Post by Dr. Moritz Kuentzler

When demand slows, cost pressure becomes much harder to absorb. That is exactly where many consumer durables companies find themselves today. Key input costs remain elevated, with steel up by 47%, electricity up 161%, and EU labor costs up 23% versus their respective pre-Covid baselines. Those increases would be challenging in any environment, but they are much harder to manage in a market where consumers are trading down, pricing power is weakening and Asian OEMs are gaining share across major appliance categories. This is now moving beyond P&L and becoming a balance-sheet issue. Our benchmarking shows that the post-Covid revenue upside has faded in Europe, with Germany trailing even the regional average. Smaller players are particularly exposed. Across the sector, net debt has increased by roughly 50% since 2021, while net debt to EBITDA has increased from 1.5x to 2.0x, with the European average sitting at 2.2x. That is how a margin squeeze turns into a resilience problem. The takeaways are clear: act while there is still room to manoeuvre – protect cash, fix pricing, working capital and cost-to-serve, reduce complexity, and shift resources toward the categories and customers where margin can still be earned and maintained. Next week, we will turn to the practical turnaround blueprint: How management teams can move from diagnosis to action across the full value chain. #ConsumerElectronics #HomeAppliances #Innovation #Restructuring Lutz Jaede Dr. Martin Schulte Linus Leopold