Electrolux has confirmed what the major appliance industry has surmised: Prices will rise again in 2019.
In the company’s third-quarter earnings report, president/CEO Jonas Samuelson said the impact of Trump administration tariffs, higher raw materials costs and lower OEM sales to Sears will lead to additional price hikes from Electrolux in the new year.
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Samuelson didn’t detail the action, which follows “already implemented and announced price increases.”
“Further price increases will be implemented to mitigate cost inflation,” he said in a prepared statement.
The Trump administration imposed a 10 percent tariff on $200 billion of Chinese imports on Sept. 24, and the duties are scheduled to increase to 25 percent on Jan. 1. The government also imposed sharp tariffs on imported steel and aluminum earlier this year.
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Samuelson said the cumulative impact on Electrolux of tariffs, costlier raw materials and unfavorable currency fluctuations will total 3 billion SEK this year.
For the third quarter, ended Sept. 30, net sales rose 5 percent to 30.4 billion SEK, driven largely by prior price increases, while operating income fell 11 percent to 1.8 billion SEK.
In North America, sales fell 3.9 percent to 10 billion SEK including the negative effect of currency fluctuations, and operating income declined 55 percent, to 347 million SEK, due to the trade sanctions and higher materials and transportation costs. Previous price hikes partially offset lower sales of Kenmore products, Electrolux said, but also had “a somewhat negative impact” on unit volume.
Electrolux’s North American majap unit derives about 10 percent of its total revenues from Sears, which is restructuring under Chapter 11, but made “increased provisions” for the bankruptcy, which had a negative non-material impact on earnings.
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The results were set against a backdrop of a 2 percent decline in industrywide demand for major appliances in the U.S. in the third quarter, and a flat market for microwave ovens, ACs and other smaller appliances, the company said.
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