Electrolux AB’s share price up, posts profit above analysts’ expectations due to more profitable products and cost reduction

The largest manufacturer of home appliances in Europe, Electrolux AB, made an official statement today, that its earnings rose for a third consecutive quarter due to a cut in expenses and the release of more profitable products on the market.

The Chief Executive Officer of the company, Keith McLoughlin, said in a statement, cited by the Wall Street Journal: “Despite continued difficult market conditions, with a recent weakening of leading indicators and consumer confidence in a number of countries across both western and eastern Europe, we have managed to significantly improve results.”

According to the statement, the operating profit of Electrolux excluding one-time items increased by 29% to reach SEK 1.39 billion ($190 million). This result outpaced the initial analysts expectations pointing to an operating result of SEK 1.32 billion. Electrolux also revealed that its operating margin in Europe increased more than four times to 5.5% due to cost savings, production efficiency and more profitable items.

However, according to Catarina Ihre, the head of the companys investor relations, demand in the region remains relatively weak and may grow at the low end of Electrolux 1% to 3% annual projection. Its operations in Europe continue to recover.

In addition, the company reached an agreement with General Electric to purchase its appliance business. The deal is estimated to $3.3 billion, while it may facilitate the expansion of Electrolux reach and the consolidation of its positions.

As reported by Bloomberg, the CEO of the company also noted: “We were cautiously optimistic that Europe was on a gradual recovery at the beginning of the year, but things have gotten weaker. Our assumption is it will be relatively flat, move relatively sideways.”

Electrolux AB added 7.29% to trade at SEK 198.60 per share by 13:33 GMT, marking a one-year increase of 16.55%. The company is valued at SEK 57.119 billion. According to the Financial Times, the 19 analysts offering 12-month price targets for Electrolux AB have a median target of SEK 199.00, with a high estimate of SEK 250.00 and a low estimate of SEK 132.00. The median estimate represents a 7.51% increase from the last price of SEK 185.10.