Electrolux Beats Estimates as Price Hikes Offset Tariff Costs

(Bloomberg) -- Electrolux AB reported higher-than-expected earnings and said raw-materials costs and tariffs won’t be as big a burden as feared.

  • The Swedish maker of Frigidaire and Zanussi appliances reported adjusted operating profit of 1.3 billion kronor ($136.5 million) in the first quarter, it said a statement on Friday. Analysts predicted 1.2 billion kronor, on average. Electrolux also signaled that price increases offset higher input costs, trade tariffs and currency effects.

Key Insights

  • Europe’s largest appliance maker needs price increases to stick as raw materials, tariffs and currency moves could be a financial burden of as much as 1.9 billion kronor in 2019. Still, that’s 500 million kronor less than its earlier estimate.
  • Tariffs on Chinese goods that were scheduled to come into force at the beginning of this year have been pushed back as the U.S. and China are holding talks to end the trade war. Any agreement to remove duty fees would be a relief to Electrolux, which imports components from China to the U.S.
  • Chief Executive Officer Jonas Samuelson said that while the uncertainty on trade tariffs impacts Electrolux’s visibility, the company expects price hikes to offset “these significant external headwinds.”
  • As Electrolux raises prices, it needs to strike a balance to avoid hurting demand for its products. The company expects demand in North America to decline slightly this year, while it said Europe should be “slightly positive.”

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