Job-cut costs take their toll on Electrolux earnings
Electrolux AB, Europe's largest appliance maker, reported a first-quarter loss on costs to cut jobs and a decline in North American demand.
The net loss totaled 106 million kronor ($18 million), compared with a profit of 492 million kronor a year earlier, the Stockholm-based company said yesterday. Sales slipped 3 percent to 24.19 billion kronor. Analysts surveyed by Bloomberg predicted a loss of 135 million kronor on sales of 23.89 billion kronor.
Chief Executive Officer Hans Straaberg is paring headcount to help widen profit margins to the industry average of 6 percent as steel and plastic costs soar. Earnings are forecast to be little changed this year as North American operations have been hurt by faltering consumer demand. Western European sales also declined, the company said.
"Demand for our products has been lower than we expected and the market downturn in Europe and North America affected our results negatively," Straaberg said in the statement. "There is great uncertainty about future market developments."
The maker of Frigidaire appliances has lost almost one-half its value in 12 months, giving a market value of 29 billion kronor. Whirlpool, based in Benton Harbor, Michigan, has slipped 6.4 percent, valuing the US company at $5.7 billion.
Electrolux this year introduced new higher-priced appliances in the US after revamping its product line in Europe last year.
The Swedish appliance maker got about 31 percent of its revenue last year from North America, where appliance sales are declining amid the worst slump in the US housing market for two decades.
Shipments of major home appliances in the US fell 7.9 percent in March, led by declines in dishwashers and microwave ovens, according to the Association of Home Appliance manufacturers. Electrolux products are sold in Sears Holdings Corp Lowe's Cos and Best Buy Co stores.
Agencies
(China Daily 04/29/2008 page16)
