Electrolux braces for more disruptions from global supply chain squeeze By Reuters

STOCKHOLM (Reuters) -Europe’s biggest home appliances maker, Electrolux, reported profits above pre-pandemic levels on Tuesday but saw its shares slump 9% after it warned of further component supply problems in coming months.

The Swedish company reported an operating profit of 1.98 billion crowns ($227.6 million) for the second quarter, versus a loss of 62 million a year earlier. In the second quarter of 2019, operating profit was 1.62 billion crowns.

The rebound came on the back of a 39% sales increase as consumers kept spending more on home improvement during the pandemic.

However, irregular deliveries of mainly electronic components due to a global supply chain squeeze hampered production, and the profit lagged analysts’ expectations.

“The global supply challenges experienced in the first half are expected to have a higher impact in the second half of the year,” Chief Executive Jonas Samuelson said in a statement.

“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,” he said, adding that the situation was likely to remain uncertain for an extended period of time.

The news sent shares in the Swedish company down by 9% by 0900 GMT, reducing a year-to-date rise to 13% .

The rival to Whirlpool said that in the second quarter it had fully offset higher costs for raw materials, electronic components and logistics through price increases to customers, and that it expected to manage to do so for the full year as well.

It reiterated that it expects demand to start normalising in the second half, albeit with significant regional variances driven by pandemic developments and government stimulus programmes.

Late on Monday Electrolux said it was raising its dividend policy to around 50% of annual income from at least 30% and proposed to distribute 17 crowns per share this year through a share redemption. It also said it planned to buy back more shares over time.

($1 = 8.6991 Swedish crowns)