Electrolux beats expectations in Q2 as it outperforms in North America, offsets tariffs

By Greta Rosen Fondahn

STOCKHOLM (Reuters) -Swedish home appliances maker Electrolux (ST:ELUXa) reported a bigger rise than expected in second-quarter profit on Friday as it outperformed the wider market in North America, and price hikes offset higher costs related to U.S. tariffs.

Operating profit at the group, whose brands also include Frigidaire, AEG, Zanussi and Volta, was 797 million crowns ($82 million) against a year-earlier 419 million, on organic sales growth of 2% driven by North America and Latin America.

The profit included a 180 million crown one-off gain related to the sale of a trademark in India.

Analysts had on average forecast a profit of 710 million crowns, according to a poll provided by Electrolux.

"In both Europe and North America, consumers continue to shift to lower price points and demand was impacted by uncertainty due to ongoing geopolitical developments," CEO Yannick Fierling said in a statement.

Electrolux, however, swung to profit in North America despite a slight decline in overall demand in North America as well as Europe, helped by cost cuts.

The North America division, which last year accounted for a third of group sales, made an operating profit of 57 million crowns, against a year-earlier 369 million crown loss.

The division has struggled in recent years in the face of high costs, competition and underperformance at its factories.

Electrolux said in April U.S. President Trump’s tariff plans had hit consumer sentiment, and lowered its North America market outlook. It said at the time it was extremely difficult to predict tariffs, and that it aimed to offset any further tariff increases with more price hikes.

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"We reiterate our aim to offset tariff-related cost increases in North America through price increases," Fierling said on Friday.

Electrolux, a rival to China’s Midea and U.S. Whirlpool (NYSE:WHR), maintained a "neutral to negative" full-year market outlook for North America, and a "neutral" outlook for Europe and Asia-Pacific markets as well as Latin America.

The company produces most of its goods sold in North America in North America, where it has production sites in both the U.S. and Mexico, with most raw materials also sourced locally. However, it imports some components and products from China.

($1 = 9.7272 Swedish crowns)

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