UPDATE 2-Electrolux sees sales growth and lower costs in 2013

Wed Nov 14, 2012 7:00am EST

Related Topics

* Sees organic sales growth in 2013

* Sees cost saving of 1 bln SEK in 2013 over 2012

* Says raw material prices to give tailwind in 2013 (Adds quotes, background)

By Patrick Lannin and Veronica Ek

STOCKHOLM, Nov 14 (Reuters) - Appliances maker Electrolux said on Wednesday it expects sales to grow in 2013 thanks to expansion in emerging markets which will offset weak demand in Europe and the United States, while costs will fall due to cheaper raw materials.

Electrolux, second in the market only to larger U.S. rival Whirlpool, has steadily moved manufacturing from high cost to low cost countries, focusing on emerging markets to offset weaker mature markets.

"Although the demand situation in Europe remains uncertain, Electrolux as a group expects another year of positive organic sales growth," it said in a statement ahead of a presentation to analysts and investors.

The company expected cost savings next year of more than 1 billion Swedish crowns ($147.56 million) compared to 2012.

"The raw-material headwinds experienced in previous years are expected to turn into tailwinds," it said.

Most growth was expected from emerging markets and a positive mix of higher prices and sales of more expensive appliances. The company this year launched a new kitchen range and cookers for the top end premium market.

Electrolux shares were up 1.3 percent by 1030 GMT. The benchmark Stockholm index was down 0.13 percent.

SPAIN - BACK TO 1990S

Chief executive officer Keith McLoughlin said he stuck to his forecast for North American appliance demand to fall up to one percent this year, while Europe showed few signs of life.

"We don't see positive signs at the moment (in Europe)," McLoughlin said at the presentation. The current forecast is for Europe demand to be flat or down 2 percent in 2012

He noted that demand for appliances in crisis-hit Spain was back at 1990 levels while the drop in Europe overall from peak to trough was 16 percent.

"Our current view is quite uncertain ... and more of the indicators (in Europe) for us are heading in the wrong direction than the right direction," he said.

He said the U.S. market was more advanced in its consumer debt de-leveraging process and that the housing market, an important indicator for appliance makers, was turning better.

"We are beginning to become cautiously optimistic about U.S. appliance demand going forward," he said. A key issue would be when U.S. unemployment fell to 6 percent from its current 7.9 percent, but he was not sure when that would happen.

Another leg to growth would come from acquisitions, where the company has become more active by buying companies in Egypt for Middle East growth and in Chile for Latin America.

"We are keeping up our acquisition activities, putting more focus on it to step up the pace of acquisitions," said chief financial officer Tomas Eliasson.

Even without acquisitions, McLoughlin said sales would be split 50/50 between mature and emerging markets by 2017. Emerging market sales are 35 percent currently. ($1 = 6.7771 Swedish crowns) (Editing by Jon Hemming)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.