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Electrolux Q2 Profits Up 56%

7/20/2010 08:53:08 AM Eastern
Stockholm, Sweden - Electrolux's strategy of strong brands, innovative products and low production costs bore fruit during the second quarter.

Net sales for the three months, ended June 30, slipped 1 percent to $3.7 billion, but net earnings rose 56 percent to $139.4 million, including the negative impact of currency fluctuations.

In North America, net sales rose 1.8 percent to $1.4 billion while operating income fell 8 percent to $62 million. The decline in operating income was attributed to inventory closeout sales as Electrolux transitioned to its new 2010 product line; to costs associated with its move to new headquarters in Charlotte, N.C.; and to higher raw-materials costs and marketing outlays.

Nevertheless, the company's product mix is now more profitable in North America following the relaunch of its Electrolux and Frigidaire brands and the termination of several contracts to produce majaps under private label, the manufacturer said.

Also buoying operating income was strong sales of room air conditioners due to early summer heat waves.

The company said the U.S. government-funded appliance-rebate programs increased market demand by about 10 percent during the second quarter, particularly in April, marking the third consecutive quarter of industry expansion following more than three years of contraction.

In a statement, president/CEO Hans Straberg said he is "especially satisfied" with the company's performance in North America considering the extra costs incurred during the quarter. He added that he believes "we will see continued growth in North America in the coming years, as many American consumers need to replace their old appliances which are beginning to reach the end of their life cycles."
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