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Indesit profit rises 56% after relocating production

Indesit Co., the Italian maker of Hotpoint cookers and refrigerators, said fourth-quarter profit rose 56% after it introduced new products and relocated production to eastern Europe to cut labor costs.

Net income of Indesit Co., Europe's third-largest home-appliances maker climbed to €34.1 million ($44.7 million) from €21.8 million a year earlier, the Fabriano-based company said yesterday. Sales added 8.6% to €914 million. Indesit has closed plants in Portugal and France, while it plans to finish two new factories in Poland this year to take advantage of lower labor costs and stem a two-year decline in profit.
The company is also counting on new products to boost demand, with a target of selling 1 million of its Aqualtis washing machines by 2008. „The Q4 bears out the excellent trend seen over 2006, crowning a series of positive quarterly results in line with the company's three-year plan,” CEO Marco Milani said in the statement. Shares of Indesit rose 51 cents, or 3.7%, to close at €14.17 in Milan. It was the steepest gain since November 14, giving the company a market value of about €1.6 billion.
The stock has gained 15% since the beginning of the year. Indesit joins Electrolux AB and other rivals that are shifting production to lower-cost countries in the face of stiffening competition from Asian manufacturers such as South Korea's LG Electronics Inc. Stockholm-based Electrolux, the world's second-largest maker of household appliances, today reported quarterly profit almost twice as large as analysts had estimated.

CEO Milani is also channeling funds into research to help develop more technologically advanced products. Indesit collaborated with David Lewis, best known for his work with luxury electronics maker Bang & Olufsen A/S, on a new range of touch-sensitive cookers called Attitude. Annual profit rose 51% to €76.4 million, on a 6% gain in sales to €3.25 billion.
UBS analyst Laura Leonardelli had estimated €68 million. UBS last month raised its Indesit earnings targets 5% for the 2007-2008 period, citing an improved stock track record and better sales. Leonardelli has a „reduce 2” rating on the stock. Quarterly profit at Indesit was equal to €0.33 a share, up from €0.21 a year earlier. (Bloomberg)