Electrolux results better than expected despite loss

Swedish white goods maker Electrolux announced further losses on Wednesday, adding it saw little chance of improvement in the foreseeable future.

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

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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.