Stockholm, Sweden – Electrolux will take a $70m hit to operating profit in Q4 2019, after plant re-jigs and restocking hits sales.
The company is investing $250m a new refrigerator and freezer plant in Anderson, South Carolina, when complete the new factory will replace production at St Cloud, Minnesota, an adjacent plant in Anderson.
In a profit warning, Electrolux said it has already closed the St Cloud plant. This has increased delivery times to customers in North America and increased costs.
At the same time, one of its wholesale customers is destocking, and the company is making accounting adjustments from earlier periods in its fourth quarter results. The company expects operating income in the fourth quarter of 2019 to be $70m less than the fourth quarter of 20198.
The company said it plans to run both of the plants at Anderson into the second half of 2020 to ensure a steady supply of products. This will push the costs savings from closing the older plant in Anderson into the 2021 financial year, Electrolux said.
Electrolux expects to reduce its costs by SEK 3.5bn ($ 373m ) by 2024. The amount it will save in 2020 has fallen dramatically from SEK 800m to SEK 200m as a result of the changes in North America. 'Re-engineering measures in Latin America and global streamlining measures are progressing well,' the company said.
Fourth quarter 2019 financial results are due to be published at the end of January 2020.
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