Stockholm, Sweden - Price promotions, soft sales and high raw materials costs led to a 43-percent decline in Electrolux's earnings during the first quarter ended March 31.
Operating income fell to 696 million kronor while net sales slipped 7 percent to 23.4 billion kronor.
In North America, net sales rose 1.8 percent to 6.7 billion kronor excluding the impact of unfavorable currency fluctuations, on a 71 million kronor loss for the quarter.
The world's No. 2 majap maker attributed the loss to continued strong pricing pressure in the marketplace, particularly within the laundry segment, and substantially higher raw materials costs. Manufacturing costs were also temporarily higher due the transition of washer production from Webster City, Iowa to Juarez, Mexico.
The sales gain was driven by increased shipments of refrigerators and room air conditioners, plus an improved mix of higher-margin SKUs, the company said.
The quarter was the first under recently installed president/CEO Keith McLoughlin, former head of U.S. operations. In a statement, McLoughlin said higher raw materials costs will be mitigated by price increases that will gradually take effect this quarter. Prices are being raised about 4 percent on average in North America, he told Reuters, and are expected to stick due to stable demand and comparable price hikes by other leading majap manufacturers.
Raw materials costs, led by higher prices for plastics, are expected to increase by about 2 billion kronor this year, McLoughlin noted. "Our ambition is to gradually compensate for the increase in costs through price increases, improvements in product mix and cost savings," he said.