Electrolux to Cut Overhead
STOCKHOLM-Electrolux said it will seek to reduce overhead costs in all of its regions, with savings amounting to about $98 million on a yearly basis.
The company said it has already begun to reduce staffing levels in all regions, and that these efforts will continue in the beginning of 2012. In the fourth quarter, the overhead reduction will bring a non-recurring charge of about $91 million against operating income. The annual savings are about $26 million more than previously estimated, while the charges against operating income are about $19 million higher than a prior estimate.
This morning's statement followed announcements of an overall cost-saving program from Electrolux at its Capital Markets Day, which the company hosted here on Nov. 15. Management said this program, which involves overall operational efficiencies, would save Electrolux about $733 million on an annual basis.
Electrolux said the 2011 fiscal year has included reduced sales volume in household appliances (which in North America are expected to be 25 percent less than in their peak year of 2005, and in Europe 15 percent less than in their peak year of 2006), along with a hit on its earnings resulting from increased costs for raw materials. For the third quarter, the company's operating income fell 80 percent on a sales decrease of 2.6 percent.