Electrolux blames World Cup for sales dip

Swedish home appliance maker Electrolux reported a loss in the second quarter 2014 citing weaker demand during the World Cup and weaker sales in Asia, Australia and Latin American markets.

Electrolux blames World Cup for sales dip
File photo: Fredrik Persson/TT

Losses in the second quarter amounted 92 million kronor ($13.5 million) compared with a 642-million-kronor profit a year earlier.

In the last quarter of 2013, the company posted its first losses since 2009.

The group said sales were down in several regions, especially in Asia, Australia and most Latin American markets, while Europe and North America experienced modest increases of one and six percent respectively.

"The economic slowdown and the FIFA World Cup had an adverse impact on demand for appliances in the second quarter," Electrolux said in a statement, while stressing that company had a "good performance" in the region despite a "weak market".

Revenue in the second quarter fell by five percent to 26.330 billion kronor, falling short of the 28.48-million-kronor figures expected by analysts polled by Dow Jones Newswires.

Last October, Electrolux announced 2,000 job cuts, with a factory closure in Australia and staff cuts in Europe.

Chief executive Keith McLoughlin said that there had been "a positive impact from the ongoing cost-reduction program in Europe", where the company expects demand to fall between one and three percent in 2014.

"We will continue to launch new, innovative products in parallel with optimising global production with a strong focus on cost efficiency," McLoughlin 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.