STOCKHOLM—The bottom line for Electrolux lost much of its luster in its fiscal second quarter, as “our most important earnings drivers worked against us,” according to Keith McLoughlin, president and CEO.
Net income for the appliances giant fell 45 percent as expressed in Swedish krona and 34 percent in U.S. dollars, to $89.6 million (using the average currency exchange rate for the entire quarter). The company’s net sales finished at $3.9 billion, which was up in dollars by 7 percent by down in krona by 12 percent. The discrepancy is due to a 21 percent increase in the value of the krona versus the dollar between the two periods.
“Declining volumes, lower prices and increased product costs” combined to depress Electrolux’s second-quarter performance, McLoughlin said. He cited weakness in the North American market in particular. Last year’s second quarter saw “robust growth” in sales due to the effects of the U.S. government’s stimulus package, providing a difficult comparison to this year. Price declines and higher product costs in Europe and Latin America also hurt the quarter’s numbers, he said.
In response, McLoughlin said Electrolux would raise its prices again. “In North America and Brazil, we are now noting the effects of previously announced price increases,” he said. “In the North American market, we will implement an additional price increase in August.”
While the hiked prices will help, along with a more favorable commodities market and lowered costs, McLoughlin said the second half of this year will still be difficult. “Even though sequentially better during the third and fourth quarter, we do not expect earnings in the second half of the year to reach the level achieved in the second half of 2010,” he said.