STOCKHOLM, May 7, 2020 /PRNewswire/ -- The comments and figures in this report refer to continuing operations unless otherwise stated
Highlights of the first quarter of 2020
President and CEO Jonas Samuelson's comment
The world is facing an unprecedented health challenge from the coronavirus pandemic and it affects us all, personally and professionally. Our top priority has been to safeguard the health and safety of our employees and ensuring business continuity as household appliances are essential for consumers' daily lives.
In the first quarter of 2020, sales declined by 5% and operating income amounted to SEK 122m. As previously communicated, we continued to experience production constraints and inefficiencies from the U.S. manufacturing consolidation. We started to see the initial significant revenue impact from the pandemic towards the end of the quarter, with an estimated direct impact on operating income in the quarter of approximately SEK -400m. The currency headwind was almost SEK -600m; to a large extent indirectly linked to the coronavirus' impact on the global economy. We have implemented comprehensive actions to mitigate the impact on earnings and cash flow from this exceptional market situation. I am very pleased that we continue to see a favorable effect from mix improvements as well as price increases.
As previously communicated, we expect a material financial impact in 2020, related to the coronavirus situation. For the second quarter in 2020 we expect a significant loss. In April sales were down by approximately 30% but we expect a gradual recovery going forward.
In several of our main markets both demand and production have been severely impacted by the strict countermeasures initiated by local authorities from mid-March, including the closure of industrial activities, retail shops and cross-border transit. In some markets, where physical stores have had to close, we have seen a significant increase in online sales, but not enough to materially offset physical retail decline. We have worked extensively to mitigate the impact from the initial outbreak in China, from where we source significant volumes of finished products and components, resulting in a limited impact in the first quarter.
In light of the sharp demand decline, we have implemented comprehensive mitigation actions. In addition to furloughs for employees affected by reduced activity, these actions include significantly reduced discretionary spending and reprioritizing capital expenditure by deferring and scaling back investments. This means that some of our investments in the re-engineering program will be impacted. For our two strategic U.S. investments; the Anderson refrigeration factory is largely completed, while the Springfield cooking facility will be delayed by up to half a year. We have also strengthened our management processes to monitor our working capital. To further strengthen the liquidity buffer, we have issued new debt and secured an additional credit facility. Given our cash position at the end of March, adding the new borrowings issued in April and our current credit facilities, we have accessible cash and unutilized credit lines of more than SEK 30bn. Finally, we have also received support from our shareholders at the AGM 2020 to withdraw the annual dividend to preserve our balance sheet strength.
At Electrolux, our purpose to shape living for the better also guides us in these difficult times. Supporting society, the Electrolux Food Foundation has made funding available to help people in need. Our people have donated time, products and raw materials to contribute to the healthcare effort.
I am convinced we are taking the necessary steps to address the challenges posed by the coronavirus pandemic and to ensure Electrolux continues to be well-positioned for the future to deliver on our profitable growth strategy. I am grateful for our shareholders' and my colleagues' support through these challenging times.
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, May 7. Jonas Samuelson, President and CEO and Therese Friberg, CFO will comment on the report.
Details for participation by telephone are as follows:
Participants in Sweden: +46-8-566-426-51
Participants in UK/Europe: +44-3333-000-804
Participants in US: +1 631-9131-422
Pin code: 54591041#
Slide presentation for download:
Link to webcast:
https://edge.media-server.com/mmc/p/ni7gcfki
For further information, please contact:
Sophie Arnius
Head of Investor Relations
+46-70-590-80-72
Daniel Frykholm
Electrolux Press Hotline
+46-8-657-65-07
This is information that AB Electrolux is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 0800 CET on May 7, 2020.
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