Electrolux, the world's leading electric appliance maker, said on Dec. 15 it plans to cut 3,000 jobs worldwide and warned it would not meet its 2008 operating profit target due to declining demand.
"As a result of weakening demand for appliances in the two last weeks of November and in December, Electrolux will not reach its outlook for the full year of 2008," the company said. The company had 56,900 employees at the end of 2007.
Electrolux said demand for appliances in Europe and North America "declined considerably" in the two last weeks of November.
"The weak market has had a negative impact on Electrolux sales volumes and product mix during the fourth quarter," it said, adding it was "no longer possible" to achieve an operating income in 2008 of 3.3 to 3.9 billion kronor (US$415 to 491 million).
The group has for more than a year been in the process of restructuring its business to reduce production costs, moving factories to countries where labur is cheaper.It also raised prices in order to compensate for rising raw material prices.
The company reported a net loss in the first quarter of the year before bouncing back into a slim profit in the second quarter. In the third quarter, the company posted an 11.2% rise in net profit to 847 million kronor, as sales remained stable. But its operating profit fell by 72% to 254 million kronor during the quarter, a drop attributed to a costly product launch in North America that negatively impacted earnings.
"In December, demand for appliances in Europe and North America continues to show a sharp decline. As sales in December are seasonally low, there is a risk that operating income for the month will be slightly negative," it said.
Electrolux said the job cuts would save approximately 1.1 billion kronor on a yearly basis, with full effect as of 2010.
Copyright Agence France-Presse, 2008