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Electrolux reports rise in first quarter figures

The Swedish appliance maker Electrolux said Wednesday that its first quarter net profit jumped by 23 percent from the same period a year earlier owing to solid demand from emerging markets.

Electrolux CEO Keith McLoughlin is pleased with the past quarter’s results.

“It was a strong quarter where most things have developed the way that we had predicted,” said McLoughlin to news agency TT.

The group’s net profit climbed to 561 million kronor (63.1 million euros, $83.3 million), well above an average analyst forecast of 485.5 million that was compiled by Dow Jones Newswires.

Electrolux sales gained more than 10 percent meanwhile to 25.9 billion kronor, surpassing an analyst forecast of 24.9 billion kronor.

“Market demand for appliances in Electrolux mature markets declined in the first quarter year-over-year, while demand in emerging markets continued to grow,” the Swedish company noted.

Prices for raw materials are expected to rise this year, and Electrolux are raising their prices to compensate for the increasing costs.

In North America the company has increased its prices, a solution which has worked out well, and more hikes in prices are predicted.

“Europe is a little more challenging, especially if you look at what is happening in southern Europe where the demand has gone down significantly. The possibilities to raise prices at that point are very slim,” he said, adding that new product launches in Europe makes up for the drop in demand to some extent.

In North America sales went down during the first quarter, but McLoughlin thinks that it will turn upward during the second quarter, while expecting a small drop in Europe for the same period.

”We think that the western markets may have reached rock bottom and that the trend will be more positive from now on,” he said.

The first quarter was also strong in Latin America and Asia is also doing well, although sales were down somewhat in China.

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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.