Sweden-based Electrolux released results today showing net sales increased to SEK 75,962 million (approx. U.S. $10,373 million) for the first 9 months of 2006, compared to SEK 72,050 million (approx. $9,839 million) for the first 9 months of 2005. Income from continuing operations was SEK 1,213 million (approx. $166 million), compared to SEK 485 million (approx. $66 million) for the same period last year.
Among the results: European appliances sales were lower, which Electrolux said was due to an unfavorable change in mix. In North American, appliances sales were up and margins were stable. Latin America delivered solid results. The company said floor-care products continue to grow and perform well. One of the negative impacts came from raw material prices. Electrolux said its outlook for 2006 remains unchanged.
Electrolux Group President and CEO Hans Straberg noted that third-quarter results increased by 10 percent. "However, this does not mean that I am satisfied," he said. "In Europe, we saw a continuation of the problems stemming from the strike in Nuremberg, Germany. In North America we continued to improve the result despite some temporary suppliers' problems at the Juarez factory in Mexico that are now under control. I am especially pleased with the development of floor care, which shows that it is possible to have good margins in a tough market - if you have the right products and the right marketing at a competitive cost position. Increasing costs for raw materials, a weakening North American market and a continued challenging competitive environment are concerns."
Straberg said Electrolux efforts to move production to countries with a lower cost base are in an "intensive phase" in Europe, and in the last 2 years the company has moved 25 percent of its total European volumes to new plants in lower-cost countries.
"Earlier this year, I inaugurated two Polish plants, in Zarow and Olawa, and this December we will see the opening of a third Polish plant, this one in Zwidnicia," Straberg said.
But the complicated restructuring plans did not come off without hiccups in the product supply. In addition, the strike in Nuremberg resulted in lost volumes, primarily in higher price appliance segments.
"I am convinced that we will regain our lost positions, even if it takes a bit longer than expected. When the comprehensive reshaping of the Electrolux Group is complete, we will have a very competitive cost situation, which strengthens my belief that programs of this size will not be necessary going forward."
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