Electrolux Fourth-Quarter Profits Fall 68%
By Alan Wolf On Feb 13 2012 - 6:01am
STOCKHOLM, SWEDEN –
Lower prices, higher
raw-material costs and weak demand contributed to a
68 percent decline in Electrolux’s fourth-quarter earnings.
Profits totaled 220 million kronor for the three
months, ended Dec. 31.
Results were also squeezed by plant rationalization
and headcount reduction costs as the majap maker
worked to bring its manufacturing capacity in line with
lower global demand.
Net sales rose 3 percent worldwide to 28.4 billion
In North America, sales fell 5.9 percent to 6.3 billion
kronor excluding the unfavorable impact of currency
exchange rates, and operating income declined
74 percent to 76 million kronor due to lower demand
and unit volume; reduced capacity utilization; higher
costs for raw materials, sourced products and transportation;
and restructuring charges.
For the full year, net sales fell 4.4 percent worldwide
to 101.6 billion kronor, and net income declined
48.4 percent to 2.1 billion kronor.
“Already at the end of 2010 demand for appliances
started to decline, while costs for raw materials
increased and prices for our products began to decrease,”
president/CEO Keith McLoughlin said in a
statement. “This downward trend gained momentum
as 2011 progressed,” as rising raw-material costs and
lower prices curtailed results by more than 3 billion
Nevertheless, the company generated nearly 4 billion
kronor in operating income and “a strong underlying
cash flow,” he said, and will continue to optimize
operations by reducing capacity and costs.
McLoughlin has also shaken up his senior ranks.
Tomas Eliasson will join Electrolux mid-month as chief
financial officer, and Stefano Marzano, formerly chief
design officer for two decades at Royal Philips Electronics,
has assumed that role for the Swedish majap
maker, heading up a new, centralized design group.
Marzano, together with chief technology officer Jan
Brockman and chief marketing officer MaryKay Kopf,
will lead a new corporate structure called the “Innovation
Triangle,” which was created to better coordinate
the company’s R&D, marketing and design functions
throughout the product development process, with an
increased focus on customers and end users.
Looking ahead, McLoughlin forecast “a certain degree
of improvement in the U.S. market by the end of
2012, supported by a modest growth in the housing
He also described 2012 as “an intensive launch
year,” which will require increased expenditures for
marketing and product development. That, plus anticipated
higher costs for sourced products and transportation,
will make it all the more important for a recent
round of price hikes to stick, he indicated.
McLoughlin said this year’s game plan calls for the
• further strengthen the Electrolux brand position;
• continue to develop innovative products that consumers
• further improve operational efficiency, and;
• maintain a strong balance sheet “to be prepared
for both uncertainties and opportunities.”