Electrolux 2Q Seen Boosted by Continued Home-Improvement Demand — Earnings Preview

By Dominic Chopping

STOCKHOLM–Electrolux AB is scheduled to report results for the second quarter on Tuesday. Here’s what you need to know:
NET PROFIT FORECAST: Analysts polled by FactSet expect the company to report a net profit of 1.55 billion Swedish kronor ($178.3 million), from a loss of SEK141 million in the same period last year.

SALES FORECAST: Analysts expect sales to rise to SEK29.19 billion on the year, from SEK23.48 billion.
WHAT TO WATCH:
MARGINS: Kepler Cheuvreux expects the second quarter to be another strong quarter with earnings before interest and tax of SEK2.36 billion and a margin of 7.5%, meaning the margin in 2021 will be a record high of 7.0%, the bank says. Electrolux said in April it had seen strong demand as customers continued to spend more on home improvements and that it expected the trend to continue in throughout the first half of the year.
RAW-MATERIAL DRAG: Steel prices have continued to rise, but are largely hedged, Kepler Cheuvreux says. However, if steel prices remain at these levels, cost inflation for 2022 will require further price increases, which could be difficult in a normalized market next year after Covid, the bank adds. “As a result, the revenue risk has increased.”
Electrolux has guided for a negative impact from raw material costs, trade tariffs, currency and labor cost inflation of SEK2.4 billion-SEK2.8 billion in 2021 and previously said that price increases would fully offset the headwind from these external factors in 2021.
COMPONENT SHORTAGES: Eyes will be on the current status of its supply chain after previously cautioning that capacity and electronic component availability will remain constraining factors into the second half.
GUIDANCE: The company has said it expects 2021 market demand for appliances to be positive in all of its markets except Latin America, where it anticipates demand to be neutral.
Write to Dominic Chopping at [email protected]