Swedish appliance maker Electrolux AB reported a 22% drop in fourth-quarter net profit, due partly to the cost of closing factories, and said it would cut around 400 jobs within its appliances unit in 2008. The company said the cuts, aimed at saving between 350 million kronor and 400 million kronor (approx. US$54.64 million to $62.42 million) a year, would cost about 400 million kronor ($62.42 million) to implement and will be booked in the first quarter.
A review of its refrigerator production in Italy, comprising the factories in Susegana and Scandicci, will start immediately, it said, and is expected to be completed in the second quarter.
Electrolux also said that providing the demand for appliances in Europe continues to show slow growth and the appliance market in North America stays weak, it expects its 2008 operating income to be the same as in 2007.
The company said it still faces a number of major challenges, where costs have to be cut for the products it sells in Europe as well as launching costs for its new premium segment product offering in North America. "We are expecting a tough start in 2008," said Chief Executive Hans Straberg, adding the U.S. launch is expected to cost about 100 million kronor ($16 million).
Net profit for the three-month period came to 1.13 billion kronor ($176 million) compared with 1.44 billion kronor in the same quarter the year before. For the full year 2007, Electrolux posted a net profit of 2.93 billion kronor ($458 million), down sharply from 3.85 billion kronor in 2006. Fourth-quarter sales reached 27.64 billion kronor ($4.32 billion).