Swedish home appliance maker Electrolux said on Tuesday it would be hiking prices as costs for raw materials have risen and that it expects a shortage of electronics components to worsen.
The company, like many other manufacturers, has seen their production hobbled by a global shortage of semiconductors that are key elements in a range of electronics and appliances.
The company, like many other manufacturers, has seen their production hobbled by a global shortage of semiconductors that are key elements in a range of electronics and appliances
“The market for electronic components is expected to be somewhat more constrained in the third quarter and, hence, we anticipate challenges to fully meet the market’s product mix requirements,” CEO Jonas Samuelson was quoted as saying in a statement accompanying quarterly results. The impact will be greater in the rest of the year than it was in the first half, he added.
Samuelson said Electrolux had navigated the constrained supply situation well so far thanks to the efforts of its suppliers and staff, and pointed to a 16 per cent increase in like-for-like sales from the second quarter in 2019.
Net sales, at 30.3 billion kronor (€3.5bn), were down by 4.4 per cent, but operating profit was up 22.5 per cent to 2.0 billion kronor. Net profit came in 1.4 billion kronor, which was below the analyst consensus of roughly 1.5 billion, calculated by Factset and Bloomberg, but up by more than a fifth from 2019.
Samuelson warned, however, of increased pressure on margins “as costs for raw materials, electronic components and logistics are increasing further”. The company now estimates the negative impact of increased raw material costs, tariffs and labour cost inflation at up to 3.5 billion kronor in 2021, up from an earlier forecast of up to 2.8 billion.
Samuelson said Electrolux had announced and had started implementing additional price increases in response. He added that market demand, which has been doped by stimulus measures in some regions, is expected to begin to return to normal moving forward.