Electrolux profits fall

Electrolux, the world's largest producer of appliances and equipment for kitchen, cleaning and outdoor use, said on Tuesday that net profit fell in the second quarter as raw materials and

component prices climbed substantially.

Net profit fell 3.5 percent to 1.19 billion kronor in the three months to June 30.

Sales rose to 33.9 billion kronor from 31.9 billion, but materials cost 1.3 billion kronor more in the second quarter than in 2004, eroding margins.

Electrolux said it had reduced the net impact of the cost increase by reducing costs elsewhere, but had been unable to compensate for all of it and the company would continue to suffer from the level of input prices.

For the full-year 2005, operating profit, which was 1.89 billion kronor in the second quarter after 1.782 billion a year earlier, was still expected to be “somewhat lower than last year”, chief executive officer Hans Stråberg said in a statement.

Increases in the appliance maker’s sales were focused on the United States, Latin America and Australia, with Europe showing only limited and fragmented increases in turnover.



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.