Electrolux shares opened a little higher Wednesday but are now trading in the red, after investors digested all the details of its second quarter earnings report. Profits were hit by an anti-trust fine while the Swedish manufacturer of electrical goods also reduced its business outlook.
By 1050 BST, Electrolux shares were 1.23% lower at SEK200.20. The stock has been mixed in recent weeks.
Electrolux Q2 earnings details
The Swedish firm’s Q2 earnings details showed that net profits between March and June this year totalled SEK517 million. That was much lower than the SEK1.29 billion net profit a year earlier, and also below expectations.
The reason for the disappointing net profits figure was due to the negative impact of a SEK254 million fine from the French competition authorities.
The fine related to the potential development of a new subsidiary in France that failed to materialise.
Other earning details show that Q2 sales totalled SEK31.35 billion. That was up from SEK30.95 billion and also better-than-expected.
“We continue to execute on our profitable growth strategy in a challenging cost environment,” said Electrolux President and CEO, Jonas Samuelson. “Sales growth amounted to 0.7%, mainly driven by higher prices and improved mix in our core appliances.”
Adding to investor disappointment was the news that the Swedish appliance manufacturer reduced its outlook for three out of its five markets.
Electrolux said that the price trends suggest there will be lower demand from its North American, Latin American and Australian markets. That’s likely due to higher prices for tis goods, which is driven by higher raw material costs.
“In addition to the price increases already implemented, we have announced further price increases in key markets, primarily in North America and Latin America. In combination with cost reductions we are determined to mitigate the increasing headwinds from raw material costs and currency,” Samuelson said.
“We now estimate the negative year-over-year impact from raw materials to be approximately SEK1.8 bn in 2018 and we plan for cost inflation following the recently announced trade actions under Section 301 in the US,” he added.