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ELECTROLUX

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.

ELECTROLUX

Sweden’s Electrolux sees big US deal stopped

UPDATED: Shares in Swedish white goods giant Electrolux plummeted on Monday morning after US firm General Electric, which was poised to sell its appliance division to the Nordic firm, cancelled the agreement.

Sweden's Electrolux sees big US deal stopped
Electrolux's office in Kungsholmen, Stockholm. Photo: Fredrik Persson/TT
Electrolux, which sells brands including Frigidaire, AEG and Zanussi as well as its own name, is already the world's second-largest home appliance maker after Whirlpool.
 
It announced a year ago that it wanted to buy part of General Electric (GE).
 
But the US firm said on Monday that it has decided to cancel the agreement to sell its appliance division to the Swedish group which had offered last year to buy it for $3.3 billion.
 
The US Department of Justice had threatened to sue Electrolux and GE over concerns the deal would create a duopoly and hand Electrolux a US market share of some 40 percent.
 
Electrolux said it had made extensive efforts to obtain regulatory approval, and said it “regrets” that GE had terminated the agreement while the court procedure was still pending.
 
“Although we are disappointed that the acquisition will not be completed, Electrolux is confident that the Group has strong capabilities to continue to grow and develop its position as a global appliances manufacturer”, said Keith McLoughlin, President and CEO of Electrolux in a statement.
 
Shares in Electrolux — one of Sweden's most famous brands — initially dropped by 14 percent after the decision was announced, and remained 12 percent lower by mid-morning.
 
The failed deal has already cost the company millions of kronor in preparatory work and General Electric has requested a termination fee of $175 million.
 
GE revealed in a statement that it was still interested in selling the appliance division.
 
Monday's announcement took some analysts by surprise.
 
“I was surprised this deal was contested by the Justice Department, but then when we saw what their concern, which was the creation of duopoly in a part of the appliance market, it began not to look so good,” said Karri Rinta, an analyst with Handelsbanken Capital Markets.
 
“It's back to square one for Electrolux in North America. This is a deal that would have made them much stronger in the US especially against Samsung and LG,” he said.