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Electrolux posts upbeat forecast

Swedish white goods firm Electrolux on Tuesday exceeded analyst profit forecasts for the first quarter of 2010 and projected a positive year as key markets begin to recover.

The world’s second biggest appliance maker behind Whirlpool of the US, Electrolux said its net profit for the January-March period was 911 million Kronor ($127 million dollars), more than reversing a loss of 346 million kronor in 2009.

Analysts surveyed by Dow Jones Newswires had expected a net profit of 609 million kronor.

“Electrolux’s main markets showed solid recoveries during the first quarter of 2010,” the company said, with North America up for a second consecutive quarter and Europe steady after ten quarters of decline.

As for outlook, the maker of refrigerators, dishwashers and vacuum cleaners said “market demand for appliances in the group’s main markets is expected to continue to grow throughout the rest of 2010.”

Electrolux’s sales slipped to 25.13 billion kronor from 25.82 billion kronor in the first quarter of 2009.

The company said, however, that sales volumes had in fact grown, led by North America, but that changes in exchange rates dragged down the sales figure.

In a separate statement, chief executive Hans Stråberg warned that prices of certain raw materials continued to rise.

“When the global economy picks up the pace, we expect even higher raw-material prices,” he said.

Electrolux shares were down 0.98 percent to 182 kronor on a Stockholm Stock Exchange down 0.79 percent in early trade.

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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.