Price pressure makes minor dent in Electrolux Professional’s UK profits but turnover soars 13%

Northcote, located in Blackburn. Electrolux photography case study. Picture by Shaun Fellows / Shine Pix

Sales of foodservice equipment at Electrolux Professional’s UK division rose a healthy 13% to £20.5m last year, but price pressures in the wake of Brexit left a small dent in the company’s operating profits.

The solid growth in revenue, which represents an increase of £2.5m on the £18m it booked in 2015, was revealed in the firm’s accounts for the year to 31 December 2016, which were filed with Companies House this week.

The only disappointment for the brand was that it couldn’t match the previous year’s operating profit of £2.2m, instead notching up a figure £1.8m as a result of the squeeze on equipment prices. Operating margin slipped from 12.3% to 9.1% year-on-year in the process.

However, as the graph further down shows, the foodservice business is twice as profitable on an operating level as it was five years ago.

The growth in sales of cooking, refrigeration and warewashing equipment was the primary factor in Electrolux Professional’s overall UK turnover rising 6% to £33m.

The other part of its business, covering the laundry market, suffered a 3.5% drop in revenue, however it’s important to note that this was driven by a significant one-off project in 2015. The laundry arm saw its operating profit decrease from £2.1m to £1.3m.

Overall operating profit, including foodservice and laundry, reached £3.1m compared with £4.3m the year before, but net assets increased 16% to £17.9m.

Electrolux sales

In his review of the business, company director Fabio Zarpellon said: “The foodservice business has seen considerable growth from a week comparator in 2015. This, coupled with an innovative approach to secure increased share in key product categories has driven the 13.4% turnover growth. The operating margin decline reflects price pressures in both food and laundry businesses.”

Mr Zapellon said that Electrolux’s high rates of innovation and widespread service network were important competitive advantages and said developments in product design and sustainability, the latter sold using the Green Spirit label, were strengthening the brand.

“The business continues with the strategy to deliver profitable growth through product innovation, operational excellence and to be the industry leader in offering sustainable products,” he stated.

Electrolux operating profit

With regards to future developments, Mr Zarpellon said there would be a focus on launching new products and services in 2017 to drive “profitable growth”, particularly efficient, easy-to-use products that consume less energy, water and consumables.

Electrolux Professional’s UK division, which has no debt, said the outlook on price risk for the market following the weakening of the pound against the euro remained “uncertain” but it would closely monitor the situation.

Currency volatility following the June vote last year led to higher buying prices across the market, which were partially passed onto customers.

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