Electrolux reports strong Q2 growth but warns of supply chain uncertainty

Consumer electronics giant Electrolux has announced sales growth of almost 40% in the quarter to June and has returned to profit after 2020’s Q2 loss.

Sales in Q2 this year grew to SKr30.3 billion (£2.56bn) from SKr23.47bn in 2020. And while that quarter in 2020 recorded a loss of SKr62m, this year the company was back in the black with an operating profit of SKr1.98bn

President and chief executive Jonas Samuelson (pictured) said of the results: “A year ago, restrictions relating to the coronavirus pandemic resulted in significant volume drops, which we partly mitigated through temporary cost actions. Compared with second quarter of 2019, organic sales growth was 16.4%.

“Strong demand together with global supply shortages, especially of electronic components, continued to be successfully addressed through my colleagues’ hard work and tight collaboration with our suppliers. However, production efficiency and demand mix matching were negatively impacted by irregular deliveries.”

Looking ahead, Samuelson added: “The market for electronic components is expected to be somewhat more constrained in the third quarter and, hence, we anticipate challenges to fully meet the market’s product mix requirements. We continue to have a close dialogue with our suppliers to mitigate these supply challenges, as we expect the situation to remain uncertain for an extended period of time.”

Referring to the rise in the cost of raw materials, he did however warn of price increases in the pipeline: “We continue to fully offset the headwind from external factors, electronic components and logistics through price and we expect that to be the case for the full year as well. We have announced and started implementing additional price increases, taking effect gradually throughout the rest of the year. This as costs for raw materials, electronic components and logistics are increasing further, resulting in increased pressure on cost efficiency and external cost factors.”

Samuelson said that Electrolux expected demand to normalise during the second half of 2021 with some regional variances, but he warned that supply issue might get worse as the year progresses: “The global supply challenges experienced in the first half are expected to have a higher impact in the second half of the year.”

He added that Electrolux expected to maintain its full-year outlook but added that “visibility remains limited due to the ongoing pandemic”.

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