Electrolux shares hit record after profit beat and positive outlook

By Niklas Pollard and Johannes Hellstrom

STOCKHOLM (Reuters) - Home appliances maker Electrolux AB (ELUXb.ST) has raised its growth forecast for European markets this year as cost cuts powered it to a bigger than expected rise in quarterly earnings, sending its shares to a record high.

The Sweden-based group, which makes fridges and dish washers under brands such as AEG and Zanussi as well as its own name, saw cost cuts in 2014 from years of plant closures kick in to fortify earnings amid tepid demand outside a firmly expanding U.S. market.

CEO Keith McLoughlin said on Wednesday the European market should grow by between 1 and 2 percent in 2015, up from a previous outlook for 0 to 1 percent, while affirming a forecast for 3 to 5 percent growth in North America.

Electrolux, vying for market leadership with U.S.-based Whirlpool (WHR.N) and China's Haier, said adjusted operating earnings rose 20 percent to 1.47 billion crowns (118 million pounds) from a year-ago 1.22 billion, just topping a mean forecast of 1.43 billion in a Reuters poll of analysts.

The outcome bore evidence of Electrolux chipping away at costs, above all in its Europe, the Middle East and Africa business, which reached a margin of 6.4 percent, its strongest since 2009 despite still only moderate market growth.

"We believe 2015 will be another year with positive growth for Electrolux and the appliance industry," McLoughlin told a news conference.

Electrolux shares were up 11.6 percent at 247.5 crowns by 11:27 a.m., making them the best performers among major European shares (.STOXX), having leaped at one stage to a record 248.5 crowns.

The group is benefiting from falling prices of raw materials such as steel, while a bigger share of costs than sales in dollars has meant the gains for the greenback versus other currencies have become a growing headache.

But looking to the rest of 2015, plunging crude prices should impact Electrolux's spending on plastics, which accounts for a third of its raw material costs. Electrolux said it saw roughly 500 million in lower material costs this year.

Electrolux is also awaiting approval for its biggest-ever deal, the $3.3 billion (2 billion pounds) purchase of General Electric's (GE.N) appliances business agreed last year, which would double its U.S. sales and tap into that market's rosier growth outlook.

Fuelled by prospects for the acquisition, Electrolux has been the best performing share in the STOXX Europe 600 Personal & Household Goods Index (.SXQP) over the past six months.

(Editing by Alistair Scrutton and David Holmes)