Whirlpool, Electrolux hike prices to offset costs

NEW YORK/STOCKHOLM (Reuters) - Top home appliances makers Whirlpool and Electrolux are raising prices to pass soaring raw materials costs onto customers and will rely on emerging markets to drive growth.

Electrolux's ambition to expand into faster-growing regions took a knock on Wednesday as it put plans to buy Egypt-based appliance maker Olympic Group on hold due to unrest there.

World appliances leader Whirlpool, which sells under the Maytag and KitchenAid brands, said fourth-quarter profit and sales rose, boosted by tight cost controls and strong demand in emerging markets like Asia and Latin America.

Excluding items, the U.S.-based company earned $2.11 a share, missing analysts' average estimate of $2.26 a share.

"For 2011, we expect positive but uneven demand levels around the world," Jeff M. Fettig, chairman and chief executive officer of Whirlpool, said in a statement.

"Raw material inflation is driving costs higher and we expect to mitigate these costs with improvements in cost productivity, innovation and recently announced price increases," he added.

The group, which makes fridges, washing machines and cookers, expected 2011 industry growth in Latin America and Asia to outstrip that of North America and Europe.

Sweden's Electrolux also missed earnings forecasts and further disappointed investors by not returning money to shareholders via a hoped-for special dividend. The cash-rich company instead extended its share buyback program.

Its shares sank 7.8 percent.

"It is a bit disappointing there is no extra dividend," said DnB NOR analyst Ole-Andreas Krohn.

Electrolux, which sells under its own name as well as the Zanussi and Frigidaire brands, is to raise prices by 8 to 10 percent in North America from April and gradually in Europe and other markets.

GROWTH HOPES

The move comes as manufacturers around the globe plot price hikes to offset higher materials costs and claw back ground lost in the recession.

Copper hit a record high on Wednesday after rising 60 percent since last June.

Electrolux Chief Executive Keith McLoughlin said the rise in raw materials' costs had been across the board.

"In the first quarter we are going to have raw materials hitting us immediately," he told Reuters in an interview after reporting core earnings of 1.71 billion crowns ($257.8 million).

This was just below the forecast of 1.78 billion crowns and down from 2.0 billion crowns in the same period of 2009.

The company raised its forecast for the impact of raw material costs to a range of 1.5 to 2 billion crowns, higher than the previous 1.5 billion crown forecast.

The uneven demand forecast from Whirlpool echoed Electrolux's earlier comments.

It expected modest growth in demand for appliances in Europe and North America this year after demand in Europe rose 2 percent in 2010 following more than two years of decline.

McLoughlin said that overall markets were growing, but again most of the growth was coming in emerging markets like eastern Europe, China and India.

"There is a global economic recovery happening," he told Reuters. Market growth was in the low single digits in mature markets but up to 7 to 9 percent in places like China and India.

Electrolux raised its dividend to 6.50 crowns a share from 4.0 crowns.

(Editing by Erica Billingham)

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