Electrolux earnings exceed estimates thanks to increased prices
Electrolux AB, Europe’s biggest maker of home appliances, reported first-quarter profit that beat analysts’ estimates after price increases offset a negative impact on results from currency movements. The share rose the most in three months.
Operating profit fell 29 percent to 516 million kronor ($60 million), the Stockholm-based company said in a statement Friday. The average of analyst estimates compiled by Bloomberg was for 336 million kronor ($38.9 million.)
The Swedish company last year agreed to acquire General Electric Co.’s appliances unit after Electrolux spent a decade restructuring and moving production to low-cost countries. Earlier this month, Electrolux raised its forecast for total cost savings from the deal, anticipated to close this year, by 17 percent to $350 million.
The stock rose as much as 7.8 percent, the steepest intraday advance since Jan. 28, and was trading up 6.5 percent in Stockholm at 9:30 a.m., giving the maker of Frigidaire appliances a market value of 79.2 billion kronor ($9.2 billion.)
The company had warned that new energy regulations for refrigerators and freezers and a slower-than-expected ramp-up of its cooking plant in Memphis, Tennessee would lead to a loss for its North American business last quarter.
Actions to restore profitability will take most of 2015 to show full effect, Electrolux reiterated Friday. Even so, the underlying market for appliances is “healthy” in North America, Chief Executive Officer Keith McLoughlin said on a conference call Friday.
Sales Boosted
The North American unit made an operating loss of 57 million kronor ($6.6 million) in the quarter, compared with a profit of 382 million kronor ($44.1 million) a year earlier. Currency effects had a negative impact of 277 million kronor ($32 million) on the group’s total operating income. They boosted sales by 13.9 percent. Revenue increased to 29.1 billion kronor from 25.6 billion kronor ($3.4 billion from $3 billion.)
The North American market for home appliances will show growth toward the lower end of the company’s previously communicated range of 3 percent to 5 percent, while the European market is expected to grow by as much as 2 percent, McLoughlin said.
McLoughlin assumed the No. 1 spot at the company’s Major Appliances North America division, which is based in Charlotte, after Electrolux announced earlier this month that CEO Jack Truong had resigned. Electrolux has said that following the close of the GE deal, the North American headquarters will remain in Charlotte, as will the next CEO.
The company, which moved its North American headquarters to Charlotte from Augusta, Ga., in 2010, employs about 925 people locally and has said it expects to increase the number to 1,600 by the end of 2017.
This story was originally published April 24, 2015 at 8:49 AM with the headline "Electrolux earnings exceed estimates thanks to increased prices."