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ELECTROLUX

Electrolux profit soars after cost-cutting efforts

Swedish electrical appliance maker Electrolux reported its third-quarter net profit soared 42 percent to 933 million kronor ($130 million) thanks to a cost-cutting programme started at the end of last year.

Published: 20 October 2014 10:01 CEST
Electrolux profit soars after cost-cutting efforts
Photo: TT
Sales over the quarter increased 5.6 percent to 28.8 million kronor, slightly better than the 28.4 million kronor expected by analysts.
   
Electrolux said in a statement that its European operations were performing better because of the reduced costs and improved management of product portfolios.
   
The trims included cutting its number of employees by 3 percent.
   
Electrolux bought General Electrics appliances business for $3.3 billion in September as part of an expansion aimed at doubling its US sales. The transaction is to be concluded during next year.
 
Electrolux, which has been in business since 1919, sells over 50 million products a year to customers in 150 markets. 
 

 

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ELECTROLUX

Sweden’s Electrolux sees big US deal stopped

UPDATED: Shares in Swedish white goods giant Electrolux plummeted on Monday morning after US firm General Electric, which was poised to sell its appliance division to the Nordic firm, cancelled the agreement.

Published: 7 December 2015 09:50 CET
Updated: 7 December 2015 13:56 CET
Sweden's Electrolux sees big US deal stopped
Electrolux's office in Kungsholmen, Stockholm. Photo: Fredrik Persson/TT
Electrolux, which sells brands including Frigidaire, AEG and Zanussi as well as its own name, is already the world's second-largest home appliance maker after Whirlpool.
 
It announced a year ago that it wanted to buy part of General Electric (GE).
 
But the US firm said on Monday that it has decided to cancel the agreement to sell its appliance division to the Swedish group which had offered last year to buy it for $3.3 billion.
 
The US Department of Justice had threatened to sue Electrolux and GE over concerns the deal would create a duopoly and hand Electrolux a US market share of some 40 percent.
 
Electrolux said it had made extensive efforts to obtain regulatory approval, and said it “regrets” that GE had terminated the agreement while the court procedure was still pending.
 
“Although we are disappointed that the acquisition will not be completed, Electrolux is confident that the Group has strong capabilities to continue to grow and develop its position as a global appliances manufacturer”, said Keith McLoughlin, President and CEO of Electrolux in a statement.
 
Shares in Electrolux — one of Sweden's most famous brands — initially dropped by 14 percent after the decision was announced, and remained 12 percent lower by mid-morning.
 
The failed deal has already cost the company millions of kronor in preparatory work and General Electric has requested a termination fee of $175 million.
 
GE revealed in a statement that it was still interested in selling the appliance division.
 
Monday's announcement took some analysts by surprise.
 
“I was surprised this deal was contested by the Justice Department, but then when we saw what their concern, which was the creation of duopoly in a part of the appliance market, it began not to look so good,” said Karri Rinta, an analyst with Handelsbanken Capital Markets.
 
“It's back to square one for Electrolux in North America. This is a deal that would have made them much stronger in the US especially against Samsung and LG,” he said.