TOP home appliances makers Whirlpool and Electrolux are raising prices to pass soaring raw materials costs onto customers and will rely on emerging markets to drive growth.
The move comes as both companies missed quarterly profit estimates and continue to grapple with tepid demand in key developed markets like the US and Europe. The news weighed on shares of both companies but hit Electrolux hardest, with its B shares sinking 7.9 per cent to close at 167.6 Swedish crowns.
Sweden’s Electrolux missed earnings forecasts and further disappointed investors by not returning money to shareholders via a hoped-for special dividend. The cash-rich company instead extended its share buyback program.
Net earnings at Whirlpool, the maker of Maytag and KitchenAid appliances, rose to $171m (£105.6m), or $2.19 a share in the fourth quarter, from $95m, or $1.24 a share, a year earlier. Sales rose four per cent to $5bn, beating the average analyst estimate of $4.8bn.
Adding more pain, Electrolux said it had put plans to buy Egypt-based appliance maker Olympic Group on hold due to unrest there.
The company is planning to raise prices by eight to 10 per cent in North America from April and gradually in Europe and other markets.
“In the first quarter we are going to have raw materials hitting us immediately,” said Electrolux chief executive Keith McLoughlin, after reporting core earnings of 1.71bn crowns, down from 2bn crowns in the same period of 2009.
City A.M. Reporter