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The
Swedish company, in a statement released on Sunday, forecast a
$70 million earnings hit in the quarter, partly due to a slower
than expected startup of its new automated refrigerator and
freezer plant in Anderson, South Carolina, which has hit
deliveries and entailed extra costs.
"The transition to the new facility has resulted in temporary
capacity constraints impacting deliveries to some customers in
the fourth quarter," Electrolux said.
The new plant will replace manufacturing at St Cloud, Minnesota
and at another facility in Anderson.
Electrolux shares were down 12% by 0942 GMT on Monday, after
rising 34% since the start of 2019 partly boosted by the
expected benefits of the shift to the new factory.
"This is a setback for Electrolux, which was previously
confident that this material factory transition would be more
successful than prior big moves that had resulted in significant
issues over the past 20 years," JP Morgan said in a research
note.
Electrolux, which is investing about $250 million in the new
Anderson plant, said it will now run its two Anderson facilities
in parallel into the second half of next year to meet market
demand and ensure a continued high product quality.
"This is a temporary setback and I am confident that the
measures we are taking to strengthen our competitiveness in
North America are the right ones," Chief Executive Jonas
Samuelson told a conference call.
The company said its investment program and streamlining
measures were still on track to generate about 3.5 billion
crowns ($364 million) of annual cost savings, with full effect
from 2024. But it slashed the forecast for 2020 to 200 million
crowns from 800 million crowns.
Electrolux, which previously forecast a negative impact of $25
million on fourth quarter earnings from the move to the new
factory, said it expected the capacity constraints in Anderson
to be gradually resolved in the first half of 2020.
It said the $70 million impact now foreseen also included
effects from accounting adjustments from previous quarters and a
reduction in inventory by a large U.S. customer.
(Reporting by Johannes Hellstrom in Stockholm and Shubham Kalia
in Bengaluru; Editing by Edmund Blair and Susan Fenton)
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