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ELECTROLUX

Electrolux profits jump after massive cost cuts

Swedish white goods maker Electrolux announced on Wednesday that its profits tripled in 2014, as it looks to North America for growth with the acquisition of General Electrics' appliance division.

Electrolux's 2014 annual earnings soared to 2.24 billion kronor (US $273 million, 240 million EUR).

The company had struggled to turn a profit for 18 months before its cost-cutting programme – including about 2,000 layoffs – turned results around in the third quarter last year.

"The initiatives to restore profitability in our operations in Europe continue to show good results," chief executive Keith McLoughlin said in a statement.

With its purchase of GE Appliances, the Swedish giant is looking to get a bigger share of the US market, where it recorded an eight percent rise in demand for white goods in the fourth quarter of 2014.

Electrolux predicted it will grow faster in North America than in Europe this year.

Annual turnover increased by three percent to reach 112.1 billion kronor.

In mid-morning trading on Wednesday, Electrolux's shares jumped 9.6 percent on the Stockholm Stock Exchange.

Electrolux's history is closely tied to the vacuum cleaner, but today it produces a wide range of major appliances.

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.

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.