Appliance maker Electrolux says Q4 profits plunged

Associated Press + More

By LOUISE NORDSTROM, Associated Press

STOCKHOLM (AP) — Swedish appliance maker Electrolux AB saw its profits plunge in the fourth quarter in an increasingly competitive market as the pressure on prices increased and the sector was hit by higher raw-material costs and weaker demand.

Electrolux reported Thursday a net profit of just 6 million kronor ($885,000) in the fourth quarter, far below the 860 million posted in the same three-month period a year ago.

Aside from tougher market conditions, particularly in Western Europe, Electrolux also said the bottom-line figures took a hit from one-time costs amounting to 825 million kronor. These were mainly due to a number of cost-saving measures that included reviewing staff levels. Electrolux didn't specify how many workers have been, or will be, laid off.

The company — which makes washing machines, dryers, refrigerators and vacuum cleaners — said that despite negative exchange rate effects, sales in the quarter rose to 28.34 billion kronor, up from 27.56 billion a year earlier.

In midmorning trading, shares in the company fell 0.2 percent to 129.70 kronor ($19.14) on the Stockholm stock exchange.

CEO Keith McLoughlin said his company has been seeking to raise prices, lower costs and buy companies in emerging markets in order to offset the tough conditions.

The company is also continuing its strategy of developing and launching new products.

McLoughlin said "2012 will be an intensive launch year," but that it will require more investment in marketing and product development.

For the year ahead, McLoughlin warned that although his company expects the market conditions to improve somewhat, "we do not anticipate that demand in mature markets will recover in the first half of 2012."

However, a modest growth in the housing market in the United States, is expected to improve market conditions there by the end of the year.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.