Electrolux Reports Third Quarter Results
Global appliance giant AB Electrolux announced third quarter results, including a 58-percent increase in net income per share to SEK 13.10 (U.S. $1.40).
The Stockholm, Swedish-based corporation reported a marked upturn in income for North American operations, although this is compared to a low level in 2001. Also noted was a substantial improvement in income and margin for appliances in Europe, as well as higher income for both Professional Indoor and Outdoor Products for comparable units.
Net Sales And Income
Net sales for Electrolux in the first nine months of 2002 amounted to SEK 102.564 billion (U.S. $10.9391 billion), compared with SEK 103.922 billion (U.S. $11.0834 billion) for the same period in 2001. This corresponds to a decrease of 1.3 percent.
Operating income for the first nine months of 2002 was SEK 8.294 billion (U.S. $0.884487 billion), and income after financial items was SEK 8.104 billion (U.S. $0.864181 billion).
Electrolux said industry shipments of core appliances in Europe increased in volume by approximately 1 percent in the first nine months of 2002 compared with the same period in the previous year. Western Europe showed a decline of 2 percent, while the market in Eastern Europe increased by approximately 15 percent.
Shipments in the third quarter increased by 3 percent, with a decline of 2 percent in Western Europe and a growth of approximately 20 percent in Eastern Europe.
Electrolux said group sales of appliances in Europe increased from the previous year, particularly in Eastern Europe and with respect to key accounts. Operating income showed a substantial improvement with a higher margin, both for the period as a whole and for the third quarter. This improvement is attributed to higher volumes, lower costs for materials and improved internal efficiency.
In the U.S., Electrolux reported, industry shipments for core appliances increased in volume by about 7 percent in the first nine months and approximately 2 percent in the third quarter.
Including air-conditioners and microwave ovens, shipments increased by about 6 percent for the entire period, and by almost 3 percent in the third quarter.
Group sales of appliances in North America were substantially higher than in the previous year, particularly for refrigerators and cooking appliances. Operating income and margin showed a marked upturn, but this is from a low level in 2001.
Income for the first nine months of 2001 was negatively impacted by non-recurring costs related to problems stemming from the start-up of a new generation of refrigerators.
Sales of room-air conditioners were lower than in 2001 and operating income in this product area declined.
Demand for appliances in Brazil increased for the period as a whole after having showed an upturn in both the second and third quarter, Electrolux reported. It said group sales were in line with last year in local currency but declined in SEK.
Operating income showed a substantial downturn and was negative, mainly due to higher costs for materials and a less favorable product mix. Lower exports to Argentina also had a negative impact.
Group sales in China showed good growth over the previous year, Electrolux reported, but said income for the Chinese operations declined and remained negative. This was attributed to higher marketing costs, a less favorable product mix, and downward pressure on prices.
Electrolux said group sales of appliances in India were lower than in 2001. Operating income for the Indian operation declined somewhat and remained negative.
Electrolux reported an upturn in the Australia appliance market, with the Group showing a positive trend in sales and income.
Overall, Electrolux said its operating income for appliance operations outside Europe and North America declined compared with 2001 and was negative.
Floor Care Products
Demand for floor-care products in the US declined for the period as a whole after a downward trend in the third quarter. Demand in the European market showed a continued positive trend, however. Group sales of floor-care products were somewhat lower than in the previous year. Operating income was largely unchanged as a result of a more favorable product mix and productivity improvements.
Demand for consumer outdoor products was slightly higher than in 2001 in both Europe and the U.S. Electrolux reported higher sales in Europe, with the operating income for the European operation showing a marked upturn.
In the U.S. the group's sales of consumer outdoor products were higher than in 2001, and operating income and margin improved.
Foodservice Equipment: Electrolux said demand for foodservice equipment in Europe was somewhat weaker than in 2001. Group sales declined, mainly due to divestment. Operating income and margin improved as a result of structural changes, as well as a more favorable mix.
Laundry Equipment: Group sales of laundry equipment decreased due to weaker demand in several European markets, as well as in Japan. Operating income and margin improved, the corporation said, as a result of higher productivity and the launch of new products in North America.
Compressors: European compressor demand was higher in the 2002 period than in 2001, with increases in group sales increased for comparable units. Electrolux says operating income showed a marked improvement as a result of restructuring and the introduction of a new compressor.
Professional Indoor Products: Total sales for Professional Indoor Products decreased, attributed primarily to divestment and implemented restructuring. Operating income and margin increased for comparable units.
Professional Outdoor Products: Electrolux reported an increased demand for professional chainsaws, particularly in Eastern Europe. Group sales of chainsaws rose for the period compared to 2001. Strong growth in sales was reported for professional lawn and garden products, while sales for construction products declined. The integration of the newly acquired Diamant Boart operation proceeded according to plan. Overall, sales for Professional Outdoor Products were higher than in the previous year. The company said that a change in accounting principle for R&D had a significant positive impact on operating income for this business area. Income and margin improved on a comparable basis, however.
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