STOCKHOLM, Jan 30 (Reuters) - Home appliances maker Electrolux reported a bigger operating profit than expected for the fourth quarter on Friday, but said competitive pressure had been high in all
Electrolux Surpasses Profit Expectations but Warns of Tariff Impact
Electrolux's Financial Performance and Market Challenges
By Greta Rosen Fondahn
Fourth Quarter Profit Analysis
STOCKHOLM, Jan 30 (Reuters) - Swedish appliances maker Electrolux beat fourth-quarter profit forecasts on Friday, helped by cost cuts, but warned that higher tariffs this year could dent demand in North America.
Impact of Tariffs on Demand
The group has been restructuring, cutting costs and shifting towards more premium categories to lift profitability amid weak demand and competition from lower-priced rivals.
Future Outlook for North America
Its shares were up 15% at 0900 GMT, after a sluggish start to the year.
Operating profit at the group, whose brands include Frigidaire and AEG, rose to 1.52 billion crowns ($172 million) in the fourth quarter from 1.05 billion crowns a year earlier, on organic sales growth of 2%. Analysts had on average expected 1.18 billion crowns, according to a poll provided by Electrolux.
SB1 Markets analyst Johan Eliason said the results were stronger than he had anticipated, especially in Europe and Latin America, even as North America lagged expectations.
TARIFFS MAY IMPACT MARKET DEMAND
The competitor to Midea and Whirlpool said it expected a hit from external factors this year, mainly higher tariff costs.
"Geoeconomic uncertainty is foreseen to continue in North America, and under the current tariff structure, general market pricing should adjust to reflect associated tariff costs. This may adversely impact consumer demand and market growth," CEO Yannick Fierling said in a statement.
Fierling said competitive pressure had pushed the company to "align" prices in North America with the market again after earlier tariff-related increases, leading to a quarterly operating loss in the region, but added that he expected market pricing to start reflecting tariff costs.
He told analysts and media on a call that Electrolux should benefit from being a "North American producer".
Analysts have hoped Electrolux's large share of production in North America would allow it to raise prices less than competitors and capture market share.
($1 = 8.8517 Swedish crowns)
(Reporting by Greta Rosen Fondahn. Editing by Anna Ringstrom and Mark Potter)
