Electrolux down on weak demand

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Demand for 'white' goods such as refrigerators adn dishwaters is declining in Europe, but improving slightly in the US, according to Electrolux.

Tthe Swedish company said profits in the first half of the company's financial year fell in Europe, but rose in the US. The Nordic countries and Britain were the most depressed.

Leif Johansson, president, said in the half- yearly report: 'Uncertainty regarding market trends during the second half of the year has increased in recent months. Demand in Europe has gradually weakened, mainly in the Nordic countries, but in the UK as well.

'The recent rise in German interest rates will also act as a damper on the European economies. At the same time, the recovery in the US will probably continue to be slower and weaker than anticipated.'

Despite economic weakness in many of its main markets, Electrolux's pre-tax profits for the three months to the end of June were almost unchanged at Skr505m.

Pre-tax profits for the six months to end- June fell sharply to Skr758m compared with Skr917m. But profits in the first half of 1991 were swollen by the Skr184m sale of businesses in the commercial services division. After adjustment for this, pre-tax profit rose by 3 per cent. The headline figure for group sales was virtually unchanged at Skr40.8m in the first half. Sales increased by about 1 per cent after adjustment for acquisitions and divestments.

Earnings per share in the half year fell to Skr4 compared with Skr6.7.

Despite the weak economic backdrop, Electrolux is continuing with a programme to introduce an extensive new product range. This will be designed to comply with new criteria for environmental compatibility and energy consumption to be introduced during the 1990s.

In an effort to improve its competitive position, Electrolux has signed a letter of intent with AEG of Germany covering the manufacture and product development of particular household appliances.

The co-operation will cover washing machines, tumble dryers and dishwashers.

Under the agreement, Electrolux will buy a 10 per cent stake in AEG's Hausgerate subsidiary. In addition, AEG will subscribe to a debenture loan issued by Electrolux, with an option for conversion into Electrolux-B shares.