Stockholm, Sweden - Weaker demand, lower prices and higher raw materials costs led to a 40.2 percent decline in Electrolux's third-quarter profits, to $128 million.
Net sales slipped 2.6 percent to $4 billion for the three months, ended Sept. 30, due in part to unfavorable exchange rates. In comparable currencies net sales rose 1.5 percent for the period.
In North America net sales fell 6.1 percent to $1.1 billion but rose 2.1 percent in comparable currencies thanks to increased AC equipment sales. Majap pricing was higher quarter over quarter but lower than in the year-ago period.
Operating income fell 74 percent to $16.7 million due to a greater mix of AC and low-priced products and higher costs for raw materials, transportation and extensive promotions, the company said.
In a statement, president/CEO Keith McLoughlin noted that Electrolux, like many businesses, "has been tangibly affected by the decline in consumer confidence in the mature markets ... of North America and Western Europe." He said the company will continue its efforts to increase efficiency, improve productivity, reduce costs and generate strong cash flow, and that these initiatives "will start generating a positive impact [at] an escalating pace."
During the quarter Electrolux elected to discontinue one production line at the manufacturer's Kinston, N.C., dishwasher factory, which had supplied the European market. The plant will continue to produce dishwashers for North American, and the line's production will be transferred to a facility in Europe.
Looking ahead, Electrolux is projecting a 4 percent to 5 percent decline in North American market demand for full-year 2011, down from a previously forecast increase of 3 percent. A total of approximately 35 million appliances are expected to be sold in North America in 2011, which is on a par with 1998 volumes and down by 25 percent from the peak year of 2005, the company said.