ClickAJob News

Swedish appliance maker Electrolux has said that its third-quarter performance within Europe was a "great disappointment".

Announcing its results today the company stressed that its operating income rose by ten per cent during the first nine months of the year, but said that costs related to product launches within Europe had seen its profits dive in the region.

Higher raw material costs and weak demand across key European markets, including within Germany, the UK and Spain, also had an adverse effect on income.

"Although our new products were well received by consumers and we basically reached our sales expectations, we had expected a significantly better financial result," said Electrolux chief executive Hans Straberg.

However the company says it still expects to report higher profits for 2007, against those reported in 2006.

But Electrolux warned that market conditions in the US had recently weakened and stressed that continued rises in the cost of raw materials and cost pressures on its European margins added "uncertainty" about whether the expectation would be achieved.

News of Electrolux's declining profits in Europe comes after the appliance manufacturer warned that the future of its cooker factory near Durham is in question.

Around 500 people are employed at the Spennymoor plant, which manufactures free-standing and built-in cookers for the UK and Irish markets.

Earlier this month Electrolux, whose brands include AEG, Zanussi and Frigidaire, said it had decided to examine the "future viability" of the factory in the wake of downward pressure on prices and intense competition.

The company expects to complete its investigation by the end of the year.

In recent years the world's second biggest home appliances maker has been cutting costs and moving production to low-cost manufacturing sites in Asia, eastern Europe and Mexico.