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ELECTROLUX

Electrolux posts upbeat report

Swedish white goods giant Electrolux posted a third quarter report on Monday that surpassed analysts' profit expectations.

The world’s leading electric appliance maker stuck to its 2008 growth forecast despite the dark financial climate.

For the July to September period, the company reported a net profit of 847 million kronor ($104.4 million), up 11.2 percent year-on-year.

Electrolux’s sales meanwhile remained virtually unchanged at 26.34 billion kronor compared to 26.27 billion a year earlier, according to its earnings report.

The company, in the process of restructuring its business to reduce production costs, thus easily beat analyst expectations that its sales in the third quarter would amount to 25.91 billion kronor, according to a poll conducted by the Dow Jones Newswire.

At the same time, the company’s operating profit for the quarter jumped 11.6 percent to 1.28 billion kronor while its margins swelled to 4.9 percent from 4.4 percent in the third quarter of 2007.

Following its earnings announcement, Electrolux saw its stock price jump 2.80 percent to 55.00 kronor a share, in a Stockholm market down 5.40 percent.

Despite the good news, company chief executive Hans Stråberg meanwhile said Electrolux was still feeling the effects of the global financial crisis.

“The financial crisis has without a doubt affected the consumption levels of appliances. Many consumers are postponing their purchases or choosing less expensive products,” he said in a separate statement on Monday.

“And there’s no evidence that the weak market developments will turn around in the near future,” he added.

In the second quarter the group revised sharply downward its growth forecast for 2008, blaming the financial turmoil, but on Monday it said it would not revise down the figure further.

It expects to rake in an operating profit of between 3.3 and 3.9 billion kronor this year, far below the 4.47 billion it made in 2007.

Stråberg refused however to try to predict how demand in the company’s different markets would develop going forward.

“We are in the midst of a very uncertain period, where the developments on our main markets-Europe and North America-are not likely to improve in the near future,” he said.

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.