Electrolux Swings Fourth-Quarter Profit -- Update

By Christina Zander 

STOCKHOLM--Swedish home-appliance maker Electrolux AB swung to a fourth-quarter profit as a recovery in its operations in Europe, Latin America and Asia offset higher costs in North America.

The strong result comes as Electrolux prepares to integrate General Electric Co.'s appliances business, which it agreed to buy last year in a $3.3 billion deal that will almost double the company's U.S. footprint and put Electrolux head-to-head with the U.S.'s largest appliance maker, Whirlpool Corp.

Chief Executive Keith McLoughlin said in a statement that cost savings, combined with higher efficiency in production and active product portfolio management, led to a significant improvement in operating income.

Electrolux said net profit for the three months ended Dec. 31, 2014, was 970 million Swedish kronor ($118 million), compared with a net loss of 987 million kronor in the year-earlier period. Sales rose 9% to 31.4 billion kronor. Operating profit was 1.40 billion kronor, compared with an operating loss of 1.2 billion kronor in the fourth quarter of 2013.

Market demand in Europe increased by 2% in the fourth quarter and Mr. McLoughlin said it is expected to grow by 1% to 2% in 2015 "although the development in Russia is very uncertain."

Market demand for core appliances in North America increased by 8% and is expected to grow by 3% to 5% in 2015.

"As in the third quarter, earnings were negatively impacted by the major transition required to meet new energy standards which affect refrigeration and freezers. We expect continued impact from this transition process also in the first half of 2015," Mr. McLoughlin said.

Demand in Australia was up during the fourth quarter but Southeast Asia and China continued to decline. Demand in Brazil and most other markets was also down as the market "remains challenging," but price increases in combination with measures to cut costs have led to good results, Mr. McLoughlin said.

"Demand in Latin America appears to be stabilizing although there is a high degree of uncertainty, particularly in light of the recent depreciation of several currencies in the region," he said.

At 0818 GMT, Electrolux's shares were up 7.4% at 238.00 kronor.

Write to Christina Zander at [e-mail]

Corrections & Amplifications

Electrolux's fourth-quarter profit was 970 million Swedish kronor, or $118 million. An earlier version of this article misstated the dollar conversion.

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