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March 27 (The following statement was released by the rating agency)
Fitch Ratings has affirmed AB Electrolux's (Electrolux) Long-term Issuer Default Rating (IDR) and senior unsecured notes at 'BBB'. The Outlook on the Long-term IDR has been revised to Stable from Negative.
Fitch has simultaneously withdrawn the ratings as they are no longer considered by Fitch to be relevant to the agency's coverage. Accordingly, Fitch will no longer provide ratings or analytical coverage for Electrolux. The revision of the Outlook to Stable is based on Electrolux's progress over 2012 in improving its financial results, which have been boosted to some degree by the internal restructuring measures the company has made, but also by improved market conditions in some key growth emerging markets. The expected financial performance of the company in 2013 and beyond is now better than previously assumed and Fitch believes that the risk of a downgrade has diminished.
KEY RATING DRIVERS
The ratings reflect Electrolux's strong market position as one of the world's largest household and professional appliance manufacturers, especially in Europe, North America and Latin America. Electrolux's size, geographical diversification and conservative financial profile support the ratings, as does its strong liquidity position.
However, the ratings continue to be constrained by the mature, cyclical and highly competitive nature of the European and North American appliance markets. Electrolux's exposure to fluctuating raw material prices and foreign exchange rates are also weaknesses, as is the company's relatively limited free cash flow generation. Furthermore, increasing competition from lower-cost emerging market producers may present a threat over the medium term, especially in lower-end product lines.