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ELECTROLUX

Electrolux stock falls on gloomy forecast

Swedish appliances firm Electrolux reported solid 2009 profits on Wednesday. But a weak forecast pushed the company's stock into a nosedive.

The firm said in its report that it expected only a small rise in home appliance demand this year as the sector struggles to recover from the global economic crisis.

The forecast, combined with slightly lower than expected fourth quarter results, sent its shares tumbling 9.9 percent on the Stockholm Stock Exchange to 162.9 kronor, in a market down 0.4 percent shortly after trading opened.

“There are no indicators of a strong recovery in any of the group’s main markets and therefore we only expect a modest improvement from the currently low level of market demand for appliances in 2010,” the Swedish company said in a statement.

For 2009, the world’s second largest appliance maker, reported net profit of 2.61 billion kronor ($362 million), nearly eight times the 366 million kronor it earned in 2008.

Sales meanwhile progressed four percent to 109.1 billion kronor.

For the fourth quarter of 2009 alone, Electrolux reported a return to profit with earnings of 664 million kronor compared to losses of 474 million for the same quarter in 2008.

“Some of Electrolux main markets started to show some recovery during the

fourth quarter of 2009, although compared to a very weak fourth quarter of

2008,” the company said.

The maker of refrigerators, dishwashers and vacuum cleaners closed many plants in 2009 because of weakened demand and has been restructuring its business since 2004, often relocating plants to countries with lower labour costs.

It said Wednesday it had decided to shut down a cooker-making plan in Motala, Sweden, were 240 people were employed after a review.

Last year, it announced plant closures in Russia, Spain, the United States and China, affecting nearly 2,500 employees.

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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.