Electrolux AB Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Akash Gupta - JPMorgan Cazenove Limited - Analyst : And my one question is on the business outlook for 2025. So on one side, you guide for a volume price mix as neutral. And on the ride, you're guiding for negative headwinds from currencies. In the past, when we had currency headwinds, you were raising prices to offset that. So just wondering what has changed this time around and why if we add both currencies and volume price mix, then basically, it reads like more negative than neutral?

Question: Martin Wilkie - Citi - Analyst : Apologies, I was on mute. Sorry, yes, it's Martin from Citi. The question I had was on your cost footprint in North America. So it looks like a lot of overtime to deliver the demand strength in Q4. How should we think about that as we go into next year when that plant is perhaps gets more efficient in terms of the shift patterns and new capacity and so forth? And just to clarify, is the benefit from that included in your cost saving number? Or would that be incremental when we think about that normalizing?

Question: Johan Eliason - Kepler Cheuvreux (Sweden) - Analyst : (spoken in foreign language) Johan Eliason, Kepler Cheuvreux. Was wondering a little bit about the dealer situation in your different geographies. Would you say that the inventories are at high low or average levels in -- yes, the three regions basically.

Question: Johan Eliason - Kepler Cheuvreux (Sweden) - Analyst : In all geographies, you would say?

Question: Gustav Hageus - SEB Equities - Analyst : A bit curious on -- I appreciate that you're rather new to your position, but it would be very interesting to get some color on, if you already now have identified any strategic agenda that you're looking to tweak compared to the previous -- your predecessor. I note that in your comment, you write that you look forward to leveraging -- global scale and innovation and mix. Is that still your that your belief that flex is benefiting from this global scale? There also has been some debate historically that maybe US has not been big enough or Electric has not been big enough in the US to be profitable longer term there. So a bit curious on your initial thoughts on the structure of the company and strategy and so forth.

Question: Gustav Hageus - SEB Equities - Analyst : And are we looking -- should we look forward to sort of a more in-depth view of your strategy? Or will you call the market for introducing sort of the way forward under your leadership going forward at some stage? Or sort of what's --

Question: James Moore - Redburn Atlantic - Analyst : Good luck with the role. I wondered if I could ask one overarching question. And then just a clarification as a follow-up. Over the last 25 years, if we strip out professional from the old days, the business used to be a 4%, 5% adjusted EBIT margin business for a long time, broadly. As you say, the industry has been through quite a lot recently. And we've been closer to sort of breakeven for a period with challenges in the US. Do you -- after everything that you've seen in the first few months, see that the path to getting above 4% is credible with some line of sight and would you care to put a time frame as to whether it's a one-, two-, three- or four-year event to get there? And my clarification question is just really on the price comment and the negative comment when your large US peer is guiding to nearly a point of positive price, channel checks in the US suggest that you guys and others are putting list price rises through. And you talk about a positive price in Latin America to deal with the significant currency. Is there a chance that you've been conservative on that? And -- or is there some other aspect that I'm not factoring in on the price guidance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, ELUXb.ST - Q4 2024 Electrolux AB Earnings Call

Question: Timothy Lee - Barclays - Analyst : My one question will go to the Latin America market, basically Brazil. So we still have a very strong development or organic sales growth numbers in the past quarters. But for your outlook statement, you're kind of seeing neutral for the overall market. So does that mean we will start to see the organic growth to normalize over the next couple of quarters, given that we have already got the high base since the fourth quarter 2023. How you see developments in the region will look like? And given that we are seeing some more competitors going into the market, especially the Chinese players building new factories here? How do you see the market development in terms of competitive landscape?

Question: Uma Samlin - BofA Global Research (UK) - Analyst : So my question is a follow-up actually from James' question earlier on your margins. But if we perhaps some into North America. In Q4, we have already seen some improvement in volumes. It seems like your production efficiencies is more back to a more normalized level. But then if you look at the margin, still at, I would say, the lower end of what we have seen in the past five, six years. So what are your path in North America to increase your margins to sort of the target that you have like around 6%? Is there any sort of more color you can give us on that? That would be really helpful.

Question: Uma Samlin - BofA Global Research (UK) - Analyst : Just because you mentioned tariffs, it will be great if you could elaborate on the impact that you expect the tariffs will have on you and the market in general.

Question: Akash Gupta - JPMorgan Cazenove Limited - Analyst : So I have a few housekeeping questions. The first one is on North America where you had SEK185 million positive earnings impact from divestment of legacy asbestos exposure. Does this mean that the underlying operating income, excluding this positive impact was SEK140 million negative?

Question: Akash Gupta - JPMorgan Cazenove Limited - Analyst : And the second one -- okay. And the second one I have is on investments in consumer experience innovation and marketing. So last year, I think we had roughly EUR600 million -- SEK600 million investment in total. When we look at 2025, shall we expect these investments to increase or stay at this level? Or like any indication on where the investments will land?

Question: Bjorn Enarson - Danske Markets - Analyst : Talk a little bit about the stability. And you mentioned stability earlier also in the last many years, we have seen a very high volatility quarter to quarter. Is it and possibility to talk a little about are we returning to normal kind of seasonality in 2025? Or are there anything we should think about when looking at the different quarters for 2025?

Question: Ebba Bjorklid - DNB Markets - Analyst : The question is regarding your market share expectations for next year, given that you have a neutral outlook on the overall market demand and also your volume price mix, it would be interesting to hear her geographical base what your expectations are and also what you see in terms of the competitive landscape? Is that increasing in terms of intensification?

Question: Johan Eliason - Kepler Cheuvreux (Sweden) - Analyst : Yes. Thank you for taking a follow-up here. I was curious, I mean, we will see what's said and written about Trump's tariffs less than right, but I also understand you've had some successes with your own antidumping petition on refrigerators into North America, which sort of is taking effect as we speak. Don't you see anything positive specifically for you coming out of this specific product category or with the sort of price competition remain on that specific product.

Question: Johan Eliason - Kepler Cheuvreux (Sweden) - Analyst : And how do you think that will impact the pricing in the market?

Question: James Moore - Redburn Atlantic - Analyst : Yes. Thanks for the follow-up. I've got a couple, if I could. I understand that we don't know what the tariffs will look like. And I'm just trying to think sensitivity for different scenarios. And I think you have said that China about 20% of your US COGS or North American cost of goods sold. And I wondered if you could just help with Mexico. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, ELUXb.ST - Q4 2024 Electrolux AB Earnings Call I struggle there because if I look at your FX transaction flow, it looks to be of the magnitude of 7%. But when I look at the headcount where you've got something like 4,000 people maybe versus 6,000 or 7,000 in the US. You could argue for it being as high as 40%. Obviously, there's the cost differential. I understand that. But would it be fair to say that the Mexico cost base is of a similar magnitude as a share of US COGS to that of China. That's really the first question. Maybe I can come back on a second.

Question: James Moore - Redburn Atlantic - Analyst : Okay. Maybe in terms of Europe, where we saw a terrible collapse in starts and construction activity in Scandinavia, which I think from history, that was often quite a profitable market in the built-in segment. Do you think there is a scenario in which we see the built-in market, which is a higher-margin category coming back now that starts rising above 50% at the moment.

Question: Timothy Lee - Barclays - Analyst : Just a quick follow-up question. Can I have an update on your disposal plan, your divestment plan for your non-core assets? So what would be your targets right now, in terms of divestment?

Question: Uma Samlin - BofA Global Research (UK) - Analyst : So my follow-up is on the -- your dividend plan. So over the past year, your cash generation has improved and the net debt-to-EBITDA ratio has also improved. What would be your sort of conditions or criterias to perhaps resume dividend payout going forward?