Swedish household appliance maker Electrolux AB (ELUXY.PK,ELXB.L) Monday reported that profit for the third quarter nearly doubled from a year ago, helped mainly by increased prices, lower costs for raw materials and low levels of marketing investments.
Income for the quarter attributable to equity holders of the parent company was SEK 1.63 billion or SEK 5.73 per share, much higher than SEK 847 million or SEK 2.99 per share in the previous year.
Quarterly net sales were SEK 27.62 billion, up 4.8% from SEK 26.35 billion in the prior year. Net sales declined by 3% in comparable currencies, due to continued market downturn in main markets. Electrolux noted that sales were negatively impacted by lower volumes, while higher prices and an improved mix had a positive impact.
Segment-wise, Consumer Durables, Europe net sales declined to SEK 10.91 billion from SEK 11.35 billion a year earlier, while Consumer Durables, North America net sales increased slightly to SEK 8.87 billion from SEK 8.38 billion in the previous year.
Consumer Durables, Latin America net sales were SEK 3.81 billion, up from SEK 2.71 billion a year ago. Consumer Durables, Asia/Pacific and Rest of world net sales increased to SEK 2.40 billion from SEK 2.19 billion, while net sales from professional products edged down to SEK 1.63 billion from SEK 1.71 billion in the comparable period.
"New Electrolux-branded products continued to contribute to an improvement in the product mix, as did recent launches of new products under the Frigidaire brand," said the company.
Operating income surged to SEK 2.29 billion from SEK 1.29 billion in the year-ago period, due to improved product mix and lower product costs. Operating income includes items affecting comparability in the amount of SEK 56 million, compared to SEK 108 million last year, referring to reversal and adjustment of restructuring provisions related to appliances plants. Excluding items, operating income increased to SEK 2.23 billion from SEK 1.18 billion last year.
Margin for the period improved to 8.3% from 4.9% last year, contributed by a cyclical trough in commodity prices and low levels of marketing investments. Cost of goods sold was SEK 21.57 billion, compared with SEK 21.49 billion a year earlier.
Further, Electrolux said it has decided to concentrate production of laundry products in North America to its factory in Juarez, Mexico, while ceasing production in the plant in Webster City and its satellite plant in Jefferson, Iowa. Production is expected to be discontinued at the Jefferson plant in the fourth quarter of 2010, and at the Webster City plant in the first quarter of 2011.
The cost for the closures is estimated to about SEK 630 million, which will be charged to operating income in the fourth quarter of 2009, within items affecting comparability. The company said a total of nearly 950 employees will be affected by this restructuring programme.
Additionally, Electrolux also has decided to discontinue production at the washing-machine factory in Alcalà, Spain, which will be in the first quarter of 2011. The cost for the closure is estimated to be about SEK 440 million, which will be charged to operating income in the fourth quarter of 2009 within items affecting comparability. The company expects a total of nearly 450 employees will be affected.
Further, the company said it has decided to launch an investigation into the future viability of the cooker production in Motala, Sweden. The factory has approximately 240 employees.
For the nine-month period, income attributable to equity holders of the company increased significantly to SEK 1.94 billion or SEK 6.83 per share from SEK 840 million or SEK 2.97 per share. Year-to-date, net sales were SEK 80.92 billion, higher than SEK 76.13 billion in the comparable period.
ELUXY.PK closed Friday's regular trading at $48.30 per share.
ELXB is currently trading at 139 pence per share, up 0.74%, on the London Stock Exchange.
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