STOCKHOLM, July 29 (Reuters) – Electrolux reported a surprise rise in core profits on Wednesday, but said market conditions weakened in North America, a key region for the home appliances maker as it tries to turn around its business and restructure operations.
Group operating profit excluding non-recurring items at the Swedish company, whose brands include Frigidaire and AEG, rose to 1.2 billion crowns ($124 million) in the April-June period from a year-earlier 797 million, on 2% organic sales growth.
Analysts had on average forecast an operating profit of 617 million Swedish crowns, in a poll provided by Electrolux.
The result was boosted by a U.S. refund of $34 million in tariffs and by a 174 million crowns change to the group’s retiree group health plan, Electrolux said.
NORTH AMERICA WEIGHS ON PROFIT
Group sales rose in its EMEA-APAC (Europe, Middle East & Africa and Asia-Pacific) and Latin America regions.
“In North America, weak market conditions and tariff-related cost pressure continued to weigh on performance,” said CEO Yannick Fierling.
The appliance maker has been battling for years with weak demand and cut-price competition, with particularly its North America business – which represents around a third of sales – struggling to turn an operating profit.
It carried out a steeply discounted 9 billion Swedish crown rights issue in June to fund a tie-up with Chinese rival Midea in North America, restructure its global business and deleverage its balance sheet.
Electrolux on Wednesday said economic uncertainty and inflation concerns weighed on consumer confidence in North America, where its sales declined 2.9% organically in the quarter and it maintained a negative market outlook.
While price increases had compensated for some of the tariffs on steel, aluminium and copper content, the cost pressure “will remain and impact earnings in the coming quarters”, Fierling said.
($1 = 9.6759 Swedish crowns)
(Reporting by Greta Rosen Fondahn, editing by Terje Solsvik)
Comments