There is a lot of talk and writing about it crisis in the household appliances industry European and North American, but the market ofConsumer electronics (CE) is not doing any better, on the contrary. The sector was hoping for a recovery in 2024, after a year of negative sales in 2023 (between -15% and -20% depending on the typology). And instead, the crash in Europe repeated itself, and turned out to be even worse. Although the European Football Championship provided some momentum, it failed to bring the global market into profit. In the first half of the year, revenues in all segments were 2-3% lower than in the same period last year. This is the very first time after decades of revelry. This, in short, is the lapidary story that Jan Lorbach, GfK insights expert, recently provided an update at the Ifa – Internationale Funkausstellung in Berlin – on the negative trend of the entire home technology sector. After two years of crisis, however, everyone agrees: the 2025 will see a general and widespread consumption recovery, thanks also to innovations related to the application of artificial intelligence.
Beko to Minister on November 7: Waiting for Recovery Plan
An important news: the 7th November we will finally know the investment and restructuring program is Beko Europe has arranged for the ex Whirlpool Italian factories. The Ministry of Business and Made in Italy, following the indication of Minister Adolfo Urso, has called for Thursday 7 November an update meeting on Beko Europe's programmes, to which representatives of the company, trade unions and local institutions have been invited to participate. Everyone is concerned about an indication contained in the press release on the quarterly report which underlines the need to adopt some measures: cost review, new technologies and staff reductions. As for the third quarter results of the consumer electronics and household appliances giants, the declines in sales and profits are painfully confirmed, with some exceptions from the Chinese giants, for which news is expected shortly, but the rumors coming out of the Asian stock exchanges already indicate very positive results. Furthermore, we report some data, as always from GfK, regarding global sales and those of the Italian market, and we explain why there are enormous differences between the GfK data on sales (sell-out), those on deliveries to retailers (sell-in) and, again, those on production.
Household appliances: who gains and who loses
What are the Q2024 and HXNUMX XNUMX results of domestic tech giants? Almost all results have been published in the past few days, except for those of Chinese and Japanese giants. Let's start with Arcelik Anonymous Sirteki, the company that, through Beko Europe, became the owner of Whirlpool's EMEA subsidiaries. The incorporation of the former Whirlpool activities led to a 13,8% increase in sales, but also resulted in a net loss — a legacy of the acquisition — of 5.001,55 million Turkish lira (TRY), compared to a net profit of 1.244,75 million TRY a year ago. Turnover also showed a strong increase, but with losses of 5.006 million compared to a profit of 4.500 million. For Electrolux, the quarter marked the tenth consecutive one with a drop in sales, especially in North America, where the difficulties of the supply chain are also being felt. Everywhere - says the Wallenberg company - they are feeling the effects of competition from Midea. EBIT fell by 42% (with a collapse in the stock market). Sales were blocked to raise resources necessary for the relaunch, as in the case of the brand Zanussi, which has been confused by Italian newspapers with the group of Italian factories. The brand also Aeg is about to be relaunched, after Swedish managers realized that having abandoned or obscured historic brands such as Zanussi, Rex, Arthur Martin and Aeg contributed to the loss of image and market share. Finally, delocalization does not seem to have given the expected results, as demonstrated by the case of Electrolux Professional, which, counting for about 80% on the production capacity of the former Zanussi Professional Italian factories, closed the first nine months with record sales and profits.
But how did the markets go?
Below we present the data processed by GfK for FIRST online, which offer an interesting look at market trends in the first half of 2024 compared to the same period in 2023.
Globally, the consumer electronics market (ce) recorded a slight decline of 2%, while the telecommunications sector (tlc) saw an increase of 2%. As for information technology (it), sales fell by 5%, while small household appliances (ped) suffered a slight contraction of 1%. Finally, the large household appliances (majaps) segment saw a decline of 2%.
Moving on to the analysis of Italian market, a more critical situation is observed: the CE sector has seen a significant decrease of 10%, and even telecommunications have registered a decline of 4,3%. Information technology has suffered a decline of 5%, while small appliances have shown a positive trend with an increase of 5,8%. However, large appliances have marked a decrease of 4,6%.
Looking at the most recent data, from September 2023 to September 2024 (until October 27), the Italian consumer electronics market continues to show signs of difficulty, with a contraction of 14,6%. Telecommunications also saw a decrease of 4,2%, and IT suffered a decline of 7,1%. However, small appliances still show some resilience, with an increase of 2,3%, while large appliances remained almost stable with a marginal growth of 0,1%.
As regards the Made in Italy in the field of large appliances, the data provided by Applia Italia for the period from September 2023 to September 2024 show a 14,5% contraction in production and a 11,7% drop in exports. Deliveries to retailers (sell-in) also showed a 3% decrease.
The real reasons for the crisis in our factories
From these data it appears that the cause of the the crisis of Made in Italy is, on the one hand, the fall of the exports and, on the other hand, the growing presence of Asian brands, which hold increasing market shares. But how did they do it? Often through various methods, aid and strategies. Non-European competitors all enjoy, without exception, substantial government export incentives, very low energy and labor costs, persistent dumping conditions and, finally, a total lack of controls on the conformity of the devices to European regulations, to which Europeans are subject.
Furthermore, many innovations of non-Asian competitors derive from patents e European innovations that the EU – before Brexit – never protected, and by the frequent use of materials that were “not in line” with European food regulations. To further weaken the Made in Europe and Made in Italy labels, the cheap imports without controls of low-quality and low-priced Chinese goods, despite the strong increases in logistics. The question then arises: why are there no controls on the companies importing these devices?
Whirlpool and Samsung suffer
However, the trend in turnover and EBIT is disappointing. Whirlpool, which closed the quarter with revenues of 3,99 billion dollars, down 18,9%. The most important market, North America, did badly. As for the Koreans, LG Electronics posted revenue of 22,18 trillion Korean won (KRW) and a record operating profit of 751,9 KRW, celebrating an excellent quarter thanks to favorable development in the B2B segment and home appliance subscriptions, despite rising transportation costs. Samsung, despite recording a 6,6% growth in total sales, saw a 12,84% drop in profits due to the delay in the production of AI chips compared to competitor Nvidia. “We expect a sharp slowdown due to the oversupply of Chinese chips, but we deny layoffs and the spin-off of our 'fabs'”. The 'fabs' are the foundries for the production of chips. Group Seb, the French company and world leader in small household appliances, recorded a 5,6% growth in turnover and 4% in operating profit in the first nine months. The growth forecast for the whole of 2024 is around 5%, with an operating margin of 10%. Positive growth, also thanks to M&A operations in the professional sector.
