Electrolux cuts 3,000 jobs and seeks cheaper workforce

Electrolux, the Swedish home appliances group, is to cut 3,000 jobs after saying it will miss full-year profit targets as demand for its goods in Europe and the United States continues to fall.

It gave warning that further positions would go as production is moved to low-cost countries in a programme that the company expects to be completed by 2010.

Waning demand for washing machines, vacuum cleaners and cookers has hit sales, the company said, forcing it to make SKr1.2 billion (£100 million) of savings by cutting staff. It sells appliances under its own name as well as AEG, Eureka and Frigidaire.

Electrolux said demand for appliances in Europe and North America “declined considerably” in the second half of last month.

The group, which employs 57,000 people worldwide and about 600 in the UK, said that the job cuts would affect all its operations. A spokesman for Electrolux declined to specify how many workers would leave specific plants.

Electrolux has already closed a factory in Spennymoor, Co Durham, this year.

The company said a sales fall at this time makes it unlikely that it will meet its target of between SKr3.3 billion and SKr3.9 billion in operating income this year. It said that operating income had amounted to SKr 2.7 billion by November but that the figure could be negative this month.

Electrolux raised prices to compensate for rising raw material prices.

The company reported a net loss in the first quarter of the year before bouncing back into a slim profit in the second quarter. In the third quarter, it reported an 11.2 per cent rise in net profit to SKr847 million as sales remained stable.

However, its operating profit fell by 72 per cent to SKr254 million during the quarter, a drop that was attributed to a costly product launch in North America that hit earnings.

Electrolux shares closed down almost 10 per cent in Stockholm at SKr67.25.

Source : TimesOnline
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]