Q1 revenue soft but profit strong.
Electrolux’s quarterly net profit has more than doubled to 875 million Swedish kronor from 339 million kronor a year earlier with sales driven by increasing demand in Europe and North America.
However, revenue notched up at 28.11 billion kronor, slightly below expectations compared with 29.09 billion kronor in the first quarter of 2015.
Electrolux’s strong results stem from a solid performance in its major markets. Demand in the first quarter for core appliances increased 3% in Western Europe and by 8% in North America, Electrolux said.
Operating income for major appliances, which include washing machines, refrigerators and other large kitchen equipment, was up 49% in Europe, the Middle East and Africa, while sales of major appliances recovered in North America.
However, Electrolux chief executive and president Jonas Samuelson (pictured above) has said he was “surprised by the strong market growth in the U.S.”
Electrolux enhanced its US market demand outlook for appliances to 4% to 5% growth in 2016, up from a previous outlook of 3% to 4%.
Samuelson said that last year, Electrolux suffered a weak first quarter in the US because of a difficult launch of new refrigeration products and a costly expansion of its factory in Memphis, Tennessee.
He said the appliance market continued to grow in Western Europe and was particularly strong in Italy, Germany and the UK as Electrolux maintained a positive 2% to 3% outlook for Western Europe.
By contrast, sales of small appliances, mostly vacuum cleaners, declined in Europe, North America and Brazil, while sales of professional equipment rose. Electrolux Russian business appeared to have stabilized at low levels following a significant downturn last year. He said he expected the Latin American market to remain challenging in the near future.
Changes in exchange rates hit operating income at around 720 million kronor, Electrolux said.
Electrolux’s results come a few months after Europe’s largest appliance maker saw a protracted US$3.3 billion deal to acquire General Electric Co.’s home appliance business collapse. However, Samuelson said the failed GE deal will have no future impact on Electrolux’s earnings and operations.