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ELECTROLUX

Electrolux reports mixed earnings news

Electrolux, the world's biggest household appliances maker, reported mixed first quarter earnings news on Thursday, as a restructuring plan begins to bite.

Net profit was down 39 percent at 492 million kronor ($73.21 million), it said in a statement.

But on a like for like basis, when the costs of last year’s restructuring, which involved the closure of factories in Europe are taken out, the net profit rose by 30.5 percent

Sales in the first quarter were 24.930 billion kronor, an increase of 1.5 percent compared to the 24.553 billion in the same period a year ago, it said.

Operating profit increased 66.4 percent to 757 million against 455 million a year earlier.

“Operating income for the first quarter of 2007 confirms clearly that all business areas are on the right track. We exceeded our forecast and our income improved by about 25 percent over the same period last year. We also expanded our market shares in all regions,” Electrolux chairman Hans Stråberg said in a statement.

“We are maintaining our forecast that operating income, excluding items affecting comparability, for 2007 will be somewhat higher than in 2006, despite increased costs for raw materials and uncertainty regarding the market development in the US,” he said.

Electrolux shares opened 4.27 percent lower at 179 kronor in early deals on the Stockholm stock exchange, with the overall market 0.18 percent higher.

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.