STOCKHOLM (AP) - Swedish home appliance maker Electrolux AB blamed weaker demand in its key markets as well as higher raw material costs for a near halving in second quarter profits.
The company also warned Tuesday that the second half of 2011 "will remain difficult."
The downbeat news prompted a slide in the company's share price. In early trading, it was trading more than 10 percent lower at 128.80 kronor ($19.61).
A more detailed look at the quarterly figures showed that the Stockholm-headquartered group posted a net profit of 561 million kronor ($85 million), down sharply from around 1 billion kronor a year ago, as its businesses in Europe and North America disappointed. Sales also slipped to 24.1 billion kronor from 27.3 billion kronor in the same period in 2010
CEO Keith McLoughlin described it as "a tough quarter," warning that his company doesn't "expect earnings in the second half of the year to reach the level achieved in the second half of 2010."
To offset the downward spiral, he said that Electrolux plans to raise prices in some of its main markets and by introducing cost-efficiency measures. He did not give details of those measures however.
"The second quarter was a period when our most important earnings drivers worked against us; declining volumes, lower (market) prices and increased product costs," he said. "The results for our European operations were a disappointment."
In the first quarter, Electrolux launched a cost-cutting program aimed at saving some 2-2.5 billion kronor a year with full effect from 2015. The group said the program had cost it around 150 million kronor in the second quarter, but that its actions are "running according to plan."
For 2011, it said it expects the market demand for appliances "to show modest growth" in Europe and North America.