Electrolux to raise prices in Europe as costs soar

By Helena Soderpalm

STOCKHOLM, June 13 (Reuters) – World number two home appliances maker Electrolux AB is to raise prices in Europe from October to cover surging raw materials costs, even as it faces competitive pressures, the company said on Monday.

The group, as well as world leading appliances maker Whirlpool Corp, has already raised prices in North America after the prices of metals, chemicals and plastics soared.

It has said it expected the higher prices to stick and has now moved to boost European prices.

“Over the past 18 months, the average costs for some of Electrolux’s most important raw materials have increased between 40 and 90 percent, while costs for transportation have also increased significantly,” Electrolux said in a statement.

“The trend is now stabilising, but there are no signs of a broad-based major downward correction towards the prior cost levels.” It said prices rises for appliances of between 5 and 7 percent would come into effect from Oct. 1.

“During the same period of time, Electrolux has experienced increased price pressure in the market, which accelerated in the first part of 2011,” it added.

Electrolux shares were up 0.8 percent at 153 crowns at 0758 GMT, while the broader Stockholm market was up 0.2 percent.

In April, Electrolux reported first-quarter profit just ahead of forecasts and kept an outlook for modest growth in demand in Europe and North America.

Price rises in North America have averaged 4 percent.

“We will see, but our ambition is to try and compensate for all of it,” said company spokesman Erik Zsiga, when asked whether the European hikes would cover all the increased raw material costs.

As part of a strategy to boost sales in fast-growing emerging markets, Electrolux has signed a preliminary deal to buy Egyptian appliances maker Olympic, but the political unrest there has delayed the deal.

“We are still interested in closing the deal, and talks are still going on,” Zsiga said. He reiterated that the group remained interested in Daewoo Electronics if the South Korean group got in touch with it. (Reporting by Mia Shanley, Niklas Pollard and Patrick Lannin in Stockholm; Editing by Will Waterman)