Stockholm, Sweden - Lower prices, higher raw-material costs
and weak demand contributed to a 68 percent decline in Electrolux's
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 kronor.
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
"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 kronor.
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 market."
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,