Published by Global Banking and Finance Review
Posted on April 29, 2025
STOCKHOLM (Reuters) -Shares in appliances maker Electrolux plunged after it lowered its North America market outlook on Tuesday and missed first-quarter profit expectations, saying U.S. President Trump's import tariff plans hit consumer sentiment.
The Swedish company said that although overall market demand was largely unchanged in North America and Europe in the first quarter, increased economic uncertainty and concerns around U.S. trade policy developments meant shoppers held on tighter to their wallets.
"Consumers shifted to lower price points," Electrolux said, adding that shoppers also postponed purchases of discretionary goods and that the demand outlook for home appliances was becoming increasingly uncertain in the second quarter.
"On the back of this, we have adjusted our market outlook for North America for the full year 2025 compared to 2024 from 'Neutral' to 'Neutral to negative'," Yannick Fierling, CEO since January, said in a statement.
Electrolux said it now sees a "significantly negative" effect on the company this year from external factors, which include trade tariffs. Its previous forecast, from January, was for a "negative" effect.
Shares in the group were down 14% at 1132 GMT, taking a year-to-date fall to 31%.
The group, whose brands include Frigidaire, AEG, Zanussi and Volta as well as Electrolux, said it aimed to offset higher tariff related costs with price increases to customers.
Fierling told Reuters that Electrolux has raised prices enough to compensate for current tariff levels, and that any further hikes this year would depend on further tariff announcements. Cost cuts also help make up for tariffs, he said.
"For us producers, it is extremely difficult to anticipate where tariffs will be landing," he said in an interview, adding that his teams were working hard on being ready to react quickly to any new tariffs.
The trade war launched by Donald Trump has raised fears of a recession, with looming 145% tariffs on most Chinese goods threatening to upend supply chains and a whole range of industries.
Electrolux produces most of its goods sold in North America in North America, with most raw materials also sourced locally. However, it imports some components and products from China.
Fierling said the company is considering moving that sourcing elsewhere, mentioning other Asian countries and Turkey as possible alternatives.
Electrolux swung to an operating profit of 452 million crowns ($467 million) in the first quarter from a year-earlier 720 million loss on sales growth before currency translation effects of 8%.
Analysts polled by LSEG had on average forecast a profit of 610 million crowns.
Electrolux said higher sales volumes and cost cuts lifted earnings, while currency effects and a slightly negative price impact weighed. Changes in U.S. tariffs had a minor impact.
The rival to China's Midea and U.S. Whirlpool repeated outlooks for neutral demand levels this year in its Europe and Asia-Pacific markets as well as in Latin America.
($1 = 9.6259 Swedish crowns)
(Reporting by Anna Ringstrom, editing by Stine Jacobsen, David Evans and Susan Fenton)
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