“As a result of weakening demand for appliances in the two last weeks of November and in December, Electrolux will not reach its outlook for the full year of 2008,” the company said in a statement.
“In light of the sharp market decline, Electrolux is reducing the number of employees by more than 3,000 in the fourth quarter of 2008 and in 2009,” it said.
“The weak market has had a negative impact on Electrolux sales volumes and product mix during the fourth quarter,” it said, adding it was “no longer possible” to achieve an operating income in 2008 of 3.3 to 3.9 billion kronor ($415 to 491 million).
As of November 2008, the company’s operating income was about 2.7 billion kronor for the year.
It remains unclear exactly how the cuts will affect Electrolux employees in Sweden.
“It’s going to have an effect on Swedish operations, but it’s too early to say exactly how big it will be,” said Electrolux spokesperson Anders Edholm to the TT news agency.
“In Sweden, there will be more white-collar workers than blue-collar workers who leave. Even the headquarters is included.”
In addition to its headquarters in Stockholm, Electrolux has operations in Ljungby in southern Sweden, Mariestad and Motala in central Sweden, and near Lilla Edet in the west of the country.
The company had 56,900 employees at the end of 2007.
The Electrolux share price plunged on the news, falling by 7.05 percent in opening trading on the Stockholm stock exchange to 69.25 kronor, in an overall market up by 1.28 percent.
The group has for more than a year been in the process of restructuring its business to reduce production costs, moving factories to countries where labour is cheaper.
It also raised prices in order to compensate for rising raw material prices.
The company reported a net loss in the first quarter of the year before bouncing back into a slim profit in the second quarter.
In the third quarter, the company posted an 11.2 percent rise in net profit to 847 million kronor, as sales remained stable.
But its operating profit fell by 72 percent to 254 million kronor during the quarter, a drop attributed to a costly product launch in North America that negatively impacted earnings.
“In December, demand for appliances in Europe and North America continues to show a sharp decline. As sales in December are seasonally low, there is a risk that operating income for the month will be slightly negative,” it said.
Electrolux said the measures announced Monday would cost some 1.2 billion kronor, and would be charged against operating income before items affecting comparability in the fourth quarter of 2008.
“The savings are expected to amount to approximately 1.1 billion kronor on a yearly basis, with full effect as of 2010,” it said.