Electrolux, the world’s second largest household appliance company, on Wednesday posted annual profits and dividend up more than 50 percent, but said 2011 would provide only “modest” growth amid rising costs for raw materials.
Thanks to the economic recovery seen in many countries last year as well as several plant closures, the Swedish company said its net profit jumped 53 percent to 4.0 billion kronor (453 million euros, 627 million dollars) last year.
“Demand in our largest markets recovered somewhat in 2010,” the company’s new president and chief executive Keith McLoughlin said in the earnings report, describing the full-year results as “the best ever for Electrolux,” but cautioning that the market “continues to be very competitive.”
The boost allowed it to distribute a dividend of 6.50 kronor per share, up from 4.00 kronor in 2009, according to its earnings statement.
“I see very good opportunities going forward to be able to continue to deliver a high return to our shareholders,” said McLoughlin, who succeeded Hans Straaberg at the helm of the company at the start of the year.
Nonetheless, the company saw its share price plunge more than five percent to 172.50 kronor within minutes of trading start on the Stockholm stock exchange, with observers hinting that a cautious outlook and smaller-than-expected dividend were to blame.
Electrolux meanwhile posted a three-percent drop in sales to 106.33 billion kronor in 2010, but said that disregarding an unfavourable exchange rate its sales actually swelled 1.5 percent.
In the last quarter of the year, the company reported a net profit up just two percent at 667 million kronor on sales down two percent at 27.56 billion kronor.
The results beat the expectations of analysts polled by Dow Jones Newswires, who had predicted an eight-percent drop in net profit on sales down three percent.
In 2011, the appliance giant, which is second in the sector only to US Whirlpool, forecast “modest” growth in sales, with demand up two percent in Europe and three percent in North America.
McLoughlin said the company would see “most of the growth in the second half of the year.”
It said higher raw material costs were expected to dent its results to the tune of between 1.5 and 2.0 billion kronor, with most of the impact felt at the beginning of the year.
“The costs for our most important raw materials continue to increase. In addition to increased costs for steel, we also see considerable increases in resins and base metals,” McLoughlin said.