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.
