Electrolux Q3 Profits Soar 93%
By Alan Wolf -- TWICE, 11/9/2009
STOCKHOLM, SWEDEN — Cost reductions, favorable exchange rates, lower raw material costs and stable pricing helped Electrolux ratchet up third-quarter earnings 93 percent to $234 million.
Net sales increased 5 percent to nearly $4 billion for the three months, ended Sept. 30.
“Our results indicate that we have chosen the right strategy,” president/CEO Hans Straberg said in a statement. “Innovative products, investments in the Electrolux brand and cost-efficiency measures have yielded results. Our strong balance sheet provides us with good opportunities to create growth.”
But the continued cost-cutting also came with a price: The company announced plans to shut a laundry plant in Webster City, Iowa, and a satellite facility in nearby Jefferson, by spring 2011, costing the communities about 950 jobs. The capacity will be moved to the manufacturer’s $100 million production facility in Juarez, Mexico, and security has been beefed up at the Iowa plants in the interim, according to local newspaper reports.
In North America, net sales increased nearly 6 percent to $1.3 billion due to favorable exchange rates, and operating income soared 130 percent to $101 million due to prior price increases, a greater mix of higher-margin products, improved internal efficiencies, lower raw-material costs and reduced marketing expenditures.
The company attributed the favorable margin mix to what Straberg described as the “very successful launch” of the premium Electrolux brand, and the recent relaunch of the Frigidaire brand in the midprice segment.
The gains came against the backdrop of a 7 percent decline in factory shipments of majaps in the U.S. during the period, representing the 13th consecutive quarterly decline.
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