Electrolux Professional has published its latest financial results for the 12 months to 31 December 2019.
The report, publicly available from Companies House, shows that the company’s profitability has bounced back, following the impact of the guaranteed minimum pension (GMP) equalisation between benefits for men and women. This resulted from a high court ruling in October 2018 in a case brought by Lloyds Banking Group Pensions Trustees against the bank itself.
Darren Lockley, head of region UK and Ireland at Electrolux Professional detailed: “Operating profit margin was also favourable across both our foodservice and laundry divisions due to the high court judgement in the Lloyds case which impacted 2018 accounts by £500,000. This related to the financial effect of GMP equalisation on the benefits of the defined benefits pension scheme.
“This one-off impact, split £275,000 laundry and £225,000 foodservice, was not repeated in 2019. Underlying operating profit in 2018 excluding this impact was 7.7% laundry and 10.7% food.”
However the division’s turnover did drop by 15% from £16.6m in 2018 to £14.2m in 2019.
Lockley analysed: “The foodservice business sales performance weakened, reflecting the challenges in a softened market faced by key customers. Those customers were primarily high volume and low margin customers.
“This drop in sales from those customers drove part of the operating profit benefit due to a more profitable product mix, and reductions in the held warranty provisions.”
Like the whole foodservice equipment industry, the pandemic hit Electrolux Professional in 2020. Reviewing the period following the manufacturer’s latest report, Lockley wrote: “Covid-19 has had an impact on a large proportion of commercial operations, closing many in the food industry for a period of time, and those that stayed open served fewer customers putting less strain on the equipment.
“Demand for products and service calls dropped by as much as 80% during full lockdown from March 2020, but has steadily recovered up to the time of signing which was after October 2020 results were known to within 10% of 2019 sales for the same month.
“In the UK lockdown between March and July 2020, Electrolux Professional has remained profitable, making use of the government job retention schemes and managing cost bases and cash flows carefully.”
He added: “Whilst the long term implications of Covid-19 remain unclear, we have identified that the key risks are lower sales volumes and customers being unable to settle debts. The company has put in place measures to address these risks and ensure it can continue to meet operational demands by enabling staff to work remotely, implementing cost containment measures and reviewing credit limits where applicable.
“As a result, we are confident that the company is in a strong position to continue to mitigate these risks as necessary.”
And on Brexit issues, Lockley detailed: “The company has considered the key areas of impact from Brexit and allocated risk factors to them. The company is mitigating these risks by adding alternative routes and modes of transport into the UK and increasing available warehouse facilities and stock holding where necessary.
“In the event of increased costs such as currency, customs tariffs and compliance costs as a result of Brexit, the company is reviewing the opportunity to pass these onto customers.”
As far as trade predictions for the subsequent period to the latest report, Lockley concluded: “The financial projections for 2020 are to be around 20% down in sales versus 2019, with 2021 being 10% up year-on-year versus 2020.”