Stockholm, Sweden — Global appliance giant Electrolux lost $71.8 million and sales slipped 5.5 percent to $4.3 billion for the three months, ended Dec. 31.
The company attributed the fourth-quarter losses to sharply lower demand, higher raw-material costs and expenses related to last year’s launch of the premium Electrolux line in the United States.
Earnings were also impacted by temporary but widespread plant shutdowns to reduce inventories, and by a $167 million charge to cover a previously announced layoff of 3,100 employees worldwide.
“Unfortunately, we see no market improvement in the short term,” said president/CEO Hans Straberg, although cost-cutting measures and investments in new product lines will help the company weather the downturn and position it for renewed growth when the market rebounds.
In the meantime, Electrolux has frozen wages, will suspend 2008 dividends to shareholders, and will not forecast operating income for 2009 “in light of the great uncertainty [in] the market.”
Within the North America division, fourth-quarter sales were essentially flat, up 0.6 percent to about $1.4 billion on lower unit volume, compared with a 13.4 percent decline in industry-wide U.S. factory shipments over the same period. The company attributed its relatively strong performance to price increases and a higher-margin product mix following the introduction of the premium Electrolux line. Straberg said the new program can be found in more than 4,000 stores, and estimated its share of the premium appliance market at 5 percent.
“I have followed this launch very closely and am especially pleased by the strong support we are receiving from our retail partners,” he said in a statement.
In an interview with Bloomberg News, Straberg pegged the company’s total North American market share at 25 percent, and said it would now turn its attention to the mid-price tier of the U.S. market by revamping its Frigidaire line of kitchen and laundry products.
Despite steady sales, temporary factory shutdowns prompted by “a dramatic” decline in November demand, coupled with the layoff of 700 U.S. workers and approximately $76 million in start-up costs for the Electrolux brand, led to a $6.6 million loss in operating income for the quarter.
For the full year, company-wide sales slipped about 1 percent to $15.9 billion on earnings of $55.5 million. North American sales were down about 1 percent to just under $5 billion for the full year while operating income declined 87 percent to $33 million.