STOCKHOLM, SWEDEN – Electrolux said price hikes, a richer product mix, and improved manufacturing and supply-chain efficiencies in North America and other markets contributed to significant third-quarter gains.
For the three months, ended Sept. 30, net income increased 19.4 percent to 985 million kronor on net sales of 27.2 billion kronor. The company attributed the 5.9 percent sales hike to market strength in North America, Latin America and Asia, and to the accretive effect of recent acquisitions, which together helped offset the negative impact of unfavorable exchange rates.
In North America, net sales rose 9.1 percent to 7.8 billion kronor and operating income soared 389 percent to 523 million kronor, as operating margin edged up from 6 percent, to 6.7 percent, year over year.
In a statement, president/CEO Keith McLoughlin said the operating income and margin gains in North America reflected higher sales and prices, a greater mix of higher margin products, and enhanced operational efficiency. Electrolux, along with other manufacturers, raised factory prices in April and August of 2011, and again in February 2012, although increased costs for sourced products continue to depress results, McLoughlin said.
The company said North American market demand for major appliances was up 1 percent during the quarter on strength in freezers and cooking products, while demand for select categories, including microwave ovens and room air conditioners, was cumulatively up 4 percent. Electrolux “expect(s) this trend to continue to improve, supported by a gradual recovery in the housing market,” and plans to leverage the momentum through greater investment in “brand-building activities” to further strength its market position, McLoughlin noted.
He added that new product launches in North America and other core markets have boosted Electrolux’s market share, which together with emerging market expansion is fueling greater sales and earnings.
Looking ahead, the company projected a decrease in North American market demand of as much as 1 percent for the full year, down from prior forecasts of flat to positive 2 percent.