Electrolux cuts market outlook after Q1 profit beat

·2-min read
FILE PHOTO: The Electrolux logo is seen during the IFA Electronics show in Berlin, Germany

By Anna Ringstrom

STOCKHOLM (Reuters) -Electrolux posted a smaller-than-expected drop in profits but downgraded its 2022 outlook for a market beset by political and inflationary pressures, supply chain woes and uncertainty around the COVID-19 pandemic.

Operating profit at Europe's biggest home appliances maker fell to 1.58 billion crowns ($161 million) in the first quarter from a year-earlier 2.30 billion due mainly to lower sales volumes. Analysts polled by Refinitiv had on average forecast a 962 million crown profit.

The Swedish group warned in January of persisting supply chain woes.

It said on Friday it had passed on significantly higher raw material and logistics costs to customers in the first quarter, and that it planned to raise prices further in the second.

"In the increasingly inflationary environment, price increases are now more accepted in the market. For the full year, we remain confident that price will fully offset cost inflation, as it has done for the past four years," CEO Jonas Samuelsson said.

The white goods maker said it expected supply chain constraints to start improving sequentially from mid-2022.

"We estimate that the second quarter will be as challenging as the first quarter, with significant risks of disruptions relating to the resurgence of the coronavirus in China," Samuelsson said in a statement.

Electrolux said visibility for the rest of the year was limited and lowered its market outlook for Europe to negative from neutral due to lower consumer confidence, and its guidance for North America to neutral from positive due to supply constraints.

U.S. rival Whirlpool earlier this week said it would pass on higher raw material costs to customers after it reported lower sales and profits.

Electrolux said it had re-started limited sales and production in Ukraine during the second half of April, after it paused its operations in Russia, Ukraine and Belarus at the start of the invasion, which Russia calls a "special military operation".

($1 = 9.8098 Swedish crowns)

(Reporting by Anna Ringstrom; editing by Niklas Pollard and John Stonestreet)