Electrolux B Stock

Welcome to the presentation of Electrolux Group's Second Quarter Result 2026. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability reporting. .

Today, we are running a webcast and a fun conference simultaneously, and you will hear us but not see us, as you typically do, as we had to postpone the forces from the original date of until today as a result of the completion of the rights issue at the end of June.

We will open up for Q&A after the presentation. With me today, I have Yannick Fierling, our CEO; and Therese Friberg, our CFO.

So now I hand over to you, Yannick.

Thank you, Sofi. And again, a very warm welcome to all of you for this second quarter presentation 2026. This quarter is marking a very important milestone for the Electrolux Group. At the beginning of December last year, we presented an overarching strategy direction for Electrolux. This included the top priorities to improve our business in North America.

In this quarter, we announced an important step for transformation of the region, a strategic partnership with Media for food preservation and fabric care business. This partnership is introducing a new operational model for parts of the business and will be a major contributor to improved performance in the future.

We also announced global organizational efficiency and footprint initiatives and successfully completed a rights issue of about SEK 9 billion. We strengthened our balance sheet and took us 1 step closer to our ambition to have a leverage of about twice EBITDA.

Let's speak now about Q2. Organic sales grew earnings and cash flow improved. Our market position in Europe continues to strengthen, and our position in Brazil remains strong. We made price increases of about 5% to 20%, depending on product category in North America to offset the cost impact from the extended Section 232 tariffs. This we did in a market that continued to decline in the quarter. We estimate the cost pressure from tariffs will remain in North America in the coming quarters.

Next slide, please. Let me turn to the development in the quarter. Organic sales growth was positive, driven by higher volume despite continued competitive market conditions across most regions. In EMEA, APAC, organic sales grew 4.5%, supported by higher volumes and a favorable product mix. While pricing remains under pressure, our Electrolux and AG brands continue to gain both value and volume share. Strengthening our position in the market that remained broadly flat and characterized by cautious consumer demand.

In Latin America, organic sales also increased by 4.5%, driven primarily by higher volumes in Brazil. This more than offset negative price development and an unfavorable mix during the quarter.

In North America, organic sales declined by 2.9%, reflecting lower U.S. market demand and achieved to lower points. At the same time, we successfully implemented price increases across product categories with pricing developing positively during the quarter.

Finally, our aftermarket business continued to grow slightly, providing additional support to group sales. Overall, the quarter demonstrated our ability to drive volume growth and gain market share in key markets while continuing to navigate a challenging and highly competitive environment.

EBIT, excluding nonrecurring items, improved compared to last year, with stronger performance in both EMEA, APAC and Latin America. In these regions, earnings benefited primarily from higher volumes and continued progress on our cost efficiency initiatives. Across the group, cost efficiency contributed approximately to SEK 1.4 billion to operating income demonstrating that the actions we have been taking to improve competitiveness and delivering tangible results.

In North America, profitability remained under pressure. Lower sales volumes and unfavorable mix and increased U.S. tariff costs negatively impacted earnings during the quarter.

We implemented price increases across categories, which helped offset part of the tariff-related cost inflation, but not all of it. It is important to note that tariff costs will have a greater impact in the third quarter as Q2 only reflected a partial quarter of these costs. At the same time, second quarter results in North America benefited from approved EPA tariff refund claims and a positive effect from a decision to reshape the traditional retiree group health plan in the U.S.

External factors negatively impacted the group during the quarter, driven primarily by tariffs as well as the consequences of the conflict in the Middle East regions, which increased logistics and raw material costs. As previously communicated, operating income included negative nonrecurring items of SEK 2.2 billion, mainly related to the strategic partnership with Media in North America and our ongoing footprint and organizational optimization initiatives. Overall, while external conditions remain challenging, we continue to improve our underlying earnings to support disciplined execution and sustained.

Next slide, please. In Europe, market demand was broadly stable across both Western and Eastern Europe during the quarter. However, consumer sentiment remained weak, reflecting geopolitical uncertainty, inflationary pressures and elevated interest rates. Demand for built-in kitchen products continued at a low level and was primarily replacement driven.

In Asia Pacific, consumer demand was largely unchanged year-over-year, while competitive intensity remained high across the region. We saw continued market share gains for AEG and Electrolux brands. EMEA and IFA delivered organic sales growth of 4.5% in the quarter, driven by higher volume and a slightly favorable mix.

Recently launched products continue to support our market position, particularly in higher value categories such as built-in kitchen products. While competitive pricing pressure remained intense, resulting in a negative price impact, we continue to strengthen our price position [indiscernible]. We improved EBIT excluding R&I, in the quarter, while cost efficiency improvements were the main earning drivers supporting by purchasing savings and value engineering initiatives.

Higher volume and slightly positive mix also contributed positively. These gains were partly offset by negative price development due to continued competitive pressure. External factors remained a headwind, primarily reflecting higher raw material, logistics and labor costs, including impacts related to the Middle East conflict. As previously announced, operating income included a restructuring charge of about SEK 0.6 billion relative to the planned closure of the refrigeration factory in Hungary. Also note that in the second quarter 2025, operating income excluding Nice included a positive effect from the divestment of Kelvinator trademark portfolio in India of about SEK 180 million.

Next slide, please. Coming back to the European market. Market demand was broadly unchanged in the second quarter. [indiscernible] representing about 80% of the market increase while the Eastern Europe remained unchanged. Consumer demand continues to be largely replacement driven, reflecting a market environment where spending remains cautious. It is also worth noting that today's market remains below historical level. Compared to the second quarter of 2016 for 10 years ago, the European demand is still about 5.5% lower.

Next slide, please. Moving now to North America. The market demand declined by approximately 3% in the quarter with weakness across the major product categories. While market price levels increased year-over-year, they have not yet fully offset the cost impact of the recently implemented U.S. Section 232 that includes Mexico. Consumer demand remained predominantly replacement driven with economic uncertainty and inflation concerns, waiting on confidence and supporting a continued preference for lower price points.

The region reporting an organic sales decline of 2.9%, mainly reflecting lower U.S. market demand and an unfavorable mix. They continue to face a challenging demand environment while pricing actions, we've increased -- or pricing actions, we've increased between 5% to 20% depending on product categories, helped partly to offset pressure from lower volumes and mix.

EBIT excluding RNIs was negatively impacted by lower sales and negative mix and higher U.S. tariff cost pressure, impacting earnings in the second half of the quarter. While implemented price increases had offset part of the tariff-related cost pressure, the net impact remained negative. We expect tariff headwinds from the extended U.S. Section 232 tariffs, including Mexico, to increase in the third quarter as it will reflect a full quarter of tariffs.

Also, the cost pressure will remain in the coming quarters. Cost efficiency improvement contributed positively, driven by finished goods sourcing, value engineering and purchasing savings. External factors remained a headwind, reflecting increased tariff costs, currency headwinds and consequences from the Middle East conflict with increased raw material and logistic costs.

Earnings also benefited from a positive SEK 174 million impact relative to a decision to reshape its traditional retiree group health plan in the U.S. and recognition of previously submitted U.S. tariff refund claim of SEK 310 million.

Next slide, please. Looking at the U.S., market demand declined by approximately 3% in the quarter with weakness across the major product categories. While market pricing increased year-over-year, it has not yet fully offset the cost impact of a recently implemented U.S. tariffs. This continues to create a challenging industry backdrop and reinforces the importance of disciplined pricing actions, cost efficiency initiatives and operational execution.

Next slide, please. Now, that's a very important page, certainly. It's about, I mean, the media execution. The strategic partnership we announced for media is progressing according to plan. What you see here is a very high-level milestone plan for the coming quarters. During the second quarter, we set a governance in place and whereas in Mexico, we have been making progress in the food preservation transition, and we are preparing to handle this factory to media and -- handover this factory to media. Here, we will have a 35% stake going forward.

In Anderson, production we closed at the end of these months, meaning in 2 days, then we will start to repurposing of a plant into a fabric care plant. Here, we will keep a 55% share. For Visage JV, where we will have 50% of stake, the CEO and Board of Directors have been appointed, and the start of all the JVs are planned in this quarter.

Going forward, one of the major milestones after start of the JVs will be where we start to rehire personal in Anderson and start the fabric care production next year. The first quarter where we will be reporting according to the new operating model in North America is in Q3, it is in this quarter.

Next slide, please. Now, moving to Latin America. Market conditions remained relatively resilient during the quarter, supported by positive demand development in Brazil and solid demand in Argentina and Chile. Competition remains intense across most categories, continuing to put pressure on pricing. At the same time, interest rate that kept at a high level affected consumer spending and reinforced the focus for the across the market.

Against this backdrop, demand helped up well, and the region continues to offer attractive growth opportunities over the longer term. Organic sales growth was positive in the quarter, supported by higher volume in Brazil and Chile. Small domestic appliances continue to perform well, benefiting from an expanded product portfolio, while aftermarket sales also developed positively. The market remained competitive, however, and continued price pressure resulted in a negative price and mix effect.

Despite this backdrop, the region delivered growth supported by volume expansion and continued category development. EBIT and margin improved year-over-year, excluding nonrecurring items, driven by higher volumes and strong execution of cost efficiency measures. Product cost reductions and sourcing initiatives contributed positively, helping to offset continued pricing pressure and a slightly unfavorable mix.

External factors were slightly negative overall as favorable currency effects were offset by inflation. We also continue to invest in our brand building activities and direct-to-consumer capabilities, which are certainly our strength in this region. Reported operations income included a negative SEK 101 million nonrecurring items related to downsizing optimization measures in Argentina. In the quarter, we also see production in Santiago, Chile. We will remain in Chile, but we have an operating model where we source products from other countries.

Next slide, please. I'm very happy today we'll be able to speak to you about the SDA progress we have been making in Brazil. Let me illustrate how we're executing this product category, which is once again small domestic appliances. It is one of our key growth items. A central part of that strategy is the Gradaazul factory that we inaugurated in 2025. It was our largest investment in Latin America last year. The investment increases regional production capacity and strengthens our local for local manufacturing model, allowing us to respond faster to consumer needs while improving competitiveness.

A good example is our blended platform launched in September 2025 and produced locally in Brazil. Since we launched it, more than 500,000 units have been sold, and we expect our volume to approach 1 million units in 2026. This has contributed to a strengthened brand positioning and demonstrated the value of combining local corporate development with local manufacturing. At the same time, we're expanding into attractive growth categories. During the quarter, we entered the espresso coffee machine segment, 1 of the fastest-growing categories in the market, supported by increasing consumer interest in premium at-home coffee experiences.

We also launched a sparkling water machine, extending our presence into our category supported by sustainability and health conscious consumer trends while creating opportunities for recurring revenue for consumables. These initiatives are supported by the strength of the Electrolux brand.

Today, Electrolux is sold as 1 of the leading small domestic appliances brand in Brazil, reflecting strong consumer relevance, differentiated products and consistent execution. Together, this gives us confidence in our ability to continue growing profitably and strengthening our market position over time. The combination of local manufacturing, innovation and a strong brand continues to support profitable growth in Brazil. Our latest air frac campaign is a good example of this practice.

Let's have a look at a small video.

[Presentation]

Very good. Moving now into the cost reduction slide. Delivering cost efficiency remains a key strategic priority for the group. For the full year, we continue to expect a saving of SEK 3.5 billion to SEK 4 billion of earnings. In the quarter, cost efficiency contributed at the level of SEK 1.4 billion, driven primarily by product cost reductions, sourcing actions and improved operational efficiency. Our focus remains on accelerating product cost reductions, increasing sourcing from best cost countries and leveraging our global scale more effectively, sorry, across the organization.

These actions are important not only to offset external cost pressures, but also to strengthen our competitiveness over time.

With that, I hand it out to Therese. Therese?

Thank you, Yannick. Net sales increased in the quarter with organic growth of 2% and reported growth of 0.9%. As Yannick has presented, it was driven by EMEA and APAC and Latin America, whereas North America saw a decline. EBIT excluding nonrecurring items, improved to SEK 1.2 billion, corresponding to a margin of 3.8% compared with 2.5% last year. The key driver was improvement from cost efficiency measures contributing by SEK 1.4 billion in the quarter. This more than offset the negative impact from volume, price and mix combined and negative external factors and the effect from the divestment profit from last year.

External factors remained a headwind, driven by increased tariff costs and the consequences of the Middle East conflict, mainly through increased raw material and logistic costs.

In summary, the bridge shows clear benefits from our cost actions while the weak demand situation and external cost pressures continue to weigh on earnings.

Next slide, please. As previously announced, operating income in the second quarter, including nonrecurring items related to the Media partnership in North America of SEK 1.9 billion, group organization and footprint optimization of SEK 0.7 billion as well as the claims for refund of EPA tariffs related to 2025 of $49 million, equal to SEK 450 million, totaling SEK 2.2 billion.

The difference between the estimated nonrecurring item for the second quarter that was announced on April 23, and the actual reported NRI is related to timing differences between quarters. The EPA tariff refund claims have been validated and approved for payout by the CBP, and the amounts have, therefore, been slightly revised compared to the estimated figures announced on the 29th of June.

It should also be noted that the NRI is not related to refund claims for 2026, but still, of course, the costs we have taken in the last 15 months. And remaining EPA tariff claims will be handled in a separate process, but we don't deem this to be material. And related to when the cash will come for this process, based on what the time has been in other cases, we estimate the cash could come within 60 to 90 days from the day of validation. And as I stated earlier, the claims have been validated as of the beginning of July.

Next slide, please. Turning to cash flow. Cash flow after investments improved to SEK 1.6 billion in the quarter compared with a negative SEK 0.7 billion a year ago. The operating cash flow after investments in the second quarter was driven by a positive operating income, excluding nonrecurring items. As the majority of the nonrecurring items that was booked also has had no cash outflow yet. We also had a more favorable development of operating assets and liabilities, and investments continue to be at a low level. The operating cash flow compared to the same period of last year was better as a result of lower increase in net operating working capital with a smaller increase in inventory than what we saw in the second quarter of last year.

Overall, the quarter reflects improved cash generation, supported by disciplined working capital management and continued focus on capital efficiency.

Next slide, please. Turning to our balance sheet and liquidity. In the second quarter, we successfully completed a rights issue of SEK 9 billion, which combined with a positive cash flow, strengthened the balance sheet. We thereby have a solid liquidity position and a well-balanced debt maturity profile. And at the end of June, the available liquidity, including revolving credit facilities amounted to SEK 37.7 billion.

Importantly, our financing structure contains no financial covenants, and we have an S&P Global rating with BBB- with a stable outlook and maintaining a solid investment grade credit rating and remains a key priority. And to further strengthen the balance sheet, we continue to focus on improving earnings and delivering solid cash generation. At the end of the quarter, the net debt-to-EBITDA was 2.6x, and over time, we are aiming at the leverage not exceeding 2x.

And with that, I will hand over to Yannick for the market and business outlook.

Thank you very much, Therese. Let's move to our market outlook for the full year 2026. Looking ahead, the market environment remains characterized by geopolitical uncertainty and macroeconomic volatility, which may continue to weigh on consumer demand throughout the year. We maintain a neutral market outlook for Europe.

During the quarter, demand for core appliances was unchanged in Europe. Consumer sentiment remained weak, reflecting geopolitical tensions and has driven inflation, higher interest rates and continued economic uncertainty. As a result, consumers continue to postpone discretionary purchases and demand for built-in kitchen products remain stable at a low level.

We also maintained a negative market outlook for North America. Market demand for core appliances declined by approximately 3% during the quarter, with lower demand across most major product categories. Market price levels were higher year-over-year, although they did not fully reflect the impact of the U.S. tariffs implemented during the period.

Economic uncertainty and inflation concerns continue to weigh on consumer confidence. Demand remained primarily replacement driven with consumers continuing to favor products at lower price points. In Brazil, our positive full year market outlook remains unchanged. Market and consumer demand remained resilient during the quarter, supported by continued positive development in Brazil. At the same time, competitive intensity remains elevated across most product categories, resulting in continued price pressure. These combined with continued elevated interest rates, they had to greater focus on access to consumer financing, affordability and promotional activity.

Next slide, please. Our business outlook for the full year has been partially revised. Combined, this is expected to be positive in 2026. When looking -- sorry, when looking at volume price and mix combined, this is expected to be positive in 2026. We are, of course, working with all these 3 levels to achieve a positive organic contribution for the group. We expect investments in innovation and marketing for the full year 2026 to increase to support continued growth in our focus categories. Our focus on cost reductions and improving efficiency throughout the group remains critical to strengthening competitiveness.

We anticipate earnings contribution from cost efficiency of SEK 3.5 billion to SEK 4 billion in 2026. External factors are expected to have a significant negative impact in the year, mainly due to higher tariff costs from expanded U.S. Section 232 import tariffs. This cost inflation is reflected in external factors in our EBIT bridge. Also cost increases resulting from the Middle East crisis is estimated to have a negative impact with increased raw material and logistic costs.

In the business outlook, we have revised the capital expenditure outlook to approximately SEK 3 billion to SEK 3.5 billion. This is partly resulting from us being more efficient on sourcing and procurement, for example.

Next slide, please. To start up to the second quarter, our strategic execution is on track. Step by step, we take actions to deliver both on short-term and long-term priorities. The actions announced in the second quarter are improving future earnings power. We fundamentally changed our operating model and accelerating the transformation in North America business through a strategic partnership with Media. Organic sales was above our midterm target of 4% in EMEA, APAC and LatAm.

We improved market and price position in EMEA despite weak markets and continue to demonstrate strong earnings capability in Latin America. At the same time, we announced and executed on global organization footprint initiatives. We announced the closure -- the closedown of Jeff Berne, the Hungary factory and production in Santiago de Chile. We are downsizing Argentina, and we initiated a process to optimize organization and manufacturing presence in Italy, and we have been delivering on cost efficiency at the level of SEK 1.4 billion, while we also successfully completed a rights issue of SEK 9.1 million that strengthened our balance sheet and supports the execution of our transformation plan.

Our short-term priorities are clear, execute the transformation of North America, accelerate efficiency improvements across the organization, optimize the global manufacturing footprint and increase the GDT and performance focused throughout the organization. We are truly reshaping Electrolux Group to become a more competitive, resilient and consumer-centric company.

Thank you for your attention. Now, I'll turn it over to Ann-Sofi for the Q&A.

Thank you very much, Yannick. So with that, we will open up for the Q&A, and we will start with the conference call. And I will hand over to the conference call moderator to introduce it.

[Operator Instructions] We will take our first question and the question comes from the line of Hai Huynh from UBS.

My first 1 is on North America underlying earnings. Do you clarify sort of the tariffs, I understand on the refunds? Can you clarify the health fund benefit? Why is it included in NII? And are you expecting to have benefits ongoing? Or is this just a one-off for Q2? What I'm trying to get is, to forget the clean exit rate for Q2.

Yes, I can take that. And normally, we classify nonrecurring items at an amount above SEK 200 million. And since this was, yes, below SEK 200 million, we did not reclassify it as a nonrecurring item, but we still believe that it's a relevant amount for you to be aware of, so that's why we are explicit about the amount.

And of course, also importantly, if you say these type of medical expenses, which is mainly related to -- we are taking on an ongoing basis in our P&L. So of course, this cost previously also been flowing through the P&L on different lines, you could say, both in cost of goods sold and also in SG&A. And so that is why.

And then when it comes to if this was a true one-off in the quarter? Or if there is anything more to come? It's too early to judge at this point of time. Of course, as you've seen previously, we worked on our asbestos portfolio. And of course, as you understand, we always look for opportunities to, yes, become more efficient on our cost on all lines of the P&L.

On my second question, could you give me some color on the kind of proportion of the section costs now covered by realized pricing? When you expect to fully offset it? Do you think there will be further pricing actions needed on top of this to fully offset, which is your plan to fully offset?

I can take this one. I think as you said, I mean, 1 of our priorities to have a very disciplined pricing actions not only in North America but mainly North America moving forward. We have been leading price increase, as we have been announcing it in the last quarterly report. We have been leading price increase in North America by increasing prices between 5% and 20% in most of the categories. And we have been implementing price increase starting beginning of May.

In all fairness, I mean, we have been only a few home appliance manufacturer to increase prices in the second quarter. When I say a few, I mean, it is really copper. I mean, more recently, in the last weeks, what we have seen is we have seen more manufacturers increasing prices as well. And we see today a picture in terms of price environment, which is more consistent, clear. But I mean, we will certainly, I mean, remain very agile, as you can imagine, I mean, watching prices and moving on prices is something we're doing on a weekly base, not to say on a daily base here. And we will -- one of our priority will be to remain agile moving forward in terms of price development.

And then my final question is on the pricing elasticity and the kind of volume trade-off. So you made large price increases 5% to 20% last quarter. What are the observed in order intake and also retailer sales, promotional intensity?

As I said, I mean, we have been increasing prices beginning of May in North America. And we have been holding basically on the price increase. Certainly, as you could see out of the numbers, we have been slightly losing market share during the quarter, very slightly. I mean, we are down 2.9%. The market has been down a little bit less than that. So the -- we are adjusting. Certainly, we need to find a balance and the right balance between volume and prices.

As I said, I mean, we're happy to see that. I mean, the market is becoming more consistent and the competitive environment is becoming more consistent in the last weeks.

We will move to our next question. Your next question comes from the line of David MacGregor from Longbow Research.

Yes. I guess, I wanted to start by just asking about the weaker North American demand and whether this is retailer destocking to some extent in reaction to the softer consumer behavior or whether this is at the retail POS.

I'm not sure I understood side of your question here. If your question is about, I mean, prices, we have been, again, increasing prices across all our customers in North America, and we have been rolling on that. I mean, I don't know exactly what's the question in terms of POS is. What...

I guess the question was retailers destocking, and if they want to carry lower stock levels, let's say, with a weaker demand situation. And I think we have not seen any or heard any of that type of feedback. I mean, not that they generally want to keep a lower stock level. But of course, we do see that the demand has been slower and that's a reality.

Got it. Yes. I appreciate that. And then secondly, I guess the price increases that you're seeing the 5% to 20%, you talked about the fact that you're gradually seeing competitive behavior coming along with those pricing initiatives. Are those pricing initiatives being realized as a consequence of lower promotional pricing? Or are you seeing traction on list price increases?

I guess it's a mix of both. Even mainly the beginning on the promotional side of the equation. But I mean, we have seen some movements as well on the listed side of the equation. But we are, again, following price increases on a weekly base in every single product category. And as I said, I mean, we led price increase in the second quarter. But I mean, in the last weeks, we saw basically most of our competitors getting to a level, which is, I mean, pretty consistent across the markets. But I guess it's both in terms of promotion and listed.

Okay. And then last question for me is just the extent to which you're getting feedback from retailers on the Media arrangements. And you mentioned there was a slight market share loss. And I guess, you have a consequence of the pricing, but do you think retailers are fully on board with you here in supporting what you're doing?

No, I think, David, that's an important point. I mean we -- as you can imagine, that we are the first 1 we have been reaching out when we made the announcement. And as I said previously, the reaction -- their reaction has been overly positive about -- and I want to underline once again that we will be keeping the entire intellectual property of Electrolux. We'll be keeping our design we'll be keeping our signatures, all our features. I mean, we're working together with Media to develop the right food preservation products, but they will remain Electrolux products. I mean, we are just taking advantage of the supply chain they do have today and the capabilities they have in terms of manufacturing. But we are working together with media to make sure that we are keeping our identity and that we will be offering better and even more product moving forward in the different -- in food preservation and certainly moving forward in top orders.

We will now take our next question. Our next question comes from the line of Akash Gupta from JPMorgan.

It's actually Jeremy on Akash line. I've got 2, if I may. First, I would like to zoom in on the European business. I'm wondering how big is for you today as a category in Europe and did play any role in the Q2 performance. I mean, also we know that you do sell in other regions, but are there any plans to leverage your existing distribution network to enter in this category in the wider European market? Perhaps can you address the European organically? Or would you need any support from a partner like you had with media in North America?

Jeremy, thanks for the question. Certainly, I mean, we have been experiencing pretty significant heat waves in many markets in Europe and very high level of demand in terms of air conditioning. We -- I mean, in fact is for Europe today, we are not manufacturing products ourselves, and we are sourcing mainly portable air conditioner for the European regions. We are not right now offering residential or commercial air conditioning in the region yet. So I mean, we -- I would say that the contribution of the heat wave we had in Europe and the sales of portable air conditioner is probably not -- is not significant in the results we have been delivering in the second quarter for Europe.

Okay. Understand. And then also in the EMEA APAC region, you've delivered about 4% margin from Q2 despite those low volumes, should we think of those 4% as the new floor going forward? Or can you improve those margins further in the second half of the year as you get those restructuring measure benefits, which could help achieve higher margins sequentially on similar volumes than the ones you had in the first half?

Thanks again for your question. I mean, we're very proud about what we have been delivering in the second quarter in Europe because we have been, again, winning market share in both volume and value, which is very important. We have been improving our price positioning, our price index in this market once again. So we keep on executing a strategy, which has been very consistent through the last quarters on the brand. Based on the product innovations, we have been launching mainly on, again, high-value segments like the kitchen segment. So I think the market is very much subdued. We don't see any rebound.

Kitchen remains at a very low level. But I mean, the strategy and the product introduction we have been putting in place in the last month and the brand investments we put in place in the last months are paying back. And that's what is explaining basically the growth we do have in terms of earnings. And our commitment remains what we have been announcing previously midterm, I mean, we will be above 6% EBIT in this region as well.

Maybe what we can as well add with the additional, let's say, reorganization and manufacturing footprint optimization initiatives, we are not expecting to see any impact really from this in the -- in this year when it comes to this region. Then, of course, with the normal seasonality, and specifically, if we would see a stronger, let's say, built in market in the second half of the year that we used to see a long time ago now, that would normally generate a slightly higher margin than in the first half. .

We will now take our next question. The next question comes from the line of Johan Eliason from SB1 Markets. .

Yes. Just coming back to the pricing in North America. You mentioned your hike prices as of May, but you didn't fully cover the tariff costs you mentioned in the quarter, but where the price increases you did from May sort of offsetting these costs? Or how was the balance when you had introduced these price hikes? .

I think you're raising an important point here. I think we need to look back a little bit, and we should not forget that, I mean, we -- tariff is made out of different layers, which have been introduced in the last months, not to say, 2 years. And as a reminder, in 2025, we have been trying to increase prices in the second and third quarter, and we had to back off in the fourth quarter because, I mean, the industry was not following, and we had to basically preserve volume.

Now, I think on April 6, we had this new tariff 232 sections, which was including Mexico, which was adding again a second player. So what we have been doing is we have been reacting right way on May 1, and we have been increasing prices between 5% and 20%. And what we hope is that I mean the price increase we have been increasing is -- should be covering. That's our intent, at least the last layer we saw, so the 1 coming from the 232 introduction in the month of April. We will not be able to cover the full tariff structure we have seen in the last years for this 5% to 20% price increase. That's pretty sure.

We will now take our next question. Our next question comes from the line of Timothy Lee from Barclays.

Can you hear me?

Yes, we can.

So my first question is again on the North America. So you mentioned about the completion is kind of consistent in the past weeks. But at the same time, we also noticed a rebound in terms of the imports of appliances from China or Asia in the past 1 or 2 months, maybe because of the low base, but there's some rebound in terms of the imports. How do you see the overall market supply or condition in the North America market from here?

Yes. I cannot comment on the rebound of imports out of China. What is the certainty that -- I mean, again, I mean, the tariff structure as it is today, should be giving an advantage to local producers, which are North American producers. And you have 3 main North American producers. We are the second one there. And, I mean, China, you still have the 301 tariff structure. You have 232 out of Southeast Asia. So again, I mean, producing in North America, what we are doing for the majority of our appliances should be an advantage moving forward.

Understood. And then my second question is about the cost going forward. So you mentioned the tariff cost is probably going to structure further in the coming quarters. How about raw material prices or inflation in general? How do you see the development? And have you already experienced some raw material price increase in the second quarter? And how do you see the cost will develop in the coming quarters?

Thanks for the question. Of course, it's a very important one. I think as we said previously, I mean in terms of impact, we had almost an immediate impact from the Middle East conflict in logistic costs, especially on fuel cost and as well on the sea freight cost, on the bunker cost, we had almost an immediate type of impact as soon as the conflict has been initiated, I mean, now a few months back.

On the raw material side of your question, however, especially if you look at chemicals, I mean we are hedged. We are hedged for a little bit more than 3 months. So we had a significant impact in the second quarter. And certainly, I mean, we will have even a bigger impact in the third quarter.

Understood. And then my last question is on your restructuring plan. So I think for Italy, the restructuring plan earlier this year is a little bit on hold, given the pushback from the union and also some government intervention. Is there any update based on the plan or the latest timetable for that Italy restructuring given it is 1 of the global manufacturing footprint optimization plans that you communicated during the rights issue?

I think, first of all, I want to correct you. I think I don't know where you got the information that this plan is on hold because that's not at all our understanding. We, of course, are keeping on having constructive exchanges and discussions with different stakeholders, starting with our social partners, but also the Italian government. But I would -- even though rather saying that the plan is on hold, I would say, the plan is absolutely progressing according to plan. And I think we will keep on exchanging as we did in the past weeks and months with our state partners. But in -- from our side of the equation, I mean, we are following exactly the plan we had -- we have been describing in the last month. .

We will now take our next question. Our next question comes from the line of Igor Tubic from DNB Carnegie.

Just have 2 additional questions. If we start with the cost savings initiatives that you have, you managed to cut costs by SEK 1.4 billion in Q2. Was that a surprise to you, would you say? And can you elaborate a little bit more around how did you manage to cut cost that much?

Thanks, Igor. I think it's important because as I said during the presentation, I mean, cost savings and cost efficiency remains 1 of the major factor and contributor in the EBIT improvement we have. I mean, just as a reminder now, I mean, a couple of years ago, we have been putting in place a very structured program in order to improve efficiency through value engineering, better sourcing and better conversion costs in our factories. And we have been delivering last year according to plan. And our aim is to deliver once again in 2026, between SEK 3.5 billion and SEK 4 billion in cost efficiency. And I want to just again to repeat, that's purely, I mean, for value ensuring sourcing conversion quality and notes.

What is very important is that, I mean, we have been announcing within -- I mean, a few weeks ago now, in the second quarter through the mid-year initiative and the restructuring initiative, we will -- we are planning to deliver an additional SEK 2 billion in year 3 in terms of cost saving, we will be delivering SEK 600 million in cost saving in year 3 with the media initiative, and we will be delivering SEK 1.4 billion in year 3 for the restructuring initiatives here we have. So I think, again, I mean, I just want to -- the reason why I'm mentioning that I just want to underline once again that, I mean, efficiency and cost initiative remains 1 of our main priorities here. We are keeping on delivering through our program, the program we have been developing now a couple of years ago. But on the top of that, we also have been launching major initiatives, strategic initiatives with the media partnership in North America and the organizational efficiency optimization, which would be adding an additional savings in the coming years.

And maybe 1 thing to add, of course, with the announcement of the organizational efficiency initiatives have been very careful, as you can understand, on hiring and so forth. I think we got off to quite a good start of being careful with our employee hiring and so forth. .

And then, of course, you as well noticed then that we have this effect of the change in the medical plan of the SEK 170 million, it is included in cost efficiency. And I mean, this was also no surprise, but it's a project, of course, that we have been working on for some time.

Okay. That was clear. And then I just have a question around the U.S. tariffs. I mean, as I understood, you haven't received any cash yet, but do you see any risk that you will have to compensate to customers? And, yes, basically, there will be a cash in and cash out from the 2025 year's tariffs.

I guess, it's clear that we have never done any price increases that are surcharge price increases. Then, of course, I mean, we keep our customers and customer relationships very, very close. I mean, we are as well right now, as you've seen in an additional price increase mode. And of course, with that, we have very tight connections with our customers. But yes, we aim to keep this money.

With that, we will take 1 question that we have from the web before turning back to the conference call. And we have a question from Mats Lindegaard Rosendal, who is asking if the cash that we recently received in the rights issue could be used to redeem outstanding near-term bond debt or if we are prioritizing access to bond market through a curve expansion? So I think this is a question for you, Therese.

Yes. I mean we -- if the question is related to the maturity that we have upcoming during this fall, of course, there was a large EUR 500 million transaction that we did some time that, and this 1 we don't expect to renew, but we will, yes, if we would need, let's say, some smaller bonds or something like that, we will do that separately in the market and not redo the big Eurobond.

Then we turn over to the conference call again for 1 final question.

[Operator Instructions] We will take our next question. Our next question comes from the line of Opeyemi Otaniyi from GS.

2 questions from my end. Can you just maybe go through Europe, the growth there was quite strong versus sort of comment about a subdued market driven by replacements. So could you just maybe squad the second because of what's driving our performance there and so how you see the coming quarters?

Yes, absolutely. Thanks, for the question. On the European side of the equation, again, I mean, what we have been doing pretty well is, first, I mean, the product launches we made in the last months are performing well in the market, and they're supported by a very strong brand positioning on the Electrolux side and on the AG side. And I think that has been allowing us to grow in terms of market share. As I said previously, not only in terms of volume market share, but also and more importantly, in terms of value market share. So we are evolving right now in Europe with Electrolux and AG in a price segment and in the product category, which is driving value. That's 1 point.

The second point is really about cost. I mean, Europe is a region where we're executing well in terms of efficiency and cost reduction, on the product side of the equation, on the sourcing side of the equation, on the manufacturing side of the equation. Yes, so we have a very disciplined execution. So we were able to drive an improvement in terms of volume and improvement in terms of mix, and we were able to overcome basically the price erosion and the level of competitiveness we have in Europe. So it is really about a very disciplined execution of a strategy we have been putting in place which right now is proving to work, at least has been working so far in 2026.

Great. And just on cash, sort of several things driving positive free cash flow this quarter. How are you thinking about that for the rest of the year in terms of sort of inventory and also larger inventories?

Yes. Of course, I mean, we're coming from a position in Q1, where we had a quite weak cash flow that I think will -- I mean, to some extent, we have now correct in the second quarter, mainly with inventory not increasing as much as last year. Of course, we should remember though in the cash flow we had in this quarter, we also had no outflow really from the nonrecurring items initiatives. So of course, in the back half of the year, we will continue to have -- I think usually, we have a stronger cash flow in the second half than in the first half from pure operations. And that's what we are expecting as well this year. But of course, we will also start to see -- and we will also then have most likely the additional cash from the EPA tariffs that we've also mentioned in -- the amounts in the report, but then we will also start to see outflows, I mean, mainly then related to the media collaboration in North America and also related in the back half of the year related to Hungary closing. So we will start to see some outflows on those restructuring initiatives.

Okay. And maybe just 2 clarifications just on external costs. On tariffs expectations that sort of in Q3, do you expect any more refunds or it's kind of done for now?

Yes, as we mentioned and as you saw, we do have a small difference in what we announced in the press release about a month ago compared to what we now announced in the report. We don't deem that amount to be material. But as we see it, it will be in a separate process that most likely will open up at a later point, but we don't have any information about when that will happen. But as we said, we don't see that money as being material for the group.

And maybe just lastly on commodities and external costs. Are you be to guide in terms of just a range of expectations of how much do you expect that to impact earnings in the H2?

We're not giving a specific amount here. And as you see, I mean, we're watching that every single day. I mean, the situation is changing so quickly in Middle East, and I think every single change has an impact in 3 months from now, so in Q4 as well. So very difficult to say right now. What we can say certainly is that the impact we'll have in the third quarter is higher than what we have been experiencing in the second quarter.

There are no further questions. I'd like to hand back to Ann-Sofi Jönsson for closing remarks. Thank you.

Thank you very much. Thank you very much for listening in to this call. All the material will be available or is available on our web page and the IR team is, of course, available if you have any questions, just reach out. So thank you very much, and we wish you a continued good day.

Welcome to Electrolux Group and the presentation of our Q1 report. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting. I'm here with our CEO, Yannick Fierling and Therese Friberg, our CFO. We will run through the presentation and after that, we will open up for the Q&A. With that, I hand over to Yannick.

Thank you very much, Ann-Sofi and good morning, good day to all of you, very glad to be with you for this Q1 2026 report. We have been making some significant announcements last night. 2025 was the year of progress and strategic building. We are now executing this strategy. We have been announcing a series of initiatives. I would like to remind you this morning -- the first one is about a partnership we announced in the North American region with Midea. This partnership will be driving growth, will be driving better profit, thanks to savings and share of CapEx. And certainly, it will represent a very strong platform to move forward in this region. We have been announcing as well that we'll be optimizing our footprint and gaining efficiency across our organization. We are planning to expand in terms of product and geography moving forward. In order to finance these major initiatives and strengthen our balance sheet, we have been announcing a fully underwritten rights issue.

Let me now deep dive into Q1. We had to face 2 very different realities. The first one was about Europe, Middle East and Africa, APAC and Latin America, where we have been delivering in this first quarter strong results, results which were significantly better than last year. On the other hand, North America has been declining significantly. The market has been down more than 10%. The food preservation business unit has been down more than 14% from a market perspective. In terms of operating margin, we have been delivering SEK 198 million, excluding nonrecurring items. In the operating income, we have been including minus SEK 463 million due to the closure of our factory in Chile in Santiago. We have been delivering in this first quarter SEK 700 million in terms of cost reduction, which is placing us well to deliver the year-end target, which is between SEK 3.5 billion and SEK 4 billion.

Let me now deep dive into Europe, Middle East and Africa and APAC. Strong quarter for this region. We have been once again gaining market share with our main brands, Electrolux and AEG in a market which has been flat in this first quarter. We have been growing organically by 3.6%, delivering 4.1% of EBIT. This EBIT has been supported by strong delivery in terms of cost reduction. And yes, we have been investing in marketing in order to fuel all the innovation we have been launching in this first quarter. As I mentioned previously, the market was once again flat in this first quarter. Actually, it was flat in Western Europe, which represents 80% of the volume, and it was up 1% in Eastern Europe, with 20% of our volume in the market. The market was mainly replacement driven once again. But if you look at this curve, it has been the lowest quarter in the 12 last year. We are in a 12-year low volume figure in Europe here. So if you take into account that a normal organic growth in this industry is 2% to 3%, we are down between 20% and 30% versus where we should be today.

Now as I said, we have been investing in marketing. We are adjusting the Electrolux brand, and I'm very proud to show you one of our latest commercial.

[Presentation]

Now moving into North America. And as I mentioned in my introduction, the market has been significantly down in this first quarter, over 10% down. Food preservation has been over 14% down. It has been the weakest quarter in terms of market in the last 10 years. And that's why we are having an operating profit, which is pretty low in this first quarter. The market was down. And on the top of that, we had very significant external factors, mainly driven by tariffs. We had 2 internal issues, a change in accounting estimates for consumer rebates and a voluntary recall of a limited number of Frigidaire gas ranges, which have been affecting the results by SEK 0.3 billion.

Looking at the market, and I mentioned that, minus 10% in this first quarter. If you're looking the volume trend over the last 10 years, you will notice that, that has been the most challenging quarter over the last 10 years. The decline has been most significant and the decline we have been observing after 2022, so post COVID.

Moving into Latin America. Strong quarter in Latin America. Again, we have been growing organically more than 8%, delivering an EBIT excluding nonrecurring items of 8% again. Strong market in a market where we have been observing a significant level of price erosion. We have been announcing the closure of a plant in Chile, and this closure has been inducing a nonrecurring item of SEK 463 million in this quarter in our margin.

Moving now into cost reduction. Once again, I mean, our objective at year-end is to deliver between SEK 3.5 billion and SEK 4 billion. We have been delivering SEK 700 million in this first quarter, with value engineering, best cost country sourcing and by having an additional productivity in our factory. So good results again in this first quarter, which is aligned with the objective -- ambitious objective we do have at year-end to deliver between SEK 3.5 billion and SEK 4 billion. With that, I'm passing it to Therese.

Yes. Thank you, Yannick. And then taking a look at the sales and the EBIT bridge in a little bit more detail. We had essentially a flat organic growth in the quarter, where we did see volume growth, as Yannick mentioned, in Latin America and in Europe, Middle East, Africa and Asia Pacific. But this was offset by volume decline in North America and also price pressure across the markets. So if we look at the organic contribution to EBIT, this was actually the negative as the pressure on price was more than offsetting the positive volume we had. Investments in innovation and market essentially was flat year-over-year, and we did see continued strong and stable cost efficiency coming through to the bottom line. But you can also see that year-over-year, the external factors are still quite a large negative headwinds as we are having continued high tariffs in North America mainly.

And then looking at the operating cash flow. So operating cash flow after investments for the quarter was negative SEK 4.6 billion, and also lower than last year. And this was partly related to the reduced EBIT year-over-year. And then we also have a seasonal buildup in the operating working capital. But on top of that, we also have a somewhat higher buildup in inventory, specifically in North America related to the very weak market in North America, weaker than we expected going into the quarter and some small buildup related to the Anderson transition of production that you probably heard about yesterday.

And then taking a look at our liquidity and maturity profile. We still have a high liquidity with SEK 27.6 billion in liquidity, including revolving credit facilities. And we have a well-balanced maturity profile. We have no financial covenants, as you know, and we have the ambition to have a solid investment grade rating. And to get -- have a solid investment grade rating, of course, the main components will continue to be to improve our operating performance and also to generate cash flow. But of course, you heard about yesterday, the announced rights issue -- of a fully underwritten rights issue of SEK 9 billion that partly will be used to drive the additional strategic initiatives Yannick mentioned earlier, but also partly to strengthen the balance sheet going forward.

And the net debt to EBITDA by the end of the quarter was 3.8x. And if we would be adjusting for the rights issue of SEK 9 billion, this number would have been 2.8x. And with that, I hand back over to Yannick.

Thank you very much, Therese. Moving now into the market and business outlook. Following the downturn in the U.S. home appliance market in the first quarter, the market outlook for North America in 2026 is revised from neutral to negative to negative. Geopolitical uncertainty is foreseen to continue in North America, but under the assumption that the current tariff structure stays, general market pricing should logically adjust to reflect associated tariff costs. Should these materialize, it may adversely impact consumer demand and market growth. The Brazilian home appliance market developed positively in the first quarter. And although growth rates may slow somewhat throughout the year, the market outlook for Brazil in 2026 is changed from neutral to positive.

The market demand in Europe is unchanged with geopolitical and macroeconomical uncertainty weighing on consumer sentiment. Also, consumers continued postponing discretionary purchases and demand for built-in kitchen products remain subdued. In a larger perspective, it is important to remember that the European market is on a 12-year low. Therefore, the market outlook for Europe remains neutral.

Moving to business outlook. That's -- our business outlook for 2026 remains overall unchanged. Despite expected additional cost related to extended U.S. Section 232 import tariffs on products that contain steel and aluminum applicable since April 6. Sizable price increases with 5% to 20% have been announced in North America, and it is our ambition to increase prices in order to offset the negative impact from tariffs. Volume, price and mix is expected to be positive in 2026 driven by volume growth and a favorable product mix. We expect investments in innovation and marketing for a full year to increase. The new product launches provide us with a great platform to continue driving growth in our focused categories.

Our focus on cost saving and to improve efficiency throughout the group is critical for our competitiveness, and we anticipate between SEK 3.5 billion and SEK 4 billion earnings contribution from cost efficiency in 2026. External factors are expected to significantly negatively impact the year. mainly due to higher tariff costs from extended U.S. Section 232 import tariff. This cost inflation is reflected in external factor in our EBIT bridge. Raw material costs are also estimated to be negative. For the full year capital expenditure, we're expecting to reach about SEK 4 billion.

Again, I just want to summarize our Q1 performance. And as I said, as an introduction, we have really 2 very different realities. On one side, EMEA, APAC and Latin America, where we have been performing well, where we have been growing, 3.6% in Europe in a flat market, 8% in Latin America and Brazil. But we have been observing as well a very notable decline in North America, over 10%, the worst and strongest decline we have seen in the last 10 years.

In terms of cost reduction, we have been reaching SEK 0.7 billion in the first quarter, and we have a good confidence to reach the SEK 3.5 billion to SEK 4 billion by year-end. We have been making last night very big strategical announcements, a strategy we have been working on for the last months. The partnership with Midea in North America will be key in order to structure this region, grow in this region and add savings, improve our profit and share our capital expenditure with Midea.

We have been announcing as well that we'll be optimizing our footprint and gaining efficiency in the rest of the organization. And we will be expanding our product offering from a geographical perspective and from a product perspective here. So big milestone for the company has been announced last night. With that, I would be glad to answer any questions we may have. Ann-Sofi?

Yes. Thank you, Yannick. So now we will turn over to the conference call first, to take questions from the conference call.

[Operator Instructions] And our first question comes from the line of [indiscernible] from Goldman Sachs.

Maybe just starting with the U.S., could you sort of break down what you're seeing sort of was changed in terms of organic growth. I think sort of maybe through last year, we're seeing some market share gains. And so how much of sort of the minus 10 is the market versus what's happening in terms of things on a competitive basis?

Yes. Thank you very much for the question. So as we said, I mean -- and of course, we are referring to sell-in data and volume. We have seen the biggest drop in terms of volume in the first quarter over the last 10 years. And of course, I mean, the geopolitical environment has not been helping in North America. From a mix perspective as well, we were hit from the fact that, I mean, the biggest drop we have seen in the North American market is coming from our biggest product category, which is food preservation. Certainly, I mean, we did not lose a significant level of market share in the quarter. We have been losing a little bit of market share due to the recall we made at the beginning of the quarter, and we're always placing the safety of our customers first. Certainly, it would be very interesting to observe our North American market will be evolving in terms of demand in the coming months.

The big announcement we are making today is certainly in terms of price increase. We are facing very significant external factors in North America, and that has been a big part of the profit decline we had in the first quarter. On April 6, there was the announcement about the 232 tariff. So we have been announcing to our customers that we'll be increasing prices between 5% and 20% by the end of April. Most of our competitors are producing appliances as well in Mexico. So we have a good confidence level that we will see price increases in North America overall as an industry in the coming weeks.

But the 10%, just to be specific, that is the market decline. So pure market and we were declining, as you saw, somewhat more than that, but only slightly.

Great. And maybe just on our Section 232, I don't know if you can't give a number, but do you have a sort of an estimate on sort of external factors for -- so 2026 and as the year goes on?

No, we don't have an updated number. Of course, as you see, we are already guiding for significantly negative. And I think it's fair to say that if the current 232 tariff stays in place as it is today, it will be even more significantly negative than, of course, we had going into the year. But on the other hand, as Yannick mentioned, I think this is really now leveling the playing field with lower debt if these tariffs are legally valid and so forth. So the confidence to actually increase prices and have them stick in the market is higher than ever before, I would say.

Great. And maybe just the last one for me. Could you just maybe comment on sort of what you're seeing on cost from a commodity perspective, given what's going on? And just remind us of how sort of hedging works from your perspective and therefore, how we should think of things assuming sort of spot prices remain where they are?

Yes. In terms of, of course, I mean, the geopolitical war in Iran is influencing raw material. As we mentioned previously, I mean, we're hedging plastic over 3 months, usually 1 quarter. So the impact we have seen in Q1 is limited, very limited. I mean, the main impact we see is much more transportation costs and fuel costs. So the bunker costs we have on sea freight, for example. But I mean, we are largely protected in this quarter, in the Q1 quarter, thanks to the hedging we do have on raw material and plastic.

We are -- but it's also included in the forecast that we have now. Of course, it's -- as you all know, it's extremely volatile, but we do see somewhat increase in -- now in the second quarter, partly related to logistics and partly related to plastics that we have then had to lock at slightly higher prices for the second quarter. But it's already included, let's say, in our business outlook with our current understanding.

Your next question today comes from the line of John Kim from Deutsche Bank.

Could we get a little bit of a steer impacting the external factors? Any sense on ForEx versus tariffs versus underlying cost inflation?

Yes. I mean, really, the majority -- you have a little bit of inflation and a little bit of currency, I would say, if we talk about Q1, but the vast majority of the number is really tariffs.

Understood. And can you help us -- can you help characterize kind of pricing dynamics from your competitors in Q1?

I think in North America in Q1, in North America, we have seen a very light price increase in North America. What we're expecting is to see larger movements in the second quarter and moving forward due to the additional pressure we're experiencing from 232 and this pressure will be experienced as well by our competitors moving forward. In the other regions, if I may, in Europe and in Latin America, of course, we see price pressure, and we see price erosion, which is higher than what we were originally expecting. However, again, we are performing really well in these markets. I mean, in Europe, we are improving our mix as well moving more into a kitchen and built-in. So I think we have all the measures in place in this region to counteract against this price erosion we're experiencing.

Your next question today comes from the line of David MacGregor from Longbow Research.

Just with regard to the North American market, you've discussed pricing of 5% to 20%. That's a pretty large range, obviously. Can you just discuss that range and what constitutes the lower end? What would constitute the upper end?

Of course, I mean, you're absolutely right. It is a low range. However, we will not be butter spreading the price increase. We have products which are more impacted than others. And we have product categories which are more under, I would say, competitive pressure than others. Food preservation, for instance, is a product which is far more a commodity, I would say, in the market and under price pressure. That's exactly by the way why we are putting in place all the strategy we do have with Midea moving forward. We'll be reinforcing food preservation significantly in the future. But I mean, in terms of price increase, it would very much depend on the impact we do see from tariffs. So we will filter and have a price increase by product category, which is needed in the market in order to overcome the tariff impact.

And do you foresee -- just as a follow-up question, do you foresee the potential for further price increases as the year goes on? Is this kind of the first of the sequence of multiple increases you would consider?

I think it's a very good question, but I mean the North American market has been extremely dynamic in the last months. I mean the tariff structure has been changing several times in the last 12 months and the way it has been really big in terms of external factors. We're absolutely convinced that there will be now a significant price movement because simply, I mean, 232 is putting a significant level of pressure on the entire competitive landscape, but it's very difficult to predict how, I mean, these external factors will be evolving in the coming months. And as a consequence, our prices would be evolving in the coming months. But certainly, I mean, our ambition and I won't repeat it, is to compensate for the vast majority of the impact we are facing in terms of tariff through price increase.

So this 5% to 20% series of price increases would be sufficient to fully offset the tariff expenses on 232 that you're incurring now?

Yes. I think that's our intent for sure. The intent is to compensate for the vast majority of the impact we are inducing through tariff.

Your next question comes from the line of Akash Gupta from JPMorgan.

I got a couple as well. The first one is on Europe. So maybe if you can talk about what's your -- I mean you left your market for Europe unchanged, but given the war in the Middle East and in higher interest rates, how do you see prospect of a recovery in the European market? And have quantified price increases in North America because of tariffs, but I guess prices need to go up in Europe as well when your hedges especially run out. So can you quantify what sort of magnitude we will be looking at price increases in Europe in rest of the year? So that's number one.

And number 2 is on free cash flow. So again, I mean, if you look at the North American business and your outlook, clearly, that will be a drag for this year. We also have some outflow -- cash outflow from restructuring and actions that you are taking to drive efficiency. So maybe if you can give us a high-level view of how shall we think about free cash flow for this year? And if it will be negative, then how big negative it might be?

I will take the first, and I will leave the second one to Therese. On the European market, I think the good news really is that, I mean, in a market which is still very much subdued in Europe. Again, I've been mentioning -- I mean we're missing 20% to 30% of volume versus what could have been expected prior to COVID. I mean we are truly winning and gaining market share. We're not only gaining market share with Electrolux and AEG, but we're also reinforcing our price positioning in the market. We're gaining market share in the product category where we are really strong, like in cooking, for example, in some markets. So it is really a winning equation today.

And we are investing in marketing in order to dust and promote the brands we do have in Europe. So it is right now a positive dynamic we see in these markets, thanks to all the work the team has been putting in place in the market, which is very difficult. Right now, we don't see price increase in Europe. I mean it's rather the opposite. As I've been mentioning, when I covered the region, we see a level of price erosion which is more or higher than what we have been expecting probably at the beginning of the year. Of course, I mean, I mentioned it. In Q1, the impact we do have due to raw material and the war in the Middle East, I mean, it's very limited. I mean, this impact, as Therese said, would be growing throughout the quarters here. But at this point of time, we don't see any price movements in these regions. And in all fairness, I mean, we don't see -- we're not expecting any significant price movement moving forward.

Maybe one comment on the market as such. I mean, as you're saying, we do see some increases in interest rates and so forth in Europe. The market was flat essentially in the first quarter. Of course, we have been expecting the market to start to grow for the last 2 to 3 years, at least. And it hasn't started to grow yet. And the reason for that is that, I mean, it's only, only driven by replacement today. So even with an elevated interest rate or even with increased uncertainty related to Middle East conflict and so forth. It's really hard to see that the European market could go even more south from here.

And on price, I mean, we did see, as Yannick said, quite high price pressure in Europe. I mean, to see price increases in Europe is very, very unusual. Of course, what could happen is more that the price pressure downwards could ease a little bit, but to see price increases in Europe, I think, is very rare. And then on the cash flow, you are absolutely right. We're not guiding on cash flow. I mean, we're keeping our CapEx for the year at SEK 4 billion. So we don't see an additional pressure from these initiatives on CapEx as such.

But you are right that with the announcements we are having both related to Chile and Hungary that we have announced in the last few days and weeks and also related now to the cash NRI in North America that we will have in the second quarter of SEK 0.9 billion. All of that will be paid out pretty much this year. So yes, that will be an additional drag to our net cash flow for the year.

And maybe on working capital because you'll be closing down production in Anderson. So how should we think about working capital swing from cash point of view in 2026?

Yes. Working capital, I think in North America was in the first quarter pretty negative because the market was simply down. very much. Of course, on the Anderson side of the question, as you can understand, you're not making these type of decisions and building a strategy as the one we have been building with this partnership in Midea in a few weeks. We have been planning for that long in advance. So we have been planning for ramp down in Anderson for quite some time here. So we don't see a significant impact. And we have been planning for this impact, if there is any in the third quarter. So we're ramping down Anderson in the third quarter, but that's all basically taken into account.

And maybe a follow-up on tariffs. I mean we saw that U.S. Supreme Court ruled against reciprocal tariff and the administration has started issuing refunds in, I think, this week or maybe last week from last week. Can you quantify when it comes to tariff, especially what you paid last year? Is there any potential for refunds if you have paid significant reciprocal tariff?

Yes. So we have not disclosed the amount, but we can say that it is a material amount as you can imagine, and you know that we had a very large external factors during last year, and we can say that a large portion of this was related to the reciprocal tariffs. When it comes to the process, it's divided depending on the type of claim you will have, it's divided in 2 different process flows. So what is starting to -- and has been clarified from a process perspective now is what is the easier claims, so which is in the first flow, so to say. And our claims will be in the second process flow, which has not yet been clarified how it will happen and when it will happen. So of course, as we would know more about this process going forward and also potential timing of a refund, we will come out with additional information.

We will now take the next question, and the question comes from the line of Hai Huynh from UBS.

I have 3, if you don't mind. The first one is on the cost efficiency. So you delivered SEK 700-ish million now and reiterated the SEK 3.5 billion to SEK 4 billion. How should we think about the phasing of this to the rest of the year? And the SEK 2 billion savings by year 3 from your partnership initiatives, does it already get included at all in FY '26 target? Do you expect anything to flow through that SEK 3.5 billion to SEK 4 billion this year?

So thank you very much for the question. It's a very important question. And as we said, I mean, the cost saving piece in the environment we are in today is extremely important for us to deliver the year and target. And that's why we have been putting in front of ourselves a very ambitious target once again for '26, which is between SEK 3.5 billion and SEK 4 billion. To your point, we have been delivering SEK 0.7 billion, which is basically meeting our expectation for the first quarter usually in terms of cost savings, especially when you're looking at value engineering, I mean, best cost country sourcing or conversion costs, you have basically an increase quarter by quarter because, of course, I mean, you are having and adding projects throughout the different years. That's why the SEK 0.7 billion is aligned with what we have been expecting for the first quarter, and we are repeating and reiterating our ambition to reach SEK 3.5 billion to SEK 4 billion at year-end.

Now thanks for your question about the additional cost savings or what we're announcing here in terms of strategic cost savings moving forward. We have been announcing is that we will be saving SEK 600 million in year 3 with a partnership of Midea and that will be saving an additional EUR 1.4 billion in year 3, thanks to the optimized footprint and the efficiency we'll be gaining through the organization efficiency. That's, of course, I mean, this saving will be growing year-after-year. And you can see it in the graph I showed it last night, we'll have a saving year 1, year 2, and we'll have a SEK 2 billion saving in year 3. What I want to insist on is that, I mean, the partnership for Midea is a long-term partnership. It is a long-term partnership where we'll be growing. We'll be saving more money, and we will be sharing capital. And saving more money is pretty important because of the scale we do have, the access of the supply base we do have moving forward.

So I think it will be progressively increasing. And I think the amount we'll be reaching and the amount we'll be disclosing is the SEK 2 billion in year 3.

And of course, this is progressing. So year 2 already will be quite a bit of a step-up. But for the first year now, it's really about getting everything up and running, and we are in a squeezed timing. So there will be limited amount in 2026, and it is included in our business outlook essentially, you could say.

Understood. My second question is on the Midea partnership. So I understand the perspective of the cost base outsourcing story. What about the market share dynamic? So you mentioned you are 2% or below on the top load washers and you're trying to get more penetration there. So can you give us a bit of an idea of what is Midea market share on those categories? And I'm trying to get to what is the additional revenue that you may get from this kind of initiative?

I cannot -- unfortunately, I cannot disclose the market share or the turnover of Midea in North America. However, what I can tell you, and you mentioned it, we have 18% market share in food preservation. We have over 10% market share in food preparation in Springfield and Springfield will be long, 100%, of course, to Electolux. So we have more than 10% market share in dishwashing out of Kingston and that will be 100% of electrics. Where we see a big potential moving forward is in the 2 categories where we will be partnering with them

First, I mean, Fabric Care, you mentioned 7% market share in front loader less than 2% market share in top loader, which is, again, the biggest platform sold in North America in washing and in drying. So we have a significant potential to grow in fabric and moving forward. If you're reaching, I mentioned it last night, if we're reaching only 10%, which is half of the market share we have in food preservation for reaching 10% in Fabric Care in the future, that would be 1 million additional pieces for Electrolux. So a significant source of growth moving forward. That's for Fabric Care. But even if we have 18% market share in food preservation, there is still space for growth, and we will be able to access new platforms, thanks to the broad range of product Midea is having today, and we will be able to lower our cost, thanks to the vertical integration and the scale this partner does have today.

So significant level of potential in terms of growth. I've been mentioning that, thanks to these new products, significant level of potential in terms of saving, and it will be an increasing saving as you mentioned it previously as well. And we will be sharing CapEx here, which would be a positive item in terms of cash flow.

Understood. And then my final question. Of the SEK 0.3 billion headwind from both rebate provisions and the Frigidaire recall, how much is it -- and should we expect any further impact beyond this closes?

Yes, we don't separate up the 2 items of the SEK 0.3 billion. We thought that in combination, they are a relevant amount to mention, and that's why we highlight it and also why we highlighted it is because we believe that this is behind us. So you should not be including that in your forward-looking expectation. Of course, it will still stay in our results for the full year, but we should not incur additional similar costs in the quarters to come.

Our next question comes from the line of Timothy Lee from Barclays.

So my first question is about the price increase in the North American market again. So if the market decline for the first quarter is probably due to, let's say, economy or inflation, then how are you the confidence that the price increase will not be -- will not affect your product demand going forward?

I'm not sure I got to tell you the question. I mean the connection is not really good. But in terms of price increase, once again, I mean, we are pretty confident that this price increase will stick in the coming months because we really truly believe that the industry will be moving towards price increases due to the latest tariff structure we see in North America. So of course, I mean, the big question mark is the one you have been mentioning and is how much demand will be impacted by this price increase. We certainly have been putting quite a lot of flexibility in our industrial assets in order to cope with a potential demand decrease in North America.

But I mean, it is absolutely, it is a price increase, which is needed. It's a price increase we have been announcing to our customers, and we are personally pretty confident that, I mean, competition will be following in the same direction.

Got it. And then my second question is about the expenses related to the recall. So we have a couple expenses related to that in the first quarter. Would that be some more expense in the second quarter going forward as well?

Therese mentioned it, and I want just to be very clear. I mean, first of all, I think it is a voluntary recall. I mean we're putting safety as an absolute priority for our customers, and I want to underline that. I mean -- but this recall is behind us. I mean the entire expenses, which are linked to this recall were basically spend in the first quarter, and that's what we have in -- that's the impact we have basically in the profit we have in North America as well. So it is behind us, and we not see any additional expenses in the coming quarters due to this limited recall we had in North America.

Understood. Very helpful. And then my last question is about Latin America. So -- but still, obviously, it was very strong in the first quarter. But you also mentioned the growth rate may slow somewhat throughout the year. So what would be the reason to result in the slowdown in terms of growth? And last quarter, I think we also had the supplier rebate to help on the margin in Latin America. So I'm just wondering whether there will be any -- that kind of increased rebate from supplier in the first quarter as well?

I would -- first, I think we're very proud of our results. In Latin America, we have been organically growing again by 8% in the first quarter. I mean, we are gaining market share in the upper price segment. We have been having a very strong results in this first quarter in small domestic appliances as well, which I want to underline. And in all fairness, I mean, as I said previously, many times, the strategy is sound. The product pipeline we do have is sound. We have been investing in the market here.

The Electrolux brand is extremely strong in the market. We don't see why we would be slowing down in terms of dynamic in this market. In terms of supply rebate, in all fairness, I don't know what you're referring to I mean, to my knowledge, we didn't declare any supply rebate in Latin America. Therese, I mean, do you have anything in that?

Yes, you're right. In Q4, we -- yes, we talked about an amount related to supplier rebate. This quarter was not including any additional supplier rebate. So this was really underlying strong performance by our team in Latin America.

But we are not expecting that right now.

No, we're not expecting -- yes, let's say, the supplier rebate. I mean, of course, we're always working with our cost efficiency. As you know, it's included in the SEK 3.5 billion to SEK 4 billion. but there was a higher amount than usual, I would say, in the fourth quarter, but this is something we're continuously working with our suppliers for sure.

And the next question comes from the line of James Moore from Rothschild & Co.

I've got some questions on North America and external factors. Maybe we could go one at a time. On North America, if I take out your recall, it looks like your clean margin is about 6.5% negative. I just wondered if you could talk about how you expect that to develop into the second quarter? I mean normally, historically, you've done sort of 200 basis point increase quarter-on-quarter which will give you minus 4.5%. But I guess what I'm thinking about is does Section 232 take it worse with prices taking longer to cycle through floor retail. Do we get worse on price/cost before we get better? I guess is the question or any other topics for margin next quarter to consider.

As we said, I mean, certainly, we're not happy about the results we do have in North America in the first quarter. But I mean, the main lever we'd be executing now in the second quarter is the price increase we have been mentioning which will be between 5% and 20%. And as I said previously, I mean, our ambition is to compensate for the tariff increase through the price increase. So I think we have certainly no doubt that we'll have a positive development in terms of prices, I mean, starting end of April.

And how it practically work, of course, I mean we started to pay the additional tariffs from the 6th of April, but it also takes some time before that negative impact is flowing through the P&L as it's flowing through. The cost is flowing through the P&L as you sell the products. And as we mentioned earlier, the price increase will go live in the market really here in 1 week's time. So we believe that we are well in terms of timing of being able to match the negative cost we will incur because of the increased tariff costs and the price increases in terms of timing when it will be in the market.

It's very helpful. And just on margin mix in the North American business. I mean, are my assumptions that cold and laundry are your 2 biggest negative margin businesses by quite some way. And I see you've been quite clever about how you derisk the business. But would it be fair to assume that the rest of the U.S., which I guess is hot, dish, small aftermarket collectively is a profitable business at the moment?

I would just be repeating the answer I gave last night to the same question is that, I mean, there is absolutely no doubt that food preservation worldwide globally in the home appliance industry is the category, which is the most on the price pressure overall. Because, I mean, it is becoming a commodity for many platforms. So that's exactly why we're putting in place the actions we are putting in place with the partnership from Midea. But I mean food preservation is the category with the highest level of price pressure.

Could you help us understand the actions at Anderson, specifically, I just don't really understand why you would lay off 1,500 people in fridge freezer before rehiring 1,300. Obviously, go into laundry maybe require different skills, but are there any other reasons why you're doing it that way and not transferring the employees?

Yes. Let me just repeat what we'll be doing in Anderson, and thank you very much for asking the question, what we have in front of us is a factory transformation. I mean we will be stopping manufacturing cooling products because we have the manufacturing joint venture in Juarez for cooling, and we will be leveraging the entire footprint we do have in cooling and Midea as in cooling as well. And we'll be transforming this factory from cooling into Fabric Care, so washing and drying top loaders in the first half of 2027. So what will be happening is that we'll be stopping production. We need, of course, to dismantle the entire equipment we do have in the Anderson factory.

That's why you will see a write-off of SEK 1.5 billion in the second quarter due to this dismantling, and we would be reinstalling equipment in the Anderson factory in the second half and then in the first half of -- second half of '26, first half of '27 to start production on the laundry side of the equation. I think, again, as I said previously, gigantic potential on the laundry side. And we need to underline as well the fact that most of our competitors are producing laundry in North America today in the U.S. today. So I think having a footprint for laundry in Anderson is making absolute sense here.

So it's a pure timing impact that we will not be producing in the facility for almost 1 year. So we cannot keep the employees without working for 1 year. So that's the practical timing issue.

But we'll be reemploying 1,200 people between '27 and '28.

That makes a lot of sense. And just lastly, if I could. I mean I understand you don't want to put a hard number on your new internal forecast for external factors. But is there any way you could quantify the change of your internal expectation compared to what you expected sort of 3 months ago at the last set of results. And could you just qualify that the increase -- I understand that you're going to pass it on, and that's your ambition. I'm just talking about the gross cost side.

Is the change -- did you say earlier that all of the changes basically Section 232 and is there any way you could say whether the increase in your assumptions are SEK 0.5 billion, SEK 2 billion? Just trying to understand rough orders of magnitude.

Yes. I mean all of the increases are essentially 232, then, of course, it's a little bit more complex than that because originally, we, of course, had the reciprocal and the IEEPA tariffs that we're actually still flowing through the P&L in the first quarter. We then had the Section 122 for a period of time that we're also right now then have been paying also in the first quarter and then when we now have the new 232, then the 122 is not stacking upon the 232 but replacing. So it's a lot of dynamics and a lot of mathematics.

I mean what we can say we won't go into exact numbers, but what we can say is if the current tariff structure stays the way it is right now, also fully impacting the flow from Mexico to the U.S. Of course, we also know that it's in the middle of negotiation of the new agreement for USMCA. So I mean, we don't know exactly where this will develop, and we're not speculating about that. But what we can say is that it is a material increase if the current structure stays in place the way it is today.

Your next question today comes from the line of Johan Eliason from SB1 Markets.

Just coming back to your JV setup. I noticed you are keeping 50% to 55% ownership in the U.S. JVs you're setting up the sales JV on cold products and the Anderson manufacturing for laundry. Was that a requirement from CFIUS to approve the deal? Or why keeping these shares?

No, absolutely not. It was not a requirement from CFIUS. That was absolutely our choice, full discussions as well with our partner Midea. So I think that has not been at all a requirement from CFIUS.

And your next question today comes from the line of Martin Wilkie from Citi.

It's Martin from Citi. Just a couple of questions coming back to the transaction announced last night. And I understand that you can't give details on the Midea revenue that's coming in as part of the transaction. But 1 question we've certainly had this morning from investors is, obviously, you've got a SEK 600 million uplift in profit coming from that Mexican joint ventures. There's obviously an element of is consolidating Midea revenue and is an element of it that's a pure upside to you. Can you give us some sort of sense as to what portion of that sort of belongs to Electrolux, if you like? Is it safe to assume that the vast majority of that SEK 600 million effectively accrues economically to Electrolux?

Yes, that's what we have tried to portray with the SEK 600 million. So how we see it is that the SEK 600 million will be the additional profit in the Electrolux P&L. So yes, what additional profit potentially Midea will make on this partnership. We have not been including in what we have communicated yesterday. And that's also why we try to keep it clean, let's say, with the -- yes, with the revenue and the profit. And we think that the important number for you to include and to encompass is the SEK 600 million that we believe will be an additional profit in our bottom line.

Again, I want to repeat what I said several times, it is a long-term partnership. So we have been giving figures for the next 3 years, and you see them basically evolving. But I mean the partnership with Midea is a long-term partnership for the region.

I know that and I think that number can grow over time is all. But when you say the SEK 600 million accrued to Electrolux. And obviously if that's an operating profit level, there will be a minority. So in terms of how we think about the earnings number, just to get some sort of sense as to the net income benefit of that because you are going to get some, if I understand it correctly, some offset of a minority to Midea.

Yes, that offset will actually go below net income. So what we're trying to portray here is our improvement to EBIT and to net income.

Okay. And then if I could follow-up just on cash because obviously, you talked about delevering down to about 2x net debt to EBITDA. There's a lot of moving parts this year. Obviously, the equity raise and so forth. But just to get an understanding of the timing, and you gave us some detail on this on the timing of the various investments that you're making. Will any of those be significantly cash effective in 2026 in terms of the outflows for the investments and from some of these other restructuring? I know it's over 3 years. But should we assume those largely come in '27, '28 or could some of those come in '26 as well?

Yes, an answer you correct me, but I think we have one slide in the appendix from the presentation yesterday, which is actually breaking up the Q1 and the Q2 NRIs that we right now have announced. So if we then talk about the Chile that we announced a few weeks ago and then Hungary that we announced earlier this week and then, of course, the North American transaction that we are -- did announce yesterday that will come into the second quarter. So I think from an NRI perspective, you have it quite detailed there on how much is cash and how much is noncash.

And what we can say is what we are announcing now in Q1 and Q2 essentially will flow out this year because the Anderson factory will close in the third quarter, and Chile will close now as we speak in the second quarter, and Hungary will close by the end of the year. So potentially for Hungary, you will pay out partly then exactly at the end of '26 and then -- yes, a small part maybe at the beginning of '27. But essentially, the large part will come this year from what we have announced.

And just for North America, as we have been saying it, it's SEK 2.4 billion in the second quarter, SEK 1.5 billion being noncash and SEK 900 million being dedicated mostly to restructuring.

Okay. Thank you very much. We still have a few questions on the conference call. We will take the next question from John at Deutsche Bank. And John, if we could ask you, please only one question, that would be great. Thank you very much.

Yes. Just wanted to clarify the accounting treatment on the Fabric Care JV. So 55% ownership,will you consolidate this? Or does it go below the line because you're deemed not to have operational control?

Yes, we will have operational control. So we will fully so -- with the manufacturing JV in Anderson, we will fully consolidate line.

Your next question today comes from the line of Akash Gupta from JPMorgan.

I had a follow-up on this 5% to 20% price increase in North America. Does it cover all of your sales in the region or part of it?

It's all our sales in the region.

Your next question comes from the line of David MacGregor from Longbow Research.

Have you spoken to your big box retail customers in North America and secured their support for this?

Yes, absolutely. Of course, I mean customer first, and I think we have been calling all our main customers yesterday afternoon about the strategy we're deploying over there. And let me tell you that, I mean, the feedback was overly positive about what we are putting in place in the region. I've been exchanging myself with a North American team late last night and this morning, and it has been positive. So absolutely, yes. Of course, we have been reaching out to each of them.

And then just very quickly, do you give up any flooring space in order to accommodate the Midea brand on those sales floors?

I didn't get your question.

No, no, for sure not. I mean our sales forces, as Yannick, went into yesterday, they will still be working separately with our customers. And no, for sure not, we rather expect that we will have a broader product portfolio, and it's something we would have the ambition to gain additional floor spots.

Yes. Sorry, I didn't get the question. But absolutely thanks, Therese. I mean it is very important to underline and we will keep our identity in North America in terms of design, in terms of features, in terms of go-to-market here in the sales joint venture. What the sales joint venture we'll be doing is to define the optimal range lineup in North America in food preservation for both Midea and ourselves will be working together. We'll be leveraging the R&D resources here. But I mean, our sales force, as I mentioned yesterday, will be separate and there will be an Electrolux sales force facing the end customers in North America.

Thank you. I will now hand the call back to Ann-Sofi Jönsson, Head of Investor Relations.

Thank you very much. So with that, we are going to conclude the Q&A session and this call. I hand over to you for some closing remarks, Yannick.

Yes. Thank you very much. Again, difficult first quarter in North America, strong results in the other regions. But more importantly, we have been announcing a series of initiatives, which are building the future of Electrolux, which have a fruit of a well-thought strategy we have been developing in the last month. And we're absolutely convinced that with this new platform, we will be accelerating our growth, improving our profit and reaching the target we have been communicating in the MCU long term, which is midterm, which is 6%. Thank you very much.

Hello, everyone. I'm Ann-Sofi Jonsson, Head of Investor Relations and Sustainability Reporting here at Electrolux Group. Welcome to this webcast where we will focus on the news from tonight. Note that our full Q1 report will be released tomorrow morning at 7:00 a.m., followed by a webcast at 9. We will run through the presentation. And after that, we will have a Q&A. So for those who are on the webcast, feel free to enter your Q&A throughout the whole presentation, and we'll pick them up afterwards. And so welcome to everyone on the webcast and for those of you who are on the conference call. With me here today, I have our CEO, Yannick Fierling; and on the side our CFO. So with that, over to you, Yann.

Thank you very much, Ann-Sofi. Good evening, good day to all of you. Thank you very much for attending for what is a significant milestone for Electrolux. We're about to announce a series of initiatives, which will be changing long term the future of this company.

The first initiative we are announcing tonight is a partnership in North America with the Midea Group in order to accelerate our growth in the region in order to improve our profit. That will be representing a very solid platform in order to improve in this region moving forward. We're also announcing a series of initiatives in order to improve and optimize our footprint, increase efficiency throughout the organization. Our aim is to expand, expand from a product perspective, expand from a geographical perspective, and that's the fourth column you see on this page.

In order to finance these 4 pillars in order to strengthen our balance sheet, we're announcing as well tonight a fully underwritten rights issue. Beginning of December, we have been unveiling our vision. Our vision is to be the home appliance industry leader in consumer satisfaction, delivering outstanding lifetime experiences with solutions that always get better. And in order to do so, we have been defining 4 pillars. The first one is consumer preference. The second one is lifetime value creation. The third one is cost leadership and the last one is cash generation.

With these 4 pillars, our aim is to deliver a long-term profitable growth for the decades to come. I've been saying many times, 2025 was a year of progress, but it was as well a year where we have been defining our long-term strategy. In 2025, we have been improving the results in North America. We have been growing profitably at the level of 3.9%. We have been strengthening our market position by gaining market share with Electrolux, with AG and with Frigidaire, and we have been reaching SEK 4 billion cost reduction at year-end. In order to deliver this strategy, we have been aligning as well our organization.

2026 will be about executing the strategy we have been working on in 2025. And this strategy is, again, about a partnership in North America with Midea for food preservation and Fabric Care. It will be about gaining efficiency through our footprint and through our organization, and it is about launching new initiatives to grow and expand geographically. And again, to finance all of that and to strengthen our balance sheet, we are announcing a fully underwritten rights issue tonight.

Cost reduction is one of the biggest contributor in our EBIT bridge for 2025. We have been delivering EUR 4 billion. And we have, again, the ambition in 2026 to deliver between EUR 3.5 billion and EUR 4 billion. These cost savings are vital for the company. We are evolving in an environment which is extremely volatile, extremely uncertain. And that's why we are happy to announce that 2 of the initiatives I mentioned previously will be bringing SEK 2 billion additional cost saving in year 3.

First, the partnership with Midea, we will be generating SEK 600 million in year 3 for a capital investment of SEK 1.1 billion. The efficiency gain we will be gaining through footprint and through the organization will be generating an additional cost saving of SEK 1.4 billion in year 3 for a total investment of SEK 600 million. Again, in year 3, these 2 initiatives alone will be generating a cost saving of SEK 2 billion.

We have been presenting this EBIT bridge during the market capital update beginning of December, and I'm sure you recognize some of the numbers. We have been delivering in 2025, 2.8% EBIT, a total of SEK 3.7 billion. And we have been defining very clearly the 3 pillars on which we will be building in order to reach our midterm target, which is 6% EBIT. These 3 pillars are consumer preference, lifetime value creation and cost leadership. And I'm happy to say that what we're announcing today is simply adding a lot of substance in these 3 pillars.

For consumer preference, we will be launching new products, expanding in some markets, develop new channels. In terms of lifetime value creation, we will be able to target a full new ecosystem around the product. And in terms of cost leadership, as I mentioned previously, we will be generating SEK 2 billion in year 3, thanks to this initiative, all of that to face very strong external factors and deliver midterm more than 6% EBIT.

I would like now to address the first pillar we have, which is the strategic partnership for Fabric Care and food preservation in North America. Let me start by introducing who this partner is Midea. Midea is one of the giant for home appliances today. It was founded in 1968, a pretty young company, but this company has been delivering a turnover of $64 million in 2025, which is about 5x the size of Electrolux. It has in terms of engineering, 23,000 engineers dedicated to home appliances, which again is 10x the number of engineers we do have in Electrolux. It is a company which is located in Asia. Asia is ahead in terms of digital transformation. Midea does have today 140 million connected appliances. And we have been producing in 2025, 23 million cooling products, 23 million cooling products. Again, the level of complementarity we have with Midea is very strong. We certainly have a strong go-to-market based on more than 100 years of history. We have 3 strong global brands, Electrolux, Frigidaire and AEG. We have very good consumer insights. We have one of the best 3-star rating in North America in home appliances, and we have a strong network in North America.

What Midea brings on the table on the other side is highly efficient supply chain, cost leadership, will be leapfrogging in terms of digitalization, and they are certainly bringing scale and operational flexibility. We will be building this partnership on an over more than 20-year sourcing supplier relationship. Let me now give you a couple of examples. We have, again, a very strong distribution channel and service network in North America. We have been winning numerous prices in terms of products. We know our customer better than anybody else. What Midea brings on the other side is a strong vertical integration. And you see on this page one example. Midea is producing their own motors under the brand wedding.

I will spend quite some time on the next page in order to give you all the detail on what this partnership is about. We are announcing tonight the creation of 3 joint ventures: 1 sales joint venture in food preservation, joint manufacturing joint venture in food preservation and additional manufacturing joint venture in fabric care. These 3 joint ventures will be enabling us to grow in a profitable manner, broaden the level of offers we'll have in the different product category. We will be leveraging our R&D resources between Electrolux and Midea. We will be increasing our operational flexibility and certainly, we will be improving greatly our cost efficiency.

Let me now go joint venture by joint venture. The first joint venture we're announcing tonight is a sales joint venture for food preservation, which is cooling products. And Electrolux will keep 50% of ownership in this sales joint venture. We will be selling all the food preservation products in North America through this sales joint venture. The sale joint venture will be fed in terms of product by the manufacturing joint venture we're announcing in Juarez, but not only. It will be fed by all the factories we do have in food preservation as Electrolux and as Midea. So we're announcing as well a manufacturing joint venture in Juarez for food preservation for cooling products.

Electrolux will keep 35% of ownership in this manufacturing joint venture. We have been selling 65% of the assets of Juarez, again, for cooling, and that will be generating a positive cash flow of SEK 1 billion in the second quarter of 2026. Anderson, we're announcing tonight the creation of a manufacturing joint venture in Anderson. We are currently producing cooling products in the factory of Anderson. We'll cease to produce refrigerators in Anderson in the third quarter 2026, and we'll start producing fabric care products, washing machine and dryers in the first half of 2027. We will have 55% of ownership in this manufacturing joint venture. We'll be declaring in the second quarter of 2026 in order to make this transformation from cooling to Fabric Care, a nonrecurring item of SEK 2.4 billion. SEK 1.5 billion will be noncash. It will be to write off the assets we do have in Anderson and SEK 0.9 billion will be dedicated mainly to restructuring. We will be investing as well in terms of capital in order to have new products, both in Anderson and in Juarez, a total of SEK 1.1 billion. That's for Fabric Care and food preservation. Certainly, we are keeping our factory in Springfield, 100% owned by Electrolux in order to produce food preparation product. We'll be keeping our factory in Kingston, producing dishwasher, and we will be keeping our Fabric Care factory in Juarez producing today front loader. Let me go again into more detail. First, Anderson and a manufacturing joint venture where we will have 55% of ownership. We will be producing starting in 2027 in the first half, both top loader washer and top loader dryer in this factory. We have been working hand-in-hand with Midea in order to grant product leadership in this product category. Of course, Electrolux will keep its identity in terms of design and in terms of features for this product category moving forward. Now moving to the manufacturing footprint in Juarez for food preservation. We will be accessing brand-new platforms, thanks to the know-how we do have and we're building with Midea. We will be broadening the product offer in food preservation in North America.

Now let me give you an example or an illustration of the potential of this partnership moving forward long term. If we focus now for a second on Fabric Care, the total turnover Fabric Care represents in the North American market is about $12 billion. We have more than 18% market share in food preservation, in cooling products. We have far more than 10% market share in dishwashing and in food preparation, cooking product, but we only have 7% market share in front loader and less than 2% market share in top loader washer and dryer. Just imagine, if we're able to reach 10% market share in laundry, that will be representing an additional 1 million units for Electrolux, gigantic potential today.

Today, we don't have as Electrolux, our fair share in laundry. Moving now into Juarez and the manufacturing joint venture we are announcing in cooling, -- lots of potential, certainly from a product platform perspective, as I mentioned previously, we'll be able to access and develop new platforms on the side of Juarez. We'll be benefiting from a cost side of the equation from a high level of vertical integration coming from Midea. As an illustration, Midea is manufacturing their own compressors under the brand GMCC. We will be able to leverage the R&D capabilities between Electrolux and Midea. We will be able to benefit from best practice sharing through all the manufacturing sites Midea does have worldwide and from our factories in refrigeration. And finally, the last one is really important. We will be able to share CapEx in order to be faster, more agile going to market with new products and new innovation, which will be delighting our end consumer.

Moving now to the sales joint venture for refrigeration. We'll be launching the sales joint venture in the third quarter 2026. We will be owning 50% of the sales joint venture. And we will be consolidating our P&L line by line in the financial income statement of Electrolux. We will be able to work together with Midea to align on the right product offer in the market in North America. The sales team between Electrolux and Midea will be divided. We will have our sales team -- our Electrolux sales team facing the end consumer and the customers we do have in North America. And this sales joint venture will be fed once again by a full range of new products we will be able to source from Midea and from our factories. It is a long-term partnership. And I just want to show you now how the EBIT bridge looks like. And again, we have been adding a lot of substance in consumer preferences, lifetime value creation and cost leadership.

In consumer preference, it's pretty easy. It is about all the new products we will be launching in North America and top rollers, washers and riders are probably the best example. But it's not only that. It will be new food preservation products as well. We'll be improving our mix. We'll be strengthening our competitiveness in terms of R&D and innovation. We'll be faster, more agile going to market. In terms of life value creation, we're able to access to a brand-new expanded ecosystem around the product. We'll be able to develop the D2C channel. And finally, as I mentioned previously, in your 3, but not only in year 3, but in year 3, we'll be saving SEK 600 million through this partnership. It is a very strong and solid platform to deliver the 6% EBIT we're aiming for midterm and to overcome the very strong external factors we have to face in this region.

Let me move now to the second pillar, which is the improvement, the optimization of the manufacturing footprint and the gain in efficiency we will be having throughout the organization. First, as I have been mentioning previously, we will be seizing the cooling activity in Anderson in the third quarter 2026, and our resources will go down by 1,500 people. We'll be rehiring 1,200 people is over '27 and '28 in order to start the factory -- the Fabric Care factory in Anderson.

On the top of the Anderson closure and reopening, we will be reducing our workforce by 3,000 people over the next 3 years. And this reduction will be coming through by optimizing our footprint, better leveraging the assets we do have today, but also working on the overall organization in order to make it more efficient, use modern tool like AI and getting some reduction in terms of corporate functions in order to focus much more on the front line and on the end consumer. Over the next 3 years, we'll be reducing our staff by 8% -- let me just now move into the manufacturing footprint optimization we are announcing today. This footprint is about better leveraging our assets. As we said, as we announced in the last 2 weeks, we have been closing our factory in Santiago in Chile.

This market has been opening up, and it was not making much sense looking at the competitive landscape to keep on producing in Chile. We have been announcing as well yesterday the closure of our factory in Hungary. That's 2 closures. Certainly, I mean, there will be more announcements to come in the coming future. We want to become a more consumer-centric organization. And we have been announcing changes end of 2025 and beginning of 2026 going exactly in this direction. First, we have been announcing the creation of 4 regions: North America, Latin America, EMEA and APAC. P&Ls will be clearly driven by these 4 regions. What we have been announcing as well is the creation of a very strong and efficient product organization. The aim of this product organization will be to serve the 4 regions. We'll be accelerating in terms of well-being and SDA because there is a lot of potential in this product category for a company who has been inventing vacuum cleaner.

What we want to do is to be more efficient in terms of global manufacturing. We want to source product whenever that is making sense as well. We want to reduce the level of corporate staffing and reinvesting into the front line. So if I summarize the footprint optimization and the efficiency we'll be gaining, that's probably the best page we can present. We'll be better utilizing our global manufacturing footprint. We'll be flattening our organization in order to make it closer to the end consumer. We'll be creating and we have been creating a very high product efficient product organization. We are deploying AI tools wherever we can in order to get more efficient, agile and fast in the market. And certainly, and I want to repeat that, we are reinforcing our front line in order to be faster in reacting to our consumer needs.

I will move now to the third bucket, which is about profitable growth. I would just remind everybody that 1/3 of our turnover is made in Europe, Asia, other 1/3 is made in North America, and we have about 22% of our turnover made in LatAm. We have a lot of areas where in all fairness, we don't have our fair share. I would just mention 2 of them. India, very small, gigantic market with a high level of development. Mexico, we are strong in LatAm, but we're not selling products in Mexico. We are selling this type of possibility in order to extend in the future. We'll be expanding as well and taking advantage of the quickly expanding D2C channel in every single region. We'll be looking at any single product category we can sell on the top of what we're selling today. Top loader in North America is a very good example. Lifetime value creation expansion is one of our priority. We are accelerating in terms of connectivity. We will have access to a much broader ecosystem moving forward in terms of consumables, accessories. This category has a much higher profit percentage than appliances. We have been moving part of our organization in this direction. We have a clear strategy in this field, and we will be delivering as well under this pillar. That's closing my part, and I will pass now it to Therese.

Thank you, Yannick. Yes, now we will take a deep dive into the fully underwritten rights issue and the different components of that. As Yannick mentioned, we will be spending approximately half of the SEK 9 billion of the fully underwritten rights issue on the strategic initiatives that we are announcing today. So the partnership with Midea, driving additional efficiency in our organization and in our optimizing our manufacturing footprint and to boost the additional strategic initiatives for long-term growth that we can invest in.

But we will also spend approximately half of the rights issue on strengthening the balance sheet. And of course, to have a strong balance sheet under these conditions with very volatile market environment to have a company that has -- can have a flexibility and agility and resilience in these tough market conditions makes us a stronger company. Of course, you know we have a commitment to have a strong balance sheet and a strong capital structure. And we also have the objective to be at 2x net debt to EBITDA, which if you look at the graph, you see that we have been solidly below 2x net debt to EBITDA for a long period of time as a company. But then in 2022, when we had a lot of disturbancy after the post-COVID time period, we have been at elevated levels. We have been taking decisive actions, as you know, over the last number of years, and we did bring down the net debt to EBITDA to 3x by the end of 2025. And with this additional rights issue of SEK 9 billion that we are now asking for, that would take down the 3x net debt to EBITDA to 2x if we would have the SEK 9 billion additional.

I think what we still want to say is that, as you understand, this is a large transformation ahead of us. We will have a number of nonrecurring items, both in cash and also in noncash over -- and also in cost over the quarters to come. So even with the SEK 9 billion, we do not see that we will be below 2x in the next coming quarters. But we see that when we are executing on the strategic initiatives, we will come down to below 2x in this time period. And then looking a bit closer then at the underwritten rights issue. As you can imagine, we have been going through a quarter of really identifying what should the number be. And we have concluded together with our Board that SEK 9 billion is the right number for us both to be able to fund these additional strategic initiatives we are driving and also to create the financial flexibility and agility that we need while executing these initiatives.

As you may have also seen today, Investor AB, our main shareholder, is also fully supporting us, and they are subscribing to their pro rata of 18.78% and also an additional guarantee of the same percentage, which means that their total undertaking is 37.56%. And the rest of the rights issue is fully underwritten by Morgan Stanley and SEB. The rights issue will include both Class A and Class B shares. And then when it comes to the overall time plan in brief, on the 22nd of May, we will announce the terms for the rights issue. And then on the 27th of May, we will call for an extra general meeting to approve the rights issue.

And the 28th of May, we will publish the prospectus and the 29th of May is the record date where you need to be recorded as a shareholder to be able to subscribe to the rights issue. And then the subscription period is from the 2nd to the 16th of June and the preliminary results of the rights issue, we will have on the 17th of June. And then summarizing what Yannick has really gone through in more detail, where will we use the proceeds from the SEK 9 billion rights issue. So SEK 1 billion to SEK 1.5 billion will be allocated to the partnership with the Midea Group with the majority around SEK 0.9 billion out of this will be a nonrecurring item as we transform the Anderson facility into a -- from being a food preservation factory today to a fabric care factory in the future.

And then the second part, so SEK 2 billion to SEK 2.5 billion will be allocated to drive efficiency improvements in our organization overall, but also in optimizing our manufacturing footprint. And this is where you will also find the 2 announcements that we've had in the last days and weeks with the closure of Chile and Hungary. And the third bucket, SEK 1 billion will be allocated to long-term profitable growth initiatives that you saw, we have very exciting opportunities that today with a constrained balance sheet, we would not be embarking on and executing on, which we will now have the possibility to do in parallel. And then about half of the rights issue will be about reinforcing the balance sheet to -- for us to have the flexibility to execute this transformational strategy.

And just as a calculation example, then it would take down the net debt to EBITDA that we had by the end of '25 of 3x down to around 2x. And to do the same then calculation, you probably saw it as well in the communication today that the net debt to EBITDA by the end of the first quarter was 3.8x. And with the same methodology there, it would also take down the 3.8 down to 2.8 by the end of the first quarter. And then we will take a look as well at the update for the first quarter.

As Ann-Sofi Jonsson mentioned, we will come with the full report tomorrow morning, and we will also have the press conference where we will go into a lot more details, of course, tomorrow. But some financial highlights. The net sales was SEK 30 billion for the first quarter and the operating income, excluding nonrecurring item, was SEK 0.2 billion. And the operating cash flow after investments was SEK 4.6 billion, which was negatively impacted by our seasonal increase in operating working capital that you usually see in the first quarter. But then it was also impacted by a large operating loss in North America. And net debt to EBITDA, as I mentioned on the previous slide, ended at 3.8x for the first quarter. And then moving into some more details on the operating income, where we did see a significant loss in our region, North America.

The market in North America has been extremely tough in the first quarter, so negative 10% with the home appliance market, which is actually the largest negative impact we have had in a 10-year period in a quarter. We also then have a very volatile pricing environment. So we have done a change in accounting estimates for customer rebate provisions. And we also, as you may have seen, have done a limited number -- we have done a recall of a limited number of gas ranges in North America. And these 2 items in combination resulted in a negative impact to earnings of SEK 0.3 billion. But really, the main reason for North America making such a large loss was a combination of the very negative market environment in combination with, of course, still significant continued year-over-year external factors related to tariff cost. If we then take a couple of minutes as well on our 2 other regions, so Europe, Middle East, Africa and Asia Pacific and Latin America. In both these regions, we had solid performance in the first quarter, where both of them were showing improvement in operating income year-over-year, and both of them landed on SEK 0.6 billion for the quarter. And then also taking a look at the market and the business outlook.

As you can imagine, then the market in North America that was significantly negative for the first quarter. We have revised the market outlook down from neutral to negative to negative for the full year. On the opposite, we did see a strong market in Brazil for the first quarter. And so here, we have actually changed in the other direction from neutral to positive. while the European market was relatively flat, and we continue to see a neutral outlook for Europe. And then looking at the business outlook. Overall, it remains essentially unchanged compared to when we talked about the business outlook the last time in connection to when we released the Q4 results for 2025. And this is despite the newly introduced tariff structure related to Section 232 in U.S. that was going into the market from the 6th of April. And just to mention on that, we have already announced relevant price increases in the U.S. market to offset these additional headwinds from the Section 232 tariff. With that, I will hand it back to Yannick to conclude -- thank you very much.

And certainly we will be speaking more and going more into detail about Q1 tomorrow morning. Some concluding remarks. I mean, what we have been presenting tonight are long-term items, which will be changing the profile of profit we'll have in the coming years. It will be accelerating in terms of growth. It will be improving the profit level, and it is once again building a very strong platform for us to move forward.

First, in North America, we have been announcing a partnership with Midea in food preservation and in Fabric Care. We'll be growing in a profitable manner by launching far more products. We'll be faster in terms of go-to-market. We'll be more innovative. We'll be broadening our product offer. We'll be expanding our offer in other markets as well. We'll be strengthening our market position. We're gaining market share with Electrolux, AEG and Frigidaire.

We'll be optimizing our footprint, and we're becoming more efficient in terms of organization moving forward with a significant level of additional cost savings we will be generating through these initiatives. And with all of that here, we will be gaining in agility and speed throughout the organization being more consumer-focused than ever before. It is a long-term move we're announcing tonight. It is a milestone for the company, and we're all very confident that the strategy we have been building throughout the last month, we will be gaining the fruits pretty soon. Thank you very much.

Then we will turn over to Q&A. So we will start with open up with questions on the conference call. And for those of you who are on the webcast, put it into the chat. So I turn over to the moderator.

[Operator Instructions] We will take our first question. The question comes from the line of Akash Gupta from JPMorgan.

I have a couple of questions. The first one is that how big are these 2 categories, food preservation and Fabric Care for you now in North America? I think based on your 2023 capital markets disclosure, it used to be around half of your North American revenues in 2022, but I'm curious to know how big these categories are? And then how does that compare to revenues of Midea in these 2 businesses? So we have a rough idea of how much additional revenue you might get? And then the second question is, how does the margin look like in the business that you are injecting in the joint venture compared to the businesses that you're keeping with you in North America?

Okay. We'll answer the first 2 questions and give you some market shares I've been giving earlier on. We have 18% of market share today in North America in food preservation, 18%. We have 7% of market share in front loader, and we have less than 2% of market share today in top loader in North America, which is once again the biggest platform in North America. Certainly, I mean, what is in this deal for Midea is the strength we do have in food preservation in terms of distribution and the volume we do have over there. I think what we are gaining on the other hand is, of course, much bigger scale, access to new platforms, much better cost. We're leapfrogging in terms of digitalization. And what I can tell you in terms -- I cannot tell you exactly disclose the turnover Midea does have today in North America. But what I can tell you certainly is that, I mean, they are growing in this market. The sales joint venture, I just want to repeat what I said during the call, if I may, we'll have a 50% of ownership in the food preservation sales joint venture, but we will be consolidating line by line the results of the sales joint venture in the financial statement of Electrolux. And that will certainly be an advantage. Therese, do you want to add anything on that?

Yes. Maybe to -- I think it was very clear. But of course, the only part that we will include in the sales joint venture is the Fabric Care -- or sorry, it's the food preservation. So when it comes to the Fabric Care or actually the Topload Laundry manufacturing joint venture, that will only be a manufacturing joint venture. So that will not generate any additional, let's say, consolidated sales with Midea or anything like that. That will be pure sales from us. Of course, it will be boosted because we will have the additional platform on Toploader that we don't sell today. But yes, that will not be co-owned sales JV with Midea.

We will take our next question -- your next question comes from the line of John Kim from Deutsche Bank.

Exciting times here. If we think about kind of the figures you gave towards the efficiencies, should we think of these as a pretty linear cadence? Or is there a bit of asymptote to it? Put slightly differently, are the costs and charges front-end loaded and the benefits nonlinear? You made some pointed comments about relative market share. But is there kind of a midpoint target or a certain level you need to see in Fabric Care before we really start to see margin improvement?

You want to start on the cost, and I will be taking the market share.

Yes. So we actually had a slide in the deck. I don't think we need to go back with the cost efficiencies then coming up to SEK 2 billion. So of course, we're talking about SEK 2 billion in year 3. But we are seeing a steady progression, I would say, with a smaller number for sure in 2026, but then a relevant uptick, I would say, in 2027 and then the full impact in 2028.

Yes. And in terms of market share, I mean, of course, we want to go as high as possible. I mean that's the simple answer. Certainly, I mean, we are -- as I said, we have a market share, which is north of 10% on dishwasher in food preparation, which again, will be remaining at [Equux] -- products. We have 18% in food preservation. So aiming for 10% market share in Fabric Care seems to be pretty reasonable. And if we're getting to this 10% market share for laundry and dryers, I mean, that will be generating 1 million additional pieces for Electrolux in North America, which is very substantial, of course.

But of course, we have a timing impact here where, I mean, we talked about that we are aiming or yes, we actually aim to start the production in the first half of 2027. But of course, until we are fully ramped up and these products are fully out in the market on a full year run rate perspective, it will take some time. And also, of course, why we would want the rights issue is exactly what you are after that, of course, we are seeing that some part of the cost and also some part of the cash out to do the transformation and the restructuring will come upfront. So it's a timing issue of when we will need the cash compared to when we will then deliver the savings.

And just a quick follow-up there. You characterized the laundry market or Fabric Care is $12 billion annually, if I heard you correctly. How would that divide between the front and the top loading segments, if I may?

Yes, absolutely. The top loader segment is bigger than the front loader segment in North America today pretty substantially. I don't -- I can't tell you a clear percentage, but it is substantially bigger than front loader.

Your next question comes from the line of Martin Wilkie from Citi.

It's Martin from Citi. Just to understand a little bit more about the structure of the food preservation JV. I'm not familiar with Midea at all in Mexico. I mean are they effectively bringing cash to the JV? Or are there any assets from Midea that are forming part of that? And also just to clarify, when you've got food preservation at Anderson and you talk about that being phased out, is that -- is anything moving there into this JV as well? Or what happens to those products that are currently manufactured in Anderson?

Okay. Very good. I think let me -- and I have the right slide here just to explain that again. I mean, today, we are producing refrigerators in Anderson, and we will be seizing stopping the production of refrigerator in the third quarter 2026, and that has been announced today. We will be starting producing washing machine and dryers in the first half of 2027. And we will be writing off the vast majority of the assets we do have today for cooling in Anderson. That's a total write-off of SEK 1.5 billion that we will be placing as an R&I in the second quarter 2026. On the Juarez side of the equation, it's a little bit different because, of course, I mean, we'll keep on producing refrigerators as we are producing refrigerator today. However, we will be injecting additional capital in order to develop and manufacture new platforms as well in Juarez, and we'll be sharing this capital injection together with Midea, which has, again, a gigantic knowledge they are producing 23 million cooling products a year currently. So I think to answer your question, I mean, we'll be writing off the vast majority of the assets in Anderson in the second quarter. We'll be investing in terms of capital in a truckload washer and dryer in the first half of 2027. And in Juarez, we'll be injecting capital here in order to develop additional platforms in food preservation.

Maybe just one additional comment. As you see on this slide, we will have a 35% ownership of the Juarez manufacturing JV. So the majority ownership will be with Midea. And related to that, then we're also then selling our factory that we have for food preservation today to Midea to be part of the joint venture. We are selling essentially for book value. So we will be generating, yes, SEK 1 billion in cash as -- or as the transaction comes through. probably in the third quarter, but this will not be generating any profit to the P&L.

I just want a follow-up question on the principle of manufacturing in Mexico. I mean you mentioned that you've been able to offset Section 232 tariffs. But obviously, there's been a lot of movement on that in the past few months. And obviously, you're effecting increasing your reliance on Mexico. I just want to understand the thought process behind that. Are you comfortable with the position of the continued reliance on Mexico for the U.S. market?

The important thing is to have a balanced manufacturing footprint. I mean, Mexico is not in isolation. We will have additional factories in Asia producing cooling products as well. We have a factory ourselves in Thailand, for instance. So you need to keep a good balance. On the top of that, I mean, Mexico is still today competitive in order to increase product in North America. Of course, it has been losing some level of competitiveness now with the recent tariff 232. We are all -- I mean, all the -- all our competitors, the vast majority of them at least are producing appliances today in Mexico. So we will not be isolated in terms of impact from 232 from the Mexican production. And Therese has been mentioning it, because of tariffs, because of 232, but not only because of 232, we will be increasing prices in North America end of April by between 5% and 20%.

Your next question comes from the line of Hai Huynh from UBS.

From UBS. My first one is on the CapEx phasing. How should we think about the SEK 1.6 billion investments across the 3 years? You've guided for SEK 4 billion before. Is it safe to assume that SEK 4.5 billion is for FY '26, if you split it out evenly by 3 years?

No. So as we mentioned on our business outlook, our business outlook overall remains unchanged, also including these initiatives. So that means that for 2026, specifically, we will be able to do the additional CapEx that we need to do within the SEK 4 billion. But then, of course, a large part of this transformation is going to happen in 2027, for sure. So we have, of course, not given a guidance on CapEx for 2027, but you can believe that a larger part of the increased CapEx will come in 2027, I would say the majority and partly as well in '28.

And I want to repeat what I said previously. I mean, the fact that we will be able to share CapEx for new product launches with Midea, both on the Fabric Care side and on food preservation side of the equation is certainly an advantage in terms of speed and in terms of CapEx spending.

Yes. We should also be able for us to be more flexible in the manufacturing and sourcing footprint going forward with a smaller CapEx as well over a longer period of time.

Got it. Understood. My next question is on the economics of the JVs separately, the sales JV and the manufacturing JV. So I understand that you're consolidating the sales JV line by line. So top line, that's 50-50, I get that. But how does that work down the line in terms of profitability? How do you split that? And then is that because of different cost base that -- as in what's the economics of splitting that in terms of the profit line for the sales JV? And also, just to clarify on the manufacturing JV, essentially, these will be consolidated as an associate income line. Essentially, you're sharing a cost line, right? Is that how I should understand it in terms of consolidation?

Yes, of course, this is a quite technical question. But how it will work is both that the -- or the sales joint venture for food preservation, we will consolidate fully. So the full net sales and the full, let's say, P&L. And then 50% of the net income will then be shared under net income with Midea. And the same for the Anderson JV. This will also be fully consolidated by us. And then the margin on that flow, so the margin in that JV will also then be, let's say, redistributed to Midea below net income. And for the Juarez manufacturing JV, you are absolutely correct that the profit from this JV because we really think that the way the structure is set up with the transfer prices between the manufacturing JV and the sales JV, we believe that the manufacturing JV should actually have a profit. And you are absolutely correct that, that profit will come up in our P&L as an income from associates.

Got it. And my final question is on the front lines, customer relations, sales execution, aftermarket. I think in the release, it says that each company will manage their own. So then how do you own pricing and then customer contracts and margin management at that JV?

What we'll be doing in the Sage JV is we will be developing a lineup together and make sure that, I mean, we are keeping our identity. That's extremely important to us with the key features, which have been making basically Electrolux very successful in the past. So we'll be developing together, leveraging the R&D capabilities we do have on both sides of the equation within the Sage JV. But I mentioned during the presentation as well, we thought it was important to keep our identity as well when we'll be facing our customers. So there will be a sales organization dedicated to Electrolux and another sales organization dedicated to Midea.

We will take our next question, and the question comes from the line of James Moore from Rothschild & Co Redburn.

It's James here. I have a few questions, if I could. Would it be possible to give the pro forma revenue for 2025 for North America, imagining that this structure had been in place for the full year? Just trying to understand what the actual increase to revenue and what the change to adjusted EBIT would be. And could you just talk through the margin implications for North America for each of the 3 JVs separately as there are no pro forma numbers whatsoever, and it is impossible to understand truly from the outside at this point with what you've disclosed, what it does for the sales and EBIT direction of North America.

Could you also talk about the effective EV EBITDA of Midea's acquisition -- and then my final question is, why do you think this is enough? Why not more? It still leaves you with quite a tight balance sheet. You could potentially done more. Is that about the preservation of equity for existing shareholders or other topics?

Yes. Maybe on the first question. So we have decided not to do a pro forma because it's really not possible because this is a partnership that is driving the business going forward. So it would be completely impossible to look at this and reconstruct this in the back mirror. So that we have decided not to do, and it would actually be completely impossible and would not give a fair picture. I believe that the comment that I had on the previous question is around how we will consolidate -- and that's why we are quite clear more from the perspective what we believe from an operating result, this improvement will look over time over these coming 3 years. So that is really the number that we believe is of interest for you to understand at this point in time.

You say that Therese, but having listened to 25 years of the company hoping for a 6% margin and you're hitting it maybe twice in 20 years. I'm more interested in what the reality is upfront. So would it be possible to talk about whether the margin is initially diluted by these new structures or is accreted by these new structures from the beginning start point before we deal with the speculative hope that you generate the efficiencies in the future. Is the starting margin about the same or less or more with the creation of the JV.

Yes. I think the best representative of that, of course, I mean, as you know with this, it's not only a partnership, but we are really, I mean, closing one factory, I mean, moving and ramping up another factory. So the construction is really not the same and comparable. So I think the best relevant number to take a look at is the number we have in that case for 2026 in this -- so we have a graph in the presentation with focus on the North American business with focus on the Midea partnership that then in year 3 is coming up to an additional SEK 600 million. And you do see -- we don't have the number per se, but I think you get a quite good estimate of what the additional contribution from this partnership will be in 2026.

Okay. I'll have to study that. But is it possible to talk about the effective EBITDA of their acquisition in Far and to address the topic of whether this is a sufficient amount of equity raise and why not more?

Yes. I think on the sufficient equity raise, of course, as you can imagine, this has been a quite -- yes, a period in the first quarter with quite a lot of analysis and of course, quite heavy work together with Yannick and the full Board to conclude on the SEK 9 billion. And we have really concluded that the SEK 9 billion is the right number, both to be able to execute on this transformative initiative, but also then to, with confidence say that we will come down to the 2x net debt to EBITDA after a number of quarters when we have gone through these largest transformation, we do see and we have confidence in that we will come down to the 2x net debt to EBITDA. And that is really what is behind the rights issue. So this is to do the best for the company, both in the short term, but also to set the company up for a long-term success.

Are you able to comment on the multiple for the disposal to Midea?

I mean -- so yes, what we said is that we are essentially selling the factory for book value.

Yes. You said that it was after the profit multiple.

We probably need to follow up on that exactly what you mean with that question.

We will take our next question. The question comes from the line of Johan Elisaon from SB1 Markets.

I hope you can hear me.

Yes, we do.

Good. Excellent. So exciting changes here. The focus is mainly on the food preservation, the refrigeration stuff. Is that sort of implying that the profitability levels that you are seeing today in cooking and in the front loaded that you do have is supporting your 6% margin ambitions already?

Thanks a lot for the question, Johan. What is certain is that the food preservation category worldwide is certainly the category which is the most under margin pressure. It is -- I mean, it is a category, let's face it as well, which is widely developed in Asia. Asia has been starting with food preservation. You saw that Midea is manufacturing 23 Midean cooling products every single year. So it is a category which is much more a commonality today -- commodity today, sorry, and which is more under margin pressure. So it is the one we need to fix. It is the one we will be fixing with this partnership with Midea.

As I said, and it's very important, we will keep our identity in terms of design, in terms of features. So we will not have the same product as MDA has. I mean I think that's really important in the North American market. But certainly, it is a product category which is under a lot of pressure in terms of margin. Cost is very important. Scale is very important. And through the partnership with Midea, we will have access to a brand-new supply chain overall. So I think it is about cost, it is about scale. And we are absolutely confident that, I mean, we will be improving the profit of this product category substantially moving forward through this partnership. And it is a product category, again, which is severely under pressure. Cooking, and that's why we're keeping as well Springfield Cooking is a product category where usually full built-in full kitchen, I mean, the margin level are, for instance, higher. That counts as well for dishwashing. So you're absolutely right, Johan. Food preservation is usually the product category where margins are the lowest, at least in most of the regions we do have today.

And does this imply that, I mean, these joint ventures are for North America today? What will we see in the other regions in the coming period? Shouldn't it make a similar sense to do something like that in Europe, Asia?

Yes. I think, of course, I mean, your question is logical. But today, what we're announcing is a partnership in North America. And I think we are remaining totally independent in the other regions. However, I mean, as you can imagine, a partnership with a giant like Midea is opening many opportunities. And I think we have been describing some of them here, and it will be our duty to work on these opportunities moving forward. But I would not draw any conclusions tonight on what we will be doing next in other regions.

Okay. And then just finally detail then on trying to figure out the numbers here in the quarters going forward. You're obviously closing down the Anderson manufacturing in Q3. But your supply, I mean, will that be sort of managed by building inventories on a huge scale in Q2? Or do you have other areas where you can source from to make sort of on the sales numbers, a smooth transition of volume numbers or whatever?

Yes. I really want to insist on one thing, Johan, and you're allowing me to do it. We're announcing a big initiative tonight. I mean we have not been creating this initiative to substantiate the rights issue. We have been working on this initiative for more than a year now. And I think it has been complex setup, and we're absolutely convinced that the 4 pillars we're announcing tonight will be changing the profit level we do have in these companies. So as you can imagine, for Anderson, we have been planning very well ramp down and ramp up in these factories in order to make sure that, I mean, we will not be handicapping sales in North America moving forward. So it is something we have been studying for quite some time here. We have been working on. And we have been looking, of course, at ramping up and ramping down this factory and ramping it up again in the first half of 2027.

I think it's fair to say that, I mean, we did see -- of course, we have a seasonal increase in working capital in the first quarter as normal. But of course, I mean, as we are now soon approaching to closure of the Anderson factory, I mean, we have been, of course, producing a little bit extra. So I would say, to some extent, it's already included in the buildup of working capital that you would see already at this point.

Looking forward to the transition with 20 years following Electrolux, I'm sort of wishing you the best for a smooth transition.

We will take our next question. The next question comes from Uma Samlin from Bank of America.

I just want to follow up with the structure of the joint venture. So if we take, I guess, consensus have around $43 billion of sales for North America in 2026. So how should we think about that evolution? How much of -- what's the proportion that's going to be in the JV versus what's the proportion in Electrolux? And then how should we think about what part of the cost will be shared Electrolux versus Midea? Just want to get some clarity there to think about the numbers going forward into '26 and '27.

Yes. So I mean, of course, the full SEK 43 billion that you're referring to will also be consolidated by Electrolux going forward. Even though -- I mean, the food preservation part of that SEK 43 billion will be under a different legal entity, which is then the sales joint venture, but it will be still fully consolidated under Electrolux. And then what you will have additional that you will actually see then we will not do a pro forma, so we will not come back and tell about the numbers for 2025. But what will also go through the sales JV then for the future is the sales for Midea Food Preservation. So this is what you will then see coming on top and that you will clearly see in our sales bridge moving forward because that you will see as sort of an acquisition part of our sales. And then when it comes to the different structures then, so again, we will fully, fully consolidate the SJV with all of the different lines in the P&L, and we will then share 50% of the net income with Meda below net income. And the same for the Anderson JV. So we will again consolidate all of the lines for the Anderson JV, which will, of course, be cost and then it will be sales through our Fabric Care sales through our normal Electrolux company and then consolidated all of the way down. And then for the Juarez manufacturing JV, of course, we will buy at cost, including a transfer price between the KRS M JV to our JV for food preservation. And then whatever net profit there will be in the KRS M JV, we will then include in our P&L as share of associates. And all in all, this should generate an additional profit in year 3 of SEK 600 million.

We will take our next question. The question comes from the line of Timothy Lee from Barclays.

So my first question is about the itself. So I understand you're probably going to do this kind of initiatives and also fix the balance sheet probably in one go. But I think in the past, if I remember correctly, I think you have been saying that the priority in terms of capital raising is probably or let's say, fundraising is probably like using debt over equity. So I'm just wondering how you make the decision to do the YD at this point in time?

Okay. I think I got your question. I mean the line is not very good. Of course, I mean, in all, I mean, our strategy has been evolving. We have been working hard on the different initiatives and the level of opportunities we have seen moving forward during the year 2025, building this strategy is becoming to a level where we said that, I mean, the best tool we can use is a rights issue to, at the same time, finance this initiative in which we fully believe and where we see a very big potential and at the same time, strengthen our balance sheet. So I don't think it's counterintuitive that, I mean, a few months ago, we're not looking strongly at rights issue.

Of course, the level of debt was always making us consider a lot of options, but that was maybe not the first option. at the beginning of the year. But I mean, looking at the potential we had through this partnership with Midea in terms of efficiency, in terms of manufacturing optimization, it became pretty obvious at some point of time that, I mean, the best solution in order to both finance these initiatives with high potential and strengthening the balance sheet was the right issue. And as -- there I said several times, I mean, we have been debating for quite some time on how much. And together with the Board, we all have been aligning that EUR 9 billion was the right amount.

Understood. And to achieve the 2x leverage, do you have a time line now to achieve that target given you have a lot of initiatives and you have a lot of CapEx to be spent under the new initiative as well. So whether you have like a schedule or like a timetable for achieving the 2x leverage?

Yes. I mean the indication that we can give, of course, the large part of this transformative initiatives should really be concluded by the end of '28. We will not be through. I mean we will have additional growth opportunities. And of course, the efficiencies will continue to come beyond that time frame. But the majority and the large heavy lifting of these initiatives will be during this year '27 and '28. So we are really looking at when we are through the large part of these initiatives, we should come down to the 2x net debt to EBITDA.

And again, I mean, partnering with Midea should bring a lot of speed. And I don't want to give you the impression that we will be slow. I mean we are starting the manufacturing joint JV in Juarez in the third quarter. We're starting the same JV in the first quarter. We are starting the production of the top loader, which is on this picture in the first half of 2027, which means, I mean, we have been working really hard already with Midea and with the engineering team in order to develop the product you see on this picture here, which will have product leadership beginning of 2027. So what -- there is explaining is absolutely not slow. It's a standard type of processes and time line we do have when you are launching this type of big transformation here. But we want to be as fast as possible, and we want to become faster actually moving forward in producing more and more products by leveraging the capabilities of Midea's and in order to delight our customers in North America.

Got it. And maybe lastly, in terms of pricing, as you mentioned, you implemented price increase in North America. How does the other players in the market behave right now? Are they also announcing any price increase -- and how is the response of the customers?

Thanks for the question. So as Therese said, what we can tell you today is that we have been sending letters, very clear letters to our customers that we will be increasing pricing starting April 30 between 5% and 20%. And we want to see between 5% and 20%. We certainly cannot speak for our competitors. However, what we can say is that looking at the level of additional external factors we will have to face, I mean, coming from the 232 tariff or coming from the war in Iran, we have a high confidence level to see the entire industry moving towards a price increase.

And we can say with our customers, we are not getting a large pushback, which I think is also indicative of that price increases are actually, yes, coming through on a broader base.

We will take our final question. The final question comes from the line of [Indiscernible] from Goldman Sachs.

Maybe 3 from my end, one a clarification. So maybe starting with that one. At some point in the slides, you kind of have our footprint going down 8% over the next 3 years, I believe. So could you give like a sort of cost-out number associated with that? I think of all the announcements today.

Yes. So we're not only talking about footprint, but we're talking about the manufacturing footprint optimization and of course, a broader organizational efficiency where we will be reducing around 3,000 employees, as mentioned. And as Jannick showed on one of the slides, this will generate additional cost efficiencies of SEK 1.4 billion then by year 3. And you see on this graph that it's quite a large part of that saving will come through already in year 2.

Okay. And maybe just firming up sort of what capital allocation might look like out 2 years. I appreciate there's a lot of moving parts between '26 and 2028, but I suppose with leverage down to 2x now, could you give us a sense of what your ideal capital allocation will look like in the future in terms of do you have a firm sort of leverage target number and what you're comfortable with and how to think of sort of potential buybacks, dividends?

Yes. To be fair, I mean, that is not a discussion that we have started at this point in time with the Board. I think that is well ahead of us. I think right now, of course, the main part will be really to transform the company to become a stronger long-term company and getting to the 2x net debt to EBITDA. And then, of course, we would want to come back to the general dividend that you know for the last couple of years, we have not been giving a dividend to the shareholders. So before we would start to talk about anything around share buybacks or anything like that, if it would ever become relevant, we would first go back to normally, yes, giving out dividend.

Great. And I haven't quite -- I suppose there's a lot of moving parts, but I haven't quite worked out sort of in terms of the footprint of the JV in terms of Asia versus the U.S. My guess is quite U.S.. But could you just give a sense of sort of price competitiveness versus other Asian players given tariffs kind of some of the U.S. footprints and how you're thinking of sort of ability to compete other Asian players?

Yes. I think it's a difficult question. What we can tell you certainly is I mean we're looking at tariff. I think China is very heavy tariff, more than 40%. I mean the Southeast Asia as well is at a level now of 25% according to 232. So I mean, Asia is heavy tariff for products entering into North America, not only at finished product level, but also at components level. Mexico now is entering and is hit by the 232 tariff. But certainly, I mean, discussions have been starting in the frame of the U.S. MCA negotiation. Negotiations are ongoing, and I'm sure that, I mean, there will be evolution as well in the coming months.

This concludes today's question-and-answer session. I will now hand back for closing remarks.

I think again, I mean, what we're announcing today is truly a big milestone for the company. It is not a strategy we have been building short term. It is a long-term strategy where we have been paying a lot of effort with the entire organization to build and announce tonight. We're all absolutely convinced that it could change long term the face of this company and deliver midterm the 6% EBIT we're aiming for. Thank you very much for your attention.

Welcome to the presentation of our fourth quarter results. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting here at the Electrolux Group. With me today, I have our CEO, Yannick Fierling; and our CFO, Therese Friberg. We will go through the presentation. And after that, we will open up for a Q&A session, both for those on the conference call as well as for you on the webcast. [Operator Instructions].

With that, I hand over to you, Yannick.

Thank you very much, Ann-Sofi, and good day to all of you. Very glad to be with you for the Q4 report. I will start, if you allow me, with some highlights about 2025.

We are happy to report that the organic sales has been at the level of SEK 131 billion, which represents an organic sales growth of 3.9%, very close to the 4% we have been communicating about in the capital market update, I mean, midterm. The improvement in the operating income was at the level of SEK 3.7 billion, which represents 2.8% on net sales, which is again an improvement of 0.8 points versus last year. This SEK 3.7 billion were supported by a high cost reduction level of about SEK 4 billion, driven mainly by procurement and value engineering.

We had one of the strongest quarter ever in Electrolux in the fourth quarter in terms of cash flow, delivering SEK 5.2 billion, bringing the entire year at the level of SEK 2 billion, which is taking our financial position in terms of leverage at the level of 3.0.

With that, I would like to go into the fourth quarter. I'm sorry, the slide is not changing. Technical issue, which was working, of course, nicely, this morning. It's always like that. Okay, very good. Now it's working. Apologies for this technical issue. Very good.

Let me deep dive into the fourth quarter here. First, we're glad to report out that, I mean, we have been gaining market share once again in Europe, Asia Pacific, Middle East and Africa and Brazil. We have been delivering a flat market share in North America, very high level of price pressure in the 3 regions. The operating income has been positively impacted by cost reduction at the level of SEK 1.2 billion. But we have been delivering on efficiency in engineering, in procurement and on the conversion side of the equation. On the headwind side of the equation, unfortunately, we had to face a high level of cost due to U.S. tariffs and the currency with dollar depreciation.

Let's move now to Europe, Asia Pacific and Middle East and Africa. First, as I said, I mean, we are happy to say that once again, we have been growing market share with Electrolux and AEG. We have been gaining more market share with Electrolux and AEG than we have been losing by ramping down with Zanussi. Very high level of pressure in this region as well. I mean we have been going into Black Friday. We have more and more pressure from the Asian competitors, but we have been managing to grow organically by 3.6% in the quarter, which is pretty remarkable, especially when you think that the market has been going down by 1%. We had a positive mix effect, helped by significant volume increase here. And the region has been benefiting by a high level of cost efficiency as well.

We have been introducing major innovations in Europe here, and we thought it was wise to fuel this innovation with a higher level of marketing spending. The negative news is certainly on the volume side of the equation. Can we change to the next slide, please? I mean, the negative news is, of course, about the market level. The market has been losing, once again, 1%. We have been down 1% in Western Europe, and we have been up 2% in Eastern Europe. With Western Europe representing more than 80% of the volume overall, the market has been once again down. We are now at the level of 2016. We're 10% below the fourth quarter of 2019. It is a 10 years low in terms of volume. And the market remains subdued. Of course, we have positive signals from interest rate and the construction side of the equation, but it will take time to have these positive signals materializing in additional volume for home appliances.

Moving to North America. Now I mean, the quarter has been very challenging. Of course, we knew Black Friday was highly promotional. But certainly, I mean, we did not expect the level of competitive pressure we have seen in the market. And I think entering into the promotional season here, we had no choice but to reduce the price increases we had implemented throughout the year 2025. And that's explaining why we are delivering a negative EBIT in the fourth quarter. So a very high level of price pressure in North America, which has been forcing us to step down for the price increase we had implemented throughout the year.

The good news is that after the promotional pressure here, prices have been bouncing back to last year level. But still significant negative external factors are driving our results down. And these factors are simply the U.S. tariff as well as the depreciation of the U.S. dollar. Tariffs are what they are, 15% to 20% for imported goods out of Southeast Asia, 55% to 60% out of China. So if the industry is reacting rationally here, and we will see price increase in the coming weeks, in the coming months, we should be benefiting from that being a North American producer. The market has been pretty resilient when you look at this picture here. The market has been going up in the fourth quarter by 1%, mainly driven by laundry. But still consumer sentiment is pretty low and price increase could have an impact moving forward on the demand.

Moving now to Latin America, and I'm glad to say that, I mean, we had another strong quarter in Latin America, gaining value market share in Brazil. The entire region in terms of volume has been growing. We saw Brazil slightly slowing down in terms of increase, but still a good quarter in the region. We had a very strong Black Friday, which is a promotional pressure, but the team has been doing pretty well. And we were helped finally at the end of the quarter by a heat wave, which has been present in the region. Our position remains very strong in the region. I just want to underline one point, which is explaining part of the 11.5% in terms of EBIT. We were helped and supported by a onetime high level of supplier rebates at the end of the quarter in this region. This rebate has not been material for the group, but certainly has been relevant for LatAm.

Let me show you a short video on how we have been communicating during Black Friday in the region.

[Presentation]

So very strong results in LatAm during Black Friday. We're also glad to report that, I mean, we have been reaching SEK 4 billion in terms of cost reduction. And just as a reminder, SEK 4 billion was on the upper level of the fork we have been communicating about in the last months. We have been reaching this SEK 4 billion through value engineering, better sourcing and higher efficiency in our factories. So we have a very strong process in place internally to deliver these type of results.

With that, I have the pleasure to hand it out to Therese, hoping that the pointer will be working, Therese, in your fingers.

Thank you, Yannick. And then looking at the sales and the EBIT bridge. We had a 2% growth in the quarter, which was driven by volume growth and also positive mix in Europe, Middle East and Asia Pacific. And we also had a positive volume growth in Latin America. Unfortunately, if we look at then organic contribution to earnings, it was slightly negative. And this is a result of that the positive volume was then offset by negative pricing pressure, especially in Europe, Middle East -- in Europe, Asia Pacific, Middle East and Africa. And as Yannick mentioned, we also had to back off from the previously introduced price increases in North America in the quarter.

This volume growth and positive mix was supported by increased investments in innovation and marketing. And we also had a quite strong quarter in the fourth quarter in terms of cost efficiency. And we can also mention here that group common cost was below the last year level, and this is a result of cost containment during the year, but also due to part of a timing effect where the cost in group common cost last year was at a high level in the quarter.

When looking at external factors, we had another quarter with significant headwinds. Of course, the introduced tariffs in U.S. continues to be at a high level and a high impact in the fourth quarter. But also, we had a negative currency impact, both from a devaluation -- both from a strengthening of the Swedish krona, which is then contributing to a negative translation effect for the group, but also for North America, where the weakening of the U.S. dollar versus many or several of the important production currencies like the Mexican peso and the Thai baht and the Chinese renminbi is then giving a negative result on the group. And the negative effect in acquisitions and divestments is related to the divestment we did last year of the water heater business in South Africa in the fourth quarter.

And then taking a look at the full year, we had a sales growth of 3.9%, where we had volume growth in all our business areas, and we also had a positive mix for the group. This also contributed to a positive organic contribution to earnings despite that during the year, we did see a price pressure, mainly in the European market that also was negative for the full year. We were boosting and supporting the volume growth and our strong product portfolio by increases in investments and marketing in the year. And as Yannick mentioned, we managed to hit the SEK 4 billion in cost efficiency.

We had for the full year, heavy headwinds in external factors. Of course, the tariffs we have talked about a lot. And on top of the negative currency that we saw in the fourth quarter, also for the full year, we have negative currency mainly in the Latin American markets in Argentina and Brazil and also in the Australian dollar.

And then looking at cash flow. As Yannick mentioned, we had a strong end to the year. So we had SEK 5.2 billion operating cash flow in the quarter, which took the full year then to SEK 2 billion, which was almost in line with the last year cash flow. The strong operating cash flow in the quarter was driven by positive working capital and mainly by a large reduction in inventory. As you know, our seasonality is like this that we always have a positive contribution from reduced inventory in the fourth quarter. But also as we have talked about during the year, we came from a position where we, specifically in certain categories and in certain business areas, were at a high level going into the fourth quarter. And specifically then mentioning air conditioners in Brazil, where we, at the end of the year, had the heat wave in Brazil, which also helped us to reduce inventory further. We're also keeping high containment of CapEx, and this has also been helping and CapEx is below the last year level.

And then looking at the balance sheet and liquidity, we have a solid liquidity and a well-balanced maturity profile. In the fourth quarter, we were amortizing a long-term borrowing of around SEK 2 billion, and we also draw down on the previously announced loan with EIB of USD 230 million. If we look into 2026, we have a maturity upcoming in October of SEK 5.5 billion. And as at the end of December, we have a liquidity, including revolving credit facilities of SEK 32.7 billion. We have no financial covenants, and our target is to maintain a solid investment-grade rating and our leverage improved during the quarter and the year. So we ended the net debt to EBITDA by the end of the year at 3x.

And with that, I hand back over to Yannick.

Thank you very much, Therese. See, it worked fine in your hands. So let's hope it will be like that as well for me.

So moving now to sustainability. And as you all know, I mean, sustainability is in our DNA, and we are very proud to be one of the sustainability leaders in the industry. We do have very ambitious targets moving forward. We are planning to reduce, between 2021 and 2030, Scope 1 and 2 by 85%, Scope 3 by 42%. We're planning to have 35% of recycled material in our product. And in terms of incident rate, we have a very ambitious target to be at 0.3, which is best-in-class in the industry here. We made tremendous progress in 2025. And we're proud to say today that, I mean, we have been reaching, out of the 85% already in 2025, year-to-date, 45%, 33% for Scope 3, and we have 23% today of recycled material in our products. In terms of incident rate, we have been reaching the target of 0.33.

Let me just come back. I mean, it's a little bit more than 1 year that I'm in this position today, and we have been defining very clearly these 5 strategic pillars when I started. First, it was about improving North America. And yes, we had a difficult quarter in Q4 in North America. However, let's take into consideration that we have been growing organically in this market by more than 6% in 2025. We have been gaining shop floor spaces. We have been entering into channels like the contract channels in a very significant manner. We have been ramping up Springfield in Q1 to cruising altitude today. Yes, this market is extremely difficult because of tariff, but producing in North America the vast majority of our products, we are well placed moving forward.

In terms of profitable growth, we have been declaring the target of growing by about 4% mid- to long term during the capital market update. We have been growing in 2025 by 3.9% after a strong growth as well in 2024. So we are restarting to grow in Electrolux after having lost quite a lot of scale in the past years.

We have been strengthening our market position. We have been launching a lot of great innovations in 2025. I would just mention some of them. I mean, we have been presenting the pizza features. I mean, we have been launching this feature in North America very successfully, in Europe. We had new kitchen lines in Europe as well under AEG and Electrolux. We have been launching our new dishwasher in 2025 as well. Lots of innovation here, innovations we have been fueling once again with marketing spending.

Cost reduction, we're proud to say that, I mean, we have been reaching the SEK 4 billion. It was a challenging target we put in front of ourselves here. We communicated a fork between SEK 3.5 billion and SEK 4 billion in the last months. We have been reaching the upper spectrum here. But more importantly, we have a very solid [indiscernible] in place in the company to keep on delivering cost saving moving forward.

Last but not least, it is about culture, it is about leadership. And I always said, my objective is to combine 120 years of history of Electrolux with all the changes we see in the market right now in order to drive more speed and agility. And that's the perfect bridge to the next slide. We have 4 very clearly defined strategical drivers, which are, first, our bread and butter customer preferences. The second one is about life value creation, sitting next to our customers along the consumer journey from the purchase to the disposal of the appliances. It is about cost leadership and certainly about cash. But all of that will only be possible if we have the key enablers on the right-hand side. And one of them is about culture.

And that's why we're happy to announce today a second wave of organizational changes. And the aim of these organizational changes is to get us closer to the end consumers, in order to be able to listen to them and innovate more and more and bring progress in their homes. This new wave of organizational changes will clarify a role, reducing duplication of responsibilities moving forward. We will be faster, we will be more agile, having end-to-end clear accountability in the organization.

I'm moving now to the market and business outlook. During the fourth quarter, market demand in Europe decreased with geopolitical and macroeconomic uncertainty weighing on consumer sentiment. Consumers continued postponing discretionary purchases, and demand for building kitchen products remained subdued. In a longer perspective, it is important to remember that the European market is on a 10-year low. Again, we have been losing 1% in the fourth quarter 2025. Looking at 2026, we expect market demand to be neutral. There are signs of recovery as a consequence of a low inflation and interest rates. However, market demand is expected to remain subdued due to continued geopolitical uncertainty.

Now moving to North America. In North America, market demand remains resilient in the fourth quarter with a plus 1%. The industry market price adjustments did not reflect the implemented U.S. tariff structure, and competitive pressure and promotional activity remained high, and we decreased prices in the quarter. In 2026, we expect market demand to be neutral to neutral negative. Geoeconomic uncertainty is foreseen to remain in North America, and under the current tariff structure, general market pricing should adjust to reflect associated tariff costs. This may adversely impact consumer demand and market growth.

Consumer demand is estimated to have increased in Latin America in the fourth quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the fourth quarter 2024, mainly due to inflationary pressure and high interest rates affecting consumer spending. Brazil will have elections in 2026, which might elevate uncertainties, and we expect market demand to be neutral with a stabilizing consumer demand following growth in 2024 and in 2025.

Let me turn to the business outlook 2026. Volume, price and mix is expected to be positive in 2026, driven by volume growth and growth in the focus categories. This is expected to be partly offset by a negative price development. We anticipate that the high degree of demand will continue to be driven by replacement purchases. We expect investments in innovation and marketing to increase in 2026, again, to fuel our new products. New product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on cost savings and improved efficiency throughout the group is critical for our competitiveness, and we anticipate, again, SEK 3.5 billion to SEK 4 billion earning contributions from cost efficiency in 2026. External factors are expected to be significantly negative for the year, driven mainly by increased tariff costs. The impact from currency and raw material is expected to be relatively neutral. The full year capital expenditure is expected to increase to approximately SEK 4 billion.

With that, I close, and I hand that to you, Ann-Sofi.

Thank you. So we will open up for Q&A, and we will start by opening up for questions on the telephone conference.

[Operator Instructions] We will now take our first question from the line of Fredrik Ivarsson from ABG Sundal Collier.

First, on North America, if you could help us out a little bit with the bridge in Q4 as the losses increased by almost SEK 200 million in the quarter. I presume tariffs and FX played a significant role, as you alluded to. But if you could help us out with that, that would be helpful. And also, if you have any view on the inventory situation in the U.S. market today with some focus on the nondomestic players.

I can start with that, Fredrik. Thanks for your question. I think the main impact, as we said previously here is the fact that we have been reducing our prices. In all fairness, as we said, we were able to compensate for the vast majority of the tariff impact in Q2 and Q3. That was due to the competitive pressure we have been observing in Q4, unfortunately, not possible. And we had during the quarter, we had to take the difficult decision to reduce our prices. That's the first aspect.

The second one, as you said, is certainly tariff, tariff and the devaluation of the U.S. dollar, which has been weighing pretty significantly in the negative external factors we had to face in the fourth quarter. So that's it. I mean, as I said previously, I mean, prices have been bouncing back pretty quickly post Black Friday in North America to last year level. Our last year level is not enough to compensate for tariff.

Now I mean, it's very important to just repeat and remind everybody about the basics. Imported duty goods out of Southeast Asia are taxed today between 15% and 20%. Out of China, it's between 55% and 60%. We have competitors which are massively importing out of these regions here. So if the industry is reacting rationally, what we should be seeing, what we should be expecting in the coming quarters is certainly a price increase.

Now to your last question about inventory. I mean, we have been mentioning it very clearly as well in the last report. I mean, we expect the last goods to be arrived without the full tariff impact to have arrived in North America beginning of October. I think it is wise to see or think that most of these goods have been consumed during the promotional season on Black Friday. So I think most probably what will be remaining today in the North American market are goods which are fully impacted by the tariff level I mentioned previously.

And maybe we can just add that the vast majority of the headwinds we had for the group in external factors is related to North America. So let's say, that's the magnitude of the headwinds we saw that we were then again not able to offset with price increases. But the underlying performance then from the business was positive.

Yes. That's very clear. I think I lost you a little bit in the end, but that's a super clear answer. And then second one on LatAm, quick, if you could just talk about that onetime high level of supplier rebates in the quarter. How much did that sort of add to the margin, which was obviously very high?

First of all, we are very proud about the earnings we do have in LatAm. I think, again, I mean, LatAm is delivering very strong results in 2025. And believe me, it is thanks to our strategy, and it's not a short-term strategy, a long-term strategy we have been putting in place in the region here in terms of product leadership, I mean, go-to-market. So that's the first point, and we should be underlining that. Certainly, we are stressing the fact that, I mean, we had a one-time supplier rebate at the end of the quarter. I mean, this supplier rebate is not material for the group. It is relevant for the region, and that's why we have been mentioning it, but I want to underline that it's not material for the group.

Okay. And then just one last housekeeping before I jump back into the queue. If you have any guidance on the group costs for '26 since they were fairly low last year. I guess you mentioned a timing impact there, Therese. But if you could help us out with some expectations for '26, that would be helpful.

Yes, I would say for the full year, I could say that it is a little bit on the low side. Of course, we will try to really keep a very high cost containment in the group common cost. But also for the full year, I would say it is a little bit on the low side, as an indication.

You mean 2025 was on the low side?

Yes, exactly, yes.

High in '26. Okay, good.

We will now take our next question from the line of Johan Eliason from SB1 Markets.

Also sort of relating to the pricing component. You also mentioned pricing negative in Europe and rest of Asia. I guess, it's mainly Europe. Is that sort of -- you talked about the trade down, but I think it sounded like you have a lot of new products coming in, in AEG and the Electrolux brand. Is it so that you also sort of discounted out some of the older products still remaining, and then the pricing should somehow then be a little bit of a temporary issue? Or is that wrong of me to think like that?

Johan, thanks for the question. It's an important question here. First of all, I mean, mix and volume have been positive in Europe in the fourth quarter. And I think I don't know how familiar you are with the concept of price index, but price index being basically at 100 would be the average of the prices here. What is very important for us, and we have been fighting for that, is to keep the price index we had throughout the year for both Electrolux and AEG. So we absolutely have been very directive on keeping the brand positioning in the regions. And actually, our price index has been even going slightly up.

So the decision we took now a couple of years ago to exit the entry price point and really focus on the core plus and premium segment has been the right decision. And we are occupying today and growing into these 2 segments, which are core plus and premium segments. Where the big price war is going on even in a more fierce manner is certainly in the entry price point segments, where we have more new entrants putting pressure on the price level. And that's taking a little bit down the entire European market. I think what is very important for us is, again, to leverage our brand, to leverage the strength of our brand, leverage the innovation we are putting here in the market and actually occupy and grow where we belong, which are the core plus and premium segment in the market.

Good. Then just on your pricing outlook again. You say price/mix and volume to be positive in '26 and then you focus on volume and the mix, sounding like prices could be negative for full year on a group level. Then your comments on U.S. prices have to adapt to the tariff level leaves me with the thinking that pricing should then be negative in sort of Europe, Asia and Brazil. Apart from Europe, where we discussed the tough in the entry level, what about Brazil? It seems like you were more comfortable with the Q4 development than Whirlpool were in their outlook statement.

No, I think you're absolutely right, first of all, to divide this question per region, because the answer will be slightly different region by region. First, I think if you look at Europe and Asia, we're absolutely expecting the price pressure to continue moving forward. I mean, we will have more and more pressure, as I said, especially on the low-end segment and entry price point segment, and we need to defend basically the value on the core plus and premium segment.

In Latin America as well, you're absolutely right. I mean, to mention Brazil and Latin America, we have price pressures in Latin America as well with new entrants coming out of Asia as well in Latin America and as well in Brazil. However, once again, I mean, our position is pretty clear. We are playing in Latin America as well in core plus and premium. And the new entrants are mainly playing in the low-end segments. And that's why we are gaining and we keep on gaining value market share in this region. And in all fairness, I mean, the biggest battle getting played is in the entry price points here. So we're redefining our go-to-market, we're redefining our innovation in Latin America, the strength of our brand. The brand is very strong in Latin America, and we're executing here.

The last one is, of course, North America here. North America would very much depend if the industry would be reacting rationally now to the tariff structure. As we said many, many times, but I think it's worth repeating, the current tariff structure is benefiting the local producers, and we are only 3 major local producers in North America under the condition, of course, that, I mean, prices would be moving up. Otherwise, you just need to absorb the tariff structure in the negative external factors. So I think it will be very interesting to observe moving forward what the price evolution would be in North America.

I would just finish by one point, which is extremely critical here is that, I mean, we certainly are expecting higher pressure moving forward on prices. And it's making cost reduction and cost efficiency even more important moving forward. And that's why we are putting as well so much emphasis on getting more efficient, preserving, of course, the quality of our products, preserving consumer preference for our products here, but getting more efficient as a company such that we can mitigate the price pressure we'll be encountering in the 3 markets.

We will now take our next question from the line of Uma Samlin from Bank of America.

My question is on the raw material front. I mean, given a lot of the raw mat that you use, steel, for example, the prices increased quite a lot over the past few months. I was wondering that how do you think about that going forward? It seems like you think it will be neutral when it comes to raw material impact in 2026 in your slides. Just wondering how does that work? And how should we think about that? That's my first question.

Absolutely. What we said, just to be very precise, is that, I mean, the impact from currency and raw material is expected to be relatively neutral. But let me put a little bit of flavor on that. As you know very well, we are hedging. We're hedging our plastic material, and we're hedging even on a longer time period, I mean, steel. So I think we have been hedging part of plastic, and we have been hedging part of steel. What we see right now, of course, is a potential increase in steel in North America because of tariff. So that's what we're expecting here. So I think we see pressure on the steel side of the equation on North America. However, if you balance, I mean, currency together with raw material, we see that to be relatively neutral moving forward.

Therese, do you want to add anything on that? No? Very good.

Okay. And just a follow-up on North America. I was wondering like what are the dynamics you're currently seeing in Q1 post the Black Friday period? I mean, obviously, I guess you understand that a lot of the inventory has been perhaps still there for the Black Friday promotion period. But after that, I guess, previously, you've said that you expect pricing to normalize, stabilize going forward, because it wouldn't make sense for especially the Asian competitors not to compensate for the tariffs. So just wondering, what are you seeing today on the market? Are you seeing similar dynamics so far in January as in Q4? Or are you seeing any improvement there?

I think -- of course, I mean, we will not be discussing in detail about Q1. What I can tell you is that, as I said, I mean, prices have been bouncing back in December to last year level post Black Friday, and they have been bouncing back quicker, I would say, compared to 2024 post Black Friday. I think I'm stating the obvious to all of you here, but I mean, there has been quite a lot of discussions around tariff as well with the Supreme Court. And I think this discussion probably has been inducing doubts on how sustainable tariff would be moving forward or if there will be changes. So I think now it's pretty clear that, I mean, the decision will not be -- has not been happening in the first weeks. So again, with the level of tariff we're having out of Southeast Asia and China, rationally, I mean, we should see movements at least in the market.

Sequentially, we have seen prices then improving post Black Friday, but we're not really seeing price increases to offset the current tariff structure.

We have a few questions from the web as well. And here is one that is a little bit repetitive to what we have been speaking about. But are 2026 savings enough to offset external headwinds? And any color on where external headwinds will have the main impact?

I think, again, it's very difficult to say. I mean, we don't know exactly how currency will be moving on. Very difficult to predict here on the matter. What we say is that, I mean, we're setting again very ambitious targets in terms of cost reduction, which is between SEK 3.5 billion and SEK 4 billion in 2026 here. And I think it will be of prime importance to deliver on this target to face any type of headwinds we will see in terms of price pressure, tariff and others moving forward. But again, as Therese said, I mean, tariff, we were not able to compensate, at least in Q4, the full tariff impact through our pricing strategy.

And on external factors, of course, as we've talked about, we expect currency and raw material, with the current levels and the, let's say, current hedging, to be essentially flat right now. And then, of course, we have significant headwinds still year-over-year in tariffs. And then we are still having some inflation. So we're still having, of course, some high inflation countries that will also be a negative impact a little bit then, yes, broader across the regions.

Now we go back to the conference call again.

We will now take our next phone question from the line of Akash Gupta from JPMorgan.

I have a couple of questions as well. The first one is on external factors. I think you said you're expecting significant, but I was wondering if you can help us quantify a bit. So if you look at, in second half last year, on average, you had SEK 700 million-ish external factor with SEK 1.5 billion in second half primarily coming from tariffs. So is it fair to say that when we look at 2026, probably we should expect similar SEK 1.5 billion external headwind in first half before it might go down a bit in second half, because you have the same base as year before. And therefore, overall external factors based on how it looks today could be somewhere below SEK 2 billion. Would that be a good estimate?

Yes, of course, we are not that specific, but your overall rationale seems like a reasonable logic.

I would just remind everybody that in the fourth quarter, at least, I mean, the external factors were split between tariff and currency and the depreciation of the dollar.

And my second question is on your cost efficiency. Again, the number you guided for 2026 coming in ahead of what people were expecting. But maybe can you tell us about where is it coming from, which geographies, which product lines? And will there be any cost to get this cost efficiency that might lead to some one-off below the line? And also, when we look at the phasing of this cost efficiency, I mean, can you give an indication? Last year, we had a very big Q4. How should we think about the spread between first half, second half this year?

Thanks a lot for the question. I think it's an important question. I mean, as mentioned previously, we have been putting in place -- end of 2023, actually, we started to put in place a cost excellence program in the company, which is a very well-structured program, a cross-functional program heavily focused on engineering for design changes, procurement in terms of sourcing and of course, conversion in our factory. I mean, we took some time to ramp up in 2024. And in 2025, I mean, this program has been delivering to the level we have been describing here on the SEK 4 billion.

It is, again, very much process oriented. The program is the same across product categories. So I think there is no significant differences in terms of product categories here. And it is as well, I mean, very well distributed across the different regions. So no major differences from product line to product line or from region to region. I think the important matter is really the systematic approach we have to address cost reduction and efficiency. And I think, of course, we'll be leveraging that moving forward.

We will now take our next question from the line of Timothy Lee from Barclays.

So the first question, I would like to follow up a little bit on the Latin America, the supply rebate. What's the nature of this given it is onetime, why it is not recurring? And if you think about the margin going forward, what level of margin should we expect for the Latin American market if we are not considering this supplier rebate to continue?

I want to repeat what I said previously. First of all, I mean, it's not exceptional. I mean, we have year-end rebates on the supplier side of the equation. And Michelle, our procurement lead, with the entire team, I mean, globally and in Latin America, have been doing an outstanding job in 2025 here, which have been driving to a one-timer significant rebate at year-end. But I want to repeat, I mean, and I think it's very important in terms of verbiages. I mean, this one-timer is not material for the group. It's only relevant for LatAm, and that's why I think it was very fair to mention it.

On the other hand, I mean, if you look at, I mean, the 3 first quarters, and the last quarter is always the strongest one in the year from a seasonality perspective, we have been delivering very well in Latin America for the 3 first quarters. And I think we had a great Black Friday, again, based on an outstanding work from the team, especially in Brazil, but as well in Latin America, which have been driving to these results. That's what I would be saying. For sure, I think it was worth mentioning this one-timer. I mean that's very fair here. But I mean, that should not be undermining really good ongoing results for Latin America.

And while we wanted to mention it, it's not a one-timer, if you look at it in the full year perspective. It is a one-timer in the sense that the full effect is happening in the fourth quarter. So that is what is then boosting a bit additionally, let's say, the results, specifically in the fourth quarter for Latin America.

It's fair to say that -- obviously, we have the seasonal factor, we have the seasonal stronger quarter in the fourth quarter, but this year is definitely much stronger. So can I assume, if we are not seeing this higher rebates than normal, it is probably the margin in the quarter is somewhat similar to what we had in the past quarters or in the previous year in terms of seasonality?

Again, I want to repeat. I mean, there is always a seasonal effect. I mean, in our industry here, fourth quarter being the strongest quarter here. I mean, we cannot go much more into detail here regarding that, but I think the explanation we gave is the one. It is a strong quarter in Latin America. I mean, these are onetime rebates not undermining the performance level in Latin America right now. And again, it is something which is not material for the group, but relevant for Latin America.

And what we want to say is that Latin America has not reached a completely different profitability level. So I guess your conclusion of that, it is continuing to perform at a high underlying level, boosted by additional seasonality in the fourth quarter and by this additional supplier rebate.

Okay. Understood. And my second question is on Europe. I think you also mentioned there was some positive effect on earnings due to the phasing of the innovation and marketing expenses between quarters. Can you elaborate a bit more on that? Does that mean there was some marketing expenses, which probably deferred from Q4 to, let's say, Q1?

No, not related to Q1, I would say. But it's more the phasing as well during the year where, specifically for Europe, we have had some additional marketing earlier in the year compared to last year. So it's only a phasing, I would say, within the year of 2025.

Understood. And my final question would be on your cash flow statement. I think there was a provision that you released in Q4 of SEK 476 million. Can you explain what's the item for this release?

No, that we don't recognize a large provision that was released. The main impact that we mentioned is the reduction of inventory of SEK 3 billion in working capital.

Yes. And that's what we said. I mean, there was a very significant effort in the fourth quarter to reduce our inventory in the 3 regions, and that's what we have been delivering.

Okay. Thank you. And we have more questions from the web. So the next question is, the leverage improved in the fourth quarter, but still the net debt remained rather high. So could you -- or do you have concerns about the net debt level? Could you elaborate around that?

Yes. Listen, I mean, we have been delivering SEK 3.7 billion in EBIT in 2025 here, 2.8%, which is 0.8% better than last year. We have been getting our leverage to 3.0. But I mean, it's a fact, I mean, our debt level is pretty high. And I would say that like any other companies in the same situation, we are constantly evaluating the capital structure we do have today in order to deliver the strategy, the profit and the growth we have in front of us.

Okay. Great. Now we turn over to the telephone conference.

We will now take our next question from James Moore from Rothschild & Co Redburn.

It's James from Rothschild. I've got a few. I'll go one at a time, if I could. Just on cost efficiency, great to see the SEK 3.5 billion, SEK 4 billion again in '26. And I know you're doing an ongoing best cost country procurement sourcing action, and you're trying to be more sustainable in the ability of savings to get every year. I'm just wondering, is this level for '26 indicative of the sustainable potential in the outer years of, say, 2027 to 2030? Or is the run rate this year still elevated? Is there any sort of way you can quantify what your new procurement savings machine looks like in the outer years?

I think, first of all, thank you very much for pointing that out. And good day to you. I mean, because, yes, best cost country sourcing is absolutely something we are focusing on in the procurement organization. Big focus in 2025 with the arrival of Michelle. Michelle is located in Asia today. And I think we have been focusing throughout the year to understand what best cost country sourcing was for the different regions, because as you can understand, maybe, I mean, China is not a best cost country sourcing region any longer for North America, at least for all the components we do have today.

So we have been really doing, I think, a good job on the procurement side of the equation to expand the supply base. We have to be fast as well in releasing these components here without endangering the quality we do have. And that has been a source of the saving you see right now. But I mean, whatever we have been implementing in 2025, of course, will remain in our products in 2026 moving forward. And we have this clear process in taking additional actions in procurement in order to investigate what are the other components we may be going and source from better suppliers.

But you can't say whether the rate in '26 is elevated versus the outer years?

I think -- and again, in all fairness, I mean, we -- I don't want to -- I'm never somebody who is pleased to start with. So it's difficult to be fully satisfied about that. But in all fairness, I mean, the delivery we had in 2025 was a strong delivery. And that's why I think we were able -- I mean, procurement has been a major contributor in delivering part of the cost savings here. So I'm expecting them not to slow down in 2026.

Okay. And just on price, I hear everything you say net negative U.S. -- sorry, Europe, Asia more than offsetting positive U.S. I would have hoped for a sort of like a mid-single-digit price hike all in net after promotion in '25. And obviously, it depends on the behavior of rational or not rational agents. But is it fair to assume that you're assuming materially less than 5% behind your comment?

And I'm trying to gauge your degree of conservatism. Do you think that it is possible to achieve that in the situation that the Chinese and Korean manufacturers hike their prices? And talking of that, tied to that, have you seen the Chinese or Korean manufacturers hike their prices in the first month of the year? I can't see any channel indications that they have yet.

First of all, I mean, I think we should not be forgetting about what has been achieved in the first quarters of 2025 in terms of price increase. And I need to recognize my North American team for the agility they have been showing, because the picture has been changing several times, I mean, throughout the months in 2025. And we have been taking and grabbing any opportunity we had to increase prices, and we have been leading price increase in Q2, Q3, and we have been compensating the vast majority of the tariff impact in Q2, Q3. I mean, this situation was simply not sustainable any longer in Q4, especially in the light of the promotional period we had. And we had to face reality, especially looking at, I mean, potential volume impact that we had to step down on prices.

And let me tell you that promotional level in 2025 was at least at the same level as in 2024, which is pretty incredible when you think about the tariff level imported finished goods are facing today, 15% to 20%, 55% to 60%. So I cannot -- I mean, as Therese said, we have not seen -- we have seen basically prices bouncing back in December quicker than last year. But in all fairness, I mean, we have not seen tariff being reflected in the price level in North America. Now the big question is -- I mean, we are benefiting from producing in North America. The big question is, is this situation sustainable with 15% to 20%, 55% to 60% tariff for people and for competitors which are sourcing most of their products today for the North American market.

Great. I've got a couple of more technical ones, if I could. Just in terms of your external factors, I think, Therese, you mentioned the majority of the SEK 739 million group impact was in North America. There's obviously some dollar impact and there might be some stuff in Asia and Europe. But would it be fair to say roughly SEK 0.5 billion was the impact of pure tariff in the quarter? And would it be possible to say whether your FY '26 tariff assumption is closer to SEK 1 billion or SEK 2 billion, to gauge the tariff?

Yes, we don't give that specifics. But yes, I would say a relevant portion of the external factors was related to currency in the fourth quarter and the rest was tariffs. So there was a significant impact of tariffs.

The majority was tariffs.

Yes. And this is, of course, the level that we are expecting to continue for the first half. And then to your point, it will then -- for the second half with the current tariff structure still being in place, it will sort of even out from a year-over-year perspective.

Okay. So we comp out easier in the second half? Could you remind us, was the third quarter a similar magnitude to the fourth? Or was that sort of like half?

It was similar, I would say.

Okay. So it's really a first half outstanding impact that we have yet to address?

When it comes to the tariff impact, yes, the majority in the first half.

That's great. And just the final one, just going back to that other point. Has there been any indication of Asians rising price in the U.S. market in the last 30 days?

No, not apart from what we mentioned, that sequentially, the heavy promotions from Black Friday has been, of course, lifted, so to say. So sequentially, we have seen pricing coming up, but we're not really seeing price increases to offset the tariff structure that is in place on top of that.

Thank you very much. We are now running out of time. I know we have more questions. We will make sure that we will get back to you from the IR team. And I would like to thank everyone who has listened in, but I would also like to hand over to Yannick for a few closing words before we end this session.

Again, we have been making progress in 2025, and we have been delivering according to the strategic drivers we defined early on. I mean, we're very much looking to do the same in 2026 and delivering basically in the coming quarters. Thank you very much for attending today.

Thank you very much.

Very welcome to the Capital Markets update here at Electrolux. So welcome to you here in the room and also welcome to all of you who are viewing on the web.

For those of you who are here in the room, I would like to start with a very, very short safety instructions. We have 2 emergency exits: one that you entered and one up in the corner over there. We have hosts here that will help you in case of an emergency. Assembly point is outside of the building, and they will take you there. And in case you need safety equipment, it's at the reception where you came -- which you passed through when you walk here.

So over to the agenda. Today, we're going to talk about our strategy and the updated strategy will be presented. It's going to be presented by Yannick, our CEO; Therese, our CFO; and Michelle, our CPO. Here they are. The IR team is also here in case you have any questions at all. After the presentations, we'll go through a Q&A session. [Operator Instructions] And after the Q&A, we will close the webcast. And for those of you who are here, we will take a brand booth tour outside here and end it with a mingle and pizza tasting. So with that, I hand over to you, Yannick.

Thank you very much Ann-Sofi. Good day to all of you. Very happy to see you back. Welcome to the people online and certainly welcome to everybody who has been joining us in the Electrolux headquarter. Very happy to be here for this capital market update. That would be giving us the opportunity to look back into '25 and give you a fair glance on what is coming up in terms of strategy.

As I've been saying it before to many of you, I've been working in this industry for more than 25 years. And I've seen more changes in the last 5 years that I have been experiencing in the first 20. Post-COVID this industry has been going through a big storm, quite a lot of turmoil. And I'm absolutely convinced and positive that the Electrolux group has been taking the right, very courageous decisions.

Let me just mention a few of them here. Electrolux kept on investing in the industrial tool for the last 3 to 4 years. We have been innovating and launching products in every single region. We have been resizing the organization. We have been reducing our workforce by more than 20% between 2023 and 2024. We have been stepping up in terms of cost reduction first, by downsizing the organization after by taking cost out of our products. And finally, we have been sharpening our strategy by divesting from noncore assets, but also by refocusing the entire organization in the premium segment.

Let me look a little bit forward, and I've been saying that for the last quarters, our main priority are 5 today. And the first one is pretty obvious. We will be improving North America. We have been improving North America. We have been growing in North America by almost 10% in 2025. We have been expanding our presence on shop floors. We have been expanding our presence in many channels like the contract channel. We have been launching major innovations, you will be able to taste one for once here, which is the pizza baked on ovens. We have been doing the right things in North America, and we have been making progress, taking Springfield to cruising altitude as well, but we need to do more in order to bring this region to a 6% EBIT.

I personally very much believe that in order to get to the targeted profitable level, we need to keep on growing. We have been losing too much market share in the past years. We need to regain this market share in a profitable level. That's why profitable growth is the second pillar you can see on this page. We need to strengthen our market position by keeping on launching consumer relevant innovations in every single region.

We need to keep on doing what we have been doing in the last years in terms of cost reduction. We're well placed to deliver once again in 2025 between SEK 3.5 billion and SEK 4 billion in terms of cost reduction. We need to keep the space moving forward.

Last but not least, this company has more than 100 years of history. We're very rich in terms of legacy. What we need to do is to combine this richness with more speed and agility moving forward.

That's why I will be presenting to you today a strategy, a strategy which is ambitious, a strategy which has been built with the entire staff in full cooperation, a strategy which has clear responsibility and accountability moving forward, a strategy which has clear projects and initiatives with timelines. And this strategy will be laid on key enablers, which are the operating model. We are changing the organization, meet people and people is the major resources we do have and certainly the culture.

I'm very proud today to present the new vision for Electrolux, which would be the North Star for the company. This star we will be following as an organization. Let me just read it to you: Our vision is to become the home appliance industry leader in consumer satisfaction, delivering outstanding lifetime experiences with solutions that always get better.

Consumer satisfaction is today our bread and butter. We have some of the best consumer star rating in every single region. We're winning prices, prices that we'll be showing in a couple of pages. We need to innovate and deliver outstanding product. Our customers love our product. Lifetime experiences is about standing next to the consumer at every single step of the consumer journey. Building consumer intimacy, building consumer loyalty moving forward, connecting with the consumer and monetizing this connection. We have solutions that always get better and not older. Most of our new platforms will be connected. With this connection, we will be able to upgrade the appliance exactly why like your phone is getting upgraded from a software perspective. In terms of durability, we will be breaking through.

Let me get to the main consumer -- main strategic drivers. The first one will be consumer preference here. And the consumer preference is built on brand strengthening, product leadership and go-to-market. The second one will be lifetime value creation here. And as I said previously, it is about consumer journey ecosystem, innovative lifetime solutions. The first one is about cost leadership. And Michelle will be presenting that in a few minutes. And the last one is about cash. And I'm used to say cash is king and the entire royal family here. We will certainly be focusing on the bottom line here, gaining efficiency in terms of working capital and capital expenditure.

The next page is giving you a picture on where we are. I mean 1/3 of our turnover is realized in Europe. Another one is realized in North America. We are generating close to 1/4 of our turnover in Latin America and slightly more than 10% in EMEA, Middle East and Africa and Asia.

We have 3 main product categories. The first one is Care, which is englobing dishwasher, washing machine and dryer. Representing about 30% of our turnover. The second one is Wellbeing. And in Wellbeing, you have key historical product categories like Electrolux vacuum cleaner. And the last one is finally the products you have in your kitchen. I mean food preparation and food preservation representing 61% again of the turnover.

Financial targets. And we have been publishing them this morning. We kept our commitment in terms of EBIT 6%, we will be delivering more than 20% on RONA side of the equation and the capital turnover rate will be at least 4x. The single big difference we have is the first column you see on this page, which is about annual organic sales growth. I'm -- as I said, I'm absolutely convinced that we will only be able to reach 6% if we're growing. In the past, we said that we will not be fueling growth before getting to 6% EBIT. Today, what we're saying is that, I mean, we need growth to get to 6% EBIT. And our target is to grow by more than 4% organically in the coming years.

Let me just go to the 6% bridge at a group level first. And as you can see outlined on this page, you have the 4 main columns, which are consumer preference, lifetime value creation, cost leadership and external factors. In terms of consumer preference here, one of the main factor will be growth. And growth will come through expansion, expansion, geographical expansion in areas where we're not very much present today. Expansion from a product perspective, we'll be focusing on key markets where we are strong today and we'll be getting stronger, and we'll be expanding as well in terms of channels. And I think one of them, obviously, is the D2C channel. Many opportunities we do have in front of us.

From the lifetime value creation here, it will be about ecosystem, creating a partnership with a lot of third parties around the product. Along the lifetime from the purchase stage to the disposal stage of the product. The third one will be about cost reduction here. And as you can see, there is one point about footprint. We have a good footprint. We have factories in Asia. We have a factory in Thailand. We have a factory in China here. It is about how we will be utilizing this existing footprint in the best possible way, reducing cost.

And the last one is about external factor. And as you can see, we are starting with 2024, and we are facing in 2025, significant external factors, one of them is tariff, and we don't see these external factors moving away in the coming years.

If you allow me, I would like to deep dive into North America, which is, again, one of the main focus points we do have. And you will find the same for columns, consumer preferences, lifetime value creation, cost leadership and external factors. We want to grow in North America. We have been growing in North America, again by almost 10% in 2025. Tariff is a big subject, and we all know that, I mean, the latest tariff structure will be benefiting local producers and we are one of the 3 local producer. We will be taking full advantage of that moving forward.

However, we'll be expanding as well from a product perspective. There are many product categories we're not in today in North America. And if I can give you one example, it is the vacuum cleaner. We're just relaunching an upright vacuum cleaner in North America that will be generating additional revenue and additional profit. We'll be expanding in channels, the contract channel was one of them. D2C is another one. So lots of opportunities to move further in North America. Lifetime value creation is again about ecosystem and the D2C channel. We will be gaining inefficiency in North America moving forward. Springfield has been reaching a cruising attitude, but still, there are pockets of efficiency to be gained in the coming years. And again, tariff would be one of the headwinds we had in 2025, and it will not be going away in 2026. That will be driving us towards 6%. Again, there is a very detailed plan next to this bridge here with very clear accountability and responsibility.

Moving into consumer preference here, and I will be jumping to one of the main strengths we do have, our brands. We have 3 main brands: Electrolux, AEG and Frigidaire, and we have been spending a lot of time in the last 12 months clearly identifying who our consumer targets are. Clearly, refining the identity of every single brand, understanding who our target competitors are for Electrolux, AEG and Frigidaire.

In terms of identity, Electrolux stands for Scandinavian design, human centricity and legacy, we have been existing more than 100 years. AEG is much more about precision, performance, German engineering design. And Frigidaire is about affordability, legacy, modernity. And as you could see, at the introduction of this session, we have been dusting the brand, launching new campaigns here more modern campaign, giving a new image for these 3 brands.

The North American team has been doing an outstanding job mixing up Frigidaire in the last years. Few years ago only, the price index of Frigidaire was around 80. Price Index being 100 is the average prices you can find on the market. So only a few years ago, Frigidaire was around 80. We are close to 100 today in Frigidaire with the introduction of 2 signature brands, which is -- which are Frigidaire Gallery and Frigidaire Professional. Electrolux is a premium brand, mainly focusing on front loaders in North America. And as you can see on the right-hand side here, we have been downsizing the Frigidaire brand, but growing with Frigidaire Gallery, Professional and Electrolux, mixing up our price index, mixing up our product.

And the best illustration is when you look at products. If you look at food preservation, we have been growing with high-value appliances. Upright freezers, multidoor, side by side, when we have been going down in terms of share with entry price point products like top freezers. Story is exactly the same on food preparation with wall oven, freestanding front control, which is a premium product, where we have been growing significantly while reducing our presence on freestanding rear control which is an entry price point product. Same story for laundry and dish care. So mixing up, gaining shop floor spaces, expanding our presence in different channels.

Many awards, many recognition. We have been putting a few of them on this page. A few weeks ago, we had a supplier partnership, a journey with Home Depot, one of our main retailer in North America. And we're very proud to say that we got 2 prizes. The first prize was the best supply of a year and the second prize was the best innovation of the year. Never ever a supplier has been getting these 2 awards at the same time, big recognition for the North American team.

Latin America, fresh out of the press here among -- we were recognized among a top brand among with 15 preferred brands in Brazil for the Generation Z. In Europe, many recognition, I mean, for the ones who know Germany, many customers are looking at StiWa. StiWa is the main test institute in Germany, for appliances. We have been winning 7 StiWa awards in laundry over the last 24 months. Never ever a manufacturer has been winning as many StiWa awards in Germany.

And very lately, I mean, Darty, one of the main retailers in France, present in Italy and in Belgium has been publishing his barometer of after-sale service. And here once again, our appliances have been getting the top positions in terms of durability and reliability. Many recognitions, which is, again, proving the quality, the reliability of our appliances and why our customers are showing the level of satisfaction we are showing today.

This page is a pretty important one as well in terms of mix. If you look on the top hand side here in North America, you have a curve showing the market share we had in terms of volume and the blue line is the market share in terms of value. The first conclusion you can draw out of this page is that we have been losing a lot of market share between 2020 and 2023. This market share we want to recover. The second conclusion you can draw out of that is that our 2 lines are getting very close together in '23, '24 and '25 here, which is showing once again that we're mixing up, that we're getting closer to 100 price index in North America.

The curve at the bottom is the curve for Europe. On the top, you have a value market share. And on the bottom, you have a volume market share. And here in the last 3 years, we have been increasing the distance between volume and value market share, gaining market share with our premium brands, Electrolux and AEG.

We are on the right path. We are growing again in the different regions, and we are mixing up, gaining price indexes.

The next slide is about sustainability. And here, I will not be very humble if you allow me. I mean there is absolutely no doubt that Electrolux is the leader in terms of sustainability for home appliances. We have a very ambitious target. We have been reducing our scope 1 and scope 2 footprint by 42% between 2021 and 2025. And we have been having a reduction of scope 3 at a level of 31% in the same time period just for the one -- I'm not familiar with what scope 1, scope 2 and scope 3 are. Scope 1 and Scope 2 represent the carbon footprint you are having, while producing the appliance, while Scope 3 is a carbon footprint you are having while using the appliance here. Very ambitious target moving forward. we want to reach 85% for Scope 1 and 2 in by 2030 and 42% for scope 3.

On the right-hand side, the message we want to give you is that the most sustainable product we're producing today do have as well the highest gross margin.

On the go-to-market side of the equation, I just want to underline on the left-hand side, some of the key trends we see globally. The first one is during COVID and post-COVID the market has been moving online. The second big trend is about cost. I've been mentioning it. I mean, lately, commodity prices in Asia have been extremely cheap versus Europe and North America. Energy cost has been significantly higher in Europe as well. So never ever, the cost different has been as big between Asia on one side of the equation in Europe and North America on your other side of the question. One of the other key trends, and you would not be surprised, is a digital trend in our industry.

We have very clear answers towards these trends. First, I mean, we're investing massively into digital. And one of the channels we are expanding the most is D2C and the e-commerce side of equation. We had as well a very strong product range in terms of premium. The message we want to give here is that cost entry price points is not our battle. Our battle is about customer satisfaction, our battle is about premiumness. And we are expanding the offer we have in terms of connectivity. All the new platform we will be launching in Electrolux will be connected.

Last but not least, we are working on AI. We are working on digitalization and we are working on taking our customers -- on connecting better with our customers in terms of intimacy on the post-purchase experience.

Let me show you some video now on the product side of the equation, which are demonstrating some of the latest innovation we have been launching. Bear with me.

[Presentation]

That's only a few examples of what we have been launching in 2025, much more to come. But I mean, again, outstanding reception for every of these products. I will be moving to the next pillar of our strategic drivers, which is the lifetime value creation. And the lifetime value creation is based on three drivers, which is the consumer journey, the ecosystem and the lifetime solutions.

As I mentioned previously, in every single region, we have been dissecting every single stage of the consumer journey, starting with a purchase experience until the customer is disposing the appliance. And we have somebody standing at every single stage to really understand how we can build a better consumer intimacy moving forward, how we can build this relationship here, how we can build the ecosystem around the product.

That's exactly what we're doing, thanks to connectivity. We'll be selling -- thanks to connectivity and the relationship we will be having with a customer, we'll be building and selling spare parts, we'll be selling consumables and accessories. We'll be selling services. We'll be selling extended warranty and much more moving forward. The intent is to reach out to the end consumer, to engage with consumer and to monetize the relationship we have been moving in -- we have been creating. Again, creating a full ecosystem around this relationship and the customer.

And I think that's an example. We want the appliance to live longer. We want your ability to be one of the main streams we will be -- moving forward, we want to demonstrate clearly that I mean the reliability we do have as Electrolux is superior to the one you will be finding by our competitors. And that's one example. Thanks to connectivity, we will be able to detect in advance when an appliance will have an issue. We'll be able to help our service technician to understand exactly what's wrong with the appliance. We'll be able to come to the customer with the right spare parts moving forward. That's -- we will be able to upgrade the software of the appliance during the lifetime until disposal. So much more to come in terms of digitization and monetization.

In terms of cost leadership, which is the last driver we do have today, we have been delivering strong results in the past years, SEK 4.7 billion in 2023, SEK 4 billion in 2024. And certainly, I mean, we're aiming to deliver the SEK 3.5 billion to SEK 4 billion in 2025.

In 2023, I mean, most of the savings was coming from the restructuring process we had on the blue collar side of the equation and the downsizing of our workforce. In 2024 as well, we have been simplifying our organization. In 2025, the saving is of another nature. We are really pre-taking product -- cost out of the product. We are sourcing our product -- our components in a more efficient manner, and we are gaining efficiency in our factories. But Michelle will be speaking about that in a second. Michelle. Very warm welcome. I leave you the floor.

Great. Well, thank you, Yannick. As Yannick mentioned, cost leadership is a key pillar for us. So before I go into the details, cost leadership can't be done just by finding ideas here and there. By doing it that way, you're not going to get repeatable cost benefits. So we actually have a very structured way in doing that, not only involving our people getting the engagement, really driving cost leadership into the ways of working. But we also have a toolbox that we leverage different tools for the different needs we will be requiring.

And one of them is best cost country sourcing. And you have heard of best cost country sourcing before. So we are increasing the percentage of our components that are coming from best cost countries compared to high cost countries. And you might say, okay, it's just labor cost. No, it's way more than just labor cost. And that is the degree of details we go into. We look at commodity cost trends. We look at energy utility costs. And more importantly, as we look at the maturity of the supplier ecosystem. It's not just about the Tier 1s, what they can give you. If they don't have sufficient Tier 2s and Tier 3s that to give the cost efficiency in the value chain, you will not get that efficiency and optimized cost from the components. So we are now going with an approach that is a lot deeper than ever before to balance what is the best cost country sourcing for the different markets as well.

Of course, tariff is real in the U.S. as well. So we look at landed cost really take the approach to understand where value can be generated and also at a landed basis, how do we get the cost to the optimum that we can. So with this approach, we are able to achieve the cost efficiencies and the competitiveness that you have seen in the 9-month results that Yannick has shown before just now.

But that's not the only tool. You have seen the beautiful SaphirMatt hob in the -- our campaign early on as well. This product is a collaboration with our supplier. And the innovation we were able to bring to market ahead of our competitors is through the collaboration with our suppliers. So the relationship we have with our supplier base is not only just on cost efficiency, but it is also on collaboration on leveraging where can we get the innovation extracted out of the supplier ecosystem to allow us innovation that is ahead of our competitors whilst maintaining the cost leadership.

And if you look at the SaphirMatt, not only it's a beautiful piece that every family enjoys it did bring us 7% more volume in our built-in hobs in Europe and also 15% of the revenue. And again, we were ahead of the pack with this innovation as well. So we will be exploring more on supply collaboration, not only from a cost competitiveness perspective but also from an innovation perspective. So that we are able to bring products that actually our consumers love and also meets the quality promise that we have to our consumers as well at that competitiveness and also ahead of everybody else. So another lever that we're pulling.

So of course, there are tools. There are a lot of tools in our tool boxes. We can -- we are using to drive the competitiveness of our products. But the key really is in our people. It's not just Yannick or myself or the rest of the group management delivering this. We need every part of the organization to understand what is cost leadership and embed that into their day-to-day as well.

So we have been on the cost excellence journey since late 2023, and we have gained speed this year really on value engineering, really focus on our products. How do we maintain the products the consumers love, the quality promise we deliver, the specification we need to compete but at the same time, drive cost competitiveness as well. So we have a structured program and through the structured steps to really get all the different functions of Electrolux together to deliver that. And the best way to see this is to hear from our colleagues rather than me. So we'll play the video.

[Presentation]

It's always great to see actually the teams have a smile on their face when they're working on cost. So it is really getting embedded into everything we do. But it's not only just internally, you saw some of the supply collaborations. There's plenty more photos we could show on the suppliers working with us closely. And also the outside-in information is so valuable for us to not only knowing where we need to go, but also where we can improve with where we have already been as well.

So this program will continue to drive and embed the tools, the methods to deliver the results we have, but also getting that cost leadership mindset and ways of working embedded truly into our organization.

So just to summarize, cost leadership is a key pillar to Electrolux growth. And that is one pillar we have full control of, and we truly believe with the tools, with the methods and the people we have and the supplier base we have and also going to have, we will have the competitiveness in cost leadership. That's because we have the structured approach. We are sourcing better. We are doing value engineering better, and we'll continue to do that.

But we also, to Yannick -- what Yannick has mentioned, we do have the footprint our competitors have. We have factories in China. We have factories in Thailand. We can also have our optimized product flow to give us competitiveness as well, and we will leverage that as well. And more importantly, we are building a lean and also customer-centric organization, coupled with cost leadership. And that really drives the entire organization to move forward to drive cost leadership, which will be the rock bed of our growth as well.

So with that, I'll pass on to Therese, who will talk about cash generation.

Thank you, Michelle. Yes. So moving now to the fourth strategic driver, which is cash generation. And of course, the main item of cash generation is really to improve the EBIT performance, which is really what you've heard about from Yannick and from Michelle. But there are also other levers that we can pull when it comes to cash generation, which is specifically around operating working capital improvement. And also, of course, how we allocate our capital in the best manner to bring the return and also to strengthen the balance sheet. And these 2 items are the 2 items I will come back to in this section. But before doing that, we have also been working on derisking our balance sheet with a couple of initiatives during the past couple of years that I wanted to mention to you.

Yes. And that is related to derisking our pension liability. So in the end of 2022, we were actually transforming our internal pension debt in North America pension fund to an external partner to take that over, which meant that we moved out the pension liability, but also the asset that came along with that, which meant that we took down our gross pension debt by around SEK 6 billion and this we did without any impact to the EBIT bottom line.

And the other transaction, some of you might remember from the end of last year when we divested our potential large exposure of asbestos in U.S. where we divested the subsidiaries that held this exposure and liability and also then the insurance assets that came along with this. And while completing this transaction, we also made a profit to the bottom line. So these are 2 examples of how we have, in the meantime, been able to derisk our balance sheet.

But then with that, we will move into the 2 main items apart from EBIT that we can also then work hard on in improving our cash generation. The first one, I think, is really obvious when it comes to, of course, improving operating working capital. You know that we have worked a lot with this over the years. I think we went through a very hectic and difficult period during the COVID -- post-COVID crisis during the supply chain crisis, during 2021 and 2022, when our operating working capital went up significantly. Mainly related to inventory. And as you know, the full supply chain kind of coming out of sync. Since then, we are gradually taking operating working capital back down and specifically also taking inventory back down.

Still where we are today is not back to the pre-COVID levels. And this is mainly related to slightly higher component and material stock to be able to supply our customers in a really good manner in a still quite volatile market environment. And then you know during 2025 that we have also had negative cash flow and specifically related to operating working capital. So it's fair to say that inventory this year has gone up, not only inventory, but working capital in total.

And what we talked about at the end of the third quarter is that we are tying up somewhat high receivables at the end of the third quarter due to that we have entered into high season and that September was a quite high sales month. But also that we have relatively high inventory levels. This is related to several parts. One part is related to that Latin American retailers has been taking down their inventory level during the second and third quarter, which has put pressure on us as a supplier.

The other part is related to tariffs. You know that the cost, of course, has increased, but also in relation to the timing of when those tariffs are being paid, this is also increasing our working capital. And then the market in Europe has been very volatile and also a little bit softer than what we anticipated going into 2025. And so also in Europe, we're sitting on a little bit high inventory. You all know that the fourth quarter normally is our strongest cash flow year, and this is really what we are looking for as well this year also in working capital.

And then looking a little bit further ahead, for sure, when it comes to working capital performance and inventory performance, we need to stay in sync with our strategic priorities with change -- potential change in business model but also in changes and opportunities that are happening in the external environment.

And to mention one, which Yannick also touched upon earlier on is the important channel of direct-to-consumer, which, of course, is an enabler for us, yes, to interact directly with the consumers, but also to build lifetime value creation. And this is meaning that we need to be much more flexible and agile and sometimes also slightly increase the inventory levels because all of you know that if you're shopping for something online, if you don't find it online, you don't find it in stock and you can't get it delivered within the time frame that you are expecting. You're most likely jumping to the next appliance, and we lose sales in those instances.

So this means, of course, that we need to stay very, very close to our customers and our consumers, which means that the accountability needs to be very close to the market when it comes to working capital management. And in this case, we also have the possibility to help our colleagues around the world in terms of data-driven decision-making to be able to be more flexible and more agile. And this is, of course, big initiatives that we need to drive going forward.

The other part then is around CapEx. Yannick touched upon it. I think, as you know -- as you've seen on this graph, if you go back several years, we have been on around SEK 4 billion to SEK 5 billion in CapEx for quite many years. We then went through a high investment cycle when it came to globalized architectures and driving automation. We then have come down since 2022 of around SEK 7.6 billion at the peak in CapEx, then to 2024 around SEK 4.6 billion, and the updated outlook that we have for 2025 is that we should be between SEK 3.5 billion to SEK 4 billion. Compared to when we entered this year, we said that we would be between SEK 4 billion to SEK 5 billion.

And this is really not about us deprioritizing or pushing investments further. As you've heard, we have the most updated product portfolio we have ever had. And Michelle and the team is doing a great job, not only when it comes to cost reduction on material, but this is also really valid when we are buying equipment and tooling. So we're also benefiting for the great job that we're doing under the cost excellence program also when it comes to optimizing CapEx.

And then to wrap up this section. By driving cash generation, we are really aiming to strengthening our balance sheet. And we want to do that because we want to continue and we really are committed to continue to be a solid investment-grade rated company, which then means that we need to take down the net debt to EBITDA below 2x, and then we cannot exceed the 2x net debt to EBITDA. We know that at the end of the third quarter, we are at around 3.5x net debt to EBITDA, so improving from 1 year ago, but we still know that we have to focus on continuing to get it down. And that, of course, we need to do through earnings improvement. That's a given. That's the main, main lever, but also, of course, through cash generation and to strengthening our balance sheet. That's a key priority.

And then when it comes to then how do we allocate our funds, CapEx is our main priority within allocating capital. And that is to continue to fuel the product innovation and the product pipeline that we have. It's to continue to support the cost-out projects. Of course, we have some special areas that Yannick mentioned around new product categories that could drive higher growth. We have lifetime value that we know is generating a higher profitability. These areas continue to be very interesting also from a capital allocation point of view as well as certain sustainability initiatives that are also driving value creation.

Then when it comes to dividend, I mean, our -- of course, this is the Board decision. You all know that. But the Board has been very clear in their direction about strengthening the balance sheet. And that we need to maintain being an investment-grade rated company.

And with that, I hand back to Yannick.

Thank you very much, Michelle. Thanks, Therese. Thank you very much. I think -- yes, I'll just quote somebody called Einstein who was saying that "the definition of insanity is to do the same thing over and over and expect different results". I think we will be doing and we are doing things differently, and we are certainly expecting a different result. And one thing we want to do differently is to get much closer to the end consumer. And that's why we are changing the operating model. We want an organization which is flatter, which is heavier on the frontline side of the equation, we have been announcing a few weeks ago that we would be splitting the EA region in an EMEA region and an APAC region. And the simple reason why we are doing that is to be closer to our customers in Asia here in order to serve them and support them better moving forward.

I just want -- I mean one of the sentences we put here is, I mean, the boat and the engine. What we want to do really is to serve the customer in a much faster, much more agile way, much more consequent way, much better way than our competitors here. That's why I was saying we want to make the engine much bigger moving forward while making the boat lighter on the corporate side of the equation.

Again, I just want to repeat what I said previously, we are doing things differently versus the past. I mean, in terms of profitable growth, we want to increase the consumer centricity here. We want to improve our cost level. We want to offer more products into the market by strengthening our market position. Michelle has been explaining very well what is the new approach we do have in terms of cost efficiency, taking cost out of our products, sourcing better our components, using our footprint in a much more efficient way moving forward. And last but not the least, here, we want to drive a cultural transformation in the organization, leveraging the richness we have been gathering for the last 100 years, but being more fast or faster and being more agile moving forward.

I would just close here before taking your questions about a high-level summary. We have clear strategic drivers. We have been defining these clear strategic drivers, and I want to underline once again that we have clear actions, roles and responsibility next to the projects initiatives we are launching. And these strategic drivers are consumer preferences, life value creation, cost leadership and cash generation. And we have been reiterating some of our financial targets, which are 6% on EBIT, over 20% on RONA and 4x the capital turnover rate with an organic growth rate, which would be above 4% -- which should be above 4% in the coming years.

That's concluding the presentation. Thank you very much once again, and we would be glad to take any questions you have for us. Thank you.

Great. So if we could have Michelle and Therese also on the stage. We will start with the questions in the room.

Johan Eliason, SB1. I think it was interesting listening today about your focus on growth. Growth tends to imply that you need to invest as well. And I was wondering if there's sort of CapEx program coming related to this. And secondly, the last time I heard about best cost sourcing, Hans Straberg went to Australia and spent SEK 8 billion, closing and moving manufacturing locations, et cetera. Are you satisfied with your manufacturing locations as you have today? Or will there also be sort of CapEx related to potential relocation of manufacturing?

Thanks, Johan for your question. I mean the first thing I would like to say is that, I mean, you know very well, we have been investing massively in the past year in our industrial footprint, massively. I think now this CapEx is going down. And it's giving us some oxygen to finally invest in products and marketing because we're launching these great products, which are extremely well received on the market here, and we need to fuel growth indeed in order to sell this product here. We are scrutinizing, of course, every single investment we're making on the marketing side of equation in order to warranty that we will have a fast return on investment on the marketing side of the equation.

But again, I mean, you saw some of the campaign we defined. I mean, they're new, they're fresh. I think they are again targeting very clear customers for Electrolux, AEG and Frigidaire. So yes, I mean, we have great products. We need to market these great products. We don't think it will be inducing a significant level of additional capital here because, once again, I mean we're reducing the industrial capital we have been investing for the last years.

On your second question here in terms of footprint, like any company, any company I know who are dealing with industries, we are always looking at footprint. And today, indeed, I mean, there is no secret. I mean, we are at a volume level, which is 10 years low in Europe. So we have factory which are underutilized. But what we're looking much more than, I mean, closing or whatever is, I mean, how can we utilize the factories in the best possible manner, how can we be agile enough to move platforms or produce platforms in one factory or the other one? And Michelle said it very well, we have great assets. We have assets in China. We have assets in Thailand. We have assets in Asia. And while cost in Asia is so low. I think it is our duty as well to utilize these assets to grow.

And maybe coming back slightly on the first question. The example that Yannick took, of course, related to vacuum cleaners in North America. As you very well know, we have had vacuum cleaners for ages, and we have vacuum cleaners, of course, in all the other regions of the world. We -- but we have not had them for a long time, at least not under the Electrolux brand in North America. So this is an initiative. It's not triggering any type of CapEx or any type of investments like that, then it's much more around go-to-market and of course, yes, marketing on that end.

It's Martin Wilkie from Citi. The question I had was on growth. You talked about consumer preferences and channels and products. But how dependent are you on a recovery in the housing market? I mean, obviously, there are parts of the world where that part of the industry has been quite depressed for some time. And within that 4% target that you have, how much of a reliance do you have on a housing market recovery?

I think we have strong holds, I think, in LatAm, in many markets in Europe, in Australia. And certainly, I mean, we need to keep on developing the strong growth, and we keep on -- in growing in this strong. We keep on fighting. I'm just coming back from Brazil, last week, and we have a very strong strategy moving forward in order to gain in terms of value in this market. So I think we're not -- absolutely not giving up on that.

Certainly, I mean, the markets are very depressed right now in Europe. I mean we are 10 years low. I mean we're at the level of 2014. And the best help we would be getting is to get back to normality in markets like Europe with a 2% to 3% organic growth moving forward. So I think we're not counting on external factors. I mean that's why we're really speaking about organic growth. I mean we cannot -- we should focus on what we can control, not what we cannot control. And I think the growth we are looking at are mainly coming from new product introduction, new platforms, new -- expanding some geographical areas as well we have in front us. There are many opportunities we have in every single region that we're looking at. Just to give you another example, we just opened in LatAm a few months ago, a new factory focusing on SDA. And we're launching new product categories and use these factories in LatAm here, which we'll be generating, again, growth. So many examples to be given here, but I mean the size of the opportunity is relevant.

I guess we're not betting on, let's say, any quick recovery, but we should be able to drive this type of growth rates independently.

If I go to my second question as well, just on working capital, are you suggesting we get back to the levels we had previously because you've kept your RONA target unchanged. So should we expect that those percentage of sales numbers go back to the long run average?

I mean, I think, of course, RONA is 2 items. And when you talk about capital turnover, we're actually quite close, I would say, still today with the 4x. So of course, it depends on what type of levels you're looking at as well. And I think there was honestly some room in those metrics if you put them together.

Is there a possibility to get back to where we were pre-COVID? I think that we have certain pockets, which I mentioned as well on inventory where we right now at least, are having somewhat higher supplies inventory or inventory of components and materials.

Do we see a possibility of getting back? I mean, of course, that will always be our ambition, but it always will depend on what type of business model will we have. And we, of course, need to be -- the highest priority needs to be that we need to serve our customers and consumers in the best manner because if we fail there, then we will fail much more than optimizing inventory to the kind of ultimate level.

Uma Samlin from Bank of America. First, I have a follow-up on the growth that you mentioned. I guess in terms of organic growth, how should we think about the split price mix versus volume? If I look at the graph you presented like so far this year, it seems like you've had relatively limited unit growth, but you've had like more focus on the price mix. So how should we think about that going forward? Is that your focus more on growing the mix rather than growing the absolute volume share in the market in both Europe and North America? That's my first one.

It's a great question. Thank you very much for asking it. I think it will depend on the region mainly. And on the market share we do have. It will even depend on the product category. I mean we have very different type of market share, depending on the product category. You look in North America is a great example. So there may be product category where we'd be increasing. But in a nutshell, of course, we have a strong position in LatAm today. So the focus in LatAm is much more on the value side of the equation when it is on the volume side of the equation. That's where we want to grow. It is on the value side of your question. That doesn't mean that we're not paying attention on volume. But I mean what we want to fight is on core plus and premium segment of the equation.

In Europe, where we are growing is with Electrolux and AEG, so core plus and premium. We have been ramping down the Zanussi brand. And despite this ramp down, we have been gaining market share in value and volume in Europe in a very depressed market. So I think in Europe, it would be volume and it will be volume uncertainty value market share.

In North America, we have been growing by more than 10% in Q3 here. And I think there are many product categories where we're not present today. I mean the upright vacuum cleaner is one example, but there will be more. And that's where we will be focusing. So it will be certainly volume and value market share. But the environment in North America, as you know very well, has been pretty hectic and will be probably hectic moving forward.

My second question is on North America. Perhaps it's a bit more shorter term. So I guess you had a really good growth this year in North America, close to 10%. You've heard really good cost cutting as well. And then going forward to next year, how should we think about that? What are the incremental improvement you can do going forward to bring the margin from where it is today to 6%?

I think, of course, we're not discussing -- I mean, we're discussing near term and midterm. So I will not be giving clear indication about 2026. But certainly, I mean, what I want to underline once again is that the latest tariff structure in North America should be benefiting the local producer. And we are one of these local producers. We are producing the vast majority of our appliances in North America. So on the top of organic growth that you have been mentioning previously, on the top of cost reduction that I mean, we'd be driving factory efficiency, like pockets of efficiency still to be gained in Springfield, certainly. I mean we will be looking at any potential gain we can get as well in terms of price, thanks to the tariff situation we do have in North America.

It's Akash here from JPMorgan. I've got a couple of questions as well. The first one, and I'm surprised not to see in presentation is about operating leverage. I think you have been cutting costs in the last 3 years. And you talked about underutilization in factories, especially in Europe, where demand is at 10 years low. Sooner or later, we will get recovery at some stage. So can you tell us about some indication of operating leverage that we should be able to get out of this footprint that is there? And can it be higher than what you have seen historically?

And second one is on dividend, and that's with, Therese, like what needs to happen? Like do we need to see leverage going down below 2x before dividends can be resumed again?

Do you want to start with the second part?

Yes, of course, this is for the Board to decide on an annual basis, as you very well know. We have not been discussing how far down would we need to go to start initiating dividends, but they are very clear in their direction that we need to deleverage and they are committed that we should continue to be a solid investment-grade rating, which of course, we then classify us becoming -- yes, seeing a path of becoming below 2x net debt to EBITDA.

On the operating level side of the equation here, certainly, I mean what we are all hoping is that, I mean, first market will be recovering as we said, at a normal speed, which would be a 2% to 3% growth. I mean the second aspect, and we have not been approaching that in this presentation is certainly kitchen. Because, I mean, we are very strong. We are a strong #2 in terms of kitchen and the kitchen channel here and right now, construction is pretty subdued. So I think once construction will be restarting, we're hoping to take full advantage as well on the kitchen side.

On the operating level side of the equation, I mean, right now, I think what we're looking is all the level -- all the potential level of efficiency we are gaining out of the lower volumes we have indeed been reducing our workforce pretty significantly in our factories. And we have been -- thanks to automation and all the investments we have been making in our factories. We have been able to take this volume down without being hit with a cost which is outrageous or too significant.

This is Gustav Hagéus with SEB. You mentioned, if I recall correctly, that there's never been a bigger cost discrepancy between Asia and your bigger markets. Is that true also when you incorporate tariffs in U.S.? And can you talk a little bit about how that dynamic has changed? That's my number one.

And then number two, a very easy question to answer. If the war in Ukraine were to stop or somehow halt. How would that dynamic change? Because in that scenario, then that Russia would be able to export plastics and steel also to other jurisdictions than China?

Yes. I think a very interesting question. On the tariff side of the question, if you allow me, I would just go back a little bit in time, 2018 I mean the first tariff wave was mainly on China and on component level. And that has been actually handicapping the local producers in North America in the sense that I mean, we were using Chinese components. So we were impacted by tariffs. But I mean people producing finished goods were not impacted. After we had only basically China being tariffed on a finished good level here. So I think a lot of footprint has been moving from China to Southeast Asia, Thailand, Vietnam. And I think Chinese producers were producing out of Southeast Asia and basically importing finished goods once again in North America. So we -- the single tariff structure, which is purely benefiting local producers has been the one published on August 7, which is, at the same time, handicapping significantly Southeast Asia and China here. And by handicapping Southeast Asia and China, local producers are benefiting basically from the structure.

We are producing out of North America, the majority of our appliances. I mean we have factories, we have 3 factories in North America. We have factories as well in Mexico, which are USMCA. So we are benefiting out of that. So I think it's pretty recent that tariff is truly making sense for North American producers.

On the top of that, we have been leading price increase in Q3. But unfortunately, we have not seen basically competitors clearly following in this respect here. So I think what we are looking forward is to see if Russian oil would be hitting basically the North American market moving in the coming months and see some price changes in the market. Do you want to add anything on that?

No.

And what about the other question on the Ukraine?

Yes, that's a very easy question. I guess yes, very hard to speculate, I guess, how quickly other markets potentially in Europe would start dealing with Russian oil and steel. But we know that, of course, that is clearly an advantage today for Chinese or Asian production, not only -- yes, also -- not only related to the tariff structure, but for sure also related to being able to access lower cost of steel and oil and plastics. How quickly that will move even if we get some sort of resolution, I guess, it's, at least from my point of view, very hard to speculate.

It's something we're not controlling in [ Russia ]. It's very difficult to speculate upon at this point of time.

Of course, I think one item that we might mention related to the conflict is that I think we would have hoped going into this year that we should have seen a recovery in the European market. While, of course, what we saw in the beginning of the year when the conflict intensified further and, of course, also then with the trade war between U.S. and Asia, that indications of a fast recovery in Europe and a pickup in consumer confidence, I think, really took another hit.

So I guess that -- and while I think most of the consumers in Europe are actually doing relatively okay, they're not starting to spend yet, specifically not in our category. So I think -- and that, of course, is not only related to the war or to the conflict. But that, of course, is at least one thing that I believe could help consumers in Europe to actually start taking those consumer decisions going forward and get a little bit more beat up in confidence.

Björn Enarson, Danske Bank. If you can shed some more light perhaps on the tariff situation. I mean when your relative position really or the headwind kind of peaked? And if you have seen any effects in the market on pricing, et cetera?

I can only speak about Q3, [ not sure ]. As we discussed, I mean, we did not see significant price movement in the North American market. I mean we have been leading price increase, but unfortunately, I mean we did not see a clear impact on tariff.

Now I think what we need to say as well is that I mean the products which were on the sea before August 7 were not fully impacted or were not impacted by the full tariff structure. These products, which were on the sea just shortly before August 7 have been arriving in North America beginning of October. And they will be probably consumed, I mean, during the promotional season, which is Black Friday. So the full tariff impact will really be visible. I mean, now in the coming months. We'll see how the market certainly will be reacting.

And on the margin bridge that you had going to 6% and you have this external headwind. Can you give some color on what you're including in that headwind?

Yes, we are assuming the tariffs to stay. I mean when it comes to the tariffs, we are assuming the tariffs to stay where they are currently with the current structure. That's what it's based on.

That's an incremental headwind then for '26?

That would be an incremental headwind for '26, yes.

Thank you. I'm Tim from Barclays. A couple of questions as well. So the first one about the strategy to go to Asia Pacific as one of your commercially focused area. Can you talk a little bit more about your strategy going into that region, given that it's also the base of your major competitors, even in Europe and the U.S., how do you see your potential to really gain market share in the region? Yes, that's the first question.

Yes. Thank you very much for asking this question. I mean we have been showing where the revenue split for the company. I mean, 1/3 in Europe, 1/3 in North America, 20% or close to 25%, 23% be precise in LatAm and a little bit more than 10% in Middle East and Africa and Asia. So if you look at this market share, obviously, I mean the conclusion you may have is that I mean, there is -- there are a lot of opportunities in Asia. We have a stronghold, which is called Australia, where we are a market leader today. But certainly, there is a lot of opportunity in a lot of locations and in product categories. So we are certainly studying the possibility to keep on growing in this area here. Looking at the geographical opportunity we do have, but also on the product side of the equation.

Understood. And then the other one is about the trend of the consumer behavior, which are focusing or continue to favor the lower-priced products. How do you see that trend to evolve going forward? And given that you have been gaining market share quite successfully over the past couple of months, including some of the brands, the higher end products or high-end brands, which help you to gain the market share. But given if consumers continue to favor the lower priced products, how do you see the sustainability of your market share gain by focusing on your high-end products?

Yes. I think you're right. I mean, right now, we have seen a level of -- a significant level of price pressure in the 3 region. And we have seen, indeed, I mean, especially in the European region, the price level going down. However, there is still plenty of space in the core plus and premium side of the equation. And I think -- what is certain is that, I mean on core plus and premium, it's not just about the product. If you look at the kitchen channel, it is as much about the product as it is about the service, the logistics you do have. How we can deliver basically the full range of product to your kitchen manufacturer. It's about fit and finishing. It's about understanding the customer. It's about basically having the consumer relevant innovations for this product.

I mean the example, if you allow me, I would like to give is the AI assist feature we had in our oven, which was about downloading a recipe on your phone and sending it to your oven and having -- we won a lot of prizes on this feature. So it's not about the pace of innovation you have and how you put just a Wi-Fi sign on the product. It's how you're using this feature to benefit the user and basically show progress in his daily life. And that's what I think we're really good at. So we may not have introduced on the market the highest number of innovation in terms of connectivity, but the ones we have been selecting have been extremely well received in the market.

So once again, I mean, you're right. I mean, very the market is very promotional these days. I mean consumer confidence can be one of the drivers here. I mean price pressure, I mean, out of Asia can be another one. But I mean the focus we do have on core plus and premium is absolutely working, and we are gaining market share with Electrolux and AEG in these segments.

Understood. And my last question will be on aftermarket. I think in your last CMD, you have targets to achieve 10% aftermarket by 2025 and 15% in the long term compared with 7% in 2022. If I look at the numbers that are in one of your previous slides in 2024, around SEK 9.9 billion, that's also talk about like 7.3% of 2024 revenue if I calculate correctly. So that means it seems like contribution didn't really achieve what you targeted previously or the growth was not really coming through. So I'm just wondering what's the reason to hold back the growth of the aftermarket? And how do you think it can accelerate to 10% CAGR according to your targets?

Your conclusions are correct. It's the first thing I would say, we did not deliver on expectation on aftermarket so far. And that's why we're accelerating as well. I mean the entire ecosystem I have been describing on the strategical side of the equation. And moving forward, we will be focusing on year-over-year growth in this segment. The approach we're having is different. I mean we're not leaving of course, I mean, spare parts, accessories, extended warranty and stuff like that. But we're enhancing that by really creating through connectivity these bridges with third parties moving forward. And we would have many examples here. So I think our aim is really to go in this direction and increase the level of revenue and profit we will be driving out again of this ecosystem strategy.

Thank you. Okay. Some more questions in the room? Yes, Uma?

I just have a quick follow-up on your chart for procurement for the best sourcing part. It seems like from the chart that you have more benefit from 2028 onwards. Is that correct? Or is that intentional?

Yes, I think it's a buildup. So we've started to qualify different sources from last year and also this year. As some of you might know to qualify a new source, it does take time to do that. So it's not a linear curve, like as you've seen on the chart, it will exponentially grow a bit but also at the same time, to build our resilience as well, we're not going from 0 to 100 or 100 to 0. We're also balancing between the incumbent and the new source as well, so that we are able to also choose between the 2 and also have the resilience built up as well. So this is where you will see the -- not a linear curve from that perspective.

Johan have another question?

Yes. I just want to follow up. I thought it was interesting with your chart, the new organization with Asia being mainly marketing and sales, et cetera, driven and the operations staying in the European part. If we look forward a decade, is Electrolux a company that needs to have manufacturing at all or can't this approach be applied to all of the business? I remember 10, 15 years ago, it was talked about, you need to have manufacturing close to the end customers in Europe because it was expensive to ship, but that I think we have learned that, at least into the U.S., it's been pretty favorable to ship from Asia. And I mean isn't it so that most of the value is in your product innovation and your brands to reach the customers rather than manufacturing the actual stuff by yourself?

Yes. Thanks a lot for the question. I mean, the answer -- simple answer is yes. Because I mean, again, I mean, our main focus point is customer satisfaction. Customer satisfaction is coming with quality. It is coming with reliability. And I cannot imagine a company like Electrolux without factories because, I mean, we have a know-how. We have a savoir-faire, which is basically has been built for all these years. I mean, we have been investing massively in automation today to really grant the quality and the level of reliability we do have out of our factories today, which doesn't mean that we should not be leveraging other companies here.

But I mean, the core of our products are benefiting from the gigantic legacy we do have as a manufacturing company today. And I wish I could take you to one of our factories, but it is actually a top-notch, very advanced automated factory we do have across the world. So there is -- I know how our products are benefiting from and our customers are benefiting from. So we will be, of course, working with other partners as well. But moving forward, I think I don't imagine us without an industrial tool.

And the chart is not saying that we should not have any manufacturing in Asia, just to be clear. So I mean, as Michelle mentioned, we have already today, manufacturing in both China and Thailand that we want to leverage even more than what we're doing today. So it's just indicating that from an organizational perspective, it will be having the management leader in -- from Europe and Asia.

No. Okay. I understand where your question is coming from. I mean, indeed, I mean, we will have a commercial area focused on Asia. But certainly, I mean, we are expanding our high-end factory today in Thailand. We have a factory in China as well. But what we thought is that we would be keeping basically the operational side of the equation under one umbrella which is covering Europe and Asia at the same time to leverage best practices. But I mean it is much more the customer relationship we wanted to announce and to accelerate and to speed and having Europe between basically the upper management and Asia was filtering somehow, I mean, the needs we were getting out of the market.

So it is really reinforcing this frontline getting consumer needs in a faster manner, being able to support these consumer needs faster from a headquarter perspective. That's what we wanted to do. But on the operational side of the equation certainly, I mean, we would keep and expand the factories we do have, and it's fantastic tools we do have in Thailand and China.

Okay. And then finally, the last time you talked to market was end of October, and then you talked about Black November. Now we have passed Black November. Can you give any sort of indications what happened with pricing or volumes in this important period?

We're not giving indication of course, about what is happening in November right now. But certainly, I mean, it's not -- we're not speaking about a Black Friday any longer to your point. We're speaking about a Black November. And I think -- that's certainly a promotional season. We don't see -- which originated in North America. But I mean, we don't see it only in North America. We see it as well worldwide.

It's Martin from Citi again. Now that you've been at the company for almost a year, when you look at the portfolio, is there anything that you think is missing? I mean I realize you don't have a huge amount of balance sheet to do acquisitions. But from a product perspective, you're obviously very focused on larger domestic appliances. I know you obviously have some and small, but there are large parts of the market that are fast growing, high margins in countertop appliances that you're probably underrepresented in. When you look at the portfolio, when you look at your growth strategy, even organically, is that an important shift for you? Or do you think that the major categories that you've outlined today are enough to drive the growth and profit that you like?

I'm somebody who truly believes that you need to leverage the strength before looking at your weakness or what is missing. And I think we have a lot of strength. I mean, if you look, we have been launching the best kitchen range ever in AEG and Electrolux in recent years and in the recent months. And I think that's something we would be leveraging.

There are certainly areas of opportunities we're looking at. I mean we have been inventing the vacuum cleaner or at least we have been one of the leaders driving vacuum cleaner in the past years. To me, it's abnormality that we don't have our fair share in North America in terms of vacuum cleaner, and that's certainly an opportunity that we are looking at. And that's why we have been reintroducing the upright vacuum cleaner in North America, and we are looking at how we can expand basically this range moving forward and increase revenue. That's one example, specific example here. We will be covering the entire infra space, not right away, but I mean where will we see clear opportunities moving forward, we will certainly be studying them and leverage them and executing them.

And the strategy that has been done really in detail since Yannick came in was really looking at that angle between geography and product categories and where do we actually see opportunities to leverage them, of course, in the cost-efficient manner. But that's what also the kind of growth ambition is built on.

Okay. So we have 2 more questions here in the room, here in the front and back.

One more question on promotional activities and months or Black November or what have you. I mean, it's taking more and more porch time of the year over the years. Yannick, what is your experience, is the best way to deal with those periods? Do you fully participate or selective? Or what's your view on that?

I think we need to find the right balance. That's the way I would be describing it on -- I mean, the bottom line perspective, not -- we're still a scale industry, obviously here. And that's why I mean growth is very important. So not participating at all in a season, which is gaining in terms of volume is not reasonable, it's not rational. But certainly, you need to find the right equation between how much you want to be promotional and how much you want to drive volume, which will be driving to the highest level of profit bottom line. So I think it is really something where you need to find the right balance when you're approaching these type of seasons. And you have more and more of these type of seasons, unfortunately, I mean globally.

And do you have the offering in North America today to choose a good strategy to be -- to participate where you want and not participate where you can't. Because I remember, it's in the past, it has been a little bit like you have not had that full offering. So you have been hurt perhaps more than other players, et cetera. But do you think that offering is in place? Or is that something to come? Or can you be better or is it decent?

I think in all fairness, that's what I've been trying to demonstrate through the presentation. I think we have been increasing the level of offering significantly. The product reception in North America, the latest one from Springfield, especially the front controlled that I have been showing got a great reception, and they are higher priced products than the ones we have been offering by the past.

So really, we -- that's why we invested as well in North America, so massively in the past years. It was to increase the product range we do have in this market, increase the level of quality features we do have on these products. And I can say today that I mean, again, reception has been really good and strong here. So we don't have an issue in terms of product acceptance. I mean, that's why we have been growing by 10% in the third quarter or close to 10% here despite we have been leading price increase.

Okay. I think this will be the last question.

It's Akash here again. I think, Yannick, earlier, you talked about consumer star ratings. And my follow-up is on, maybe if you can elaborate a bit more, like when you have industry-leading consumer star rating, how does it translate into price premium because there could be a story on like having more products with higher rating and being an industry leader in all the categories. And I just want to understand how much price premium can you get out of it? And is this something that is part of that 6% margin that you have set as a medium-term target.

Again, what is -- thanks for the question. What is extremely important when you have a brand portfolio is really to understand first, who you're addressing. And that's really, we have been doing a massive amount of work in refining the consumer target group, we do have to really understand who we are targeting here. The second point is really to understand what is your price positioning. Where do you want to play in terms of price index? And how would you be moving this price index?

And afterwards, I mean, you need to define very clearly the identity of your brand, especially if you have a market like Europe, where we have Electrolux and AEG, you need to make sure that, I mean, the brands are not stepping on the feet of each other that they have distinctive price indexes that they have a very clear and differentiated identity here such that you can basically play on both sides of the equation, Electrolux, and on the AEG side of equation.

So what I've been hammering since I came here is we want to grow. We want to grow certainly not at the expense of price index. So what is extremely important, even if the market is getting more promotional, we want to keep the market position. We want to keep our identity where we are in the markets here, even I think if prices and promotions are getting more aggressive on the other side of the question.

That's why I think I really want to applaud the decisions which were taken before my arrival. I mean moving away from entry price points in Europe, a market which is extremely competitive and focusing on premium, core plus and premium product offering just more than a product with services as well was absolutely the right decision. And that's why we keep on growing in these segments here because, I mean, we were focusing. We're fueling basically the growth, and we have the right product to feed basically the customers we have been targeting.

Thank you very much. And thank you very much for your questions today. So before we end the session in this room, I will hand over to you, Yannick, for a short...

I just wanted to thank you all for joining us today online, especially, I think that has been a first glance on what's coming from a strategic viewpoint of equation. So many changes in the market which is very volatile, which is very uncertain, right, but I'm absolutely certain that, I mean, we are navigating as a group in the right direction. So thank you very much again for attending this Capital Markets update today. Thank you.

Welcome to the presentation of Electrolux Q3 report. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting. I'm here with our CEO, Yannick Fierling and our CFO, Therese Friberg. We will run through the presentation. And after that, we will open up for the Q&A session. If you are viewing on the web, do feel free to put your questions in the chat throughout the presentation. And with that, I hand over to Yannick.

Thank you very much, Ann-Sofi. Good morning, and good day to all of you. Very happy to be with you for this third quarter report. I will start with very general comments. I mean, growth is 1 of our strategic pillar, and I'm very glad to say that we have been growing once again in the third quarter. We have been increasing our net sales by 4.6%, mainly driven by North America. I'm also very glad to share that we have been growing our market share in the 3 regions here with our main brands, Electrolux, AEG, and Frigidaire. We have been taking our operating margin to 2.8%, with a good progress on cost reduction.

We have been adding to the SEK 2 billion we achieved in the first half of the year, an additional SEK 800 million. And afterwards, I've been sharing with you in the last quarters, the aim we have to get faster and more agile moving forward, and I'm very glad to announce some organizational changes, which would be putting us closer to the end consumer. Moving to the results. As I said, I mean, we have been growing our net sales by 4.6%, mainly driven by North America, where we have been gaining in terms of shop floor spaces, and we have been expanding in key channels like the contract channels.

In Europe, Asia Pacific, Middle East and Africa, we have been growing slightly in a subdued market with quite a lot of price pressure. In Latin America, strong results once again here, stable net sales on the back of a very strong and hot 2024. In terms of operating margin in the EBIT bridge, we had 2 positives, which were volume and mix and these 2 positives were slightly offset by a price -- negative price development. In terms of external factors, as you can expect, we were hit mainly by tariff and currency. We are very glad to say that we made progress once again in terms of cost reduction by adding SEK 800 million on the SEK 2 billion we achieved in the first half of the year.

Moving now to Europe, Asia Pacific, Middle East and Africa. Again, we had a slight organic growth in this quarter. We have been gaining market share with our 2 main brands, Electrolux and AEG, more than offsetting the ramp down we have on the Zanussi brand. Zanussi was an entry price point brand, and we are focusing today on core and premium brands. Quite a lot of pressure, again, in prices, and we saw a negative price development. On the operating income side of the equation, positive in terms of volume and mix, but these positives were slightly offset by a negative price development. The region has been benefiting by a good effect on the cost reduction side of the equation, and we kept on investing in the marketing side of the equation.

And that's pretty important because we launched major innovations, especially in the kitchen area under AEG and Electrolux, and we are glad to be able to fuel these major innovations through marketing money. In terms of external factors, we had a negative impact of currency, mainly driven by a weak Australian dollar. Again, in terms of market development, this picture is very similar to the one I've been showing in the last quarters. We had a positive development in Western Europe of 1%. Western Europe represents 80% of the total volume for the region and a minus 1% for Eastern Europe, flat.

And here, once again, we had minus 11% versus the third quarter 2019 back to levels we had in 2014. The construction market remains very subdued. I mean we are hoping it to rebound in the coming months due to the lower interest rate, but we don't -- we have not seen any sign of that in the third quarter. On the positive side of the equation, I just want to underline that we saw some sign of recovery in the region, in the month of September. We have been working very hard in the last months to really improve the brand image we have, defining more precisely the consumer targets we have and clearly define an identity card for our 3 brands, Electrolux, AEG and Frigidaire. And I'm very glad to share with you one of the latest campaign. You have seen some just before we have live.

This campaign is called the Wash Life Balance, and it's featuring the product leadership we do have in care and garment care. We have been also very proud to announce the launch of our new dishwasher, the AEG FAVORIT dishwasher here, which has been focusing on fit, fill and finishing. It has leadership in terms of perceived quality. And we're also leading in terms of energy consumption, noise level and water consumption here. Let me share with you a short video.

[Presentation]

Moving now to North America. And we're glad to say that we have been growing significantly in North America. We're announcing a double-digit growth in the third quarter here, thanks to, again, a higher penetration in terms of shop floor space and an enhanced presence in some of the channels we do have like the contract channel here. We're not buying market share. We're increasing the presence we do have in the different channels. We had a positive price impact. We were actually positive on the 3 dimensions, volume, mix and price in North America. As you all know, I mean, we are building our appliances in North America. We're one of the North American constructor.

And the last tariff structure should certainly benefit the North American producers. Unfortunately, we have to say that we have not seen the expected price increase for our imported goods coming from basically Asia in this third quarter. We have been leading price increase, and that's very important. I'm very proud to say that we have been covering the vast majority of the tariff impact for the price increase. So it's a competitive situation we have in front of us, with in front of as well a pretty promotional time which would be a Black November in North America. However, I want to repeat that, I mean, the last tariff structure should be benefiting for North American producers.

Negative impact as well from a currency side of the equation with a weak dollar in this quarter. The pressure about the picture about the market is very much unchanged versus last year. The market has been pretty resilient to the inflation we have seen in the market.

Moving to Latin America here. Almost flat organic growth in the region on the back of a very strong 2024 where we had a heat wave, and where we're selling a significant level of air conditioning and refrigerator. Unfortunately, the summer is not very hot in 2025 here, which has been increasing slightly the stock level we have in products like air conditioning. The competitive pressure in the regions remains pretty high. However, we're delivering, once again, 5.7% in terms of EBIT. We had a bad impact in terms of currency because of the Argentinian pesos and the Brazilian real. The Argentinian market is opening up, which means that we have a high level of import products -- our imported products out of Asia.

Cost reduction, we're glad to say that, I mean, we're delivering once again SEK 800 million in the third quarter, which is taking the total amount of SEK 2.8 billion for year-to-date here, and we're still confident to reach between SEK 3.5 billion and SEK 4 billion cost reduction for the full year. This cost reduction is mainly driven by product redesign, a better sourcing in terms of components and suppliers, a higher level of efficiency in our factories and a full leverage of our global scale as Electrolux.

Next slide is a slide we're very proud about. In 2016, Electrolux has been funding the Food Foundation here. And the aim of this Food Foundation is twice. The first one is to educate children and adults to eat in the most sustainable manner, but we're also helping adults needs here by giving them cooking lessons given by chef in the different regions.

Year-to-date, we have been educating more than 300,000 children and adults through the Food Foundation. And the aim, the target we do have by 2030 is to have more than 1 million people benefiting from this foundation. With that, I'm passing it to Therese.

Thank you, Yannick. The organic sales growth that we had in the quarter of 4.6% generated a positive impact to earnings of SEK 384 million. This was mainly derived from volume, but we also had a positive mix contribution in the quarter. And this was, of course, offsetting the slight reduction that we did see in price. We are continuing to invest in innovation and marketing, as mentioned by Yannick to really support the strong product portfolio we have in the market. Cost efficiency was a saving of SEK 760 million in the quarter. And I would also like to mention here that in the quarter, we had the group common cost of SEK 50 million, which was SEK 84 million below last year.

And this is a result of cost containment, but also a result of some timing between the quarters. We have very significant negative external factors. Of course, as you all know, the negative impact from tariffs, but also quite significant negative impact from currency in the quarter, mainly related to the weakening of the Argentinian piece, but also the strengthening of the Thai baht versus the U.S. dollar and the Australian dollar. And the negative effect we have in acquisitions and divestments is related to the divestment of the water heater business in South Africa that we did last year.

The operating cash flow was positive SEK 600 million in the quarter, which was somewhat below last year. This is mainly a result of a negative impact -- a larger negative impact in working capital compared to last year. This -- and this is attributed to one seasonal effect related to receivables that are usually increasing in the third quarter, but this year increased even more substantially than a normal seasonality related to higher sales growth, but also quite a strong September month, as Yannick also touched upon earlier. As you also know, we came into the third quarter with quite high inventory levels from the second quarter from volatile market during the first half and also from that the Brazilian retailers were destocking during the first half or specifically in the second quarter.

And this, in combination with weak or cooler weather in Latin America means that we're still sitting on some of that stock. As you know, we usually have a strong reduction of inventory in the fourth quarter according to our normal seasonality, and this is what we are looking for as well this year. CapEx, we are having slightly lower than last year. And then looking at our balance sheet and liquidity. We have a solid liquidity and a well-balanced maturity profile. In the quarter, we amortized long-term debt of around SEK 1 billion, and we issued 3 new bonds of a total of SEK 2.6 billion under our EMTN program.

And this will mature in 2029. And for the remainder of 2025, we have borrowings maturing of approximately SEK 1.9 billion, which we will finance from our existing liquidity. We increased the financial net debt slightly in the quarter, but we still have a solid liquidity of SEK 29.4 billion by the end of September, including revolving credit facilities. And of course, we don't have any financial covenants and our target to maintain a solid investment-grade rating remains. And with that, I hand back over to Yannick.

Thank you very much, Therese. I will now move to the outlook and the summary. During the quarter, the market demand in Europe increased slightly. Consumer demand continued to be predominantly replacement driven. In Asia Pacific, consumer demand is estimated to have decreased slightly year-over-year. Promotional activity and competitive pressure increased across market. Geopolitical uncertainty negatively impacted consumer sentiment in Europe. This contributed to consumers continuing to shift lower price points and postponing discretionary purchases. Demand for built-in kitchen products in Europe remains subdued.

In a longer perspective, it is important to remember that the European market is on a 10-year low. For full year 2025, we reiterate our neutral market outlook for core appliances in Europe and Asia Pacific. During the quarter, consumer demand in North America remained resilient. Industry market price adjustments did not reflect the implemented U.S. tariff structure and competitive pressure and promotional activity remain high. Demand continued to be mainly replacement-driven and consumers continue to prefer lower price points. For the full year demand outlook, economic uncertainties and inflation concerns risk having a dampened effect on consumer demand.

Consequently, we maintain our outlook of neutral to negative market demand. Consumer demand is estimated to have increased in Latin America in the third quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the third quarter 2024, mainly due to inflationary pressure and higher interest rates affecting consumer spending. These factors contributed to retail continuing to reduce inventories. For the full year, we reiterate our outlook of neutral market demand for core appliances in the region.

Moving now to the outlook. We still expect the impact from volume, price and mix to be positive for the year. Previously, price was estimated to be a main positive driver. Now the main driver is estimated to be growth in focused category because of the market dynamics in the third quarter and especially the challenging prices environment in North America. We reiterate that we expect investments, innovation and marketing for full year 2025 to increase. New product launches provide us with a great platform to continue driving growth in our focused categories. Our focus on reducing costs remain high, and we stick to the outlook of SEK 3.5 billion to SEK 4 billion in earning contribution from cost efficiency in the full year 2025, with product cost out being the main driver for the cost reduction.

External factors are expected to be significantly negative for the full year. The cost inflation related to increased tariff is included an external factor in our EBIT bridge. Currency remains a headwind and the impact from raw material costs expected to be slightly positive for the year. For the full year, we are lowering our outlook for capital expenditure from SEK 4 billion to SEK 5 billion to approximately SEK 3.5 billion to SEK 4 billion. Investments to strengthen our competitiveness through innovation and manufacturing efficiency are essential to support growth and improve efficiency. But also, we are looking at being as efficient as possible we can and are scrutinizing our priorities. This resulted in a lower CapEx outlook.

Moving now to the strategy. And I think we have been hammering. That's our 5 strategic pillar, and we're improving on all of them here. In terms of North America, we have been increasing our market share. We have been increasing the penetration level we have in key channels. We have been increasing the number of shop floor spaces we have, thanks to innovation like the stone-baked pizza feature we presented last month.

In terms of growth, we are growing in a challenging market. We are growing in core and premium segments with our brands like Electrolux and in AEG. We keep a very strong position in Latin America. The organic growth has been at the same level as last year, but again, it was on the back of a very strong 2024. We have been launching very strong innovations in kitchen in Europe. In North America with a big kitchen bake oven, and we have product leadership in Latin America. We made progress in terms of cost reduction, adding again, SEK 800 million on the SEK 2 billion we have been achieving in the first half of the year. And last, but not least, the environment is changing. We are in a very unstable market right now where we need to react very fast.

We need to be better in terms of speed and agility. And that's why we're driving organizational changes, increasing customer centricity. The first announcement we're making today is we will be splitting Europe, Middle East and Africa and APAC in 2 different regions, 2 commercial regions. One, we'll be focusing on Europe, Middle East and Africa and the other one, we'll be focusing on APAC. As a result, Anna Ohlsson will be leaving the company. Leandro Jasiocha, who is currently in the LatAm region will be moving to Europe, and he will be heading the region. Patrick Minogue will be replacing Ricardo Cons who decided to retire from the company pursuing a family journey he has been starting. And Eduardo Mello will be replacing Leandro Jasiocha as the Head of Latin America. We are sure that with these organizational changes, we will be increasing speed agility and be more consumer-centric moving forward. That's concluding this presentation, and we'll be happy to take any questions.

Great. Thank you, Yannick and Therese. With that, we will move over to the participants on the telephone conference. So Sarah, you could please go ahead and open up for questions.

[Operator Instructions] We will now take our first question from the phone lines. And this is from Gustav Hagéus from SEB.

Congrats on a good result. If I may start on the comment on the U.S. market share gains. And as you mentioned, you take shelf space in the quarter. It appears as if you've had now 4 quarters in a row with some market share gains in the U.S., obviously, superseding a period where you've lost some market share. So interesting to hear now that you're starting to meet a little bit tougher comps in terms of market shares in the U.S. if you see this trend potentially continuing into Q4 and into next year?

And if you could shed some light on who you're taking shelf space from, maybe not the name, but if it's domestic or nondomestic players or if it's private label or how you view that dynamic in the trade, that would be interesting to hear.

Thanks for the question, Gustav. I think we're taking share, I would say, across. And I think it's mainly due to -- and thanks to the innovation we have been launching mainly in kitchen. Let's not forget as well that we have been ramping up Springfield in the last months here. We have been launching through this ramp up, a new series of cooking products, for instance, which are feeding brands like Frigidaire Gallery. We have been launching the great innovation, which is the pizza stone-baked oven in North America here, which has been getting an excellent reception in the market.

We have some new products as well in the food preservation side of the equation. So it is really across market share here. We have been entering, and I want to make sure everybody understands we are not buying market share, but we have been entering into new channels like the contract channels here, and we have been really gaining shop floor spaces in -- with our main customers. I mean Lowe's, Home Depot and Best Buy and others here in the last months. So it's not one specific competitor we're taking share from, but it's a wide range of competitors.

And the second part of that question, as you look into -- it appears as if comps on the market share gains in U.S. is a little bit tougher to meet now as you enter Q4 into 2026. Should we expect this trend to continue with some recovery of the market shares also as you enter 2026?

Yes. I think I would like to make 2 points going into the volume side of the equation. First, I want to insist on that. I mean that was our commitment. We have been leading price increase in North America in the last month, and that has certainly not been easy. And I think we were very fortunate to have all these innovations in order to compensate basically for this price increase because we are producing, as you know, in North America, we're among the 3 producers in North America. And the last tariff structure introduced at the beginning of the summer was certainly privileging or benefiting North American producers.

So we were expecting a higher level of price increase for imported goods, especially coming out of Asia. Unfortunately, I have to say today that we did not see that happening. And I think we're entering into a promotional season in North America now with Black November. However, what I want to underline as well is that, I mean midterm, there is absolutely no doubt that, I mean, North American producers will be benefiting from the current tariff structure here and that import products will be handicapped significantly, and we'll have to increase prices. So we did not see that in the third quarter.

We're entering into, of course, a promotional period, which is Black November here, but there is also no doubt in our mind that, I mean, the current tariff structure should be benefiting basically North American producers amongst who we are. We're not giving up on prices, not at all. Here, we're just expecting the market to be rational in North America as well.

And I guess, a little bit more overall, of course, some of the effects that Yannick talked about with gaining additional shop floor and gaining traction within the contract channel, of course, this is not something that is just happening on and off. But we believe that those types of changes are structural changes that has come gradually during this year, which, of course, also should continue to be a positive going forward.

And if I may ask one question on Europe, too. It's interesting to hear that you see some improvement in September in terms of market volumes, if I understood you correctly. Companies tend not to raise these type of monthly data towards the end of the quarter if they haven't seen a similar pattern going into the month that we're in now. Is there any reason to assume that, that logic would not apply to you that October would not follow the September trends? Appreciate it...

Yes, I think that's a great question. Unfortunately, in all fairness, I mean, if you look at full 2025, I mean, we have not been going through normal type of patterns in most of the regions, but especially in Europe. Indeed, I mean -- and I think we're happy to say that. I mean, September, we have been mentioning has been a positive month here for us. And I think all we wish is that it will be continuing in the fourth quarter, but I mean the level of unpredictability and uncertainty we do have in the market today in Europe is pretty high. So it's -- I would say it's difficult to say. Certainly, I mean, we're entering as well into a Black November type of market in Europe.

But we are confident that with the product we have been introducing, the innovation we have been introducing, with the plan we have in place. And I think the quality of the people we have facing the end consumer, I mean, we will be doing the right thing for what we can control. But unfortunately, I mean, the level of uncertainty is pretty high in the market.

I appreciate that. But the question was specifically on October. Is there any reason to assume that the trend reversed again in October?

I think I cannot give you any trend, of course, for October right now. But certainly, I mean, the fact that, I mean, September was a positive month is certainly a good indication for us.

And this is also an important point when thinking about cash flow because as you've seen, we had a weaker cash flow this quarter compared to last year where a large part of this is really related to that we are tying up quite a lot more in receivables this year compared to last year. And this is really driven by that the September month was the very strong month in sales. And hence, we are tying up larger amount in receivables. So we don't see any changes in terms either in receivables or in payables. So it's important to understand, yes, that effect from a cash flow perspective.

We'll now take the next question from the phone lines. And this is from John Kim from Deutsche Bank.

Two questions, if I may. Can you comment on what you're seeing in North America in terms of any potential inventory overhangs? My understanding is that some of your foreign competitors put extra inventory into the market ahead of anticipated tariff increases. I'm just wondering how that's absorbing.

John, thanks for your question here. And I would just be repeating the answer I gave last quarter, which is -- again, a very transparent answer. I mean, the fact that, I mean, we may have some of our competitors preloading in order to avoid tariff seems to be logical. However, we did not observe this phenomenon ourselves here. And I think this phenomenon was not reporting to us by our team basically in North America. So unfortunately, I mean, again, logical, but I mean it is something we cannot confirm.

Okay. And I was wondering if you could give us a little bit more color on the reorganization, particularly on the split on what looks like EMEA, Asia Pac and the different regions?

Yes, absolutely. I think again, we -- the aim we have in terms of organizational setup is really to get closer to the end consumer from the top to about to reverse basically the organizational pyramid here, and I have the entire organization supporting what we'll be delivering to the market. Having the Asian organization below the European region, I mean, has been adding one layer. What we want to do here is to be able to respond in a faster manner, in a more agile manner to the needs our customers do have as well in the Asia Pacific region.

And that's why we have been carving out this commercial region. We will have the head of this commercial region, which we will be reporting directly to myself, the CEO here. And I think with this setup, we are convinced that, I mean, we would be able to support again the region in a better manner.

Maybe one clarification from an external reporting. We will still hold it together from a back-end perspective across Europe, Middle East, Africa and Asia Pacific. So it will really be a commercial region. So externally, we will continue to have the same segment reporting as today.

Next question today is from Akash Gupta, JPMorgan.

I have a few as well. The first 1 is on -- again, going back on North America. One of your North American competitor mentioned earlier this week that they produce about 80% of their appliances in the region. And if I may ask, if what's the share of your local production in North America? And how does that compare with industry average if you have that figure?

Okay. Thanks, Akash, for the question. We're not giving any precise number here. What I can tell you, however, is that we have 5 factories in North America, 3 in the U.S. and 2 in Mexico, who are USMCA here. So the vast majority of our products are produced in North America today. And again, USMCA compliant. So we are among the 3 major North American producers for appliances here. And certainly, as I said previously, long term, and if the industry is behaving rationally, we should be benefiting from the latest tariff structure here.

Unfortunately, that's not what we saw in the third quarter here because we did not see a price increase from import finished goods. Now in all fairness, I mean, the full tariff structure would be implemented beginning of October. So it would be interesting to witness what will be the movements in the coming quarter knowing again that we have Black November in front of us.

And I think what we have said is that with the competitor you are referring to, we have a relatively similar footprint. So that we have been clear.

And my second 1 is on the cost savings. You had SEK 2.8 billion in the first 9 months, SEK 800 million in third quarter. Your target is SEK 3.5 billion to SEK 4 billion. That would imply SEK 700 million to SEK 1.2 billion in Q4. But I think in Q4, you have a very tough comp because last year, half of the savings came in Q4 alone. So any indication like where are we trending towards this -- in this SEK 3.5 billion to SEK 4 billion range for cost savings this year?

Yes. A couple of stuff, Akash. The first one, I mean, we explained that. I mean it's very difficult to compare the SEK 4 billion we delivered last year with SEK 3.5 billion to SEK 4 billion we're delivering this year because last year, I mean, the saving was for a big part coming from restructuring we have been doing in the past. The SEK 3.5 billion to SEK 4 billion we're delivering in 2025 are much more coming from product redesign, better component sourcing, higher efficiency in terms of factory and better leverage of our global scale here. All what I can tell you today is that we are confident to deliver between SEK 3.5 billion and SEK 4 billion for 2025.

And my last one is on free cash flow. So again, I mean, you don't provide bridge like your -- some of your competitors, but -- when we look at this change in CapEx outlook, which you have cut today, would that change your internal assumptions for full year free cash flow? Or are there any other element like working capital or something else that might offset? So any commentary on your own expectations for free cash flow? Does that change after CapEx outlook a bit?

No, I would say that those are disconnected. So with the CapEx refocus that we've done, of course, we continuously do prioritization and reprioritization. And with the focus that we have on cost reduction, actually, that is also spilling over on the CapEx reduction. So of course, when we're looking at costs, we're also looking at how we buy equipment and so forth. So we're not doing the CapEx reduction really to offset other negatives in our cash flow. Those are disconnected.

That's very important to underline, and Therese said it. I mean, we are not delaying any launches. We're not delaying any programs. We're not delaying any footprint or whatever here. What we have been doing is, I mean we have been using our CapEx in a better manner in 2025 here. And as you know, we have been hiring about a year ago now, a new CPO, and I think we have been really focusing on buying better, cheaper from best cost countries in 2025. And that's reflected in the cost saving we're having, but also on how we are purchasing equipment and tooling.

I mean that's fair. But I mean, in theory, like if your CapEx is going down and keeping everything else equal, your free cash flow should be better than before. So my question was that, is this the case that now we should expect keeping everything else equally better free cash flow? Or is there anything that might be offset this benefit that you may get from lower CapEx?

I guess it depends on the time frame you are looking at. Of course, as we have been transparent about we are not having a strong cash flow this quarter as we did last year. And of course, also year-to-date, we have a weaker cash flow than last year. But the reductions we're doing in CapEx are not to compensate for the negative effects that we have been seeing in working capital. Of course, as we also said earlier, one part of that is really temporary or seasonal that we had a strong September with receivables being negative then in the quarter, more negative than last year and more negative than the usual seasonality.

Of course, inventory, we have also been clear with that it is on a higher level already when we came in to the second quarter. And we are usually having a seasonality where we have large inventory reductions towards the end of the year, and this is what we are expecting as well this year. Maybe one additional point that we didn't touch upon. Again, this is not related to the CapEx, but if you look at the full free cash flow for the year, we have talked about earlier in the second quarter that the impact of tariffs is also impacting the working capital level since the terms of when you are having to pay for tariffs compared to when you're able to then reclaim them from price increases from the retailers, there is a time gap. So of course, we've been clear with that. Structurally, we have had a negative impact from that in our cash flow in the year.

[Operator Instructions] We will now move to the next question. And this is from Johan Eliason from SB 1 Markets.

I was wondering once again, North America. You say you are taking market share there. The brand you have in North America, Frigidaire is typically a mass market brand, which historically has sort of gained share when the consumers become more price conscious. Is that part of what we've seen over there? And could you also update me on how the progress is developing, moving your price points on the brand towards the higher price points like the Frigidaire Gallery issue that you have been focused on over the past few years. Would you say that you have been able, in general to move up the brand a bit on the pricing ladder?

Johan, thank you very much for your question. And yes, absolutely, I mean, for the first question, we are not targeting opening price point with Frigidaire, and that's exactly how we have been mixing up with Gallery and Pro. And in all fairness, the entire strategy developed over the last years as well with factories like Springfield or Anderson have been to mix up and have a higher offer in terms of products for Gallery and Pro. I just want to give you very concrete examples. I mean, back command on oven ranges are usually low end. I mean the -- most of the products we do have now, a big part of it out of Springfield has front command here, which is more mid- to high-end segments here.

I could give you a similar example on the Anderson side of the equation. The pizza stone-baked oven is, again, a feature which is a big innovation, and we're pricing for this innovation as well in North America. So no, I mean, we're not fighting really for opening price points on Frigidaire. We're not buying market share. What we're really doing is, I mean we're occupying new shop floor spaces by entering new retailers by expanding in channels like the contract channels here, and we are mixing up actually our products here. We should not forget about the Electrolux brand as well in North America, which is a strong brand for front loader for instance, here, and it is a premium brand. So not at all. I mean, we certainly have a philosophy in North America, which is to mix up our product by offering better product and innovations moving forward.

And I guess important to mention, as Yannick also said earlier, we are improving volume, price and mix in this quarter. And with the combination we're seeing of where we are taking share with what retailers and with what products, we don't really see that it's a -- that we are gaining share is not really a result of, as you're saying, what we have seen before, historically, Johan, that when the market is kind of trading down that we are absorbing that type of volume. That's not what we see in the quarter.

And clearly, I mean I want to repeat it. We have been leading price increase in a price pressure market in North America in Q3.

Excellent. And on the -- can you say anything about the product category where you are sort of gaining more or less? I think historically, the hot products were your most profitable products in North America, but you've lost out on that segment because of the sales issue. But can you say that is the hot product gaining more share? Or is it sort of a broader range over your different categories?

I think we are gaining market share almost in every single product category. We're not going into detail. There is -- I mean, there are a couple, of course, where we're losing market share here and where we need to act here, and we have plans in place in order to increase it. But I mean, on the vast majority of the product ranges, we are gaining market share here. So I don't think we should be pointing out 1 specific range or whatever. It is an overboard market share gain.

Excellent. And then just 1 final minor in the cash flow to Therese. Other noncash items had a negative delta of around SEK 500 million. What's that related to? It was positive SEK 399 million last year's Q3, and now it's negative SEK 104 million. I was just wondering what that cost related to...

Yes, yes, yes. We -- I mean, with the LTI program that is included in the EBIT, we usually have a negative -- small negative every quarter as long as we continue to, of course, increase the provision of the long-term incentive program. Last year, it's related to the divestment of South Africa, where technically, that's where the change of the goodwill was booked in last year's cash flow.

We'll now take the next question. This is from Martin Wilkie at Citi.

Thank you, Martin. I just want to come back to North America. So it sounds like you are making good progress there relative to the market, but obviously, the absolute level of profit is still quite subdued. When we think going forward about the levers to get that higher, is it a market volume question? Or is this all around price cost? I mean is it effectively that the sort of price increases linked to the tariffs and so forth has not yet come through?

And I guess related to that, is there any sort of self-help story? I mean a lot of what you've done. at Anderson and other facilities, I guess, are already completed, but is there a self-help element also to getting that margin higher?

Yes. Thanks, Martin, for the question. I mean the first thing I would like to underline if you allow me is that, I mean, we are plotting in black for the second quarter in a row in North America in a market, again, which has been pretty price pressured. I mean North America is the first priority. The turnaround of North America is our first priority. And I think we have been making progress throughout the last quarters. Certainly, I mean, we have short-term actions, midterm actions and longer-term actions to take the regions where we believe it should be belonging 6% EBIT longer term.

I think the big challenge, the main challenge we had in the third quarter is the one I've been mentioning. We have been making progress in terms of volume, mix and price. However, we were not able to price to extent, we wished simply because, I mean, the tariff structure did not impact the imported goods at the logical or rational level. Now for -- I mean, moving forward, certainly, I mean, we're entering into a Black November, where price pressure will certainly not go down. So the tariff structure would be entirely implemented started 1st of October. So if there is some rational in North America in terms of pricing, we should be benefiting. We should be benefiting mid- to long term out of the current tariff structure here as being a North American producer.

So I think, again, I mean, we did not see, unfortunately, a level of rational we would have expected in terms of price increase for importing goods in Q3. I mean challenging month of November with the promotional pressure we'll have. But logically, I mean, moving forward, we should be benefiting from the current tariff structures in North America producing in North America.

And your next question is from Uma Samlin, Bank of America.

I have a follow-up on North America, if I may. So if we look at the AHAM data on the units for North America, it seems to be flat for the quarter. And you are gaining some share, and it seems like your domestic competitor have that similar things. So who is losing share there? So is there anything you can comment on that? Because given the -- you said like the imports have sort of similar pricing point, they have not been increasing prices. So what is the reason that it seems like the domestic -- you and the domestic peers are gaining share. So is there any comment you can give there?

Thanks. Tough question you're asking. I mean, first of all, we are very proud to have gained, to have increased our net sales by a double-digit amount in the third quarter. And again, I want to repeat it is not -- we have not been buying market share. We have been gaining market share here. And indeed, I mean, one of your local producer has been saying the same thing. Unfortunately, we don't buy competitive data in North America. I wish I could answer to what you're asking, but we have the same level of information you do have. So we have AHAM data, and we have our data relative to AHAM. So it's very difficult for us to comment beyond what you just have been mentioning with competitors reporting out as well their Q3 reports in North America. So I'm unfortunately not able to give you more details about who is losing in which product category.

That's very helpful. So my second question is on Europe. It seems like the competitive pressure in Europe is still fairly strong. And -- but you are seeing some improvement in sentiment. Do you see any increased competition from your Asian peers here in Europe? Do you expect the pricing to bottom out potentially towards the end of the year or into next year?

Thanks for the question. Great question here. In all fairness, I mean, Asian penetration in Europe is not something new. I mean, Asian had been entering into Europe now several years ago. Certainly, I mean what I said previously is that, I mean, the cost difference to manufacture a product in Asia or to manufacture a product in North America and Europe has never been as big because of commodity prices, because of energy cost. So cost difference is really, really big. We opted very courageously in Europe a few years ago to step out of entry price points as Electrolux. So we have been ramping down the Zanussi brand, and we have been focusing on Electrolux and AEG.

And we're proud to say today that we're winning more market share on Electrolux and AEG core and premium than we're losing on the Zanussi side of the equation here. So we are not exposed to the entrants on entry price point. However, what I need to underline is that, I mean, you're partly right. We see the market moving down into lower price points in Europe. We see cost pressure being more and more intense here, I think we feel slightly protected from that because of the consumer segments we are targeting in Europe. But I mean there is no doubt about that. The market has been moving to lower price points recently, and we see a significant level of price pressure.

And the next question is from Björn Enarson from Danske Bank.

First question on the U.S. again. And if you can give us some color on the factory load in the plants and what kind of absorption you have of fixed cost now when you gain some volumes, but still volumes are, I assume, quite low. And second question is a little bit on Europe. If you can give some regional comments within Europe where you're seeing this slightly positive trends?

Thank you very much for your question. I mean the -- as I mentioned previously, I mean, the most subdued market versus, I mean, the past years, I mean, I mentioned 2019, is certainly Europe. I mean, we are back at the level of 2014. And as I said in the previous call, I mean, usually, this industry in Europe had an organic growth of 2% to 3% a year. So if you put 2014, 2025, we're really missing 20% to 30%. The market is missing 20% to 30% of the volume, we should have expected logically out of the region here.

And as a consequence here, the factories overall, which are suffering the most from underutilization are the European factories. That's where everybody is suffering today in terms of factory loading. I would say North America, I mean, a few good news. First, I mean, the Springfield factory, we were suffering end of last year in terms of ramp-up and additional cost. The ramp-up was basically inducing. I mean, Springfield has been reaching what I would be calling a cruising altitude. So the factory is there. And I think we don't have the same factory capacity or utilization issues we do see in Europe. I think certainly, we still have space because we just built this factory. So I think we have space in front of us here. But I mean, factory utilization rate is not the main handicap we may have in North America or the major challenge we do have in North America.

And are there actions to deal with plant load in Europe? Or how are you dealing with that? What you have done by some divestments et cetera?

Absolutely. I mean, first, I mean, we're gaining market share in the core and premium segment. So we are fighting for volume. And I think in the EBIT bridge, as I said during the presentation, I mean we have been positive in volume and mix. And unfortunately, I mean, this advantage was slightly offset by the price pressure we see on the market. So we are really fighting. We're fighting on daily days. Our team is fighting is doing a great job on the market basically to win versus our competitors in Europe.

I mean what would be helping us the most is simply to get back to a normal type of growth in Europe. And I think when I say a normal type of growth, I'm not speaking about the 20% to 30% we were expecting a few years ago, but I mean, getting back to 2% to 3% growth in this region here. And what will be helping Electrolux the most because of the strength we do have in kitchen channels is basically that the construction market will bounce back. And we believe it has been reaching bottom here. We're observing that interest rates are lower. So we're really hoping that I mean this market will be bouncing back, I mean, in the coming months. But I mean, right now, we don't have a clear sign it.

And as you know, with the cost efficiency that we're having this year, it's mainly related to product cost efficiency, but we have 2 years behind us where, of course, we have taken down our staff and our workers in the factories drastically over the last 2 years prior to this one to cope with the factory utilization.

We will now take the next question. This is from Timothy Lee from Barclays.

Can you hear me clearly?

Yes.

Yes. Absolutely.

So I have 2 questions on Europe. So the first one is regarding the trend that you have seen in September, which is some improvement. Can I ask about the historical pattern within the first quarter, whether September is usually a strong month in the quarter or not? And so the pickup in September this time is more like a seasonal pattern? Or is really some improvement in terms of your overall business? That's the first question.

And the second question is about the margin improvement in Europe on a quarter-on-quarter basis. What's the key driver for that? Is this just from -- mainly from the cost efficiency program or there's something -- some factors that drive the quarter-on-quarter improvement and how sustainable the improvement will be? These are the 2 questions.

Thanks for your question. The communication was not very good. So I hope I would be answering your questions correctly. About the month of September, first of all, I mean, we cannot speak about a pattern because, I mean, that was basically a month, and we have seen really quite a lot of unstability in Europe in the past month. And I think in all fairness, unexpected moves as well. So I think I've been in this business for 25 years in all fairness. I mean, it has been in the last years and months, a pretty unstable situation and a situation which is very difficult to predict.

However, again, as Therese and myself stated, I mean, we had some positive signals in the month of September. And I think the only wish we have is to get back to a certain level of normality moving forward in this region. In terms of...

And I guess if the question was more the historical pattern. I think what we can say, historically, of course, we had September, October, November are really the high season month in our industry. Then, of course, as you know, the last few years or quite many years now has been very volatile and not really following a normal seasonal pattern. And also, of course, with a very, very subdued kitchen retail channel in Europe, which is usually the boost as well in these 3 months.

That's not really what we have been seeing being strong in the market in the last few years. So that's why we have not really had a normal seasonality. So of course, is September strong because we're coming back to that more positive momentum? I guess it's too early to say because it has been going up and down. But historically, of course, September, October, November are the high-season months.

In terms of sales. In terms of margin, if I can just take your question on margin here. As I mentioned previously, I mean, we are not targeting entry price points. Our war, our objective is not cost. I mean we want to introduce consumer-relevant innovations here, and we're extremely proud to have a high consumer 3-star rating across the 3 regions here to win awards like 7 Stevie Awards in Germany in laundry, which never anybody has been reaching before. So we're really trying to get and extract margin out of innovation and the quality of the products we do have over there, trying to escape the price pressure and cost pressure you may find in the enterprise point.

However, I mean price pressure is big. Price pressure is big in every single quartile here. And certainly, I mean, reducing cost is one of our strategic pillar, and it is of prime importance to be cost conscious in every single line of our P&L, and that's what we are driving with a lot of intensity.

Okay. Great. We will take one question from the webinar, which is from Swedbank from Timothy Becker. And that is if we can elaborate on the goal of maintaining a solid investment rating, and if we are okay with the rating or how -- if we have a goal to improve that, and if you could elaborate on that.

Yes. Of course, I mean, as we stated in the call, our aim is really to maintain a solid investment-grade rating quarter-over-quarter. I mean compared to last year, we are improving on our net debt to EBITDA ratio. And quarter-over-quarter compared to the second quarter, we are stable. And of course, we're doing everything we can to remain a solid investment-grade rated.

Our focus remains delivering the year-end results on the profit side of the equation.

Great. We have one more question on the call that I think we will try to take after we -- or before we close off.

Final question is from John Kim from Deutsche Bank.

Follow up. I'm just wondering if you could comment a bit on wage inflation, sort of percentages are you experiencing? What's the cadence to it? Are there large upcoming negotiations with any unionized union organizations?

No, I would say nothing extraordinary that we can mention.

Okay. And while I have the floor, is there anything you'd call out in the August developments around U.S. tariffs that are particularly, we should be mindful of, whether it's the metal content or the reciprocal?

You want to answer this one? Do you want me to take it? Nothing special on the -- of course, I mean, as I mentioned previously, John, I mean, tariff -- the latest tariff structure is certainly -- should certainly be benefiting the local producers here. The full tariff structure is implemented, I mean, starting beginning of October. And again, all what we're hoping as a North American producer is to see a rational price increase from -- for imported goods starting as soon as possible. That's what I would say.

Thank you, John. And thank you, everyone, who has listened. With that, we will end this call. And I would like to remind you that we will have a capital market update on the 4th of December that will also be live webcasted. So thank you for viewing and listening in today.

Thank you very much.