Electrolux says profit falls on weak European demand

Swedish home appliance maker Electrolux said today that its profits fell in the second quarter, due mainly to difficulties in European markets.

The company, which makes household equipment such as washing machines, said it was looking increasingly to emerging markets to grow its business.

'All of our operations in Europe continued to suffer from weak demand resulting in negative price development,' the company's CEO Keith McLoughlin said in a statement.

Profits during the quarter were down by 8% from the same quarter in 2012 to 642 million kronor (75 million euros, $98 million).

That was below average expectations of 677 million kronor among analysts polled by Dow Jones Newswires.

Net sales were almost stable, down by a mere 0.3% from the same quarter last year to 27.67 billion kronor. The figure was slightly higher than analyst forecasts of 27.44 billion kronor.

At constant exchange rates, net sales growth was 6%, according to Electrolux.

The underlying weakness, especially pronounced in southern Europe, in the Benelux countries and France, was offset by strong growth in the Americas, although profits did not match that growth, he added.

'We expect demand in Europe to rebound and in combination with our measures in the region, earnings will recover,' he said.

The Swedish company also sees potential in North America, where demand for appliances is down by almost one quarter compared with the level in 2006, at the peak of the bubble in US real estate.

Electrolux said it maintained its drive to expand in emerging economies, which now account for more than 35% of sales.

'In a few years time, our ambition is to increase our exposure (in the emerging economies) to be 50%,' he said.