By Scott Kanowski
Investing.com — Shares of Electrolux AB (ST:) fell early in European trading on Monday after the Swedish home appliance maker warned that revenue would tumble in the third quarter.
The company cited an “accelerated” slowdown in market demand for basic devices in Europe and the United States so far in the three-month period, due to the impact of high inflation. on purchases of durable consumer goods and low customer confidence.
“[T]Group earnings in the third quarter are expected to decline significantly compared to the second quarter of 2022, also excluding the one-time cost of exiting the Russian market,” Electrolux said in a statement on Monday.
The company’s North American operations, in particular, are expected to fall to an operating loss, outpacing a decline in the prior three-month period. This weakness had previously caused the expanded group to post a lower-than-expected operating profit of 560 million Swedish kronor in the United States.
Ricardo Cons, credited with leading a transformation of Electrolux’s Latin American division over the past six years, has also been tapped to lead a turnaround effort in North America.
Meanwhile, the company said it would continue a group-wide cost-cutting program, primarily in its North American and European operations, where market demand is expected to remain depressed for the remainder of 2023. Electrolux emphasized the need to eliminate “inefficiencies” in production.
“Measures include increasing the productivity of operations as well as optimizing the R&D portfolio, administration, sales and marketing activities,” Electrolux said.
More information on its cost reduction targets will be disclosed in the group’s third quarter interim report published on October 28.
Elsewhere, Electrolux said it had no plans to make any additional share buybacks before its 2023 annual general meeting.