February 1, 2019 / 8:00 AM / 7 months ago

UPDATE 1-Electrolux sees easing costs headwind as Q4 profit tops forecast

* Sees 2019 hit from materials, tariff, FX at 2.0 bln-2.4 bln

* Estimate lower than Oct forecast of around 3.0 bln SEK

* Q4 operating income 1.96 bln vs 1.85 bln consensus (Adds details, background)

STOCKHOLM, Feb 1 (Reuters) - Home appliances maker Electrolux reported quarterly earnings above market expectations on Friday and forecast easing cost headwinds in 2019 and a new round of price hikes to help take the sting out of tariff-related spending increases.

Sweden's Electrolux has boosted profitability in recent years - the overriding ambition of CEO Jonas Samuelson - through greater efficiency and by cutting lower-margin products.

But a trade war between Washington and Beijing has inflated raw material costs and Electrolux and rival Whirlpool have been increasing prices to try and offset the impact.

This has caused demand to dip in North America, their main market, and Whirlpool earlier this week forecast that rising costs would see its 2019 adjusted profit and revenue undershoot consensus.

Electrolux said the negative impact from raw materials, tariffs and currency would be 2.0 billion to 2.4 billion crowns in 2019 versus its October estimate that cost increases would be similar to the 3 billion expected for 2018.

Operating earnings at the owner of Electrolux, Frigidaire, AEG and Anova brands fell to 1.96 billion crowns ($216.5 million) from 2.07 billion a year ago, but beat the 1.85 billion forecast in a Reuters poll of analysts.

"Our North American operation was significantly impacted by increased raw material costs and U.S. trade tariffs as well as lower private label volumes, partly mitigated by cost-based price increases," CEO Samuelson said in a statement.

"I am confident that we are well positioned with the right business focus in this challenging cost environment to continue to deliver shareholder value."

Late on Thursday, Electrolux had announced it would spin off its Professional Products business, which makes commercial kitchen and laundry equipment and has higher margins than any other part of the business. ($1 = 9.0524 Swedish crowns)

Reporting by Esha Vaish in Stockholm; editing by Niklas Pollard

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