Electrolux AB, the Swedish manufacturer planning to buy General Electric Co.’s home appliance business, raised its outlook for growth in the U.S. after brisk demand pushed third-quarter profit above estimates.
The maker of AEG stoves and Frigidaire refrigerators expects the North American household appliance market to grow between 4 and 6 percent this year compared with a previous forecast of 3 to 5 percent, the Stockholm-based company said in a statement Friday. Market demand in North America strengthened during the year to rise 8 percent in the third quarter, the company said.
“The factors that drive appliance demand are lining up in the right direction,” Chief Executive Officer Keith McLoughlin said on a conference call. “Right now, it looks to us like demand is going to continue at least in the near term.”
McLoughlin is racing to win a legal battle to save plans to buy GE’s appliances unit for $3.3 billion. U.S. Justice Department opposition to the deal, which could make it equal in size to market leader Whirlpool Corp. in the U.S., stems from claims that it would hurt consumers by creating an oven duopoly. To alleviate concerns, Electrolux lawyers have said the company will sell some assets. A trial is scheduled to start Nov. 9.
Electrolux’s North American headquarters are in Charlotte, on David Taylor Drive in the University City area. The company employs about 900 people there. The company has said its headquarters will remain in Charlotte after the GE Appliances acquisition, but it is evaluating whether to go forward with a planned expansion that would double the Charlotte headquarters’ size.
Electrolux released “very good” third quarter earnings driven by North America, where profits have been hit by costly complications related to new U.S. energy standards, Kepler Cheuvreux analyst Johan Eliason said in a note. With those issues now resolved, earnings beat expectations in the region as well as in Europe and Latin America while missing in Asia, he said.
Electrolux operating income rose 8.2 percent to 1.51 billion kronor ($179 million) from a year earlier afterU.S. demand and a recovery in Europe compensated for weakness in Brazil and China, according to the statement. That was higher than the average of 1.2 billion kronor of 11 analysts surveyed by Bloomberg. Like-for-like sales rose 7 percent in North America.
New-home construction in the U.S. increased more-than- expected in September to the second-highest level in eight years. McLoughlin said the rise “will continue to stimulate appliance demand.”
Observer staff writer Ely Portillo contributed