Sweden’s Electrolux reports profits slump

Swedish household goods manufacturer Electrolux reported a 50 percent drop in net profits for the first quarter on Wednesday, citing a rise in raw materials costs.

Sweden's Electrolux reports profits slump

In the first three months of the year, net profit fell to 457 million kronor ($75 million) from 911 million kronor in the same period of last year.

Analysts polled by Dow Jones Newswires had expected a fall of 42.0 percent.

The price of shares in the company slipped by 0.18 percent in early trading. The overall stock market in Stockholm fell by 1.30 percent.

The company, the second-biggest manufacturer in its sector in the world after US group Whirlpool, said that it had not passed on the increased costs of raw materials and that it had also suffered from unfavourable exchange rates against the krona.

Sales fell by 7.0 percent to 23.4 billion kronor. Excluding the effect of exchange rates, sales rose by 0.9 percent owing to strong sales in Central and South America and in the Asia-Pacific region. Sales of small devices were also strong.

Electrolux said it expected to catch up a rise in the costs of steel, plastic, copper and aluminium, by putting up prices in the second quarter.

Chief executive Keith McLoughlin said that the rise of input costs, notably of plastic, would have an impact of 2.0 billion kronor this year.

“Our ambition is to gradually compensate for the increase in costs through price increases, improvements in product mix and costs savings,” he 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.