April 28 (Bloomberg) -- Electrolux AB, Europe's largest appliance maker, reported its first quarterly loss in more than two years and lowered its full-year outlook as North American consumers rein in their spending.

The net loss totaled 106 million kronor ($18 million), or 0.38 krona a share, compared with a profit of 492 million kronor, or 1.76 kronor, a year earlier, the company said today in a statement. Sales slipped 3 percent to 24.19 billion kronor as U.S. consumers bought fewer stoves and vacuums.

Chief Executive Officer Hans Straaberg said 2008 started worse than expected in the U.S. and he lowered his outlook for full-year earnings. The maker of Frigidaire appliances has cut jobs to widen profit margins and compete with rivals such as Whirlpool Corp. and Bosch Siemens Hausgeraete GmbH. It booked 360 million kronor in costs for eliminating 400 office jobs in Europe and other measures.

``Numbers were really disappointing for the U.S. and Europe, though they were good outside,'' said Anders Trapp, a Stockholm- based analyst at SEB Enskilda with a ``hold'' rating on Electrolux. ``It's not so strange given that appliance sales are down in the U.S. and Europe. It's a very difficult market and everyone knows that steel prices are going up too.''

Electrolux fell 0.3 percent to close at 93.25 kronor in Stockholm, while Sweden's benchmark OMX Stockholm 30 Index rose 0.6 percent. The maker of Frigidaire refrigerators and Ergorapido vacuums has lost almost one-half its value in 12 months, giving it a market value of 28.9 billion kronor.

`Difficult Market'

``The rather high level of uncertainty with respect to the U.S. consumer is now accounted for in the company's outlook,'' said Christoph Berger, a fund manager at Cominvest Asset Management in Frankfurt, who helps oversee $64 billion.

Analysts surveyed by Bloomberg predicted a loss of 135 million kronor on sales of 23.89 billion kronor. Estimates for the loss ranged from 79 million kronor to 223 million euros.

Straaberg cut his full-year forecast for Electrolux, predicting operating profit will be below last year's, after saying in February it would be ``in line.'' Straaberg said today that ``in line'' means a ``single digit'' variation, with the full-year result probably ``in the lower end of that range.''

The statement ``was a masterpiece of cutting guidance without admitting you cut guidance,'' said Trapp. ``It should be interpreted as a drop of 5 to 9 percent in EBIT without nonrecurring items.''

North American Outlook

Electrolux lowered its full-year outlook for the North American appliance market to ``a decline'' from February's expectation of ``a slightly negative development.'' It forecast ``unchanged'' demand in Europe instead of the ``slow growth'' it predicted previously.

Operating income, or earnings before interest and taxes, rose 0.7 percent on a comparable basis last year to 4.4 billion kronor. That put the company's operating margin for the year at 4.6 percent.

The company said North American appliance sales for the industry as a whole ``showed a strong decline'' in the quarter and western European sales also fell. Straaberg said demand was ``lower than we expected.''

The company spent 120 million kronor in the first quarter to introduce new products targeted at the higher-priced market segment in the U.S., and will spend another 200 to 250 million kronor on the rollouts in the second quarter, with profits from the revamp beginning to flow in 2009, according to the statement.

Materials and marketing costs for last year's European product changes are still crimping profits, the company said in the statement. Costs for raw materials will trim 1 billion kronor from earnings as steel and plastics prices rise for a fourth year, Straaberg said April 1.

``That 1 billion kronor is a minimum,'' SEB Enskilda's Trapp said.

Job Cuts

Electrolux is more than halfway through a five-year plan to shift about half its production to low-wage countries, saving 3.5 billion kronor annually by 2010. The company is cutting jobs at a Swedish refrigerator factory and has two plants in Italy under review as it adjusts to competition from low-wage manufacturers including Turkey's Arcelik AS and Slovenia's Gorenje d.d.

Straaberg said on a conference call that 2008 cost savings would come mainly toward the end of the year.

The Swedish appliance maker got about 31 percent of its revenue last year from North America, where appliance sales are declining amid the worst slump in the U.S. housing market for two decades.

Shipments of major home appliances in the U.S. fell 7.9 percent in March, led by declines in dishwashers and microwave ovens, according to the Association of Home Appliance manufacturers. Electrolux products are sold in Sears Holdings Corp., Lowe's Cos. and Best Buy Co. stores.

The U.S. appliance industry has been in recession since mid- 2006, Straaberg said earlier this month.

Closest Rivals

Electrolux was No. 1 in the world until two years ago, when Whirlpool bought Maytag Corp. The same year, Straaberg spun off garden-tools maker Husqvarna AB in order to concentrate on home appliances. In Europe, the company's closest rival is Bosch- Siemens Hausgeraete, which may overtake it this year.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

Last Updated: April 28, 2008 11:54 EDT