Electrolux Profits Plunge 29% After 500 Jobs Cut In OZ
Shares in the Company fell over the weekend.
This year Electrolux who achieved a 4.9% increase in sales and an 8.9% increase in North American sales has been slashing costs and shifting production to emerging markets in an effort to reduce their overall operating costs, their Orange NSW factory which employed 500 people was the latest to feel the impact of the cuts due to a 2% decline in European sales, the Asia Pacific region of which Australia makes up a large share represents 8% of global sales.
During the past 12 months Electrolux Australia has slashed their headcount from 1756 to 1573 employees.
“Our European operations continued to be affected by challenging market conditions, especially in Southern Europe, having a negative impact on volumes and earnings,” Chief Executive Keith McLoughlin said in a statement.
“In response to the current market situation in Europe, we have initiated a new overhead reduction program to adapt the group’s cost structure.
It saw European demand for appliances declining 1-2 percent in 2013.
Electrolux makes 1,300 fridges and freezers daily at the Orange NSW plant for both their own brand and other brands including Westinghouse and Kelvinator. The plant currently contributes more than $70 million to the local economy each year.
The managing director of Electrolux Home Products Australia and New Zealand, John Brown, says the plant will continue to make large family-sized fridges and chest freezers until mid to late 2015.
In a statement issued on Friday Electrolux management said it will eliminate 2,000 jobs globally from plant cuts after reporting third-quarter earnings below analysts’ estimates.
The Company that also makes AEG vacuum cleaners said that they are looking for annual savings of about $284 million from plant closures.
In response to the cuts at Orange in NSW and other plants in Europe Chief Executive Officer Keith McLoughlin said “We expect these actions to have a positive impact on our cost position and contribute to our margins”.
Electrolux said the recent cuts are “the next phase” of a manufacturing footprint program initiated in 2011 to improve cost competitiveness. There is no guarantee that other plants in Australia will not be cut in the future.
Revenue for the North America segment rose 8 percent to $1.3 billion, driven by double-digit sales growth in cooking and refrigeration, and solid gains in the company’s dishwasher business, a spokesperson reported.
In particular, strong sales of French door bottom-mount refrigerators helped Electrolux outpace industry growth in refrigeration, the company said.
During the quarter the manufacturer introduced new induction cooking and dishwasher products in the under the Electrolux and Frigidaire brands.