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Electrolux cuts 2019 cost guidance after first-quarter profit beat

Electrolux cuts 2019 cost guidance after first-quarter profit beat
FILE PHOTO: A man walks past an Electrolux shop in Riga, Latvia November 12, 2013. REUTERS/Ints Kalnins   -   Copyright  Ints Kalnins(Reuters)
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STOCKHOLM (Reuters) – Swedish home appliance maker Electrolux cut its full-year cost guidance after reporting first-quarter earnings above market expectations as price hikes and improved product mix helped mitigate tariff and currency headwinds.

Adjusted operating earnings at the owner of brands such as Electrolux, Frigidaire, AEG and Anova fell to 1.30 billion crowns (£105.74 million) from 1.36 billion a year ago, but came in ahead of the 1.24 billion forecast in a poll of analysts.

Electrolux said it estimated the negative impact from raw materials, tariffs and currency would be 1.7 billion to 1.9 billion in 2019, a smaller hit compared to a previous estimate of 2.0 billion to 2.4 billion.

The results follow those of rival Whirlpool, which on Monday beat estimates for quarterly profit as price increases offset higher raw material and freight costs.

Samuelson has boosted Electrolux’s profitability in recent years through increased efficiency and by cutting lower-margin products, but a U.S.-China trade war has contributed to inflate raw material costs.

Both Electrolux and Whirlpool have lifted prices in response, moves that have seen overall market demand in North America cool in recent quarters.

Electrolux said on Friday that while price increases had fully compensated for cost increases in North and Latin America during the quarter, demand in North America had been softer than it had initially expected.

The company, which also counts LG Electronics and Haier as rivals, scaled back its North America market demand guidance for the full year to “slightly negative” from its previous guidance of “flat to slightly negative”.

(Reporting by Esha Vaish; editing by Niklas Pollard)

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