Electrolux profits hit after aborted GE acquisition

Electrolux has reported an operating loss of SKr 202 million (£16.5m) in the fourth quarter of 2015, following the terminated acquisition of GE Appliances on December 7.

As part of the agreement, the multinational appliance manufacturer paid a termination fee of $175m (£121m) to GE. Transaction costs of SKr 408m (£33.4m) and preparatory integration work of SKr 158m (£12.9m) also affected operating income.

The company also reported a margin of 0.6 per cent, compared with 4.4 per cent for the same quarter in the previous year.

Electrolux saw a 1.3 per cent increase in net sales to SKr 31.8 billion in the fourth quarter, compared with SKr 31.4bn in 2014. The increase was a result of organic sales growth (0.2 per cent), acquisitions (0.1 per cent) and currency translation (one per cent).

For the full financial year in 2015, Electrolux saw net sales of SKr 123.5bn, with organic sales increasing by 2.2 per cent. Operating income amounted to SKr 2.7bn, down from SKr 3.6bn in 2014, and a margin of 2.2 per cent, compared with 3.2 per cent the previous year.

President and chief executive Keith McLoughlin, who is due to retire and be replaced by Jonas Samuelson on February 1, said: “Demand for appliances continued to grow in all markets in Western Europe and was particularly strong in the Nordics, Spain and the UK. Most markets in Eastern Europe, outside of Russia and Ukraine, also showed positive growth. In this market, Major Appliances EMEA showed good organic growth and managed to profitably grow its market share.

“In December, GE took the decision to terminate the agreement related to the acquisition of GE Appliances. Although we are disappointed that the acquisition is not being completed, we are confident that Electrolux has strong capabilities to continue to grow and develop the position as a leading, global appliance manufacturer. The strategy to grow profitably in promising segments, product categories and emerging markets remains, supported by a strong balance sheet and good cash generation.”