Electrolux, the world’s second largest household appliance company, yesterday posted annual profits and dividend up more than 50 per cent, but said 2011 would provide only “modest” growth amid rising costs for raw materials.

Thanks to the economic recovery seen in many countries last year as well as several plant closures, the Swedish company said its net profit jumped 53 per cent to four billion kronor ($627 million) last year.

“Demand in our largest markets recovered somewhat in 2010,” the company’s new president and chief executive officer Keith McLoughlin said in the earnings report, describing the full-year results as “the best ever for Electrolux,” but cautioning that the market “continues to be very competitive.”

The boost allowed it to distribute a dividend of 6.50 kronor per share, up from four kronor in 2009, according to its earnings statement.

“I see very good opportunities going forward to be able to continue to deliver a high return to our shareholders,” said Mr McLoughlin, who succeeded Hans Straaberg at the helm of the company at the start of the year.

Nonetheless, the company saw its share price plunge more than five percent to 172.50 kronor within minutes of trading start on the Stockholm stock exchange, with observers hinting that a cautious outlook and smaller-than-expected dividend were to blame.

Electrolux meanwhile posted a three-per cent drop in sales to 106.33 billion kronor in 2010, but said that disregarding an unfavourable exchange rate its sales actually swelled 1.5 per cent.

In the last quarter of the year, the company reported a net profit up just two per cent at 667 million kronor on sales down two per cent at 27.56 billion kronor.

The results beat the expectations of analysts polled by Dow Jones Newswires, who had predicted an eight-per cent drop in net profit on sales down three per cent.

In 2011, the appliance giant, which is second in the sector only to US Whirlpool, forecast “modest” growth in sales, with demand up two per cent in Europe and three per cent in North America.

Mr McLoughlin said the company would see “most of the growth in the second half of the year”.

It said higher raw material costs were expected to dent its results to the tune of between 1.5 and two billion kronor, with most of the impact felt at the beginning of the year.

“Costs for our most important raw materials continue to increase. In addition to increased costs for steel, we also see considerable increases in resins and base metals,” Mr McLoughlin said.