Electrolux swings to profit but warns of more component shortage trouble

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Europe’s biggest home appliances maker reported a lower-than-expected operating profit of 1.98 billion crowns ($227.6 million) for the second quarter, versus a loss of 62 million a year earlier. In the second quarter of 2019, operating profit was 1.62 billion crowns.

The rebound came on the back of a 39% sales increase as consumers kept spending more on home improvement during the pandemic.

Irregular deliveries of electronic components however hampered production efficiency, and the profit lagged the 2.13 billion crowns expected by analysts polled by Refinitiv.

Shares in the Swedish company were down 8% in early trade.

“The global supply challenges experienced in the first half are expected to have a higher impact in the second half of the year,” Chief Executive Jonas Samuelson said in a statement.

The European rival to Whirlpool (NYSE:WHR) said it had in the quarter managed to fully offset higher costs for raw materials, electronic components and logistics through price increases to customers, and that it expected to do so for the full year as well.

It reiterated that it expects demand to start normalising in the second half, albeit with significant regional variances driven by pandemic developments and government stimulus programmes.

Late on Monday Electrolux said it was raising its dividend policy to around 50% of annual income from at least 30% and proposed to distribute 17 crowns per share this year through a share redemption. It also said it planned to buy back more shares over time.

($1 = 8.6991 Swedish crowns)