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Improving housing market boosts Electrolux North American earnings

A steadily improving housing market meant big gains for Electrolux, the Swedish appliance maker, which on Friday reported strong sales and earnings growth in North America.

But the gains came as the company’s overall profit fell, dragged down by slow sales and adverse currency fluctuations in Europe.

The North American division, headquartered in Charlotte, said second-quarter sales rose 3 percent over last year, to $1.3 billion. The spike was driven by a 9 percent year-over-year increase in demand for Electrolux core appliances, primarily refrigeration and cooking.

The North American division soared in profits, too.

Quarterly operating profit rose to a record $101 million, a 41 percent increase from 2012.

The company’s expansion into Home Depot drove much of the sales increase.

The home improvement giant began carrying Electrolux products in August 2012, and sales have begun to pick up - particularly because Home Depot holds an 11.4 percent share of the appliance market, according to Electrolux.

"Home Depot is the world's largest home improvement retailer, so it's very important for us to be there," said Jack Truong, president and CEO of Electrolux Major Appliances North America.

"It gives the consumer a choice to select and buy our products from anywhere."

Other retailers, such as Sears and Moorseville-based Lowe's Inc. also sell Electrolux products. Sears holds a 30.5 percent share of the appliance market, while Lowe's holds 18.7 percent, according to Electrolux.

In Europe, a sluggish economy stifled Electrolux’s gains in the second quarter despite its North American division accounting for almost a third of the company’s revenues.

The company’s overall profit fell 8 percent in the quarter to $98 million, dragged down by weakened sales and unfavorable currency fluctuations.

Electrolux’s quarterly sales were flat, compared with 2012, at $4 billion.

Net sales for Europe, the Mideast and Africa account for nearly 30 percent of total sales.

But at the company’s North American division, even bigger improvements are ahead for Electrolux – and the market – Truong said.

“We expect demand for the appliance market to grow between 5 and 7 percent for the whole year,” Truong said, adding that Electrolux had previously forecast growth of as much as 5 percent.

“And of course, we have to do better than that.”

Truong said demand for appliances will increase as the housing market continues to see gains.

With new homes being built and more houses moving off the market, more consumers need appliances, he said.

“New-home and existing-home inventory have really been going down in the past few quarters,” Truong said. “They’re nearly the same as back in 2005.”

The Charlotte Regional Realtor Association reported a 5.1-month supply of homes for sale for June.

A six-month supply of available homes is considered a healthy balance.

Truong said rising consumer confidence was also responsible for the strong earnings. Consumer confidence rose in June for the third consecutive month to its highest level since January 2008, according to the Conference Board’s Consumer Confidence Index.

New jobs in the area

Looking ahead in the North American market, Truong said Electrolux has big plans for the Charlotte area.

Electrolux has set an October opening for its new research and development center in Charlotte.

The new facility – Electrolux’s North American laundry products research and development center – moves from Iowa, and is designed to create new engineering and product design jobs in the area.

The center will allow for 80 new employees – and at full capacity, could even reach 100. Truong said the new facility will boost Electrolux’s local employment beyond 800 people.

McCabe: 704-358-5197; Twitter: mccabe_caitlin
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