Electrolux shares plunged nearly 24% following the appliance maker's announcement of an unexpected first-quarter loss. The company cited a sharp decline in U.S. demand as the primary reason for its financial downturn.
The Swedish firm reported an operating loss of 266 million Swedish crowns ($29 million) for January-March, a stark contrast to the profit reported in the same period last year. Analysts had anticipated a profit. Sales in North America, a key market accounting for a third of group sales, decreased by 12%, contributing to a 0.5% global sales decline.
In response to these challenges, Electrolux is undertaking significant restructuring. This includes a tie-up with Chinese rival Midea in refrigeration and laundry products manufacturing and a $1 billion rights issue to fund the partnership and other measures. The company also announced plans to cut 3,000 jobs.
Electrolux has lowered its full-year North America market outlook to "negative" due to persistently weak U.S. demand. The announced rights issue, reportedly over half of the company's market value, is expected to impact shares in the short term, though some analysts view the Midea partnership as a positive long-term development.