EXCLUSIVE: Staff Cuts Tipped At Electrolux As Concern Mounts Over ‘Mountain Of Debt’
Electrolux veteran Mike Putt is set to quit the Company he joined in 1981 with Company insiders tipping the reason is that a major restructuring of the Australian operation will include job cuts.
Putt who is set to go on gardening leave shortly is believed to have told regional management that he would rather retire than implement job cuts at the local subsidiary.
ChannelNews understands that the cuts are part of a major global rationalisation of Electrolux’s business that in Australia includes products under the Electrolux, AEG, Westinghouse, Simpson, Kelvinator, Chef and Dishlex brands.
Some products are manufactured in Australia while others are imported from Europe, China and South-East Asia.
Currently analysts are questioning whether the big appliance maker is carrying too much debt.
Currently Electrolux had A$1.7 Billion of debt, up from A$1.1 Billion a year ago.
They also have $1.1 Billion in cash on their books.
The problem according to analysts is that Electrolux has a “mountain” of pending liabilities.
$8.9 Billion is due within 12 months they also have liabilities of $3.25 Billion due beyond that.
In total liabilities totalling $7.5 Billion more than its cash and near-term receivables, combined.
Analysts claim this is “This is a mountain of leverage relative to its market capitalization of $10.4 Billion.
Simply Wall Street wrote to investors recently claiming ‘It does seem to us that AB Electrolux is a some what risky investment as a result of its debt. That’s not necessarily a bad thing, since leverage can boost returns on equity, but it is something to be aware of”.
Yahoo Finance wrote ‘Although ELUX B’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised.
Though its low liquidity raises concerns over whether current asset management practices are properly implemented”.
Putt was promoted to managing director of Electrolux Home Products, Australia/New Zealand, in 2015 succeeding John Brown who has left the company to pursue other opportunities.
Retailers have been told of the pending exit of Putt with the Company now searching for a new executive to take up the role and execute the cuts that global want.
Recently the local subsidiary celebrated the official 100 year anniversary for Electrolux.
One insider told ChannelNews that job cuts are set to happen at the Australian subsidiary “Putt didn’t want to be the guy making the cuts” they said. Electrolux Australia has not officially commented.