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Electrolux impressive with larger than expected quarterly report

Thursday, 19 July 2012
Swedish white good company, Electrolux has been getting praises here and there for reporting an impressive quarterly profit far exceeding expectations for the second quarter.
Growth is strong in Latin America and Asia and the view is also positive in the U.S.. The share rises to its highest in over a year.

The maker of vacuum cleaners, refrigerators and stoves made a profit before tax of Skr993 million in the second quarter. That was Skr170 million more than analysts expected, according to Reuters. The corresponding period in 2011, profit reached Skr696 million.

However, higher costs for raw materials continued to impact earnings negatively, but to a lesser extent than in previous quarters. These higher costs were offset by operational efficiency.

Net sales amounted to Skr 27,763m (24,143) and income for the period was Skr 763m (561), or Skr 2.67 (1.97) per share.

Net sales improved by 15percent of which 5.8 percent was organic growth, 5.6 percent acquisitions and 3.6 percent changes in exchange rates.

Operating income improved to Skr 1,150million (Skr 745million), corresponding to a margin of 4.1percent (3.1).

President and CEO Keith McLoughlin commented that  the strong sales and earnings improvement has to do with that Electrolux generated a record-high organic sales growth during the second quarter and improved its earnings significantly compared to the same period of last year.

"Our operations in Latin America and Asia showed strong volume growth and earnings in North America were up significantly. An important factor for the positive development in North America was price increases. In Europe, Electrolux continued to gain market share, but results were negatively impacted by the weak market development."

The company says that in the second quarter, organic growth accounted for approximately 6percent, which is a historic record for the Electrolux appliance business, with both volume and price contributing positively.

Sales volumes in our Latin American operations were up substantially, partly driven by government tax incentives in Brazil, and our operations in Chile and Argentina, originating from the CTI acquisition, continue to outperform the market.
By Team

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