Swedish home appliances Electrolux AB (0MDT.L, ELUXY.PK, ELUXF.PK) reported Friday a loss in its second quarter, compared to profit last year, mainly on significant charges and weak sales due to the slowdown in market demand in Latin America. Adjusted earnings, however, climbed from last year.
The company said it continues to expect higher demand in Europe and US, and that Latin America would continue to grow in the medium to longer term. Electrolux shares are currently trading around 4 percent higher in Stockholm.
For the second quarter, the company incurred a loss attributable to equityholders of the parent of 92 million Swedish kronor or 0.32 kronor per share, as against a profit of 642 million kronor or 2.23 kronor per share last year.
The latest results included restructuring costs of 1.10 billion kronor for the previously announced program.
Adjusted income, which excluded items, amounted to 815 million kronor, a 27 percent increase from last year. Earnings per share were 2.85 kronor, compared with 2.24 kronor last year.
Operating income plunged 94 percent to 63 million kronor, while adjusted operating income improved 13 percent with good results at major appliances in Europe and North America and for Professional Products. Operating margin improved to 4.4 percent from 3.7 percent last year.
The firm's net sales declined 4.9 percent to 26.33 billion kronor in the quarter from 27.67 billion kronor in the previous year. Currencies had an adverse impact of 1.1 percent, offset by price increases and mix improvements, the company noted. Organically, net sales declined 3.8 percent.
In Europe, results were benefited by ongoing restructuring program to reduce overhead costs and to mix improvements in such areas as built-in kitchen products, while North America was benefited by mix improvements and price increases.
Meanwhile, Latin American sales were negatively affected by the sharp downturn in demand Argentina and Brazil that was hurt by economic slowdown and the FIFA World Cup. The company said the region showed a good performance in a weak market.
President and CEO Keith McLoughlin said, "Although we remain confident that Latin America will continue to grow in the medium to longer term, visibility in the near term is low."
Demand in the growth markets Southeast Asia and China also declined.
Looking ahead, Electrolux reconfirmed its expectations that European market demand will increase by 1-3 percent in 2014. Also, the US appliance market continues to recover, driven by both replacement demand and housing, with a total expected growth of 4 percent in 2014.
"We will continue to launch new, innovative products in parallel with optimizing global production with a strong focus on cost efficiency. This will enable us to continue to generate a solid cash flow and shareholder value," McLoughlin added.
In Stockholm, Electrolux shares are gaining 6.80 kronor or 3.98 percent, and trading at 177.70 kronor.
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