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STOCKHOLM — Swedish appliance maker Electrolux AB reported Thursday that profits surged six-fold in the second quarter, despite a weak market for home appliances, thanks to cost cuts and favorable currency rates.
The Stockholm-based group said net profit was 658 million kronor ($84.4 million), up from 99 million kronor in the same period a year ago, and sharply beating analysts' expectations of a profit of 198 million kronor.
Electrolux shares jumped 9.2 percent to close at 127.50 kronor in Stockholm.
Sales for the three-month period increased by 7.4 percent to 27.5 billion kronor ($3.5 billion) from 25.6 billion a year earlier, boosted by shifts in foreign exchange rates. In local currencies, sales fell 8.4 percent.
The company said earnings were also helped by cost reductions, lower raw material prices and price increases on its products. At the same time, the second quarter of 2008 had been weighed down by large costs for launching a new products range in North America.
Analyst Frans Hoyer of Proactive Independent Ideas said the figures were better than he expected.
"They are managing to deliver decent growth margins despite the top-line performance," said Hoyer. "They have been doing a lot of cost-cutting and maybe the selling price increases have stuck better than we thought."
Electrolux, which last year was forced to lay off 3,000 staff because of falling demand amid the financial crisis, said demand continues to be very weak.
"Market development continues to be weak, although in North America we see certain early signs that we are beginning to reach the bottom," Chief Executive Hans Straberg said in a statement.
Straberg said he was very satisfied with the cost reduction the company had achieved but added more could be done.
"Starting this fall, we will implement a new organizational structure to fully realize synergies between business sectors in product development, manufacturing and purchasing," he said.
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On the Net:
Electrolux: http://www.electrolux.com
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Associated Press Writer Keith Moore in Stockholm contributed to this report.
