Electrolux Net Dives 28.9 Percent in Q3
STOCKHOLM-Although the company made progress in cutting expenses, Electrolux's third-quarter net income fell 28.9 percent to SEK656 million ($100.1 million).
Gross margin for the housewares giant dropped by 185 basis points to 19.4 percent. In addition, net sales in the quarter, which ended on Sept. 30, rose by a meager 0.3 percent to SEK27.3 billion ($4.2 billion). Operating expenses did fall 3.3 percent in Swedish krona and 57 basis points as a percentage of sales, to 15.4 percent.
Electrolux North America turned in a strong third quarter. Driven by volume growth in core appliances, sales in North America rose 8 percent. Keith McLoughlin, president and CEO, said sales in North America benefited from favorable market development, new distribution channels and a positive product mix. "The housing market recovery continues to stimulate appliance demand, and we are therefore raising our estimate for demand in the U.S. to increase by 7-9 percent for the full year of 2013," McLoughlin said.
To further reduce costs, McLoughlin said Electrolux would close its factory in Orange, Australia, which manufactured refrigerators and freezers, and concentrate production of these products in its plant in Rayong, Thailand. He said the company would also investigate its manufacturing setup for major appliances in Italy.
"The difficult measures ... combined with our strategic focus on growth in emerging markets and increased consumer-relevant product innovations make us convinced that Electrolux is well positioned to meet and exceed our long-term key financial targets," McLoughlin said.