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Electrolux Q2 Majap Shipments Rise

7/17/2003 09:31:00 AM Eastern

Stockholm, Sweden - Major appliance shipments to North America remained somewhat healthy in the second quarter, reported Electrolux, with shipments of core appliances edging upward 1 percent, compared with a strong first half in 2002.

However, North American dollar sales in the company's key consumer durables segment, which adds home appliances to core majaps, tailed off in the three months, to $1.6 billion, from $1.8 billion in the year-ago period, mainly due to lagging sales of vacuum cleaners.

Operating income for the consumer durables segment in North America also slipped in the second quarter, dropping to $138.8 million, down from $163.6 million in the second quarter a year ago.

Electrolux blamed some of its lower quarterly dollar numbers on currency devaluation, citing good growth for both sales and operating income for its North American appliance operation in U.S. dollars, but a decline in the Swedish krona, compared with the same period in 2002. The improvement in income in U.S. dollars was a result of higher volumes and greater internal efficiency. Margin was unchanged, as a result of increased downward pressure on prices.

Much like Maytag's floor care troubles in the second quarter (see article, p. 16), Electrolux reported declining sales and income for its floor care lineup in North America, in this case, as a result of deterioration in price and mix, following increased competitive pressure from producers in low-cost nations.

Six-month consumer durables segment sales in North America decreased to $3.1 billion, compared with $3.5 billion year-on-year. Operating income in the first half in North America dropped to $236.3 million, down from $270.7 million in the year-ago period.

Consolidated Electrolux sales in the second quarter reached $4.1 billion, down from $4.6 billion in the same quarter in 2002. Net income for the period decreased to $197 million, compared with $226.2 million year over year.

For the six months, consolidated sales reached $8 billion, down from $8.7 billion in the first half of last year. Net income decreased to $349.3 million, from $588.4 million in the same period a year earlier.

In the second half, Electrolux expects market demand for majaps to be flat or slightly up in North America year over year, with the weaker trend in floor care products continuing. Negative currency effects should show up in lower profit figures.

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