Appliance maker Electrolux posts Q3 profit drop

AP News
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Posted: Oct 27, 2010 7:03 AM
Appliance maker Electrolux posts Q3 profit drop

Swedish home appliance maker Electrolux AB said third-quarter net profits fell 15 percent because of slacker sales in Europe and North America, higher raw material costs and more spending on marketing.

The Stockholm-headquartered group said net profit slipped to 1.4 billion kronor ($210 million) from 1.6 billion kronor in the same three months a year ago.

Group CEO Hans Straberg, who last month announced his resignation, said that aside from spending more money on branding, raw material costs in the quarter rose by almost 500 million kronor compared with last year. He also warned that expenses were likely to increase next year as prices have begun to rise for raw materials, including steel, plastic and some metals such as copper and aluminum.

Electrolux spokesman Tobias Hagglov said especially the price for copper has increased on the broader market this year due mainly to higher demand, affecting the white-goods industry as a whole.

Despite this, Straberg reiterated his forecast that Electrolux will reach its goal of a full-year operating margin of 6 percent, saying he believes it "is within reach."

The Electrolux share fell 1.3 percent to 167.60 kronor ($25.12) in trading on the Stockholm stock exchange.

Electrolux, which makes refrigerators and vacuum cleaners, recorded quarterly revenues of 26.3 billion kronor, down from 27.6 billion in the same period in 2009. The number was mainly weighed down by weaker demand in Europe and North America as well as negative effects from changes in exchange rates.

Straberg said the company's operations in Asia and the Pacific reported record earnings. "This is a result of their taking advantage of strong growth in Southeast Asia, turning around the negative trend in China and successfully maneuvering in a tough Australian market," he said.

Straberg will be replaced by Vice President Keith McLoughlin on Jan. 1.