Sweden-based appliance maker Electrolux AB reduced its profit forecast for the rest of the year citing rising steel prices.
The outlook for the company's earnings was unchanged in the half-yearly report 2004 with the addition of the risk that higher costs for steel could have an increasingly negative impact on income for the second half of the year.
The company said operating income for the second half of 2004 is expected to decrease an estimated SEK 500 million (approx. U.S. $68 million). In total, costs for materials and components are estimated to increase by approximately SEK 1,200 million (approx. $163 million) in the second half of the year.
"We are increasing our efforts to improve internal efficiency and achieve cost-savings, and are also implementing price increases," Electrolux chief executive Hans Straberg said. "The price increases on steel are of a magnitude we have not seen before and will also have to affect consumer prices."
According to the company, market demand in 2004 is expected to show some growth from the previous year in both Europe and North America while operating income for the full year 2004 is expected to be somewhat lower than in 2003, excluding items affecting comparability. The company also said there is a risk that the higher steel costs could have an increasingly negative impact on income for the second half of the year.
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