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Electrolux sees extra U.S. costs hitting fourth quarter earnings 2019

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Electrolux AB said in December 2019 that its North American business would profit more than $ 70 million in the fourth quarter, in part due to the additional costs associated with its move to a new South Carolina business.

The company is investing about $ 250 million in new product platforms at a new facility in Anderson, South Carolina. The plant will replace production in St. Cloud, Minnesota, and production at another plant in Anderson.

“The transition to a new venture led to temporary capacity constraints that affected shipments for some customers in the fourth quarter,” Electrolux said.

A company that previously forecast a negative impact of $ 25 million. U.S. fourth-quarter earnings from the plant’s plan, said it expects Anderson’s capacity limits to be phased out in the first half of 2020.

It says that the projected impact of $ 70 million. The United States also includes the effects of previous quarterly accounting adjustments and stock reduction for a US customer.

Electrolux said its new investment program and rationalization measures should have provided annual savings of about 3.5 billion kroons ($ 364 million) with full efficiency since 2024. But he reduced the forecast for 2020 to 200 million crowns from 800 million crowns.

Citigroup analysts say that stocks will have a negative impact on earnings forecasts for 2020, although long-term savings will be confirmed by 2024.

Electrolux said it will launch two of its plants in Anderson in parallel in the second half of 2020 to meet market demand.