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Strong quarter for Electrolux but concerns over US market

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08:54 CEST+02:00
Electrolux, the world's leading electrical appliance maker, posted Monday a 73 percent rise in third quarter net profit to 762 million kronor ($119 million), but said its full-year result could be hit by a weakening US market.

The Swedish company registered sales of 26.3 billion kronor in the three-month period, up by 1.1 percent from a year ago but slightly below analysts forecasts of 26.5 billion kronor.

For the January-September period, sales reached 77 billion kronor, up by 1.5 percent from the same period in 2006.

Operating profit soared by 68.2 percent to 1.15 billion from 685 million a year earlier, in line with analysts forecasts of 1.11 billion, while operating margin remained stable at 4.4 percent.

On a weaker note, pre-tax profit was down by 8.6 percent to 1.03 billion kronor, excluding items affecting comparability. The drop was attributed to a rise in interest rate payments.

For the full-year 2007, Electrolux reiterated its forecast that its operating income would be "somewhat higher" than in 2006 excluding items affecting comparability, but it stressed that there were uncertainties surrounding the fourth quarter.

"The risk for further decline in the US appliance market, continued raw material cost increases and cost pressures on our European margins add uncertainty to the accomplishment of the 2007 outlook," Electrolux said in a statement.

For the full-year 2006, operating profit rose four-fold to 4.03 billion kronor.

The Electrolux share price plunged by almost 7.5 percent in opening trade on the Stockholm stock exchange, but later regained some ground and was at midmorning down 3.8 percent at 134.25 kronor.

"We previously advised that market demand for appliances in 2007 was expected to show continued growth in Europe, while the North American market was expected to decline as compared to 2006," the company said.

"Recently, market conditions in the US market have weakened," it added.

Electrolux said that, as in the second quarter, raw material costs would have an adverse effect on operating income in the fourth quarter.

"At the same time, the group's recent product launches in Europe, which have been well received, have incurred higher than anticipated costs," it said.

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