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Electrolux Sales Rise 17.6%, Takes Loss

2/14/2006 08:25:00 AM Eastern

Stockholm, Sweden — A strong fourth quarter for major appliances in North America — bolstered by price increases, good volume and the support of a number of new product launches in the Americas markets — lifted consolidated sales at Elecrolux by 17.6 percent, to $4.3 billion, up from a year-ago $3.6 billion.

However, due mainly to restructuring charges, Electrolux posted a net loss of $56.1 million for the fourth quarter, ended Dec. 31, compared with net income of $95.4 million the previous year. The company took a $267.5 million charge in the period for a plant closing in Germany.

Operating margin in the fourth quarter increased to 6.1 percent, from 5.1 percent a year earlier.

A major reason for the company’s positive consolidated sales results is due to the strong improvement of major appliance sales in North America. This business segment reported three month revenue of $1.3 billion, up from $978.9 million year-on-year. Industry shipments of majaps in the United States rose by 3.7 percent, compared with the fourth quarter of 2004.

Operating income for the majap business in North America hit $81.1 million in the fourth quarter, about double the $41.2 million reported in the same period a year earlier.

Total sales of majaps, called indoor products by Electrolux, rose to $3.7 billion in the fourth quarter, up from $3.1 billion in the same three months the previous year. Operating margin was 6.4 percent, compared with 4.2 percent the previous year.

Electrolux currently is restructuring its majap unit, with the goal of moving half its production from high-cost to low-cost countries by the end of 2008, said the company. The majap maker is facing fierce competition and rising raw materials costs, which has forced worker lay offs and the move of manufacturing to Asia and eastern Europe where labor costs are lower.

Noting that it expects demand for majaps to show some growth in North America in 2006, Electrolux reported a 7.4 percent rise in consolidated sales for 2005, reaching $16.5 billion, from a year-earlier $15.4 billion.

Consolidated net income for 2005 dropped to $224.8 million, from $415.5 million, due mainly to a $53.4 million restructuring charge for divestment of an Indian operation. Operating margin for the 12 months decreased to 5.4 percent, from a year-on-year 5.6 percent.

North American majap sales rose to $4.5 billion for the 12 months, up from a year-on-year $3.9 billion. Operating income for the 12 months in North America climbed to $184.1 million, compared with a year-ago $142.3 million.

Total sales of indoor products, mainly majaps, for the 12 months, increased to $12.8 billion, up from $11.9 billion in 2004. Operating margin reached 4.1 percent, up from 3.6 percent year-on-year.

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