Swedish appliance maker Electrolux returns to profit in Q1 helped by lower raw material prices

Electrolux returns to profit in 1st quarter

STOCKHOLM — Swedish appliance maker Electrolux AB on Tuesday said it returned to a profit from a loss in the first quarter, helped by favorable currency exchange rates and lower prices on raw materials.

The company, based in Stockholm, reported a net profit for the first quarter of 911 million kronor ($127 million), up from a loss of 346 million kronor a year earlier.

The company said the result was boosted by currency effects, increased efficiency in its operations and lower prices on raw materials. However, it said prices on raw materials are expected to rise during the year and could increase its costs by up to 1 billion kronor in 2010.

Sales for the quarter fell by 3 percent to 25.1 billion kronor from 25.8 billion kronor.

“It is a fantastic result, across the line,” SEB Enskilda analyst Anders Trapp said. “It is about 35 percent higher than analysts’ expectations.”

Trapp said the biggest positive surprise was seen in the core activities in the U.S. and Europe.

However, he said the share price was held back due to substantial uncertainty about the development of raw material prices going forward.

Shares in Electrolux bounced when the market opened in Stockholm Tuesday, but later fell again to trade down 0.1 percent at 183.8 kronor ($25.6).

Electrolux, which makes refrigerators and vacuum cleaners, said all of its main markets showed solid recoveries during the first quarter.

“Demand in our most important markets has recovered somewhat more quickly than we anticipated,” Electrolux Chief Executive Hans Straberg said in a statement. “This is primarily true of the US market, which showed strong growth in March.”

Straberg said he had also noted a certain increased demand in all of Western Europe for the first time after ten quarters of decreases.

“Although there is still great uncertainty and many things can happen in the remaining part of the year, 2010 could be the year we approach our goal of an operating margin of 6 percent,” he said.

On the Net:

Electrolux: www.electrolux.com