High steel prices push Electrolux down in first quarter

(AFP) Swedish electrical appliance maker Electrolux reported on Wednesday a 27.6% plunge in net profit in the first quarter amid rising prices for raw materials, in particular steel.

The white goods manufacturer also signalled a programme of European plant closures or cutbacks potentially costing 700 million kronor (99 million dollars) and affecting more than 1,000 staff in Italy, Spain and Sweden.

Electrolux’s net profit shrank to 854 million kronor in the first quarter from 1.17 billion in the same period a year ago, excluding items affecting comparability. Operating profit dropped by 24.9% to 1.3 billion kronor from 1.74

billion a year ago, while earnings per share fell by 23.7% to 2.93 kronor from 3.84 kronor.

Sales dipped by 2.5% to 29.74 billion, falling short of analysts’ predictions of around 30.4 billion.

In its outlook for the rest of the year, the company said it expected demand for its products “to show some growth in both Europe and the United States as compared to 2004”.

However, “higher costs for materials and components will have an adverse effect on the group’s operating income”, which is expected to be “somewhat lower” this year than last year, it said.

Electrolux shares were stable in mid-afternoon trading on the Stockholm stock exchange, down just 0.63% at 157 kronor about two hours after the earnings report was released.