AB Electrolux (publ)

Welcome to the presentation of Electrolux Group's second course of results 2026. I'm Ann-Sofie Anton, Head of Investor Relations and Sustainability Reporting. Today we're running a webcast and a phone conference simultaneously, and you will hear us, but not see us as you typically do, as we have to postpone the report date from the original date of the 17th until today as a result of the completion of the rights issue at the end of June. We will open up for Q&A of the presentation. With me today, I have Yannick Stannan, our CEO, and Therese Brébet, our CFO. So now I hand over to you, Yannick.

Thank you, Anne-Sophie, and again, very warm welcome to all of you for this second quarter presentation 2026. This quarter is marking a very important milestone for the electrical group. At the beginning of December last year, we presented an overarching strategic direction for Electrolux. This included a top priority to improve our business in North America. In this quarter, we announced an important step for the transformation of the region, a strategic partnership with Midea for food preservation and fabric care business. This partnership is introducing a new operational model for parts of the business and will be a major contributor to improve performance in the future. We also announced global organizational efficiency and footprint initiatives and successfully completed a right issue of about 9 billion Swedish kronor. This strengthened our balance sheet and took us one step closer to our ambition to have a leverage of about twice EBITDA. Let's think now about you two. Organic sales grew, earnings and cash grew improved. Our market position in Europe continued to strengthen and our position in Brazil remained strong. We made price increases of about 5% to 20%, depending on product category in North America, to offset the cost impact from the extended Section 232 tariffs. This we did in a market that continues to decline in the quarter. We estimated the cost pressure from tariffs will remain in North America in the coming quarters. Next slide, please. Let me turn to our development in the quarter. Organic sales growth was positive driven by higher volume despite continued competitive market conditions across most regions. In EMEA APAC, organic sales grew 4.5%, supported by higher volumes and a favorable product mix. While pricing remained under pressure, our ELECFLEX and AEG brands continued to gain both value and volume share. strengthening our position in the market that remains broadly flat and characterized by cautious consumer demand. In Latin America, organic sales also increased by 4.5%, driven primarily by higher volumes in Brazil. This more than offset negative price developments and an unfathomable miss during the quarter. In North America, our organic sales declined by 2.9%, reflecting lower U.S. market demand and achieved lower product response. At the same time, we successfully implemented price increases across product categories, with pricing developing positively during the quarter. Finally, our aftermarket business continued to grow slightly, providing additional support to group sales. Overall, The quarter demonstrated our ability to drive volume growth and gain market share in key markets while continuing to navigate a challenging and highly competitive environment. EBIT excluding non-recurring items improved compared to last year, with stronger performance in both EMEA-EPAC and Latin America. In these regions, earnings benefited primarily from higher volumes and continued progress on our cost efficiency initiatives. Across the group, cost efficiency contributed approximately to 1.4 billion SEK to operating income, demonstrating that the actions we have been taking to improve competitiveness are delivering tangible results. In North America, profitability remained under pressure. Lower sales volumes, an unfavorable mix and increased U.S. tariff costs negatively impacted earnings during the quarter. We implemented price increases across categories, which helped offset part of the tariff-related cost inflation, but not all of it. It is important to note that tariff costs will have a greater impact in the third quarter, as Q2 only reflected a partial quarter of its costs. At the same time, second quarter results in North America benefited from approved HIPAA tariff refund claims, and a positive effect from a decision to reshape the traditional retiree group health plan in the U.S. External factors negatively impacted the group during the quarter, driven primarily by tariffs as well as the consequences of the conflict in the Middle East regions, which increased logistic and raw material costs. As previously communicated, operating income included negative non-recurring items of 2.2 billion SEC mainly related to the strategic partnership with MIDEA in North America and our ongoing footprint and organizational optimization initiatives. Overall, while external conditions remain challenging, we continue to improve our underlying earnings supporting our own disciplined execution and sustained performance improvements. Next slide please. In Europe, Market demand was broadly stable across both Western and Eastern Europe during the quarter. However, consumer sentiment remained weak, reflecting geopolitical uncertainty, inflationary pressures and elevated interest rates. Demand for built-in kitchen products continued at a low level and was primarily replacement-driven. In Asia-Pacific, consumer demand was largely unchanged year-over-year. while competitive intensity remained high across the region. We saw continued market share gains for AEG and Electrolux brands. EMEA and EPA delivered organic sales growth of 4.5% in the quarter, driven by a higher volume and a slightly fiberable mix. Recently launched products continue to support our market position, particularly in higher value categories such as built-in kitchen products. While competitive pricing pressure remained intense, resulting in a negative price impact, we continued to strengthen our price position. We improved EBIT, excluding R&I, in the quarter. For cost efficiency improvements, we are the main earning drivers, supporting the purchasing savings and value engineering initiatives. Higher volume and slightly positive mix also contributed positively. These gains were partly offset by negative price developments due to continued competitive pressure. External factors remained a headwind, primarily reflecting higher raw material, logistics, and labor costs, including impacts related to the Middle East conflict. As previously announced, operating income included a restructuring charge of about 4.6 billion Swedish kronors relative to the planned closure of the refrigeration factory in Hungary. Also note that in the second quarter 2025, operating income, excluding R&I, included a positive effect from the divestment of Kelvin Aper trademark portfolio in India of about 180 million SEC.

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