Electrolux Q2 profit beats forecast, upbeat on Europe, US markets

Reuters with CNBC.com
Market demand solid for Electrolux: CEO

Shares of Electrolux jumped by up to 6 percent after the home appliances maker reported second quarter earnings above market expectations on Friday and forecast growth in white goods markets in both Western Europe and the United States.

Electrolux, which sells under brands such as AEG, Zanussi and Frigidaire as well as its own name, said market demand in Western Europe continued to strengthen while ongoing cost savings boosted profits.

Chief Executive Keith McLoughlin said the home appliances market was expected to grow 1-2 percent in Europe this year and he appeared a tad more upbeat on North America with a 3-5 percent forecast. In the previous quarter he predicted growth in the latter region was seen at the lower end of that range.

"Operations in North America reported good organic growth, mainly driven by high sales volumes of air-conditioners," McLoughlin said in a statement.

Eric Roxfelt | Bloomberg | Getty Images

In Eastern Europe, demand fell by 23 percent, as a result of the sharp downturn in Russia and Ukraine, he added. The Latin American market was also challenging, the company said.

The company, battling for market leadership with U.S. Whirlpool and Korean LG Electronics, said operating earnings rose to 921 million crowns ($107.7 million) from a year-ago 63 million, above a mean forecast of 760 million in a Reuters poll of analysts.

McLoughlin said results were still impacted in North America by increased costs to adapt product lines and the ramp-up of a plant in Memphis.

Electrolux's $3.3 billion deal to buy the GE Appliances business faces a lawsuit from the U.S. Justice Department to stop the purchase, arguing that it would hurt competition in the market for cooking appliances.

McLoughlin repeated that his company would "vigorously contest" the move to block what would be the biggest acquisition in the Swedish company's history and more than double its annual U.S. sales.