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Electrolux raises market outlook after profit beats forecasts

STOCKHOLM (Reuters) - A pick-up in demand for fridges and washing machines among housebound consumers during the pandemic helped Electrolux ELUXb.ST beat profit forecasts on Friday and post its highest quarterly margin ever.

FILE PHOTO: Interiors of Electrolux R&D facility are pictured at their plant in Pordenone, Italy, March 27, 2019. REUTERS/Giulio Piovaccari/File Photo

The Swedish home appliance maker, whose rivals include Whirlpool WHR.N, LG Electronics 066570.KS and Samsung Electronics 005930.KS, suffered early on in the coronavirus crisis, as lockdowns in several large markets caused a sharp drop in demand and hit production.

But it has since seen a strong rebound and is increasingly confident about the market’s prospects.

“Sales also benefited from consumers spending more time at home, using their appliances more intensively and allocating more of their household budgets to home improvement,” CEO Jonas Samuelson said in a statement.

The firm said on Sept. 25 it had seen a substantial earnings recovery in the third quarter and was reinstating dividends.

But JP Morgan questioned how long the “goldilocks” environment of strong demand, limited supply, falling input costs and strong pricing could last.

“This is a true one-off quarter in terms of industry dynamics,” the investment bank said in a note. “To what degree the industry can hold on to the favourable pricing and for how long is the key question.”

Electrolux shares, which had gained 9% this year through Thursday and have doubled from lows in March, were up 0.4% at 0742 GMT.

The firm upped its full-year market outlook and now expects demand for appliances in Europe to be “slightly positive” this year, “slightly positive to positive” in North America, and “positive” in Latin America.

It had previously forecast negative demand overall. In the Asia-Pacific, Middle East and Africa it still expects a fall in demand.

The maker of brands such as Frigidaire, Zanussi and Anova said operating earnings rose to 3.22 billion Swedish crowns (281 million pounds) from 1.06 billion, beating the 2.44 billion expected by analysts, Refinitiv Eikon data showed.

Net sales rose to 32.0 billion crowns, with organic sales increasing by 15.2%, versus 30.9 billion expected by analysts. Operating margin rose to 10.1%, the highest ever quarterly margin for the firm.

Whirlpool on Wednesday forecast a smaller drop in sales for the year and reinstated earnings targets after posting better-than-expected quarterly profit, as robust demand for home appliances helped it navigate the coronavirus crisis.

Reporting by Helena Soderpalm and Johannes Hellstrom; Editing by Jason Neely and Alex Richardson

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