Profits slump at Electrolux

Electrolux, the world's second-largest home appliances maker, has warned of lower second-half earnings after weak demand, price pressure and higher raw materials costs led to much lower than expected second-quarter results.

Weak demand and rising costs have been a curse for many consumer companies, including consumer electronics giant Philips, which reported a loss on Monday. Electrolux's larger rival, Whirlpool, has felt similar pressures.

"As expected, weak demand in key markets, lower prices and increases in raw material costs had a negative impact on second-quarter results," Electrolux chief executive Keith McLoughlin said.

"Even though sequentially better, we do not expect earnings in the second half of the year to reach the level achieved in the second half of 2010," he added.

The company reported core earnings of 745m crowns (£70m) against 911m crowns which had been forecast in a poll of analysts by the news agency Reuters.

A year ago the company posted a profit of 1.5bn crowns.

Mr McLoughlin said the result of the company's European business had been a disappointment, citing lost market share in lower price segments, intensified competition and price pressure.

Nevertheless, Electrolux intends to raise prices in Europe, as previously announced. It will also aim for a further price rise in North America, Mr McLoughlin added.