in the last 10 years. In terms of cost reduction, we have been reaching $0.7 billion in the first quarter, and we have good confidence to reach $3.5 to $4 billion by year-end. We have been making last night very big strategical announcements, a strategy we have been working on for the last months. The partnership with media in North America will be key in order to structure this region, grow in this region, add saving, improve our profits. and share our capital expenditure with media. We have been announcing as well that we'll be optimizing our footprint and gaining efficiency in the rest of the organization. And we will be expanding our product offering from a geographical perspective and from a product perspective here. So big milestone for the company has been announced last night. With that, I would be glad to answer any question we may have. Anne-Sophie?

Yes, thank you, Yannick. Now we will turn over to the conference call first to take questions from the conference call.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please type it into the box and click submit. We will now go to our first question. One moment, please. And our first question comes from the line of Ope Olanio from Goldman Sachs. Please go ahead. Ope, is your line on mute?

Hi, good morning. Could you hear me?

Yes, sir.

Hi. Hi. Good morning, Teresa, Yannick, and Sophie. Maybe just starting with the U.S., could you sort of break down what you're seeing, sort of what's changed in terms of organic growth? I think sort of maybe through last year, we've seen some market share gains. And so how much of sort of the minus 10 is the market versus what's happening in terms of things on a competitive basis?

Thank you very much for the question. So as we said, I mean, and of course, we're referring to sell-in data and volume. We have seen the biggest drop in terms of volume in the first quarter over the last 10 years. And of course, I mean, the geopolitical environment has not been helping in North America. From a mixed perspective as well, we were hit from the fact that, I mean, the biggest drop we have seen in the North American market is coming from our biggest product category, which is food preservation. Certainly, I mean, we did not lose a significant level of market share in the quarter. We have been losing a little bit of market share due to the recall we made at the beginning of the quarter, and we're always placing the safety of our customers first. Certainly, it would be very interesting to observe how the North American market will be evolving in terms of demands in the coming months. The big announcement we're making today is certainly in terms of price increase. We are facing very significant external factors in North America, and that has been a big part of the profit decline we had in the first quarter. On April 6th, there was the announcement about the 2.32 tariff. So we have been announcing to our customers that we will be increasing prices between 5% and 20% by the end of April. Most of our competitors are producing appliances as well in Mexico. So we have a good confidence level that we will see price increases in North America overall as an industry in the coming weeks.

But the 10%, just to be specific, that is the market decline, so pure market. And we were declining, as you saw, somewhat more than that, but only slightly.

Great, thanks. And maybe just on section 232, I don't know if you're comfortable giving out a number, but do you have an estimate on external markets factors for soft 2026 and as the year goes on.

No, we don't have an updated number. Of course, as you see, we are already guiding for significantly negative. And I think it's fair to say that if the current 232 tariff stays in place as it is today, it will be even more significantly negative than, of course, we had going into the year. But on the other hand, as Yannick mentioned, I think this is really now levelling the playing field with... lower debate if these tariffs are legally valid and so forth. So the confidence to actually increase prices and have them stick in the market is higher than ever before, I would say.

Great. And maybe just the last one for me. Could you just maybe comment on sort of what you're seeing on costs from a commodity perspective, given what's going on, and just remind us of how sort of hedging works from your perspective and therefore how you should think of things, assuming sort of spot

prices remain where they are yeah in terms of of course i mean the geopolitical uh war in iran is influencing all material as we mentioned previously i mean we're hedging uh plastic uh over three months usually one quarter so the impact we have seen in q1 is is limited uh very limited i mean The main impact we see is much more on transportation costs and fuel costs, so the bunker costs we have on sea freight, for example. But, I mean, we are largely protected in this quarter, in the Q1 quarter, thanks to the hedging we do have on raw material and plastic.

We are, but it's also included in the forecast that we have now. Of course, as you all know, it's extremely volatile, but we do see a somewhat increase now in the second quarter, partly related to logistics and partly related to plastics that we have then had to lock at slightly higher prices for the second quarter. But it's already included, let's say, in our business outlook with our current understanding.

Great. Thanks very much for taking my question. Thank you.

Thank you. Your next question today comes from the line of John Kim from Deutsche Bank. Please go ahead.

Good morning. Thanks for the opportunity. Could we get a little bit of a steer on packing the external factors? Any sense on forex versus tariffs versus underlying cost inflation?

I mean, really, the majority, you have a little bit of inflation and a little bit of currency, I would say, if we talk about Q1. But the vast majority of the number is really tariffs.

Understood. And can you help us, can you help characterize kind of pricing dynamics from your competitors in Q1?

I think in North America, in Q1 in North America, we have seen a very light price increase in North America. What we're expecting is to see larger movements in the second quarter and moving forward due to the additional pressure we're experiencing from 2.32, this pressure. will be experienced as well by our competitors moving forward in the other regions if i may in europe and in latin america of course we see price pressure and we see price erosion which is higher than what we were originally expecting however again we are performing really well in these markets i mean in europe we are improving our mix as well moving more into a kitchen and built in. So I think we have all the measures in place in this region to counteract against this price erosion we're experiencing.

Okay, thanks very much.

Thank you. Your next question today comes from the line of David S. McGregor from Longbow Research. Please go ahead.

Yes, good morning, everyone. Thanks for taking my questions. Just with regard to the North American market, you've discussed pricing of 5% to 20%. That's a pretty large range, obviously. Can you just discuss that range, what constitutes the lower end, what would constitute the upper end? Thank you.

Of course, I mean, you're absolutely right. It is a low range. However, we will not be butter spreading the price increase. We have products which are more impacted than others. And we have product categories which are more under, I would say, competitive pressure than others. Food preservation, for instance. is a product which is far more a commodity, I would say, in the market and under price pressure. That's exactly, by the way, why we are putting in place all the strategy we do have with media moving forward. We'll be reinforcing food preservation significantly in the future. But, I mean, in terms of price increase, it would very much depend on the impact we do see from tariffs. So we will filter and have a price increase by product category, which is needed in the market, you know, to overcome the tariff impact.

And do you foresee, just as a follow-up question, do you foresee the potential for further price increases as the year goes on? Is this kind of the first of the sequence of multiple increases you would consider?

You know, I think it's a very good question. But I mean, the North American market has been extremely dynamic in the last months. I mean, the tariff structure has been changing several times in the last 12 months. And the weight has been really big in terms of external factors. We're absolutely convinced that there will be now a significant price movement because Simply, I mean, 2.32 is putting a significant level of pressure on the entire competitive landscape. But it's very difficult to predict how, I mean, these external factors will be evolving in the coming months. And as a consequence, our prices will be evolving in the coming months. But certainly, I mean, our ambition, and I want to repeat it, is to compensate for the vast majority of the impact we are facing in terms of tariff through price increase.

So this 5% to 20% series of price increases would be sufficient to fully offset the tariff expenses on 232 that you're incurring now?

Yeah, I think that's our intent, for sure. The intent is to compensate for the vast majority of the impact we are inducing through a tariff. Thank you very much. You're welcome.

Thank you. Your next question comes from the line of Akash Gupta from JP Morgan. Please go ahead.

Yeah, hi, good morning. I got a couple as well. The first one is on Europe. So maybe if you can talk about what's your... I mean, you left your market for Europe unchanged, but given the war in the Middle East and in higher interest rates, how do you see a prospect of recovery in the European market? And you have quantified price increases in North America because of tariffs, but I guess prices need to go up in Europe as well. when your hedges especially run out. So can you quantify what sort of magnitude we will be looking at price increases in Europe in the rest of the year? So that's number one. And number two is on pre-cash flow. So again, I mean, if you look at the North American business and your outlook, clearly that will be a drag for this year. We also have some cash outflow from restructuring and actions that you are taking to drive efficiency. So maybe if you can give us a high-level view of how shall we think about free cash flow this year and if it will be negative, then how big negative it might be. Thank you.

I will take the first and I will leave the second one to Therese. On the European market, I think the good news really is that, I mean, in a market which is still very much subdued in Europe, again, I have been mentioning, I mean, we're missing 20% to 30% of volume versus what could have been expected earlier. Prior to COVID, I mean, we are truly winning and gaining market share. We're not only gaining market share with Electrolux and AEG, but we're also reinforcing our price positioning in the market. We're gaining market share in the product category where we are really strong, like in cooking, for example, in several markets. So it is really a winning equation today. And we are investing in marketing in order to dust and promote the brands we do have in Europe. So it is right now a positive dynamic we see in this market. Thanks to all the work the team has been putting in place in the market, which is very difficult. Right now, we don't see price increase in Europe. I mean, it's rather the opposite. As I've been mentioning, when I covered the region, we see a level of price erosion, which is more or higher than what we have been expecting probably at the beginning of the year. I mean, I mentioned it, in Q1, the impact we do have due to raw material and the war in the Middle East, I mean, is very limited. I mean, this impact, as Thierry said, will be growing throughout the quarters here. But at this point of time, we don't see any price movements in these regions. And in all fairness, I mean, we don't see, we're not expecting any significant price movement moving forward.

Maybe one comment on the market as such. I mean, as you're saying, we do see some increases in interest rates and so forth in Europe. The market was flat essentially in the first quarter. Of course, we have been expecting the market to start to grow for the last two to three years at least, and it hasn't started to grow yet yet. And the reason for that is that, I mean, it's only driven by replacement today. So even with an elevated interest rate or even with increased uncertainty related to Middle East conflict and so forth, it's really hard to see that the European market could go even more south from here. And on price, I mean, we did see, as Yannick said, quite high price pressure in Europe. I mean, to see price increases in Europe is very, very unusual. Of course, what could happen is more that the price pressure downwards could ease a little bit. But to see price increases in Europe, I think, is very rare. And then on the cash flow, you are absolutely right. We're not guiding on cash flow. I mean, we're keeping our capex for the year at 4 billion, so we don't see an additional pressure from these initiatives on capex as such. But you are right that with the announcements we are having both related to Chile and Hungary that we have announced in the last few days and weeks, And also related now to the cash NRI in North America that we will have in the second quarter of 0.9 billion. All of that will be paid out pretty much this year. So, yeah, that will be an additional drag to our net cash flow for the year.

And maybe on working capital, because you'll be closing down production in Anderson, so... how shall we think about working capital swing from cash point of view in 2026?

Working capital, I think in North America, was in the first quarter pretty negative because the market was simply down very much. Of course, on the Anderson side of the equation, as you can understand, you're not making these type of decisions and building a strategy as the one we have been building with this partnership in Media in a few weeks. We have been planning for that long in advance. So we have been planning for ramp down in Anderson for quite some time. So we don't see a significant impact. And we have been planning for this impact, if there is any, in the third quarter. So we're ramping down on that in the third quarter. But that's all basically taken into account.

And maybe a follow-up on tariff. I mean, we saw that the U.S. Supreme Court ruled against reciprocal tariff, and the administration has started issuing refunds in, I think, this week or maybe last week, from last week. Can you quantify when it comes to tariff, especially what you paid last year, is there any potential for refunds if you have paid significant reciprocal tariff? Thank you.

Yes. So we have not disclosed the amount, but we can say that it is a material amount, as you can imagine. And you know that we had a very large external factors during last year. And we can say that a large portion of this was related to the reciprocal tariffs. When it comes to the process, it's divided depending on the type of claim you will have. it's divided in two different process flows so what is starting to and has been clarified from a process perspective now is what is the easier claims so which is in the this first uh first flow so to say and our uh our claims will be in the second process flow which has not yet been clarified how it will happen and when it will happen so of course As we would know more about this process going forward and also potential timing of a refund, we will come out with additional information.

Thank you.

Thank you. We will now take the next question. And the question comes from the line of Hi, when from UBS, please go ahead.

Good morning. It's Hi here from UPS. Thank you for taking my questions. I have three, if you don't mind. The first one is on the cost efficiency. So you delivered 700 million now and reiterated 3.5 to 4 billion. How should we think about the phasing of this to the rest of the year? And, you know, the $2 billion savings by year three from your partnership initiatives, does it already get included at all in FY26 target? Do you expect anything to flow through that $3.5 billion this year as the first one?

Thank you very much for the question. It's a very important question. And as we said, I mean, the cost saving piece in the environment we are in today is extremely important for us to deliver the year end target. And that's why we have been putting in front of ourselves a very ambitious target once again for 26, which is between 3.5 and 4 billion. To your point, we have been delivering 0.7 billion, which is Basically meeting our expectation for the first quarter, usually in terms of cost saving, especially when you're looking at value engineering. I mean, best cost country sourcing or conversion costs. You have basically an increase quarter by quarter because, of course, I mean, you are having and adding projects throughout the different years. That's why the 0.7 percent. is aligned with what we have been expecting for the first quarter. And we are repeating and reiterating our ambition to reach 3.5 to 4 billion at year end. Now, thanks for your question about the additional cost saving or what we're announcing here. in terms of strategical cost saving moving forward. What we have been announcing is that we will be saving 600 million in year three with a partnership of MIDEA and that we'll be saving an additional 1.4 billion in year three thanks to the optimized footprint and the efficiency we'll be gaining through the organization efficiency. That's, of course, I mean, this saving will be growing year after year. And you can see it in the graph. I showed it last night. We'll have a saving year one, year two, and we'll have a $2 billion saving in year three. What I want to insist on is that, I mean, the partnership for Midea is a long-term partnership. It is a long-term partnership where we'll be growing, we'll be saving more money, and we'll be sharing capital. And saving more money is pretty important because of the scale we do have, the access of a supply base we do have moving forward. So I think it will be progressively increasing, and I think the amount we'll be reaching and the amount we'll be disclosing is the $2 billion in year three.

And of course, this is progressing. So year two already will be quite a bit of a step up. But for the first year now, it's really about getting everything up and running. And we are in a squeezed timing. So there will be a limited amount in 2026. And it is included in our business outlook, essentially, you could say.

Understood. Thank you. Thank you. My second question is on the media partnership. So I understand the perspective of the cost-based outsourcing story. What about the market share dynamics? So you mentioned you are 2% or below on the top load washers, and you're trying to get more penetration there. So can you give us a bit of an idea of what is media market share on those categories? And I'm trying to get to what is the additional revenue that you may get from this kind of initiative.

Unfortunately, I cannot disclose the market share or the turnover of MIDEA in North America. However, what I can tell you, and you mentioned it, we have 18% market share in food preservation. We have over 10% market share in food preparation in Springfield. And Springfield will belong 100%, of course, So we have more than 10% market share in dishwashing out of Kingston, and that would be 100% of Electrox. Where we see a big potential moving forward is in the two categories where we would be partnering with them. First, I mean, Fabricare, you mentioned 7% market share in front loader, less than 2% market share in front loader. in top loader, which is, again, the biggest platform sold in North America in washing and in drying. So we have a significant potential to grow in fabric care moving forward. If we're reaching, I mentioned it last night, if we're reaching only 10%, which is half of the market share we have in food preservation, if we're reaching 10% in fabric care in the future, that would be 1 million additional pieces for Electro-Rug. So a significant source That's for fabric care. But even if we have 18% market share in food preservation, there is still space for growth. And we will be able to access new platforms thanks to the broad range of product media is having today. And we will be able to lower our cost thanks to the vertical integration and the scale this partner does have today. So significant level of potential in terms of growth. I've been mentioning that thanks to these new products. Significant level of potential in terms of saving, and it will be an increasing saving, as you mentioned it previously as well. And we will be sharing CapEx here, which would be a positive item in terms of cash flow.

Understood. Thank you. And then my final question, of the 0.3 billion sec headwind from both pre-bake provisions and the Frigidaire recall, how much is it on should we expect any further impact beyond this closet?

Yeah, we don't separate up the two items of the 0.3. We thought that in combination they are a relevant amount to mention, and that's why we highlight it. And also why we highlight it is because we believe that this is behind us. So you should not be including that in your forward-looking expectation. Of course, it will still stay in our result for the full year, but we should not incur additional similar costs in the quarters to come.

Very clear, thank you.

Thank you. Our next question comes from the line of Timothy Lee from Barclays. Please go ahead.

Hi, can you hear me?

Yes.

All right, cool. Thank you very much for taking my question. So my first question is about the price increase in North America market again. So if the market decline for the first quarter is probably due to, let's say, economy or inflation, then how are you confident that the price increase will not affect your performance going forward?

I'm not sure I've got to tell you the question. I mean, the connection is not really good. But in terms of price increase, once again, I mean, we are pretty confident that this price increase will stick in the coming months because we really truly believe that the industry will be moving towards price increases due to the latest tariff structure we see in North America. So, of course, I mean, the big question mark is the one you have been mentioning, and is how... much demand will be impacted by these price increase. We certainly have been putting quite a lot of flexibility in our industrial assets, you know, to cope with a potential demand decrease in North America. But I mean, it is absolutely, it is a price increase, which is needed. It's a price increase. We have been announcing to our customers and we are, we are personally pretty confident that I mean, competition will be following in the same direction.

Okay, got it. And then my second question is about the expenses related to the recall. So we have a couple of expenses related to that in the first quarter. Would that be some more expenses in the second quarter going forward as well?

Thérèse mentioned it, and I want just to be very clear. I mean, first of all, I think it is a voluntary recall. I mean, we're putting safety as an absolute priority for our customers, and I want to underline that. I mean, but this recall is behind us. I mean, the entire expenses which are linked to this recall were basically spent in the first quarter, and that's what we have been doing. That's the impact we have basically in the profit we have in North America as well. So it is behind us, and we will not see any additional expenses in the coming quarters due to this limited recall we had in North America.

And then my last question is about Latin America. So Brazil, obviously, was very strong in the first quarter, but you also mentioned the growth rate may slow somewhat throughout the year. So what would be the reason to result in a slowdown in terms of growth? And Last quarter, I think we also had the supplier rebate to help on the margin in Latin America. So I'm just wondering whether there will be any kind of increased rebate from suppliers in the first quarter as well.

First, I think we're very proud of our results in Latin America. We have been organically growing again by 8% in this first quarter. I mean, we are gaining market share in the upper price segment. We have been having very strong results in this first quarter in small domestic appliances as well, which I want to underline. And in all fairness, I mean, as I said previously many times, the strategy is sound. The product pipeline we do have is sound. We have been investing in the market here. The Electrolux brand is extremely strong in the market. We don't see why we would be slowing down in terms of dynamic in this market. In terms of supply rebate, in all fairness, I don't know what you're referring to. I mean, to my knowledge, we didn't declare any supply rebate in Latin America. Thérèse, I mean, do you have anything in mind?

Yeah, yeah, yeah. You're right. In Q4, we talked about an amount related to supplier rebate. This quarter was not including any additional supplier rebate. So this was really underlying strong performance by our team in Latin America.

But we are not expecting that.

No, and we're not expecting the supplier rebate. I mean, of course, we're always working with our cost efficiency. As you know, it's included in the 3.5 to 4 billion. But there was a higher amount than usual, I would say, in the fourth quarter. But this is something we're continuously working with our suppliers for sure.

Absolutely.

Okay, Kali. Thank you very much.

Thank you. We will now go to our next question. And the next question comes from the line of James Moore from Rothschild & Co. Please go ahead.

Yes, good morning, everybody, and thank you for the time. I've got some questions on North America and external factors. Maybe we could go one at a time. On North America, if I take out your recall, it looks like your clean margin is about 6.5% negative. I just wondered if you could talk about how you expect that to develop into the second quarter. I mean, normally, historically, you've done sort of 200 basis point increase quarter on quarter, which will give you minus four and a half. But I guess what I'm thinking about is does section 232 take it worse with prices taking longer to cycle through floor retail? Do we get worse on price cost before we get better? I guess is the question or any other topics for margin next quarter to consider.

As we said, I mean, certainly we're not happy about the results we do have in North America in the first quarter. But, I mean, the main lever we'd be executing now in the second quarter is the price increase we have been mentioning, which will be between 5% and 20%. And as I said previously, I mean, our ambition is to compensate for the tariff increase through the price increase. So I think we have absolutely no doubt that we'll have a positive development in terms of prices, I mean, starting end of April.

And how it practically works, of course, I mean, we started to pay the additional tariffs from the 6th of April, but it also takes some time before the negative impact is flowing through the P&L as it's flowing through, the cost is flowing through the P&L as you sell the products. And as we mentioned earlier, the price increase will go live in the market really here in one week's time. So we believe that we are well in terms of timing of being able to match the negative cost we will incur because of the increased tariff cost and the price increases in terms of timing when it will be in the market.

Thanks, Trace. Very helpful. I'm just on margin mix in the North American business. I mean, are my assumptions that cold and laundry are your two biggest negative margin businesses by quite some way? And I see you being quite clever about how you de-risk the business. But would it be fair to assume that the rest of the U.S., which I guess is hot dish, small aftermarket, collectively is a profitable business at the moment?

Yeah, I would just be repeating the answer I gave last night to the same question is that, I mean, there is absolutely no doubt that food preservation worldwide, globally in the home appliance industry is the category which is the most under price pressure overall, because, I mean, it is becoming a commodity for many platforms. So that's exactly why we're putting in place the actions we're putting in place with the partnership from MIDEA. But, I mean, food preservation is the category with the highest level of price pressure.

Thanks. Could you help us understand the actions at Anderson? Specifically, I just don't really understand why you would lay off 1,500 people in fridge-freezer before rehiring 1,300. Obviously, going to laundry maybe requires different skills, but are there any other reasons why you're doing it that way and not transferring the employees?

Yeah, let me just repeat what we'll be doing in Anderson. And thank you very much for asking the question. What we have in front of us is a factory transformation. I mean, we will be stopping manufacturing cooling products because we have the manufacturing joint venture in Juarez for cooling. And we will be leveraging the entire footprint we do have in cooling and Midea has in cooling as well. And we'll be transforming this factory from cooling into fabric care, so washing equipment. and drying top loaders in the first half of 2027. So what will be happening is that we'll be stopping production. We need, of course, to dismantle the entire equipment we do have in the Anderson factory. That's why you will see a write-off of $1.5 billion. in the second quarter due to this dismantling. And we will be reinstalling equipment in the Anderson factory in the second half of 26, first half of 27 to start production on the laundry side of the equation. I think, again, as I said previously, gigantic potential on the laundry side. And we need to underline as well the fact that most of our competitors are producing laundry in North America today, in the U.S. today. So I think having a footprint for laundry in Anderson is making absolute sense here.

So it's a pure timing impact that we will not be producing in the facility for almost one year. So we cannot keep the employees without working for one year. So that's the practical timing.

But we'll be re-employing 1,200 people between 27 and 28.

That makes a lot of sense. Thanks. And just lastly, if I could, I mean, I understand you don't want to put a hard number on your new internal forecast for external factors, but is there any way you could quantify the change of your internal expectation compared to what you expected sort of three months ago at the last set of results? And could you just qualify that The increase, I understand you're going to pass it on, and that's your ambition. I'm just talking about the gross cost side. Is the change, did you say earlier that all of the change is basically Section 232? And is there any way you could say whether the increase in your assumptions are half a billion, two billion? Just trying to understand rough orders of magnitudes.

Yeah, I mean, all of the increases are essentially 232. Then, of course, it's a little bit more complex than that, because originally we, of course, had the reciprocal and the IPA tariffs that were actually still flowing through the P&L in the first quarter. We then had the Section 122 for a period of time that we also right now then have been paying also in the first quarter. And then when we now have the new 232, then the 122 is not stacking upon the 232, but replacing. So it's a lot of dynamics and a lot of mathematics. I mean, what we can say, we won't go into exact numbers, but what we can say is if the current tariff structure stays the way it is right now, also fully impacting the flow from Mexico to the U.S., Of course, we also know that it's in the middle of negotiation of the new agreement for USMCA. So, I mean, we don't know exactly where this will develop and we're not speculating about that. But what we can say is that it is a material increase if the current structure stays in place the way it is today.

Thank you very much.

Thank you. Your next question today. Comes from the line of Johan Eliasson from SB1 Markets. Please go ahead.

Hi again, Yannick, Therese and Anne-Sophie. Just coming back to your JV setup, I noticed you are keeping 50% to 55% ownership in the U.S. JVs. You're setting up the sales JV on cold products and the Anderson manufacturing for laundry. Was that a requirement from CFIUS to approve the deal or why are you keeping these shares?

No, absolutely not. It was not a requirement from CFIUS. That was absolutely our choice through discussions as well with our partner media. So I think that has not been at all a requirement from CFIUS.

Okay, excellent. Thank you very much.

Thank you. We will now take the next question. And your next question today comes from the line of Martin Wilkie from Citi. Please go ahead.

Yeah, good morning. Thank you. It's Martin from Citi. Just a couple of questions coming back to the transaction announced last night. And I understand that you can't give details on the Medea revenue that's coming in as part of the transaction. But one question we've certainly had this morning from investors is obviously you've got a 600 million uplift in profit coming from that Mexican joint ventures. There's obviously an element of that that is consolidating Medea revenue and there's an element of it that's pure upside to you. Can you give us Is there some sort of sense as to what portion of that sort of belongs to Electrolux, if you like? I mean, is it safe to assume that the vast majority of that 600 million effectively accrues economically to Electrolux?

Yeah, that's what we have tried to portray with the 600 million. So how we see it is that the 600 million will be the additional profit in the Electrolux P&L. So what additional profit potentially Midea will make on this partnership, we have not been including in what we have communicated yesterday. And that's also why we try to keep it clean, let's say, with the... with the revenue and the profit. And we think that the important number for you to include and to encompass is the 600 million that we believe will be an additional profit in our bottom line.

Again, I want to repeat what I said several times. It is a long-term partnership. So we have been giving figures for the next three years and you see them basically evolving. But I mean, the partnership we need is a long-term partnership for the region.

I know that and I think that number can grow over time as well. But when you say the 600 million accrues to Electrolux, if that's an operating profit level, there will be a minority. So in terms of how we think about the earnings number, just to get some sort of sense as to the net income benefit of that, because you are going to get some, if I understand it correctly, some offset of a minority to Medea.

Yeah, that offset will actually go below net income. So what we're trying to portray here is our improvement to EBIT and to net income.

Okay, thank you. And then if I could follow up just on cash, because obviously you've talked about delevering down to about two times net debt, but there's a lot of moving parts this year, obviously the equity raise and so forth. But just to get an understanding of the timing, and you've given some detail on this, on the timing of the various investments that you're making. Will any of those be significantly cash effective in 2026 in terms of the outflows for the investment and for some of this other restructuring? I know it's over three years, but should we assume those largely come in 2027, 2028, or could some of those come in 2026 as well?

Yes, and Anne-Sophie, correct me, but I think we have one slide in the appendix from the presentation yesterday, which is actually breaking up the Q1 and the Q2 NRIs that we right now have announced. So if we then talk about the Chile that we announced a few weeks ago and then Hungary that we announced earlier this week and then, of course, the North American transactions. that we did announce yesterday that will come into the second quarter. So I think from an NRI perspective, you have it quite detailed there on how much is cash and how much is non-cash. And what we can say is what we are announcing now in Q1 and Q2 essentially will flow out this year because the Andersson factory will close in the third quarter. And Chile will close now, as we speak, in the second quarter. And Hungary will close by the end of the year. So potentially for Hungary, you will pay out partly then exactly at the end of 26 and then a small part maybe at the beginning of 27. But essentially, the large part will come this year from what we have announced.

Just for North America, as we have been saying it, it's $2.4 billion in the second quarter, $1.5 billion being non-cash and $900 million being dedicated mostly to restructuring.

Great.

Thank you very much. Questions on the conference call. We will take the next question from John at Deutsche Bank. And John, if we could ask you, please, only one question. That would be great. Thank you very much.

Yeah, thank you. Just wanted to clarify the accounting treatment on the Fabricare JV. It's a 55% ownership.

uh will you consolidate this or does it go below the line because you're deemed not to have operational control yeah we we will have operational control so we will fully so with the manufacturing jv in anderson we will fully consolidate okay thank you thank you your next question today comes from the line of akash gupta from jp morgan please go ahead

yeah hi i had a follow-up on this five to twenty percent price increase in north america does it cover all of your sales in the region or a part of it thank you it's all our sense in the region thank you thank you your next question one moment please comes from the line of

David S. McGregor from Longbow Research. Please go ahead.

Yeah, thank you for taking the follow-up question. Janek, have you spoken to your big box retail customers in North America and secured their support for this?

Yeah, absolutely. Of course. I mean, customer first. And I think we have been calling all our main customers yesterday afternoon about the strategy we're deploying over there. And let me tell you that, I mean, the feedback was overly positive about what we're putting in place in the region. I've been exchanging myself with the North American team late last night and this morning, and it has been positive. So absolutely, yes, of course, we have been reaching out to each other.

And then just very quickly, do you give up any flooring space in order to accommodate the Madea brand on those sales floors? I didn't get the question.

No, no, for sure not. I mean, our sales forces, as Janicke went into yesterday, they will still be working separately with our customers. And no, for sure not. We rather expect that we will have a broader product portfolio. And if something, we would have the ambition to gain additional floor spots.

Sorry, I didn't get the question, but absolutely. Thanks, Thérèse. I mean, it is very important to underline that we will keep our identity in North America in terms of design, in terms of features, in terms of go-to-market here in the sales and venture. What the sales and venture will be doing is to define the optimal range lineup in North America in food preservation for both media and ourselves. We'll be working together. We'll be leveraging the R&D resources here. But, I mean, our sales force, as I mentioned yesterday, will be separate, and there will be an Electrolux sales force facing VN customers in North America. Okay. Thank you very much.

Thank you. I will now hand the call back to Anne-Sophie Jönsson, Head of Investor Relations.

Thank you very much. So with that, we are going to conclude the Q&A session and this call. I hand over to you for some closing remarks, Janneke.

Thank you very much. Again, difficult first quarter in North America, strong results in the other regions. But more importantly, we have been announcing a series of initiatives which are building the future of Electrax, which are the foot of a well-footed strategy we have been developing in the last month. And we're absolutely convinced that with this new platform, we will be accelerating our growth, improving our profit, and reaching the target we have been communicating in the MCU long-term, which is mid-term, which is 6%. Thank you very much.