Electrolux swings to loss on high costs in Europe, slow US
STOCKHOLM, Sweden—Swedish appliance maker Electrolux AB on Monday swung to a first-quarter $17.7 million loss and cited declining demand, restructuring costs and a new product launch in North America.
The net loss for the quarter that ended March 31 came to 106 million kronor, down from a profit of 492 million kronor in the first quarter of 2007.
Electrolux, which makes Frigidaire refrigerators and Eureka vacuum cleaners, said sales for the period fell to 24.2 billion kronor ($4.1 billion) from 24.9 billion kronor in the same period a year earlier.
"Demand for our products has been lower than we had expected and the market downturn in Europe and North America affected our results negatively. As everyone knows, there is a great uncertainty about future market developments," Chief Executive Hans Stralberg said in a statement.
Enskilda Securities analyst Anders Trapp said the earnings were about $16.7 million worse than expected.
"Both the U.S. and Europe were worse than expected, especially Europe, while the rest of the world came in better than expected," he said.
Shares in Electrolux have dropped close to 50 percent in the last year because of weakening demand in the U.S. and high costs in Europe.
Shares fell less than 1 percent to 93.25 kronor ($15.61) Monday.
The company said results were weighed down by $20.1 million in costs from the introduction of a new range of large household appliances in the U.S. and $60.3 million related to a cost-cutting program in Europe.
Electrolux earlier this year announced it would cut 400 jobs in Europe with a goal of saving between $55 million and $62 million annually.
The company maintained its outlook for a full-year 2008 operating income at the same level as 2007.
However, Stralberg added that "in line means a single digit percentage change, plus or minus. Given the current market development I expect our operating result for 2008 to be in the lower end of that range."
------
On the Net:
Electrolux: http://www.electrolux.com
