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Electrolux sees main home appliances markets growing in 2018

Reuters
FILE PHOTO - The Electrolux logo is seen during the IFA Electronics show in Berlin, Germany September 4, 2014. REUTERS/Hannibal Hanschke/File Photo

STOCKHOLM (Reuters) - Sweden's Electrolux (ELUXb.ST) expects its main home appliances markets to grow next year, with raw material costs rising at a slower pace than in 2017, it said on Thursday.

In its first full outlook for next year, the rival of U.S. Whirlpool Corp (WHR.N) said it expected industry demand to rise 1-2 percent in Europe and 2-3 percent in North America.

The company also said it expected to raise capital expenditure for the coming 3-4 years, signalling a renewed emphasis on growth after a year of boosting margins.

Electrolux has been weeding out less profitable product lines and fine-tuning production, helping it reach a long-elusive 6 percent operating margin in the past two quarters.

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"We’re very pleased with our improved operating margin performance, which provides a solid base to take the next steps towards targeted growth and over a business cycle reach Electrolux financial targets of at least 6 percent EBIT margin and 4 percent growth," CEO Jonas Samuelson said in a statement.

Electrolux, which also competes with Asian firms such as LG Electronics and Haier Group, is holding a capital markets day with presentations for investors, analysts and media on Thursday.

Higher raw material prices, primarily for steel, have taken a toll on white goods makers this year, with Electrolux forecasting a 1.4 billion Swedish crowns (126.30 million pounds) hit to 2017 earnings from input costs.

It said it expected cost efficiencies to offset a hit of around 1 billion crowns from input cost increases in 2018.

The maker of appliances under brands such as Frigidaire and AEG, as well as Electrolux, forecast capital expenditure of around 6 billion crowns for 2018, focussed on "product architectures, automation and innovation".

Shares in Electrolux are up 28 percent this year, outpacing a gain of just under 10 percent in the STOXX Europe personal and household goods index (.SXQP).

(Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Terje Solsvik and Mark Potter)