Bloomberg has reported that Electrolux, Europe’s largest appliance manufacturer, said it had a first-quarter loss as a slowing U.S. economy hurt demand.
“As a consequence of the initially weak trend of the markets in North America and Europe as well as a number of nonrecurring items, we expect the operating income for the first quarter will be somewhat negative,” Electrolux Chief Executive Officer Hans Straaberg told shareholders at the company’s annual investors meeting, according to a statement.
Electrolux got about 31 percent of its revenue last year from North America, where Straaberg said US appliance sales are declining for the seventh quarter in a row. New high-end Electrolux products introduced in the U.S. will not turn a profit before 2009, the CEO said.
“The issue of whether the U.S. economy is in recession or not is a frequent topic of debate,” Straaberg said. “The appliance industry has been in a recession since mid-2006.”
Western European demand has also slowed for the last two quarters, he added.
Shares rose 4.6 percent to close at 102 kronor in Stockholm. That puts the company’s market value at 31.5 billion kronor ($5.24 billion).
Full-year operating income will be little changed from last year, he said, reiterating prior forecasts. Rising costs for raw materials will trim 1 billion euros from profit as steel and plastics prices rise for a fourth year, he said.
Last year’s profit was dragged down by unanticipated engineering and extra materials costs for new products in Europe, and those costs continue to weigh on earnings, said Straaberg.
Electrolux earlier said it would take a 12-million euro charge for a dishwasher recall program which seems to have grown from Australia to a worldwide problem and a $13 million charge for a lawsuit in the U.S. in relation to the gas cooker incident we recently reported.