Electrolux CEO describes trends in Brazil as 'wicked' and 'horrendous'
The country is caught in a recession, rating agency Standard and Poor's downgraded the country's bonds to junk status, and the government has had to launch a $17 billion austerity package.
During earnings season, global companies have frequently pointed to the downturn in Brazil. But Keith McLoughlin, CEO of appliance-maker Electrolux, laid out just how bad it is.
"It's really Brazil that is very, very weak, obviously economically, inflation, unemployment and so appliance demand was down about 25%, I think it was 24% or 25% for the quarter," said McLoughlin. "That's wicked. You take a 24% or 25% decline in demand year-over-year in a quarter, that's horrendous."
McLoughlin's points are especially salient as one of Electrolux's products, washing machines, has been cited by economists as more important for economic development than the internet.
Additionally, McLoughlin said it doesn't just apply to his company's sector, but the whole economy.
"That's what the situation is and, as you probably know, it's not unique to appliances," he said in the company's quarterly earnings call Friday. "The automotive industries got the same kind of downturn in terms of percentages. So it's a very weak market and difficult situation."
Brazil was once one of the most promising emerging economies along with Russia, China and India. Now, McLoughlin said it will probably stay embroiled in the current disaster for awhile.
"Now, I'm starting to speculate, but it's hard for us to see, in the short-term, an improvement. We think it's going to take a while," continued McLoughlin. "So, for sure, it's not going to bounce back in Q4. The question is, how much of 2016 is it going to take and will it be 2017 before it comes back. For planning purposes, we're not planning for a recovery in the near term."
It seems Brazilians will continue to delay their upgrades to the way they wash clothes.