July 24, 2020
Q2 2020 interim report
Swift actions contributed to break-even EBITA, despite significant sales decline
The global COVID-19 pandemic has had a substantial negative impact on commercial restaurants, hotels and pubs, representing approximately 50% of our sales. Sales to institutions as well as sales in Laundry have also been affected, but to a lesser extent.
Sales in the quarter declined by 40%, however improving throughout the quarter. In June, sales recovered and had a 20% organic decline after the significant 50% drop in April and May. Sales in the beginning of July are in line with the percentage decline registered in June. We interpret this as a sign of recovery.
Sales of Food & Beverage declined by 48% in the quarter, reporting a negative EBITA, while Laundry was more resilient with a sales decline of 22% and a good EBITA-margin of 13.5%.
EBITA for the period came in at break-even. The decline in EBITA is predominantly impacted by the large decline in sales volumes, but also a strong positive one-time-effect from a pension plan settlement in the second quarter of 2019. Short-term savings and improvements from the 2019 restructuring program contributed positively. I am proud of the swift actions taken by the team in this unprecedented time to keep EBITA at break-even and even have a small positive cash flow given the severity of the market decline.
Several actions have been put in place to reduce costs short-term, which only partially compensated for the rapid drop in sales. The cost-saving measures, including some structural savings and government support, have reduced our cost in the quarter by approximately SEK 200m.
In order to be more flexible and to adapt our cost structure, we are reviewing structural cost-saving initiatives. In addition, structural cost-reduction activities have already been implemented in the US and Industrial Operations. The ambition is to define and start to implement new measures during the second half of 2020 that together with the already implemented activities will generate yearly cost savings of SEK 100–150m. The structural measures under review will imply one-off costs which will be communicated later.
Many countries have gradually begun to reopen after the pandemic restrictions. This had a positive effect on our customers, although it is too early to say how fast the continued recovery will be, as the general market uncertainty is still significant. We continue to stay flexible, to rapidly adapt our ways of working and our organization to the changing market dynamics.
The flexibility of our organization has been demonstrated by the release of several new product and service initiatives, for example “Two pairs of eyes” which makes it possible for service technicians to provide remote support with augmented reality, but also new products within hygiene and clean.
I am particularly proud of how our employees have continued to show commitment, perseverance and flexibility during this unprecedented crisis. This is a demonstration that we will continue to stand strong also in the future.
Alberto Zanata, President and CEO
March 23, 2020
On March 23, 2020 Electrolux Professional was separated from AB Electrolux and listed as a separate company on NASDAQ Stockholm. Having spent most of my professional career in AB Electrolux, I am proud and happy to have been given the opportunity to represent Electrolux Professional in its new role as a stand-alone company. Without doubt, the long-standing heritage and experience we bring with us from the AB Electrolux will be of great benefit to us.
Electrolux Professional is one of the leading global providers of food service, beverage and laundry solutions, serving a wide range of customers globally, from restaurants and hotels to healthcare, education and other service facilities. Our solutions meet the need for high-performing, reliable equipment, with significant aftermarket requirements over the equipment’ lifecycle and for customers focused on productivity and total cost of ownership. The Electrolux Professional brand will continue to be our main brand. We aim to stay at the forefront, offering unique, innovative solutions that help our customers to be successful.
Several global trends favor the growth of our business. The increase in out-of-home spending, especially in emerging markets, means people are spending more money on dining out and less time a on household chores such as laundry. Many businesses are broadening their offerings and are becoming multi-function assets, for example, coffee shops offering food and laundromats offering coffee and food.
At the same time, the importance of sustainability is growing significantly. In addition to general awareness of the climate and our environment, ergonomic and sustainable solutions save money for our customers. This is an area where we can be truly valuable to our customers. Our new, innovative products are efficient and ergonomic, saving time, waste, energy, detergent and decreasing sick leave. The foundations for Electrolux Professional’s future growth are in place and we are ready to seize the opportunities!
The spin-off will enable Electrolux Professional to successfully realize our strategies under the leadership of a separate management team, with our own Board of Directors and independent access to capital. Electrolux Professional and the Electrolux Group have different end markets, customers and drivers for success and, as separate companies, both are better positioned to meet the varied drivers and challenges in our respective end markets.
Although we are experiencing challenging times with the global impact of the coronavirus, it is with a lot of energy and passion that we are starting the exciting journey to develop Electrolux Professional’s business as an independent company.
A warmly welcome to Electrolux Professional!
President and CEO