Electrolux Group is stepping up its cost reduction programme to restore margins against a backdrop of continued weak consumer demand and competitive pressures in the market.
The group expects its action to result in net cost savings of SKr10-11 billion (£740-810 million) in 2024 compared with 2022, which will extend the previous cost reduction target of over SKr7bn. The move will lead to a restructuring charge of Skr2bn to SKr2.5bn in the fourth quarter of this year.
The group will also reorganise into three regional business areas and two global product lines, reporting to chief executive and president Jonas Samuelson.
Electrolux Group said it will also increase its focus to grow the mid and premium categories with its main brands in a bid to restore margins and return to profitable growth through accelerated execution of its strategy to deliver “innovative and sustainable digital consumer experiences”. The restructuring is expected to affect around 3,000 positions.
Mr Samuelson said: “We are therefore accelerating structural cost reductions and execution of product cost measures. Hence, the cost reduction target for 2024 vs 2022 is increased to SKr10-11bn, compared to the previous target of over SEK 7bn.
“The new target comprises net cost reductions from Cost efficiency and Investments in innovation and marketing, combined. For 2023 the target is to reach cost reductions of approximately SKr6bn, year-over-year, compared to the previous target of at least SKr5bn.”
Jonas Samuelson
He added: “We remain committed to achieve at least 6% EBIT margin mid-term. In addition to an attractive offering driving commercial growth in targeted areas, a key component to deliver on this under current market conditions will be to continue to annually reduce product cost at a similar rate as during the period 2023-2024. This is enabled by a new, more focused business approach and simplified organisational structure.”
The group said it will be focusing on manufacturing productivity and material cost reduction. The simplified structure will consist of two global product lines, three regional business areas and four global functions, all reporting to the CEO.
