Electrolux profits rise after cost cuts

Appliance maker Electrolux today reported a 93% rise in third-quarter profits after cost cuts and increased prices helped it offset weak market demand.

The maker of refrigerators, dishwashers, washing machines, vacuum cleaners and cookers said net profits were 1.6 billion kronor (€157m), up from 847 million kronor in the same period a year earlier.

Revenues increased by 5% to 27.6bn kronor (€2.7bn), boosted by higher prices and favourable currency exchange rates. In comparable currencies, revenue fell by 3%.

The company axed 3,000 jobs at the end of last year, including more than 500 posts through the closure of a cooker factory in Spennymoor, County Durham. It also announced plans last week to close a plant in Spain, costing 450 jobs, as the company looks to shift production to lower-cost countries.

Electrolux has a total workforce of more than 50,000 people.

Chief executive Hans Straberg said Electrolux raised prices on its products despite a competitive market.

However, he warned that demand remained depressed: “Market development continues to be weak, as expected. Even though we see things stabilising in North America, the European market has not yet hit bottom.”

The company’s shares rose by as much as 10% in early trading today.

Johan Eliason, an analyst with research firm Cheuvreux, said the results were much better than expected.

He added: “They are good numbers. Partly the raw material costs were much lower than expected and they have also cut back their marketing costs, which has had a bigger effect than forecast.”