Electrolux profits in high speed spin

Swedish white goods maker Electrolux beat market expectations with strong profits announced on Monday. But the firm also said it would close two plants in Iowa as part of its cost-cutting scheme.

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Electrolux, which on Friday said it would close a Spanish plant with the loss of 450 jobs, said it would also shutter two washing machine factories in Iowa that employ 950.

The company in addition pledged to carry out further restructuring, cheering investors on the Stockholm exchange where Electrolux shares were showing a gain of 8.9 percent to 179.70 kronor in an overall stronger market.

Electrolux said that in the three months to September it earned a net profit of 1.63 billion kronor ($240 million), up 92 percent from a year earlier on the back of low raw material costs and previous cost-cutting measures.

Analysts surveyed by Dow Jones Newswires had forecast third quarter net profit at 782 million kronor.

Third quarter sales rose 5.0 percent to 27.6 million kronor, beating expectations of 27.1 billion kronor.

"Almost everything went our way this quarter. (A) cyclical trough in commodity prices and maintained prices have been decisive for our earnings improvement.

"Other contributing factors are a better product mix and significant cost reductions," said the company, ranked as the world's second largest home appliance manufacturer after the US group Whirlpool.

At the same time, it cautioned that "demand continues to be weak, although the rate of decline has slowed down."

It pointed in particular to Europe, where it said the appliance market had further to fall.

Electrolux, after carrying out several reorganizations in recent years in a bid to cut costs, announced the elimination of 3,000 jobs in December in response to the global economic slowdown.

The company, which makes refrigerators, dishwashers and vacuum cleaners, has stepped up its restructuring efforts since 2004, in many cases moving production to low-wage countries.

Production at plants in Jefferson and Webster City, both in the mid-western American state of Iowa, will be transferred to Juarez in Mexico at an estimated cost of 630 million kronor.

The Jefferson plant is due to close in the last quarter of 2010 and the Webster City facility in the first quarter of 2011.

Electrolux recently said it had also launched a study on the viability of a stove-making plant in Sweden that employs 240 people.