• Revenue Growth: Sales increased overall, with significant organic growth in the Laundry segment.
• Margin Improvement: Margin improved by close to 2 percentage points, driven by strong performance in Laundry and Food & Beverage in the US and Europe.
• EBITA Margin: Increased from 10% to 12% in Q4, with a full-year increase from 11% to 11.6%.
• Cash Flow: Strong operating cash flow over SEK 500 million in Q4, with a full-year cash generation of over SEK 1.5 billion.
• R&D Investment: R&D costs were around 5% of net sales.
• Order Intake: Positive order intake in both segments, with growth in North America and Laundry.
• EPS: Increased to SEK 0.75 per share, up 27% compared to last year.
• Geographical Sales Distribution: Europe below 60%, Americas at 25%, and Asia Pac at 17% of sales.
• Debt Ratio: Net debt to EBITDA at 1.4 times.

• Warning! GuruFocus has detected 4 Warning Sign with ECTXF.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Electrolux Professional AB (ECTXF) reported a substantial margin improvement of close to 2 percentage points, driven by strong performances in Laundry and Food & Beverage in the US.
• The company achieved strong cash flow during the quarter, despite increased investments in CapEx and R&D.
• Order intake was positive across both segments, indicating strong future demand.
• The Laundry segment showed significant growth, particularly in North America, outperforming market trends.
• Electrolux Professional AB (ECTXF) was recognized among the 500 best companies for sustainable growth, highlighting its leadership in sustainability and environmental impact.

Negative Points

• Food and Beverage segment in Europe experienced an organic decline, particularly in Central North Europe and the Middle East and Africa.
• The company faced challenges in the Middle East and Africa markets, with ongoing uncertainty affecting performance.
• Despite overall growth, the Food and Beverage segment's growth was primarily driven by acquired businesses rather than organic growth.
• Higher tax rates impacted the quarter's financial results, with a tax rate of approximately 30% due to one-off tax costs.
• Increased CapEx is expected to continue, which may affect cash generation despite strong current cash flow.

Q & A Highlights

Q: Could you provide insight into the visibility and confidence level for positive growth in the US Food and Beverage sector for 2025? A: Alberto Zaanto, CEO: The order intake is higher than a year ago, and the pipeline of chains remains strong. Many tests have turned into business, and the order intake is good, indicating positive visibility for North America.

Q: How do you see the market conditions in Europe, particularly with the weaker performance in Northern and Central Europe? A: Alberto Zaanto, CEO: The semi-professional refrigerator phase-out is complete, so it won't impact 2025. The market remains soft in Central and Nordic Europe, while the Mediterranean area benefits from tourism. Middle East uncertainty persists, but there are positive signals in Africa and Saudi Arabia.

Q: Can you explain the strong growth in US Laundry, and are there any concerns about pre-buys or stock building due to tariffs? A: Alberto Zaanto, CEO: The growth is due to strong market performance and partnership dynamics, not pre-buys for tariffs. We are gaining market share, but the 35% growth rate is not expected to be a run rate.

Q: What is the strategy regarding the phase-out of low-margin products in Europe, and will this continue? A: Alberto Zaanto, CEO: The phase-out of drip coffee and semi-professional refrigeration is complete. We continuously improve our product portfolio to focus on high-margin products, with new launches like the undercounter dishwasher.

Q: What are the expectations for CapEx and its allocation towards growth investments? A: Fabio Zarpellon, CFO: CapEx is expected to be around 3% of sales, focusing on product development and operational preparation for new product launches. This supports sustainable profitable growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.