Electrolux welcomes rising profits

Electrolux, the world's biggest producer of household appliances, on Wednesday reported a rise in net profit in the third quarter but forecast subdued growth in Europe and North America for the full year.

Net profit including exceptional items was 440 million Swedish kronor compared to a loss of 263 million kronor in the same period last year, Electrolux said in a statement.

On a comparable basis and excluding the impact of restructuring costs, net profit stood at 809 million, 36 percent up on the figure for the same period a year ago, the group said.

Shares in Electrolux showed a gain of 5.73 percent to 129.25 kronor in midday trading on the Stockholm stock market.

The group however forecast modest growth in demand for the full year in its key European and North American markets.

“Market demand … in 2006 is expected to show some growth in both Europe and North America as compared to 2005,” Electrolux said.

Sales grew by 0.5 percent to 26.08 billion kronor, a shade below market forecasts of 26.82 billion.

The group said sales were virtually unchanged in Europe but down 3.5 percent in North America and 6.2 percent in Asia Pacific, with Electrolux blaming exchange rate costs. Sales were up 39 percent in South America on the back of strong demand, the group said.

Chief executive Hans Stråberg said in a statement that the transfer of production from high-cost countries to countries with a lower cost base was “in an intensive phase in Europe.”

The company had moved 25 percent of its European production to lower cost countries over the past two years, he said.

“As reported at the beginning of the year, I expect the operating result for (2006) … to be somewhat higher than 2005,” Stråberg said.

“Increasing costs for raw materials, a weakening North American market and a continued challenging competitive environment are concerns,” he added.

Electrolux proposed a 5.6 billion kronor cash distribution to Electrolux shareholders through a share redemption scheme “on the basis of the strong balance sheet after the spin-off of Husqvarna.”

The group sold Husqvarna, its outdoor appliances division, in June.