Electrolux Quarterly Profit Lags, Outlook Uncertain
Electrolux reported third-quarter core earnings below market expectations on Monday and said uncertainty had increased over whether it would meet its outlook of somewhat higher full-year earnings.
Earnings before interest and tax (EBIT) at the world's second biggest home appliances maker rose to 1.15 billion Swedish crowns ($179 million), excluding non-recurring items, versus a year-ago 1.14 billion and a mean forecast of 1.23 billion seen in Reuters poll of 11 analysts.
The firm -- whose brands include AEG, Zanussi and Frigidaire as well as its own name -- said it still saw "somewhat" higher operating earnings for the full year, excluding one-off items, but added that the forecast had grown more uncertain.
"The risk for further decline in the U.S. appliance market, continued raw material cost increases and cost pressures on our European margins add uncertainty to the accomplishment of the 2007 outlook," the company said.
Ahead of the report analysts had voiced concerns that Electrolux, dethroned last year as the world's biggest white goods maker by Whirlpool , would see its U.S. business suffer from the fall-out of the recent credit crunch and an extended slowdown in the U.S. housing market.
The firm said market conditions in the United States had deteriorated recently while in Europe, the launch of new products had given rise to greater-than-anticipated costs.
"We are working intensively to solve the problems, but it will take time before we achieve the expected improvement," Chief Executive Hans Straberg said in a statement.
"During the third quarter, we also noted a weakening of demand in some of our most important markets in Europe, mainly Germany, and this has also affected our development."