STOCKHOLM (Reuters) – The world’s biggest home appliances maker Electrolux reported forecast-beating profits and vigor in key markets on Thursday, but said negative currency effects would drag 2003 profits lower. The Swedish vacuum cleaners to dishwashers and refrigerators maker said there was higher income for core consumer durables like washing machines in Europe in a tough market and continued good sales growth in the United States in dollar terms.
“We expect market demand for appliances in the second half of the year to be flat or slightly up in both Europe and North America, compared with the same period in the previous year,” the company said in a statement.
But Electrolux said adverse currency movements wiped off 375 million crowns ($45.8 million) off second-quarter operating profits as overseas sales were repatriated back into the Swedish currency, a trend which would continue into the second half.
“The continued weakening of the U.S. dollar and the British pound against the Swedish krona and the euro will have a greater negative impact on group’s income than previously anticipated,” the company said in a statement.
Electrolux, also undermined by losses in its China and India units and weaker performances in other units, repeated its previous 2003 outlook that operating income for the full year is expected to be “somewhat lower” than in 2002.
Electrolux posted second-quarter pre-tax profits of 2.33 billion crowns ($283.6 million). This compared with expectations in a Reuters poll for pre-tax profits of 2.24 billion.
Analysts said the performance, while operationally strong, presented a mixed picture because of the currency factor.
“It was a mixed bag. The outlook is better looking forward but the currencies are going in the wrong way,” said an analyst.
Investors reacted by pushing the stock back and forth into the red and black. At 0815 GMT the share was down 2.9 percent at 166.50 crowns in a weaker Swedish market.
Electrolux has a global presence but is seen by analysts as being a particularly keen litmus test of sentiment for so-called big ticket consumer items in the key U.S. and European markets and a pointer to the overall condition of the economic cycle.
It’s performance echoed U.S. rival Maytag which earlier this week reported a big fall in profits hit by slumping vacuum sales but said major appliance sales — the bread and butter of Electrolux — remained robust and rose one percent.