Electrolux AB, which has its North American headquarters in Charlotte’s University City area, reported second-quarter profit that beat analysts’ estimates as Europe’s biggest maker of appliances cut costs in its home region, bringing the business there back to profit.
Operating income rose to 921 million kronor ($108 million) from 63 million kronor in the year-ago period, when profit was depressed by restructuring costs, the Stockholm-based company said in a statement Friday. The average of 11 analyst estimates compiled by Bloomberg was for 800 million kronor ($93.3 million.)
Chief Executive Officer Keith McLoughlin has turned around the European business as the company has reduced total staff by more than 2,000 since 2014. Now he’s racing to win a legal battle against the U.S. Justice Department to save his plans for Electrolux to buy General Electric Co.’s appliances unit.
“If the proposed deal in the U.S. is stopped, it’s crucial that the underlying turnaround in Europe continues,” analyst Fredrik Nilhov at Swedbank wrote in a note ahead of the results.
Electrolux’s European business swung to operating profit of 426 million kronor ($49.7 million) from a loss of 901 million kronor a year ago after the appliance maker cut costs and eliminated jobs in that region. Electrolux also benefited from increased sales of its premium brands as well as built-in kitchen products.
The company said it expects costs savings of 250 million to 300 million kronor ($29.2 million $35 million) in the third quarter, which will contribute to full-year cuts of 1 billion to 1.2 billion kronor ($116.6 million to $140 million.)
The company, which employs about 925 people in Charlotte, had also said in June that it cut less than 1 percent of its North American workforce in an attempt to boost earnings.
This past quarter, Electrolux started selling its first-ever “connected” appliance, with the Frigidaire Cool Connect air conditioner going on sale in North America in June. The appliance can be controlled via smartphones. The company has said 2015 may be the year that smart appliances finally take off after years of false starts.
Appliance demand is healthy in North America, where the market should grow along with Europe in the third quarter, the company said. North American growth was mainly driven by high sales volumes of air conditioners, Electrolux said.
The maker of Frigidaire and AEG appliances reiterated it estimates the North American market for home appliances will grow 3 percent to 5 percent this year while the European market is seen growing 1 percent to 2 percent.
Business is difficult in Latin America due to inflation in Brazil, the company said.
Sales increased 19 percent to 31.4 billion kronor ($3.7 billion) in the quarter, compared with the 29.4 billion analysts anticipated. First-quarter growth had been 14 percent.
Electrolux reiterated its goal to complete the acquisition of the General Electric unit by year-end. The DoJ says the purchase would harm competition by reducing the number of major suppliers of cooking appliances to U.S. home builders to two from three.
“Competition is actually increasing, not decreasing, given many new entrances to the marketplace,” McLoughlin said in an interview on Bloomberg Television.
McLoughlin assumed the No. 1 spot at the company’s Charlotte-based Major Appliances North America division after Electrolux announced this spring that CEO Jack Truong had resigned.
Observer reporter Katherine Peralta contributed.