Electrolux sticks to forecast, Egypt deal

World number two home appliances maker Electrolux is sticking to its market growth forecasts this year, with emerging countries remaining strong, the chief executive said on Tuesday. Keith McLoughlin also told Reuters in an interview that a stalled deal to buy Egyptian supplier Olympic Group, part of its plan to meet a 4 percent sales growth target, would go through in 2011 after talks recently restarted.
"My sense is that, just like we said previously, total demand for North America, the US in particular, will be positive, but low single digits for the year," he said. "Based on what we have seen for the first two months, I don't have any reason to change that expectation."
"For the most part, mature markets (will grow by) low single digits. Growing markets, emerging markets still strong, even with all the turmoil going on in the world," he added. He said raw materials' prices were peaking and would come down, though the long-term trend would be steadily up. He stuck to a forecast of higher costs of 1.5-2.0 billion crowns ($235-$314 million) this year. Electrolux has said it will raise prices by 8 to 10 percent in North America this year to compensate for higher raw materials costs, and that it will selectively raise prices in the European market.
"The actual net effect of that (US price rise) is a result of massive amounts of negotiation," he said. The deal for Olympic, the biggest appliance maker in the Middle East and North Africa, was put on hold during Egypt's unrest. McLoughlin said talks had restarted and Olympic executives were in Stockholm a few days ago.
"We feel positive about this," he said. "Our expectation is that it will go through this year." When the deal was announced last October, Electrolux said it had tentatively agreed to pay 45.30 Egyptian pounds a share for a 52 percent stake, and launch an offer for the rest of the shares. But Olympic shares are now 36 Egyptian pounds. McLoughlin would not say whether a new price was being negotiated. A failure to complete the Olympic deal did not mean the 4 percent growth target was necessarily under threat, he said. "There are other alternative (ways) to grow," he said, declining to go into more detail.