By Patrick Lannin and Veronica Ek
STOCKHOLM Feb 1 Swedish home appliances maker
Electrolux said booming emerging markets and an
improvement in North America would help offset poor sales and
price pressure in Europe in 2013 after posting a
smaller-than-expected rise in fourth-quarter earnings.
Operating income in its Latin American business jumped 90
percent to 657 million crowns, well above a forecast for 459
million, and the company forecast further growth in the region.
"We have increased our exposure to emerging markets, which
now represent more than 35 percent of sales, and we expect this
figure to reach 50 percent within five years," said chief
executive Keith McLoughlin.
Electrolux, second only to U.S. rival Whirlpool in size,
reported fourth-quarter operating earnings, stripping out
one-off items, rose 13 percent to 1.63 billion Swedish crowns
($256 million), compared with a forecast for 1.70 billion in a
Sales for the fourth quarter came in at 29.2 billion crowns,
just ahead of the forecast 28.4 billion and the company said
profitability had been held back by Europe as consumers continue
to struggle with austerity measures in the aftermath of the euro
zone debt crisis.
It forecast low single digit growth in the U.S., where
improving consumer confidence enabled it to raise prices last
year, and a low single digit demand drop in Europe.
"It reads to me like the politicians and financial experts
have done good work in easing or preventing a euro zone break up
or collapse. My take is that someone needs to tell the European
consumer because they're not buying," McLoughlin said.
Cost-cutting measures such as factory closures meant
Electrolux took a previously advertised charge of 1 billion
crowns in the quarter, leaving operating earnings after one-offs
at 596 million crowns versus last year's 512 million, also below
the average forecast of 695 million crowns.
The emerging markets providing a buffer for Electrolux are
also helping its rival Whirlpool, which on Thursday reported a
higher-than-expected quarterly profit and gave a strong 2013
The U.S. market looked more optimistic due to some recovery
in the housing market, which benefits the company as people
think about buying new appliances when they move house.
Unemployment needed to drop from the current 7.8 percent
closer to 6 percent for a good pick up in demand, said
McLoughlin, whose company's brands include those under its own
name as well as Frigidaire, Zanussi and AEG.
Electrolux shares were down 2.7 percent at 163.50 crowns by
0958 GMT, but they have risen 50 percent since the start of last
year. The shares trade at 10.9 times expected 2013 earnings,
lower than Whirlpool's 11.9 times, according to Thomson Reuters
McLoughlin said the group aimed to launch more new products
- which attract higher ticket prices even if volumes are down -
again this year, and continue cutting costs.
Another leg to its growth plan is more acquisitions.
McLoughlin told Reuters he thought deal sizes between $200 and
$500 million would be on the menu. In 2011 the company bought
Egyptian appliances maker Olympic and then Chilean appliances