Electrolux results better than expected despite loss
AFP/The Local · 22 Apr 2009, 12:03
Published: 22 Apr 2009 12:03 GMT+02:00
In the January-March period, Electrolux, which is behind the popular Whirlpool brand in the United States, posted a net loss of 346 million kronor ($40 million), compared to a loss of 106 million in the same period a year ago.
The result was however better than expected, with analysts forecasting a loss of 448 million kronor, according to a survey by Dow Jones Newswires.
The outcome was also better than the 2008 fourth quarter loss of 474 million kronor.
The market was buoyed by the news, with the Electrolux share price soaring more than 12 percent in midday trade on the Stockholm stock exchange which was up 1.65 percent.
"In North America, we've experienced eleven consecutive quarters of weakening demand ... Volumes in Europe have decreased for five consecutive quarters, with the first quarter of 2009 showing the most dramatic drop," chief executive Hans Stråberg said in a statement.
"Unfortunately, this will not improve in the near future," he said.
Electrolux's sales rose meanwhile by 6.7 percent to 25.82 billion kronor, boosted by the weakening of the Swedish krona against the dollar, euro and yen.
But the struggling currency has also led to rising costs -- the exchange rate negatively impacted operating profit by 397 million kronor, primarily in Asia, Latin America and Europe, the company said.
Electrolux, which makes refrigerators, dishwashers and vacuum cleaners among other things, has been trying for years to reduce production costs and since 2007 has been moving factories to countries where labour is cheaper.
The current global financial crisis has put even more pressure on costs and some 3,100 job cuts were announced in the fourth quarter last year.
In the first quarter, the company closed a refrigerator plant in China and announced cuts in staff and production in Europe. A washing machine plant in Saint Petersburg will be closed next year while a similar plant in Spain that employs 500 people may also be shut down.
The company, which sells appliances under the brands Electrolux, AEG-Electrolux, Zanussi, Eureka and Frigidaire, last year introduced a new high-end product line in the United States.
That line remains loss-making, it said