Inter IKEA: Navigating Profitability Amidst Price Adjustments

Inter IKEA reported higher profits for 2024 despite a revenue drop, thanks to price cuts aimed at boosting affordability, and lower interest expenses following a major loan settlement. The company is investing in manufacturing expansions and acquiring retail operations in the Baltic region.

Inter IKEA, the entity behind the world's leading furniture brand, IKEA, reported a boost in profits for 2024 despite an 8.9% decline in revenue. This outcome was influenced by strategic price cuts, a move designed to enhance affordability after significant hikes in previous years due to supply chain issues.

The company's Chief Financial Officer, Henrik Elm, indicated that prices on average were lowered by 15%, enabling retail price reductions by about 10%. This pricing strategy, combined with a drop in commodity costs like wood, encouraged increased consumer purchases, elevating operating profits to 2.3 billion euros from the prior year's 2.2 billion euros.

Despite reduced wholesale sales and franchise fees, Inter IKEA saw a net profit increase to 2.2 billion euros, primarily due to decreased interest expenses after settling a large loan. Additionally, the company is bolstering its manufacturing capabilities with new and expanded factories in Slovenia and Sweden, and plans to acquire IKEA retail operations in the Baltic States.

(With inputs from agencies.)