Electrolux to Close Two U.S. Plants

However profits were up sharply

Appliance maker Electrolux reported better-than-expected quarterly results on Oct. 26 but also announced the planned closure of two U.S. factories.

The company, which had already announced on Oct. 23 that it would close a Spanish plant with the loss of 450 jobs, said it would also shutter two washing machine factories in Iowa that employ 950. Production at plants in Jefferson and Webster City will be transferred to Juarez in Mexico at an estimated cost of 630 million kronor.

The Jefferson plant is due to close in the last quarter of 2010 and the Webster City facility in the first quarter of 2011.

Electrolux said that in the three months to September it earned a net profit of 1.63 billion kronor (US$ 240 million), up 92% from a year earlier on the back of low raw material costs and previous cost-cutting measures. Third quarter sales rose 5% to 27.6 million kronor, beating expectations of 27.1 billion kronor.

"Almost everything went our way this quarter. (A) cyclical trough in commodity prices and maintained prices have been decisive for our earnings improvement. Other contributing factors are a better product mix and significant cost reductions," said the company, ranked as the world's second largest home appliance manufacturer after Whirlpool.

At the same time, it cautioned that "demand continues to be weak, although the rate of decline has slowed down." It pointed in particular to Europe, where it said the appliance market had further to fall.

Electrolux, after carrying out several reorganizations in recent years in a bid to cut costs, announced the elimination of 3,000 jobs in December in response to the global economic slowdown. The company, which makes refrigerators, dishwashers and vacuum cleaners, has stepped up its restructuring efforts since 2004, in many cases moving production to low-wage countries.

Electrolux recently said it had also launched a study on the viability of a stove-making plant in Sweden that employs 240 people.

Copyright Agence France-Presse, 2009

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