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Stockholm – Appliance maker Electrolux has reduced its forecast for North American sales growth, its largest market, after higher US steel tariffs forced to raise prices.
Growth expected in North America from 0% to 2% in 2018, below its previous growth forecast of 2% -3%, while also lowering its outlook for small Latin American and Australian markets.
Jonas Samuelson, CEO Electrolux had raised prices in North America by 2% after US tariffs had inflated local steel prices and it would further increase prices to offset any additional inflation due to trade conflict.
market as a whole and we are going through this as an industry, and ourselves, as a price increase, and this is having a negative effect on demand, "said Samuelson." Electrolux, which is competing with Whirlpool, LG Electronics and Haier Group, estimates that the negative effect of the commodity price trend would be about 1.8 billion Swedish crowns (203 million dollars) in 2018 , at the top
Impact of steel tariffs
Samuelson told badysts that the impact of steel tariffs was accounted for in the indications and that Electrolux would also have an impact of $ 10 million or more on its net cost savings in 2018 from a second batch of rates imposed in July
since it's been held the highest position two years ago, Samuelson's focused on improving the a profitability of Electrolux. steel and aluminum import duties, as well as plastics fees, in 2018 challenged his plan with unanticipated costs.
The United States is also considering tariffs on additional property worth $ 200 billion. Electrolux is unaware that Electrolux would consider reducing discretionary spending in areas such as marketing to offset some cost inflation and rethink its capital investment in North America. "We are committed to ensuring that our manufacturing footprint is competitive in North America and is the primary source of our products, but the scale, scale and form of our investments [there] are affected by these prices."
Shares of Electrolux fell 1% to 200 Swedish kroner on Wednesday. This marked a reversal earlier in the day, when equities rose up to 5% after Electrolux reported quarterly results slightly better than expected thanks to cost controls.
Reuters
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