Shares of Electrolux AB, the worlds second-biggest home-appliances maker, surged by more than 5% on Friday after the company posted a second straight increase in quarterly profit as demand in Europe and North America improved, although overall sales contracted due to market weakness in Latin America.
Electrolux posted a better-than-expected second-quarter profit and maintained its forecast for demand growth in both its home market and North America. Earnings before interest, taxes and one-time items jumped by 13% to 1.17 billion kronor, exceeding analysts anticipations for 1.11 billion and last years 1.04 billion-kronor during the comparable period. After years of slack in recession-hit Europe, which accounts for a third of the companys sales, demand continued to pick up after profit rose by 4% in the previous quarter, which was the first gain in more than a year.
Electrolux Chief Executive Officer Keith McLoughlin said, cited by the Wall Street Journal: “The improvement in our European operations continued in the second quarter and operating income increased significantly over last year.”
However, growth in Europe was not completely solid as demand picked up in Britain, Poland and the Iberian countries, while France, Italy and the Nordic countries posted weaker performance. Overall, demand for appliances in Europe rose by 1%, the company reported.
Latin America was the companys soft spot as sales in the region plummeted by 26% in the second quarter, dragged by slowing economy growth and the FIFA World Cup in Brazil. As a result, overall sales slid by 4.8% to 26.33 billion kronor, compared to expectations for 28.5 billion, and the company posted a net loss of 92 million kronor for the three months through June, down from a net profit of 642 million kronor a year earlier. The loss, however, was largely incurred due to charges related to a restructuring program which amounted to 1.1 billion kronor. Currency shifts had a 1.1% negative impact on revenue.
Despite the declining sales however, earnings were boosted as the company improved its product mix and focused on premium products, reduced costs and raised prices in North America.
Although Mr.McLoughlin said for Latin America that visibility in the near-term is low, he is confident that sales in the region will continue to grow in the medium and long-term. The company reiterated its previous forecast for European market growth between 1% and 3% in 2014, while a 4% expansion is expected in the United States following the years slow start.
Electrolux AB rose by 5.21% on Friday in Stockholm to settle the session at 179.80 kronor, marking a one-year change of +2.10%. The appliance manufacturer is valued at SEK 55.59 billion. According to the Financial Times, the 20 analysts offering 12-month price targets for Electrolux AB have a median target of SEK 179.00, with a high estimate of SEK 205.00 and a low estimate of SEK 132.00. The median estimate represents a -0.44% decrease from the last price of 179.80 kronor.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
