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UPDATE 1-Electrolux sees slight growth in 2014 with Europe still a drag
November 13, 2013 / 10:51 AM / in 4 years

UPDATE 1-Electrolux sees slight growth in 2014 with Europe still a drag

* Sees demand growth in North America, Asia

* Sees roughly flat European market

* Expects savings of about 1 bln SEK in 2014

* Says parts of Indesit could be attractive (Adds CEO comments, background)

STOCKHOLM, Nov 13 (Reuters) - Electrolux, the world second biggest home appliances maker, forecast a slight rise in demand next year as the drag of a moribund European market was offset by growth in other parts of the world.

The company, which makes appliances such as fridges and cookers under brands including Frigidaire, AEG and Zanussi, also said cost savings would reach about 1 billion Swedish crowns ($150.6 million) in 2014 while investments in R&D and marketing would be slightly higher than in 2013.

Home appliances makers, including market leader Whirlpool , have been busy cutting costs and shifting production to emerging markets in recent years as they wait for market demand to revive in major markets on both sides of the North Atlantic.

While industry shipments of appliances have risen steadily in recent quarters in North America, demand in Europe remains in the doldrums and is weighing on volumes as well as prices.

Electrolux said it expected group-wide demand to rise slightly in the fourth quarter, in line with a full-year forecast for demand to rise 7-9 percent in the United States, where a housing market recovery is supporting demand, while Europe would decline 1-2 percent.

“Market demand in 2014 is also expected to be slightly positive, with growth in North America and Asia Pacific partly offset by a flat market in Europe and a slowdown in Brazil from the high levels seen in 2013,” the company said.

Demand in Europe, Electrolux’s top market alongside North America, has seen steady decline for years as the debt crisis and related deep recession has eaten into consumer spending.

“You’ve got to stop before you start going up,” Chief Executive Keith McLoughlin told journalists on the sidelines of presentations for investors and analysts.

“So I would say that we think we’ve seen the worst. We think we are at the bottom and that the decline will stop.”

The company, which unveiled plans in October to cut 2,000 jobs and save 1.8 billion Swedish crowns ($271 million) in the face of the weakness in European demand, said prices and product mix were seen yielding a slight boost next year.

Still, prices in Europe alone were expected to remain under pressure amid lingering economic weakness though a better product would mitigate the impact.

The top shareholder in Indesit is looking at alternatives to its investment in the white goods maker, the company said this month, fuelling speculation about a potential deal involving the Italian company.

“Are there portions of companies such as Indesit that could be attractive to us given their portfolio? Yes,” McLoughlin said. “Are there portions that we don’t need more of? Yes. So it is not an easy equation to solve,” he added. ($1 = 6.6415 Swedish crowns) (Reporting by Niklas Pollard and Helena Soderpalm; Editing by Alistair Scrutton)

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