Electrolux warns on profits as rising inflation hits demand for appliances

Electrolux has warned that demand for its appliances has fallen in the US and Europe because of high inflation and low consumer confidence.

In a profit warning on Monday, the consumer electronics group said that market demand in the third quarter was “estimated to have decreased at a significantly accelerated pace” compared with the preceding three-month period. The Swedish company added that the problem had been exacerbated by high levels of inventory at retailers.

Electrolux said that third-quarter earnings would decline significantly compared with the second quarter.

In response to falling demand the group promised to cut costs, saying that its plan would “focus on reducing variable costs, with special attention to eliminating cost inefficiencies in our supply chain and production”. It has also launched a turnround plan in the US, where it has appointed a new head of business.

“The group cost reduction programme and the North American turnround programme are expected to result in a material positive earnings contribution from both cost efficiency and investments in innovation and marketing in 2023,” it said in a statement.

The shares dropped 2.4 per cent in early trading on Monday.