Electrolux’s North American profits rise despite sluggish sales elsewhere
07/18/2014 11:35 AM
07/18/2014 12:07 PM
Profits for Swedish appliance maker Electrolux are continuing to rise in North America, even as restructuring costs and sluggish sales elsewhere led to an overall net loss in the company’s second quarter.
The company, which moved its North American headquarters to Charlotte in 2010, reported a loss of $13.5 million for the second quarter of 2014. It shows a drop from the $94.1 million profit posted the same quarter a year ago, as a one-time restructuring charge of about $161 million weighed down results.
Excluding the restructuring charge and other items affecting comparability, the company’s operating income rose 13 percent for the quarter.
The company’s North American market is still on the upswing, with sales rising 3 percent in the first half of the year compared with the same period of 2013. North American profits for the second quarter were the company’s highest ever.
Internationally, overall sales decreased 4.9 percent.
“In North America, our results and our profits exceeded expectations,” Jack Truong, CEO of the company’s North American division, said in a phone interview Friday. “We expect the second half (of the year) will be quite good.”
North American sales had been down in the first quarter, which the company attributed to inclement weather in January and February. For the second quarter, low demand for room air conditioners balanced higher sales of premium appliances, leading to $1.3 billion in revenue that stayed steady from a year ago.
Consumer demand in the U.S. rose 6 percent.
Truong said as the economy continues to improve, the company is seeing more consumers upgrading their appliances for higher-ticket items, paying premiums that are boosting company profits.
“We actually see an explosive growth in the more higher-end products,” he said. “Consumers are willing to look at products that have a really nice design and also help them get the job done quicker.”
Truong said rather than selling individual appliances, the company is focusing on selling whole kitchen sets. He said that initiative, as well as a nationwide advertising campaign focused on the company’s Frigidaire Gallery line, is helping to drive demand for the company’s core products significantly upward in North America.
On Friday, global CEO Keith McLoughlin said in a statement that the company expects the U.S. market to grow 4 percent this year. The European market is expected to grow as much as 3 percent.
The company’s overall sales were largely burdened by a weak Latin American market, where sales were nearly half of what they were last year. Electrolux said the slowdown there was further fueled by the FIFA World Cup, which had a negative impact on sales.
In Charlotte, Electrolux is undergoing an $85 million expansion project that will add more than 800 jobs. Plans include constructing a six-story building beside the company’s North American headquarters in University Research Park. Construction is set to finish by fall 2017.
Truong said the company is planning to expand its refrigerator plant in South Carolina as well.
Recently, the company has made headlines for charity work. Electrolux North Carolina began donating full sets of kitchen appliances to furnish veterans’ households in May, and last week it donated nearly 400 Frigidaire room air conditioners to families struggling against homelessness.
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