Swedish home appliances maker Electrolux yesterday said that it will not be able to meet its forecast for 2008 and will cut costs, including more than 3,000 jobs globally as demand for consumer electronics goods decline.
Demand for appliances in Europe and North America declined considerably in the two last weeks of November and the weak market has had a negative impact on Electrolux sales volumes and product mix during the fourth quarter.
The company said that it is no longer possible to achieve the outlook of an operating income in 2008 due to these negative developments for the fourth quarter.
Electrolux says that throughout 2008 it has introduced a number of cost-saving measures, including reduction of the number of employees due to the negative development on the main markets and will intensify it cost-saving activities.
The Stockholm based company which employs 57,000 staff worldwide had launched a series of measures to reduce the number of employees by more than 3,000 in the fourth quarter of 2008 and said that it will continue in 2009.
The company will take one time severance cost of approximately SEK 1.2 billion, and will be charged against operating income before items affecting comparability in the fourth quarter of 2008.
The savings are expected to amount to approximately SEK 1.1 billion on a yearly basis, with full effect as of 2010.
Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners and cookers sold under brands such as Electrolux, AEG-Electrolux, Eureka and Frigidaire and its main competitors are Whirlpool and General Electric.
In addition to these activities, Electrolux will continue to move its plants to low-cost countries like Mexico and China in accordance with the restructuring program launched in 2004. The program, which will be completed in 2009 and 2010, will further reduce the number of employees.
Most of the job losses in the past has occurred in Australia, Denmark, the US, while it has shut plants in Germany and Spain and it has opened new ones in low cost countries like Mexico, Poland, China, Thailand, Hungary and Russia.
Last week, Sony announced that it will shut down six factories, limit investments and cut 8,000 jobs globally, as a result of global recession leading to decline in consumer spending.