Earnings Call: Q3 2026

Oct 28, 2026

Summary

Q3 organic growth reached 3.4% across segments and regions, while profitability improved even excluding tariff refunds. Cash generation exceeded SEK 400m and leverage returned to 1x; rising costs and cautious demand remain watchpoints.

Good morning, and welcome to Electrolux Professional Group third quarter result presentation. My name is Jacob Broberg. I am heading up investor relations and corporate communication. As before, I have Paolo Schira, our President and CEO, with me, and also Fabio Zarpellon, our CFO. As always, we start with you, Paolo. Please go ahead. Thank you, Jacob, and good morning, good afternoon, everybody. Happy to present the quarter three results. It has been a good quarter for Electrolux Professional, because both the reported segment are presenting a growth, as well as the different geographies are showing organic growth. The number is 3.4%, and it is supported by price, volume, and customer care development. So, positive start for this quarter. Profitability has improved as well to 12.6%, and it is fair to mention that we had a tariff refund during the quarter of SEK 26 million. Even removing the refund from U.S. for the tariffs, the baseline profitability has been improving in the quarter. So it is positive. Cash flow returned to the historical high level, so compared to prior year quarter three, cash is slightly higher. Even more important, the comparison with the quarter two, where actually there is a material improvement. Thanks to the good cash generation, we can see that our leverage net debt on the EBITDA is returned back to one, which is positive. This is also remarkable considering that during the year, we had some cash out related to the efficiency program, as well as beginning of the year, we did an acquisition. So historical strength of the cash flow for Electrolux Professional is confirmed. Looking at the quarter, the quarter three, we have seen a bit of acceleration towards September, that has been a very good month. Overall for the group, the order intake is up. Looking now at the geographies, and I mentioned earlier, this is a positive situation we have seen in quarter three because the three macro regions, Europe, Americas, and APAC-MEA, has been delivering growth with different dynamics. In Europe, the main driver has been Food & Beverage. In Americas, main driver, Laundry. In APAC-MEA, actually both of the reported segment had a positive evolution. Now let me give you a quick perspective on the two reported segments, starting for the Food & Beverage and then moving to Laundry. So Food & Beverage, organic growth 2.3%. Different dynamics between the regions. Europe continue with the several month good trajectory of growth. Whereas Americas still has a little bit of difficulty in the quarter. Having said so, we do see actually a decrease of the decline in quarter three, especially in September. In terms of dynamics within the American market, we do see the institutional, the general market doing fairly well for us, is in the chains where we had a little bit of missing roll-outs in the quarter. The activity level is on a good level. APAC-MEA reported a very good growth of 8%. I think you recall in the previous quarter, I mentioned that we had some postponed deliveries from quarter 2, so a part of this growth you see, the 8% on APAC-MEA, is due to actually the postponed deliveries. A part of it is actually genuine new orders we have taken. The order intake is fairly flat or slightly positive. The margins improved organically. In specific case of Food & Beverage, the impact on U.S. refund for tariffs has been SEK 17 million. We go to Laundry. A very good quarter for Laundry, with strong evolution on profitable growth. So organic growth, robust at 5.2%, and margins on 18.1%. Growth delivered significantly from North America. For full transparency, last year in quarter 3, we had a relatively weaker quarter because of anticipation to the tariffs impact, so we had the good orders and deliveries in quarter 2. By even removing this effect, I would say America's performance has been very positive. APAC-MEA, very positive. A little bit softer on the Europe side due to central and northern Europe, but if I were to take a longer horizon than the quarter, I would say Europe has been, this year, delivering fairly well. Order intake positive in Laundry across the different territories. Profitability, as I mentioned, has been developing well. Also in the case of Laundry, we had a tariff refund, in this case, roughly SEK 9 million. But also here, same reasoning as for the other reported segment, the baseline profitability has been improving. In a few minutes, I will give you some color, but also noticeable to mention that we launched now recently the first part of the range of Generation 7000, the new range of laundry machines. I think having said so, is a good time to give the word to our CFO, Fabio, to give us a bit more details on the numbers. Thank you, Paolo, and good morning, good afternoon to everybody. Paolo went through the business dynamic in Q3. I will first give you some more insight into our P&L development. Just to do some order on the table, let me remind everybody that last year, quarter 3 was affected by SEK 235 million restructuring cost, impacting gross margin SEK 133 million, and SEK 102 million in SG&A. That is the reason why the comparison on reported figures is somehow misleading as is, but I will develop on it in a second. EBITA margin last year without items affecting comparability was 11.6%. A few words then to dig into the figures. In the quarter, we had a positive contribution from currency translation, both on top line and somehow minor on the bottom line, but the margin as such was not influenced. In the quarter, as Paolo anticipated, we improved the margin, and the EBITA margin expansion was driven by a gross margin expansion that you see reached 36.1% versus like-for-like, excluding items affecting comparability of 34.8% of last year. This margin expansion was a combination of different factors. The tariffs that Paolo mentioned, we had also in the quarter, positive currency transactional effect of roughly 10 million SEK. At the same time, we faced important increase in input cost, in particular on transportation cost that affected significantly the cost in the quarter. Direct material had some negative effect, not really material so far in the quarter, but more is expected to start hitting our P&L already in quarter four. On the positive side, positive impact from volume growth, price sticking and contributing to offset the inflationary item. Last but not least, the contribution as expected of the restructuring program implementation. Restructuring program that is proceeding according to plan. We have already commented the closure of the coffee facility and the move of the production in the existing facility in France. The move of production from Sursee down to Italy is proceeding according to plan, and overall this plan is confirming the yearly positive contribution, 85 million SEK on a full year basis. To give you a flavor, the contribution in the quarter was in an area of roughly 25 million SEK. Finance cost continued while development was lower than last year due to both a combination of lower borrowing, but also a more and more competitive funding structure. The tax rate had a peak in the quarter was approximately 30%, that is higher than the historical average, and this is mainly due a country mix. We generated more profit in more high tax countries, but also in United States, we had a negative influence in term of state mix. EPS, as a consequence on the stronger EBIT performance and the lower funding cost increased to 0.74 SEK per share. Cash flow, as you have seen, we are returning to solid cash generation. The cash generated in the quarter was over 400 million SEK, despite the cash out that we had for the structuring program in area of 35 million SEK, and the continued investment that we are doing in particular in the product development side. Operating working capital ended up over 17% at the end of the quarter, is higher than the level it was last year, the same period. I would say two major ingredients behind this development. One is higher receivable. This is mainly related to a country mix. Majority of the growth in the quarter happened in the Mediterranean area as well as in U.S. for Laundry that are, let me say, the country where structurally we have the longer payment term. So it's a country mix, no tension, no highlights in term of quality of the receivable that remains absolutely at good level. The second piece is related to inventories, and this is because of decision we have taken. We have taken decision to close a couple operation, as you know, and this has created temporary increase of inventory as well as some additional inventory due to phasing and phase out of new product. The Compact Power that Paolo mentioned earlier is one example of it. These are more internal factor, our decision. At the same time, if you remember, we already reported in the previous couple of calls, we were sitting on higher than normal finished good inventory because of customer postponing deliveries. We start to see a decrease of the impact of this item, but being this a rolling 12 months indicator, it still suffer from the pile up of inventory that were booked due to customer postponement. When it comes to our financial position, it remained pretty strong. We are now at one in term of ratio net debt on EBITDA. It is lower than September last year, in line with December. Along this journey, I believe a lot happened in the sense that we have been running acquisition, have a significant payout related to the restructuring program. We pay dividend, and we continue to finance our organic growth. I would say remarkable improvement, and we are entering Q4, definitely with a pretty strong balance sheet. With that, back to you, Paolo. Thank you, Fabio. As mentioned earlier, I am very keen to share some news about the product development, the launches we have been taking in these weeks. What you see here in the picture is the first part of our Generation 7000 launch that started now in October and will continue during next year. We are very excited about this launch. This is behind the major product innovation pathway we took as a company with big investments. Now, the first range is the small chassis below 10-kilo machines. We are very happy because it is like a new category in the industry. Typically, small machine in the industry are derived from consumer machines because of the capacity, but performance are somehow compromised. We are the first one to introduce in the market in this part, the sub-10 kilo, actually a fully professional 40,000-cycle machines who can deliver speed, ultimate energy efficiency, chemical and water savings. Really cool. With the next slide, I can mention that we start launching it during last week in Milan. There has been a specific Laundry show happening every four years, a big show, one of the three big shows we have globally in the professional Laundry industry. The reaction we got on this product, as well as many other innovation we had at the booth has been really, really remarkable. I saw many of the dealers commenting, "You nailed it at Electrolux Professional. This is what we need to thrive in this complex environment. We also took the chance to launch what you probably remember from quarter 2 information, the R+vive, this completely circular remanufactured units. We are the first in our industry to come with a remanufactured unit in a professional line, so not done in small bits and pieces. Also there, the reaction from different customers have been very positive. Overall, I left the show on Sunday with a lot of energy coming from the customer and the distribution. We are working on the right priority and trajectory here. Probably good to summarize, Jacob, on what has been the quarter 3 for us. Overall, a positive quarter. I think to see organic growth in the reported segment as well as in all geographies is comforting. With or without the tariffs refund, we deliver better profitability, which is as well a good thing. Clearly, a priority remains from myself and the team to make the turnaround on our U.S. Food & Beverage business. We do see a little bit of decrease or the decline in the activity level, and being frequently to U.S., I can confirm it firsthand is on a good level. So expected to see improvement soon. Clearly, tariffs as well as efficiency program help us in our profitability, but even removing the tariff, as I said, profitability has been improved. Exciting activities coming from the new products and more to come in next year. As Fabio mentioned, I think historically strength of this group is cash flow and the balance sheet, and I think we have proven again in quarter 3 that we are on this strength continuously. I just want to conclude with one slide, then leaving back the word to you, Jacob, just to remind what we somehow tackle in quarter 2 call. That's a little bit my approach as a new CEO. I think we have a super long legacy and history, more than 120 years in our spaces with a lot of innovation. I think we want to become a more disciplined and focused player to make tougher choices. The overall mantra we are taking internally in the company is really doing fewer things, but with a different degree of execution and capability. That's really narrowing down to the few essential things and really secure outstanding execution. It is really the top priority of the management team and clearly myself. What does it mean in practice? We have defined core categories, the areas where we want to double R&D investment over time, and secure we can really become the clear undisputed leader on those categories. As well as moving more people from the back end to the front end, so securing once we have the best product in the market, that we are able to give this value to the customers. The last point is about making and leveraging much better our customer care, our installed base. We have 100,000 of assets or machines out there, and I think there is a lot of opportunity for us to use it in a more intentional way and to grow the weight of customer care for our overall business. We are, I think, working in this trajectory, and we hope to show quarter by quarter the progress in that respect. Jacob, I think it is back to you. Thank you, Paolo. Thank you, Fabio. With that, we open up for questions. Operator, please go ahead. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. Our first question comes from Gustav Hagéus from SEB. Please go ahead. Thank you, operator. Good morning, guys. Thanks for taking my questions. If I start with a little bit of a broader question then, to you, Paolo, doing less things better is what I gather from main priority going forward now. Do you have already now a rough sketch of Number of SKUs perhaps that you offer today compared to what you would think is a more optimal composition a few years into the future, just to get a sense of how big you intend to skew the strategy in that sense. Thanks. First and foremost, welcome back, Gustav. We are all very happy to have you back here. On your question, I will try to articulate probably in a few lines the reasoning. First, our approach is to be disproportionately focused on fewer categories, and to name them and spell them clearly is about the overall cooking line, the overall Laundry, and the cold beverage. The first level of simplification for us is to secure, we dedicate R&D dollars and salespeople bandwidth disproportionately to these categories. That is the first part that we see on simplification. All the rest, if it is making good money, we are happy to take it. If it does not make good money, we want to be more intentional in either make a turnaround or then take a stronger decision on the assortment and other things. That is the first level of discipline focus we want to establish in the organization. The second level is, you are right, is to reduce the number of variants, the SKUs. I think we have matured over the years, and clearly in some areas like Laundry, we are more advanced. Whenever there is high level of modularization, and in Generation 7000, I think we are reaching really automotive-level modularization, actually, the SKUs is not so much the point. It is more on the components, what we call the PNCs, the unique article number inside. There we are working very hard to simplify because I think over the years, Electrolux Professional grew complexity disproportionately, and there is enormous value to make it. Back on the SKU question, Gustav, I think more than for our cost and our complexity, I think it is helping also customer choices. Historically in our industry, the catalogs given to customers were thick, very thick, thousand of pages, and I think in modern business, it is way too much complexity for customer. We need to guide on what is the right product for them. Clearly also in the way we present SKUs, we call it part of our commercial and marketing excellence, we will take more stringent action to make it simpler for everybody. Okay. Thank you, and thanks for those warm words. On the customer care then, that has been a focus of also the previous management to sort of grow that share. What do you intend to do differently as compared to history to accelerate that growth? Secondly, I do not see any comments on the OnE strategy, and maybe I missed something here, but is that sort of a strategy of the past that you try to move away from? If you could elaborate a bit on that would be helpful. Thanks. Sure. Let me tackle both questions one after the other. First one on customer care, it is true, has been high in our agenda for a while. Now what we are trying to do is we spell out internally what we call the two commitments. One of them is called monetize, the first one actually, monetize the installed base. We are planning to be more intentional, to be more clear on how we make it happen, and to stage the action by the different businesses in more consequent way. Probably the short answer, Gustav, would be we try to be much more practical, pragmatic, spending time on the how, and securing investment follows the ambitions. It will take a bit of time, of course, but I am confident if you look at many successful industrial companies, that is the strength. It adds profitable growth, creates moats to new entrants, so it just makes a lot of sense. More intentional, I would say the short answer. On the second part, and it is a very important topic you are lifting, Gustav, on the One concept. Here our approach is shifting a little bit. Historically we said we want to be the single point of contact for our customers. Now, if you take from IT industry analogies, we try to be the best of suite, so what Microsoft or other big companies are doing today. You want to encircle the customer with everything. Now, this is very successful in some areas and is mostly linked to the capability of fulfillment. If you are strong in an area, I take South Europe for our case, and you can really provide this peace of mind to the customer, you actually win and you take market share. The point is not everywhere in the planet we are able to fulfill and deliver this promise seamlessly. What we took with management as a cautious decision is to keep this One concept wherever we have fulfillment capabilities, where we are strong, but then to bring in many other areas a much more focused and stronger approach. Again, from the IT world, we call it best of breed approach. We want to be way more intentional in some areas where we want to play and then secure that on the categories we selected, like cooking or laundry, we disproportionately invest and then ultimately grow. I hope it is a pretty articulated reasoning behind. I hope, Gustav, I gave you the executive summary answer. Sure, and maybe a discussion to take more in depth in the future. Can I squeeze one last question in, more of a housekeeping question? The higher corporate costs, I think they were up 12 million year-over-year, and also the strategic initiatives relating to the production consolidation that are hitting Q3 outside of the adjusted numbers. Are these costs likely to carry into Q4 and next year, or how isolated should we view them in our models for Q3? Thanks. Gustav, Fabio speaking. When it comes to the moving cost, we had an impact in Q3. There will be a tail also in Q4. I do not expect any major cost hitting our P&L in 2027. When it comes to the group common cost increase, we had a peak somehow in Q3. I consider it as a peak somehow, and it is related to some special project that we are running a group level, and we are being accounted in the group common cost. Sorry, just because you think group common cost should trend down sequentially, is that how it works? This is how I see it in comparison with last year. It will remain pretty much on the same level last year beside any inflationary item. Appreciate that. Thanks for taking all my questions. Thanks. Before opening up for more question, I have a question from the web, from Stefan Stjernholm at Handelsbanken. He is asking about R&D cost as percent of sales. How has it developed sequentially in Q3 and Q2, and what to expect in Q4 and going into 2027? So that was the first question. The second question is, Q3 organic growth up 3%. Are there any support from volumes or only price? Do you expect price to support even more sequentially in Q4? Maybe I can take these two question. Eventually, Paolo, you complement as required. Let me elaborate around R&D cost first. In 2025, as you remember, we have reached somehow the peak of our R&D cost, both in absolute term but also in term of weight of sales. If you remember, we were closer to 5% effort on sales. We were anticipating that 2025 was really the peak, and we were expecting a reduction already this year. In Q2, if you remember, we reported that in the Food & Beverage segment, we started to see a decrease in term of R&D costing absolute term and weight on sales. Now in Q3, we have been enjoying also a decrease also in the Laundry segment in relation also to sales. Just to reflect around the R&D cost, and I connect myself with what Paolo mentioned a few seconds ago. We will continue to invest in R&D. Innovation is key to bring product innovation and solution innovation in the market. Connectivity and the investment in electronic are taking more and more importance into our investment in R&D. But the discipline that Paolo mentioned start to apply also in R&D. We are really double down the investment on the core categories and taking really a super discipline approach on the rest. On the second part of the question regarding price and volume contribution. In quarter 3, the overall growth was driven both by price and volumes development. Price across the different geography and customer segment, being able to compensate the inflationary items we have been faced, from the salary to the transportation cost. And volumes contributed significantly definitely in Europe and in the Laundry business. Going forward, moving into quarter 4, I expect still a positive contribution from volumes. We have a somehow more tough comparable for Europe, where last year in quarter 4, we had really outstanding performances. But the other geography should somehow balance it. Price execution is continuing. We were anticipating the increase of, for example, the transportation cost, and we have activated price surcharges, or we have been anticipated the price increase. So looking into quarter 4 with pricing being able to continue to compensate the inflationary items. Thank you, Fabio. With that, we open up for questions from the operator again. Thank you, sir. The next question comes from Emanuel Jansson from Danske Bank. Please go ahead. Good morning, and thank you for taking my questions. Just looking at the sales momentum, you mentioned that trading improved towards September, and you sound quite upbeat on volume growth in Q4. Has the momentum continued into October, particularly in order intake, and has the improvement been broad based, or how should we view it? The way we see it, the market has continued to be on the flattish side, and we do see some of the customers tending to procrastinate a little bit longer, but the demand and the discussion remains on the positive side. You are correct. We closed the quarter with higher order intake, specifically in Laundry, more flat on the Food & Beverage. I think there is a lot about us in being able then to convert the good discussion, the order coming into invoicing and sales in quarter four. I think we have this cautiously optimistic view on how we move forward. There is a lot about us in the capability to execute and deliver. Perfect. Thank you. That is clear. Looking at the working capital, how much of the inventory build should unwind in Q4 versus remain into 2027? In addition to that, how much restructuring cash outflow is still outstanding after the 35 million SEK paid in Q3? One by one. Inventory, we are continuing to work on cleaning up the book stock, and I expect a positive contribution in term of inventory reduction at the end of quarter four compared to the level we are at today. When it comes to the cash out regarding the restructuring program, the tail that we have in term of cash out is in roughly 50 million-60 million SEK. I expect that most of it to happen in quarter four. There will be a tail into 2027 first part, but will be somehow minor in term of cash impact for the overall group. Perfect. Thank you. That is very clear. Jumping to the efficiency program, correct me if I am wrong, but I think it is now year to date, it is roughly SEK 70 million in savings. You have a target of SEK 85 million to pull your expectation, that implies roughly SEK 50 million in Q4 versus the SEK 25 million we experienced in Q3. Is that simply a cautious assumption, or is there any reason for the lower quarterly contributions, or could it potentially exceed expectations here? First, so far, year to date, the contribution is roughly SEK 65 million in term of cost out related to the execution of the program. The yearly guidance is around SEK 85 million. We confirm it. I will be happy to report a better outcome if and when it comes in January. Perfect. That is clear. Looking at the tariffs refunds, are there further claims outstanding that could generate additional refunds in Q4? There is a tail mainly related to interest request or refund, but we talk about a few million SEK. Still positive but minor in the greater picture of the performance of this group. Perfect. That is clear. Last question from my side, jumping to the new Laundry platform and new products. The initial dealer feedback sounds encouraging for sure, but how much of the opportunity is replacement of existing products versus entering new customer segments? When should we think that this new launch could contribute meaningfully to top line? You are correct. Good reaction so far. We just started. I believe this year will be optimistic to expect very material impact from this line. A part of this business, as you properly said, will replace our old generation of products. Then obviously with our commercial team, we are very keen to expand to new customer groups and new distributors and new markets. The journey started, and I am really keen to see then the results coming in 2027. Sounds promising. Well, I think that was all my questions for now. Thank you, Paolo, Fabio, and Jacob. Thank you for now. As a reminder, if you wish to register for a question, please press star followed by one. Our next question comes from Igor Tubic from DNB Carnegie. Please go ahead. Thank you. And hi, team. I just want to clarify the 35 million in the restructuring program. Did that impact the P&L or only the cash flow? You mean the 35- In the quarter. The 35 million cash out was referring to the cash flow only. The program, just to summarize the number I mentioned. In the cash flow of 400 million SEK we generate in the quarter included and absorbed 35 million SEK cash out for payment related to the execution of the program. And this is the cash out related to the program. I also mentioned the positive impact in term of cost reduction into the quarter related to the execution of the program in the area of 25 million SEK for quarter three. So two numbers, 35 million SEK, the cash out related to the execution, 25 million SEK, the benefit in the P&L. Great. Thank you. Very clear. I also want to clarify in terms of, you mentioned that the raw material crisis will hit you in Q4. I just want to clarify also there that do you expect the price increases to offset that as well, or do you see any impact from that on a gross margin level? As I anticipated earlier, first, we expect raw material to start negative impact at the cost base, yes, already in quarter four. At the same time as anticipated, we have taken proactively actions to compensate not only the incoming direct material increase, but also the transportation cost, activating already in quarter three price surcharges or whenever it was possible, anticipate the price increase than normally we start executing at the beginning of the year. So proactiveness is super important to compensate this factor. History has been showing that this group with a super disciplined pricing execution has been able to compensate on a yearly basis all the inflationary cost increase. You may have also going forward some delta in individual quarter, but I would say structurally we have a pretty strong and disciplined execution on pricing. Okay, thank you. Very clear. A final one on the Food & Beverage in Americas, which was down, I think 4%, right? Organically this quarter. Looking at Q4 last year, would you say that the comparables are. From what base level are you coming from, so to say? You are correct. As I mentioned earlier, I think on the general market institution part, we have been doing okay. It is on the chains, and chains is really related to rollouts. So the level of activities being observed now in the market is good simply from the customer side because of the inflationary item, the geopolitics, and whatever. I think there is a little bit more wait and see approach, but I think our strong will is really to secure with our commercial team that we bring in some of these businesses in quarter four. So very difficult to project, but there is a strong focus for us. U.S. is a big market, and I think working as we are doing now in the right sequence of things, I believe we will see a good turnaround moving forward. Very clear. Thank you very much. That was all from me. Thank you, Igor. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to you, gentlemen, for any closing remarks. Thank you very much for joining us this morning. With that, we say thank you and goodbye, and speak to you next time. Thank you. Bye.