(Updates with analyst in third paragraph, CEO in seventh.)
Oct. 28 (Bloomberg) -- Electrolux AB, the Swedish maker of household appliances, cut its growth target for Europe and North America and said it will deepen cost cuts as volumes in some mature markets fall to the lowest in more than a decade.
Third-quarter net income fell to 826 million kronor ($130 million) from 1.38 billion kronor a year earlier, the company said in a statement today. Sales dropped to 25.7 billion kronor from 26.3 billion kronor. Both profit and sales beat analysts’ estimates in a Bloomberg survey. Electrolux shares rose as much as 9 percent in Stockholm where the company is based.
“Sales held up a bit better than expected in the quarter, which was positive,” said Lisa Randall, a Nomura analyst in London with a “neutral” rating on Electrolux’s shares. “Expectations were low, and the stock has been cheap.”
European demand will contract by about 1 percent this year, compared with a previous target of 1 percent growth, Electrolux said. In North America, the market will decline by 4 percent to 5 percent in 2011, compared with a previous guidance of growth of no more than 3 percent.
Electrolux traded 8.1 percent higher at 128.1 kronor as of 10:00 a.m. The stock has plunged 33 percent this year, compared with an 11 percent decline for the OMX Stockholm 30 Index.
The company estimates that about 35 million appliances will be sold in North America in 2011, a level last seen in 1998, and a 25 percent drop from the peak in 2005. The figure for Western Europe is about 65 million units, down 15 percent from the 2006 record, Electrolux estimates.
“Our business is all about consumer confidence, which has been weakening,” Chief Executive Officer Keith McLoughlin said today in an interview.
The company said it will give details of its planned cost- cutting program at its capital markets day in mid-November.
McLoughlin said Electrolux is no longer holding talks with Daewoo Electronics Corp. about potentially buying the South Korean appliance maker.
“There’s no conversations, we haven’t heard anything” for months, he said, adding that he’s still holding out some hope that Electrolux will be able to buy the company. “You never say never, but it’s certainly not an active issue,” he said.
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