Electrolux posts small profit rise but sales slip
Wednesday, February 2, 2011
STOCKHOLM (AP) — Swedish home appliance maker Electrolux AB on Wednesday reported a 2 percent rise in fourth quarter net profits thanks to lower restructuring costs in Europe and North America, but sales fell, disappointing market expectations.
The company, headquartered in Stockholm, posted a net profit of 677 million kronor ($106 million), up slightly from 664 million kronor in the same three months a year earlier.
The figure was lifted by lower costs related to restructuring measures in a Canadian appliance plant as well as staff cuts in its European work force.
Sales slipped to 27.6 billion kronor from 28.2 billion kronor a year ago, mainly due to unfavorable exchange rates.
Investors dumped Electrolux shares upon release of the earnings, sending them 5 percent lower to 172.80 kronor ($26.99) in early trade on the Stockholm stock exchange.
New CEO Keith McLoughlin, who assumed his post on Jan. 1, declared himself pleased with the results, saying that despite pricier raw materials and tough competition, his company has managed to improve results in all its business areas.
"I am extremely proud," he said, noting that product mixes improved in both Europe and North America and that "significant earnings improvement occurred in the important Oceania, Southeast Asia and Northern regions of Asia/Pacific." Full year earnings were also higher in Latin America.
Full year profits reached nearly 4 billion kronor, up from 2.6 billion kronor, thanks to lower expenses.
For 2011, McLoughlin warned that the costs of raw materials are expected to increase between 1.5 billion kronor and 2 billion kronor on the previous year.
To offset those costs, McLoughlin said Electrolux plans to make a general increase in its own prices in North America. In Europe, price increases will be more selective.
"It will take time to implement price increases and we will begin to see the positive effect in the second quarter," he said.
Electrolux, which makes refrigerators and vacuum cleaners, is due to launch a cost-cutting program within its global operations. The measures, which will start at a cost of 500 kronor million a year in 2011 and 2012, are expected to save the company some 2-2.5 billion kronor a year with full effect from 2015.
For 2011, the group said it expects appliance demand in North America and Europe "to grow modestly," with most of it coming through in the second half.
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