STOCKHOLM—Electrolux AB said Friday it remains confident its
acquisition of General Electric Co.'s appliances business will be
completed this year, as it swung to a profit in the second quarter
mainly due to a turnaround in its European business.
The Stockholm-based company, which makes dishwashers, stoves and
washing machines, is trying to broaden its footprint in the U.S.
and last year agreed to buy General Electric's appliances
business.
But the $3.3 billion agreement, which would put Electrolux
head-to-head with industry leader Whirlpool Corp., was called into
question earlier this month when the U.S. Justice Department filed
suit to block the deal on the grounds it would hinder market
competition.
Chief Executive Keith McLoughlin said, however, he remains
confident the deal will close this year even though the parties
aren't talking at present because they are preparing to defend the
acquisition. He said he doesn't exclude the possibility of an
out-of-court settlement.
Electrolux, Europe's largest appliance maker by sales, said
increased demand, cost cutting and new products in its European
major appliances business resulted in an operating margin of 2.9%,
up from 0.2% a year earlier, even as its North American and Latin
American units continued to be a drag on results.
Net profit for the three months ended June 30 was 608 million
Swedish kronor ($71.3 million), recovering from a net loss of 92
million kronor in the same period last year when restructuring
charges weighed heavily.
Operating income was up on the first quarter, although it was
still significantly lower than a year earlier as changes to meet
new U.S. energy-efficiency requirements squeezed margins.
Electrolux said demand in Europe fell in the second quarter from
the same period last year due to a sharp decline in Russia, but
demand in Western Europe increased by 4%. In North America, demand
was up by 5%, and the company's struggling U.S unit was helped by
significantly higher sales of air conditioners.
Demand for core appliances in Australia and Southeast Asia
increased during the quarter, but demand in China dropped by 6%,
the company said.
"Of course that's impacting our business, so we're pulling back
and reducing costs to adapt to a weaker demand environment in
China," Mr. McLoughlin said.
Demand for appliances in Brazil continued to deteriorate and
most other Latin American markets also declined in the quarter, but
price increases and cost cuts partly mitigated the negative impact,
the company said.
Electrolux expects sales volumes to grow in North America and
Europe in the third quarter, but developments in Russia are
difficult to assess, Mr. McLoughlin said.
Write to Christina Zander at christina.zander@wsj.com
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