Electrolux quarterly loss smaller than feared

Europe’s biggest home appliance maker Electrolux said its second-quarter operating loss would be smaller than feared, helped by a 3% rise in June sales and cost controls.

Shares in the maker of brands such as Frigidaire and Anova rose 6% in early trade on Wednesday after the announcement, to give a year-to-date drop of 8%.

The Swedish rival to US Whirlpool Corp had warned in May of a significant loss in the quarter due to the impact of the coronavirus crisis, after April sales fell 30%.

It said on Tuesday in a preliminary reading it would report a loss of about 100 million crowns (R184m) after the previous year’s 1.22 billion crown (about R2bn) profit, on a 17% drop in sales to 23.5 billion (about R43bn) crowns.

It is due to publish its full quarterly earnings on July 17.

“As restrictions gradually have been lifted, markets primarily in Europe have developed more positively than expected in the latter part of the quarter,” it said in a statement.

“The strong execution on cost mitigation actions, including furloughs for employees in several markets and significantly reduced discretionary spending, has resulted in a more favourable net cost efficiency in the second quarter than previously anticipated,” it said.

JPM analysts said they had estimated a 733 million crown (R1.35bn) loss.

“The materially lower loss points to good cost execution in the quarter and hopefully no more negative surprises on the US factory transition, a feature of past quarters,” they said.

“This quarter however may not give us much information on where margins will settle in the coming periods as demand and costs normalise,” they added in a note.

Citi analyst Martin Wilkie said in a note that quarterly sales beat market expectations by around 5%.