Electrolux increases profitability in Australia, says CEO

By Matthew Henry

STOCKHOLM: Despite flat sales for Electrolux AB in Europe for Q4 2007, the Swedish appliance maker has reported growth in profitability for its Australian subsidiary due to market growth and the ongoing restructure of its whitegoods operation.

Commenting on the group’s 2007 consolidated results, Electrolux president and CEO, Hans Straberg, was critical of the group’s performance in Europe labeling it ‘a disappointment’, but said the Australian subsidiary turned a positive result in 2007.

“In Australia, after a number of tough years we reinforced our market position and achieved considerably higher profitability,” said Straberg.

“In addition, income was higher for our products for professional kitchens and laundries, despite rising prices for raw materials and a weaker dollar.”

Electrolux Home Products Australia markets the Electrolux, Westinghouse, Dishlex, Simpson and a other appliance brands in the local market.

Straberg observed that market demand for appliances in Australia rose during the year in comparison with 2006, but said Electrolux performed well in its own right.

“Group sales rose in comparable currencies, mainly as a result of market growth,” he said of the Australian subsidiary.

“Operating income for the full year improved considerably on the basis of lower costs resulting from previous restructuring as well as lower costs for outsourced products.

“Fourth-quarter market demand for appliances in Australia continued to increase. Group sales rose on the basis of higher sales volumes, which also had a positive effect on operating income.”

Electrolux closed its Adelaide dishwasher plant in April last year as part of its plan to reduce manufacturing in Australia.
Straberg said the ongoing restructuring program, which includes closure of its Adelaide plant, is proceeding according to plan and will be completed during the spring of 2008.

Globally, 2008 is shaping up to be another uncertain year in the worldwide appliances market, he said.
“We see a great uncertainty about the global economic trend,” Straberg said.

“It is very difficult to forecast Electrolux operating income for 2008. We face a number of major challenges. We have to cut costs for the products we sell in Europe.

“In North America, we are going to launch a completely new and very impressive product offering in the premium segment under the Electrolux brand. At the same time, we are expecting a tough start in 2008 as launch costs in the US of about SEK 100 million and the cost for the reduction of employees in Europe amounting to approximately SEK 400 million will impact the first quarter result negatively.

“Provided that market demand for appliances in Europe shows a slow growth in 2008 and that market demand for appliances in North America shows a slightly negative development, our outlook for 2008 is that operating income is expected to be in-line with 2007, excluding items affecting comparability.”

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