Rising steel prices are hitting the bottom line at the world’s biggest maker of consumer electronics.
Sweden’s Electrolux has said the high cost of raw materials and strong competition from other manufacturers mean its operating income for this year will be “significantly lower” than in 2003.
Steel prices have more than doubled this year.
Previously Electrolux, which includes the Zanussi, Frigidaire and AEG brands, had forecast its profit would be “somewhat lower.”
The company’s profits in the third quarter of the year were down 28% at 134 million euros. Its share price has fallen by 18% so far this year.
Third quarter sales in Western Europe, especially Germany, fell, while sales in Eastern Europe increased.
With demand for steel still strong in China it is not likely that raw material costs will ease soon.
Electrolux plans to move production to lower cost countries such as Hungary and to raise prices.
The only comfort is its main competitor, the US company Whirlpool, has also said its income was down in the same period and operating profit this year will also fall significantly.