Electrolux faces tough European market as Q2 underlying profit disappoints

(Removing the sign to the Volta brand in paragraph 2)

Written by Greta Rosen Fonden

Stockholm (Reuters) -The Home Electrolux maker made about expectations in the second quarter of the basic profits on Friday due to the weak demand in Europe, which led to a 16 % decrease in the price of his share.

Total operating profits in the Swedish group, whose commercial signs also include Friigidaire and AEG, amounted to 797 million crowns (82 million dollars), as its business in North America led to the growth of organic sales by 2 %. This is compared to 419 million crowns a year ago.

With the exception of 140 million crown profit for one time from the sale of a brand in India, however, the profit decreased from 710 million crown through an Electrolux opinion poll.

Electrolux said that its main brands continued to outperform the market in Europe, but the general demand decreased as competitive pressure increased.

“Europe was a very difficult market in the second quarter. We have seen very aggressive price levels in Europe,” CEO Yannick Verling told analysts and journalists during a call. “The market in Europe … was particularly depressed and difficult.”

He said that while there were signs of improvement in the European market at the end of the period, it was too early to determine whether this would continue in the third quarter.

Financial Director Theres Freberg said that the improvement was in sizes, while the price pressure remained.

The shares in Electrolux decreased by 16 % at 1030 GMT, as a year decreased to a date to 34 %.

Electrolux said that in both Europe and North America, the demand was affected by the uncertainty due to geopolitical developments, as families continue to turn into cheaper products, said Electrox said that in both Europe and North America, the demand was affected by uncertainty due to geopolitical developments, as families continue to switch into cheaper products.

The company, a competition for Midea and US Firm in China, has maintained the “neutral to negativity to negative” market for North America, and “neutral” expectations for the markets of Europe and Asia Pacific as well as Latin America.

Definition compensation

JPM analysts, with the “neutral” position on Electrolux shares, said, noting that the basic profits were soft and increased competitive pressure in Europe, high promotional activity and competitive pressure in North America were unfavorable signs.

However, the business of Electrolux in North America, which has struggled for years due to high costs and lack of performance in the factory, swings to profit, outperforms the broader market in the region.

The department, which last year represented a third of the group sales, achieved a profit of 57 million crowns.

Electrolux said in April that Washington’s tariff plans have struck the morale of consumer, and reduced the expectations of the North American market, adding that it aims to increase the increases in customs tariffs with more prices.

Verling said on Friday that the decision had succeeded in allowing the company to compensate for the impact of definitions, and would continue the strategy.

“We repeat our goal of compensating for increases in the costs related to tariffs in North America by increasing prices,” he said.

Fierling told Reuters that he had no effect before buying in anticipation of high tariffs.

Electrolux produces most of its goods sold in North America in the region, with production in the United States and Mexico. It imports some components and products, including from China.

($ 1 = 9.7272 Swedish crowns)

(Participate in the coverage of Greta Rosen Fondahn; Edit by Anna Ringstrom, Joe Bavier and Susan Fenton)