Electrolux profit beats forecast on North American strength

Bloomberg

Electrolux AB raised its outlook for growth in North America as second-quarter profit beat estimates and Europe’s biggest maker of household appliances sold more air conditioners to US customers.
Demand for appliances in the Stockholm-based company’s biggest market is expected to grow by 3 percent to 4 percent this year, Electrolux said in a statement on Wednesday. That compared with 2 percent to 3 percent previously. In the second quarter, Electrolux’s operating margin increased by one percentage point to 6.2 percent, mainly driven by the improvement in North America.
“We continue to focus on portfolio management and cost efficiency, and that continues to deliver good results,” Chief Executive Officer Jonas Samuelson said in a phone interview. Electrolux’s sales in North America were boosted by high temperatures that led to brisk sales of its Frigidaire air-conditioners. Combined with the absence of costs incurred a year ago, that led to a higher improvement in the North American businesses’ operating margin than Samuelson expects in the coming quarters, he said.
Operating income rose 24 percent to 1.94 billion kronor ($234 million) in the three months through June. Analysts surveyed by Bloomberg had on average expected 1.72 billion kronor. The shares rose as much as 6.4 percent, the most in almost three months, and traded 3.7 percent higher at 292.30 kronor as of 12:11 p.m. in the Swedish capital.
Aiming to reach a target of a 6 percent operating-profit margin, Samuelson has focused on underperforming units and increasing sales of new and more profitable products such as steam ovens and washers designed to handle
delicate fabrics.
After the Swedish company’s attempt to buy General Electric’s appliances unit failed in late 2015, Samuelson — who was brought in shortly afterwards — broadened the company’s offering by buying a string of companies including European kitchen-hoods brand Best and Anova, a company that makes sous vide devices.
“With a good trend during the first half of the year, the market for appliances in North America remains strong and we see the favorable macro environment continuing to support demand,” Samuelson said.