Swedish appliance maker Electrolux reported second-quarter earnings before interest and tax (EBIT) of 921 million crowns (US $139 million), excluding non-recurring items. That was up from 844 million crowns a year ago and just above the mean forecast of 917 million.
"Isolated quarters can vary and the fourth quarter last year was very strong while we now have these problems in Europe. But I am more confident now than before about our full-year forecast," Chief Executive Hans Straberg said .
The company also repeated demand for home appliances would grow in Europe versus 2006, but would decline in North America, while higher costs of raw materials would dent earnings this year. Straberg said raw material costs rose around 600 million crowns in the quarter, roughly as much as during the first three months of the year. This was mainly due to price rises for metals such as stainless steel, he said.
"Looking at the full year we're still talking about (a cost increase of) 2 billion crowns," he said. Higher margins on the wide range of new products being launched by the firm would help offset the impact, he added.
Straberg said in a statement that the company managed to increase market share while boosting earnings, but said that he was disappointed with results in the European operations due to the raw material costs and delays in the firm's biggest-ever launch of products.
"Step by step we will get through this and the way things look right now the launches will be carried out during the third quarter," he said. "What is very positive is that we are seeing our new products being very well received."
Operating earnings in Europe fell to 299 million crowns in the quarter from 376 million despite a 1% rise in underlying industry shipments of core appliances. Electrolux sales increased to 25.79 billion crowns in the second quarter from 25.32 billion a year ago.