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Electrolux To Outsource Parts Of Hungary Manufacturing; Sees Job Cuts, Charges

Swedish home appliances giant Electrolux AB (0MDT.L,0GQ1.L,ELUXY.PK) Tuesday announced its plan to outsource parts of its current manufacturing in Hungary and invest in its Nyíregyháza refrigerator plant. The decision would result in job cuts, and the company would record restructuring charges in the third quarter 2019 of approximately 1.6 billion Swedish kronor.

In addition, the company will report a net negative impact from non-recurring items of approximately 400 million kronor in the third quarter.

Regarding its plans to improve efficiency throughout the business, the company said it has now identified opportunities to improve efficiency in both the consumer and professional organizations. The resulting redundancies would impact about 875 non-production positions globally, and relevant union consultations will take place.

Electrolux on January 31 had announced an intention to spin off its Professional Products business area as a separate company.

It is also expected that the activities will more than offset increased ongoing costs related to the separation of Professional Products and result in a more streamlined setup for the consumer business.

Further, the company said it has decided to invest about 100 million euros in automation, digitalization and innovation capabilities in its production of high-end refrigerators in Nyíregyháza, Hungary. This is part of its manufacturing investment program, totaling 8 billion kronor during 4-5 years as from 2018.

Electrolux has also decided to outsource production of vacuum cleaners from its Jászberény facility, and a significant part of the freestanding refrigerators currently produced there. This is anticipated to impact approximately 800 production employees, and relevant union consultations will take place.

The newly announced measures would help the company to generate additional annual savings of about 500 million kronor, with full effect as from 2022.

The total annual costs savings from ongoing efficiency activities and investments are now expected to be approximately 3.5 billion kronor, with full effect from 2024.

In Stockholm, Electrolux shares were trading at 226.30 kronor, up 1.16 percent.

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