Electrolux sees bright outlook

STOCKHOLM, Sweden -- AB Electrolux shares soared on Thursday after the world's biggest maker of home appliances posted higher-than expected second-quarter profits as it cut costs and increased sales in the United States.

The Swedish group -- which makes everything from vacuum cleaners and refrigerators to washing machines and lawnmowers -- said it expects operating income to rise in the second half of this year, which should help lift profits for all of 2002.

Pretax profits jumped 54 percent to 2.69 billion crowns ($291 million) in the second quarter from the same period a year earlier. Sales fell 0.6 percent in the second quarter to 37.22 billion crowns.

Analysts polled by Reuters has expected pre-tax profit of 1.94 billion crowns in the second quarter and sales totalling 36.11 billion crowns.

Electrolux shares, which have been among the best performers in blue-chip OMX index in the past six months, were up almost 9 percent to 174.50 crowns in mid-morning Stockholm trading on Thursday.

The company -- known for brands such as AEG, Zanussi, Frigidaire and Flymo -- said the rise in second-quarter profits was due mainly to higher demand in the U.S., which bolstered income for its North American operations.

Despite a slightly weaker market in Europe, it said income and margins also improved in the region in the second quarter.

Electrolux's improved bottom line also comes after a series of cost-cutting measures beginning last December, which included the closure of two plants in Europe and one in Asia, along with 2,800 job cuts.

The restructuring plan -- which has saved 460 million crowns so far this year -- was launched by former chief executive Michael Treschow, who left the company in April to become chairman of telecoms equipment maker Telefon AB LM Ericsson. He was replaced by Hans Straberg.

Electrolux said consumer goods sales in Europe rose to 11.90 billion crowns in the second quarter from 11.25 billion, resulting in a rise in operating margin to 6.9 percent from 5.1 percent.

Its North American sales rose to 15.09 billion crown from 14.10 billion, with the margin rising to 8.9 from 4.9 percent.