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Electrolux shares fall on weak outlook despite profit growth in third quarter
Published in Saudi Press Agency on 22 - 10 - 2007


Shares in Electrolux AB dropped
more than 8 percent Monday after the appliance maker warned
that the weakening U.S. market and cost overruns in Europe
raised uncertainty about its full-year outlook, according to AP.
The weak guidance overshadowed the Stockholm-based
company's third-quarter result _ a 73 percent growth in
profits boosted by higher sales.
«To me this looks like a profit warning,» said Goldman
Sachs analyst James Moore, adding that he was very
disappointed about the handling of the company's European
product launch.
Net profit for the quarter ended Sept. 30 came to 762
million kronor (US$119 million; ¤83.1 million) from 440
million kronor in the third quarter of 2006. Sales totaled
26.4 billion kronor (US$4.1 billion; ¤2.88 billion), up
from 26.1 billion kronor a year ago.
Electrolux, whose brands include Frigidaire refrigerators
and Eureka vacuum cleaners, reiterated its outlook that
operating income in 2007 is expected to be somewhat higher
than in 2006.
However, it said the risk for further decline in the U.S.
appliance market, continued increases in the cost of raw
materials and cost pressures on its European margins add
uncertainty to the forecast.
«Recently, market conditions in the U.S. market have
weakened. We still expect raw material costs to have an
adverse effect on the group's operating income in the
fourth quarter,» Electrolux said.
It added that its recent product launches in Europe «have
incurred higher-than-anticipated costs.»
Electrolux shares closed down 8.2 percent at 128.50 kronor
(US$20.08; ¤14.02) on the Stockholm stock exchange.
Chief Executive Hans Straberg said production costs in
Europe were higher than expected, but the company was
working to solve the problems.
Electrolux's results were helped by strong sales in North
and South America and a strong performance by the
floor-care operations in Asia and the Pacific.
The results excluded the former outdoor products
operations, Husqvarna, which were spun off in June 2006.


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