Electrolux reports steep earnings drop
AFP/The Local · 19 Jul 2011, 11:27
Published: 19 Jul 2011 11:27 GMT+02:00
Net profit for the second quarter dropped by 46.0 percent from the figure last year, and the price of shares in the group slumped by 11.2 percent to 128.40 kroner in early trading in a market showing an overall gain of 1.2 percent.
In the quarter, net profit amounted to 561 million kronor ($85.5 million) from 1.03 billion kronor in the second quarter of last year.
This fell short of the average estimate by analysts polled by Dow Jones Newswires of 649 million kronor.
Sales fell by 12.0 percent to 24.14 billion kronor. The polled analysts had expected a fall of 9.0 percent.
Chief executive Keith McLoughlin said: "As expected weak demand in key markets, lower prices and increases in raw material costs had a negative impact on second-quarter results."
He said "We do not expect earnings in the second half of the year to reach the level achieved in the second half of 2010."
The group was taking action, including raising prices in key markets and cost-efficiency measures, he said.
European operations had turned in disappointing results, he said, commenting that increased competition had upped pressure on prices and the group had lost market share at the lower end of the market.
"The very weak demand in Italy, a key market for Electrolux, also had an adverse impact."
Electrolux is the second-biggest maker of household electrical goods after the US group Whirlpool.
In response to the fall of demand in rich countries, it has undertaken restructuring programmes and has developed production abroad in recent years, closing several sites in Europe and North America.
At the end of June, the group employed 50,000 people or 1,200 fewer than at the end of June in 2010.