AB Electrolux (publ)

Good morning and welcome to Electrolux Group and the presentation of our Q3 report. I'm Ann-Sofie Jansson and I'm Head of Investor Relations and Sustainability Reporting. I am here in the studio with our CEO, Janik Salle. and our CFO, Therese Seiberg. We will go through the presentation, and after that, we will open up for a Q&A session. For those of you who are viewing on the web, feel free to also enter your questions in the chat, and we will try to make sure we take them in the Q&A session. So very welcome, and with that, I hand over to you, Yannick.

Thank you very much, Anne-Sophie. Good day to all of you. Very glad to be with you for this third quarter result. This quarter can be best characterized as a very strong execution and a resilient performance. I will start with the strong, strategical execution. First, the three joint ventures in North America are operational. We also kept on optimizing our organization by moving more people from the corporate side of the equation to the front line for sales and marketing, and we have been executing in this quarter once again our footprint. We have been closing the factory in Argentina in Rosario. We have been closing the Anderson factory on July 31st, and we have constructive exchanges with the institution in Italy and with our social partners. The markets have been very challenging. I mean, North America has been down by 5%, Europe has been flat, and Brazil has been slowing down with a growth of 2%. But despite these difficult environments, we kept on growing. Our organic growth in the quarter has been 3.5%. We have been also delivering one of the strongest third quarter cash flow in the past year's year. Very strong headwinds from an external side of the equation, but we have been delivering strong cost reduction. We keep on focusing on what we can control, which is execution for our strategical side of the equation and profitable growth. Let me move now through the group results. First, from the transformational side of the equation, as I said previously, we have been executing our footprint with the closure of Anderson on July 31st, the closure of the Rogerio factory in Argentina, and again, constructive discussion in Italy. The markets have been, as I said, flat, down, slightly up in Brazil, but we kept on growing organically at the level of 3.5%, with higher volume in EMEA, APAC, and Latin America, and we have been keeping the price increase we put in place beginning of May in North America. In Europe especially, we're very proud to say that we gained market share in Electrolux and in AEG, targeting the premium price levels we have been in for the last months and years. On the earnings side of the equation, very strong performance from cost reduction side of the equation. We have been delivering 1.4 billion second cost reduction here, mainly coming from product cost reduction. In this quarter, we have been, of course, facing a very significant level of headwinds. I mean, first coming from the tariffs in North America, but not only. I mean, we have been impacting fully by the Middle East countries here, not being protected any longer by hedging. These significant external headwinds will remain in the coming quarters. Moving now to Europe, Middle East, and Africa, and APAC. I mean, we will be closing our factory in Hungary at the year end. We have very good discussion with the trade unions and the institutions in Italy, constructive discussions, which are moving according to plan. The demand in Europe has been very much subdued. We don't see any signal of recovery from the construction market side of the equation, but despite all of that, we kept on growing. We kept on growing with an organic growth of 2.8%. We kept on gaining market share with our premium brands, Electrolux and AEG, keeping the high price index we had built in the last months and years. On the other side of the equation, stable operating income despite, again, a hit we have been getting due to the Middle East conflict with higher logistic costs here and higher raw material costs. If you look at the market evolution, pretty... impactful picture here. Europe has been flat once again. Western Europe has been down by 1%. That's why we're selling 80% of our products and Eastern Europe has been up by 3%, but overall flat. If you compare the volume we did have in the first quarter, 2026, we are 8% down versus Q3 2019 here, which was pre-COVID. If you're taking the volume we delivered in this quarter versus the volume we delivered 10 years ago, in the third quarter 2016, we're 4% down versus what we delivered 10 years ago. So we are back at the level of 2014 in terms of volume in Europe. Consumer confidence has been very low, impacted, of course, by the higher level of inflation we have seen here and the inflation we have been experiencing in Europe. I would like to share with you now a very interesting commercial campaign we have been launching in the UK here. The aim of AEGA is really to be able to offer products which are expressing the identity of every single customer, expressing your taste, your home. Let's watch this video. ¶¶ Now moving to North America, and again, I mean, we're very proud of that. I mean, the three joint ventures are operational as we speak today. The partnership with Midea is moving in a very constructive manner. From a market side of the equation, the market was down 5%. What we see is our volume has been slightly less down than the market. The price increase we have been implementing in the second quarter here, but as we have been communicating, I mean, a quarter ago, we have been impacted by a mix. I mean, purchasing power in North America has been going down, and our customers are orienting themselves to lower price points in the market. In terms of EBIT, I mean, we had, of course, significant external headwinds coming from tariff, raw material, again, through the Middle East impact here, but the price increase had been partly compensating for these very significant external factors. Looking at the market, very depressed market. I mean, consumer confidence in North America is under 10 years low. After a decrease of 10% in the first quarter, a decrease of 3% in the second quarter, the market has been going down once again in North America by 5% in the third quarter, with, again, consumer confidence being very highly impacted by the geopolitical position. That's a nice picture. It's a picture which is illustrating the day one of the different joint ventures. We have been closing Anderson according to plan on July 31st. We have been launching the manufacturing joint venture in Anderson on September 1st. We have been launching the sales joint venture and the manufacturing joint venture of Weiss on October 1st here, and we're still planning. to start production in Anacin with Top Loader at the end of the first half of 2027. So the execution is on plan with Midea with a very constructive cooperation with our partner. Movinging now to Latin America, another strong quarter for Latin America. Again, from the transformation side of the equation, we have been closing the plant in Rosario, Argentina. We have been keeping on extending and reinforcing our direct-to-consumer channel in the region as well. Brazil has been slowing down. Brazil's growth has been at the level of 2% in the third quarter. However, in the region, if you look at our organic growth, we have been growing by 6.6%, gaining market share at the price points we are targeting, aligned with our brand positioning here. From an external factors, of course, I mean, the market is impacted by high interest rates, which is driving a high level of inflation. And again, I mean, the impact we see in terms of raw material and logistic cost. From another side of the equation, we have been delivering on cost efficiency here. We have been recovering, as well, an overpaid tax. from the past years here, and I think these two factors have been more than offsetting a provision we had to make due to the reconstruction of one of the main retailers in Brazil. Movinging to cost reduction, and again, another strong quarter. We have been delivering 1.4 billion in the third quarter in terms of cost reduction, mainly again due to a better engineering of our product, a better sourcing of our components and additional productivity out of our factories. We have been adding here some numbers as well about the optimization we are undergoing in our organization. If you're looking, year to date we have been reducing our staff by more than 2,000 people. Since January 1st, we went from 40,000 people to close to 41,000 people to 39,000 people. And with that, I'm passing it to you guys.

Thank you, Yannick. Startinging then with the sales and the EBIT bridge. As you heard, we did grow by 3.5% in the quarter and we generated an EBIT of 912 million Swedish krona, which was slightly better than last year, with a margin of 2.7% compared to 2.8% last year. And then going through the larger items here, we have a positive impact from the volume, price, and mix, but the main contributor to the result was related to a strong cost efficiency of almost 1.4 billion Swedish krona in the quarter. And this was then offsetting the headwind that we continue to see from external factors, both from the tariffs to in U.S., but also related to the full effect of the Middle East crisis. So overall a quarter with continued strong cost efficiency that is managing to battle continued strong external headwinds. And then taking a look at the non-recurring items we had in the quarter with around 150 million each for both North America and Latin America. And starting with Latin America, this is related to the closure of the plant in Argentina that was mentioned before. And then North America, this was related to that we finally closed the Andersson factory at the end of July. So this was now the second part of the non-recurring item related to the partnership with Midea. And we are now year to date at around 2.1 billion Swedish krona of NRI. And as you heard, we did go live with the sales joint venture and the manufacturing joint venture in Juarez in October. So there will come a third and final portion of this in the fourth quarter. And then operating cash flow, we had a strong operating cash flow in the third quarter of 3.6 billion compared to 0.6 billion last year, which is now taking the year-to-date cash flow after investment to 600 million year-to-date. And what is behind the strong cash flow is an optimization in net operating working capital where we have been optimizing our inventory both going into the quarter but also further during the quarter while at the same time we have been procuring for the sales related to the fourth quarter. And receivables are pretty much flat, which is then still encompassing the growth that we see, but is offset by a positive customer mix in the quarter in terms of payment terms. So with this, we can say that part of the positive effect we usually see from net operating working capital in the fourth quarter, we already have captured now in the third quarter. And then you remember that we disclosed in connection to the second quarter a tariff refund related to the AIPA tariffs paid earlier in the year and also during 2025. And we did now get the full cash payment of around 1 billion Swedish kronor related to this overpaid tariffs in the third quarter. But all in all, it's showing good progress with working capital optimization and focus on capital efficiency. And then I will try to briefly explain the impacts that we see now from the joint venture with Midea. As you heard, we did go live with the manufacturing joint venture in Andersson in September, and therefore we are fully consolidating the impacts of this transaction in our financial statement in the quarter. And how do you see it then in the quarter? You see a controlling interest from Edea of 413 million that you see in equity and change in non-controlling interest in the quarter. And we have received a cash payment related to this of 261 million that you see under divestment and partnership transactions in the cash flow statement. and the remaining part you then see as the receivable in other current assets. And if we then move to the manufacturing joint venture in Juarez that you heard went live on the 1st of October, this has now been reclassified end of the third quarter to assets held for sale and liabilities related to assets held for sale. And then moving into the fourth quarter, we did go live with the sales joint venture. And as you know, this will be fully consolidated in our financial statement. And the stake related to Midea will be part of non-controlling interest in net income. And the manufacturing joint venture in Juarez, where you know we have an ownership of 35%, will be included in results from shares in associates in EBIT. And also as part of this transaction where we sold the 65% stake, we did get the cash payment of this of around 1 billion Swedish krona that you will see in the fourth quarter. And then ending from my part with the balance sheet side where we have a solid liquidity and a good maturity profile. And we have liquidity including revolving credit facilities of 34.7 billion Swedish kronor by the end of September. And as you know, we are aiming at continuing to strengthen our balance sheet and to continue to be a solid investment grade-rated company. And we have a net debt to EDTA of 2.2 at the end of September. And over time, you know that we should come down and stay below two times net debt to EDTA. And with that, I hand back over to Yannick.