Swedish home appliances maker Electrolux said it was to cut costs in Europe because of tough market conditions, adding it had reduced its forecast for demand in North America.

Electrolux also reported a 33 percent rise in quarterly earnings on Monday that was in line with forecasts.

Production changes in Europe, including downsizing, would cost 1 billion Swedish crowns ($152 million)in the fourth quarter, the company said.

"The market situation in Europe is likely to get worse before it gets better and we are minimizing the negative effect by launching new products and eliminating costs," chief executive Keith McLoughlin said.

The world's second-biggest home appliances maker after U.S. group Whirlpool , reported adjusted third-quarter earnings before interest and tax of 1.46 billion crowns, compared with a forecast in a Reuters poll of 1.47 billion.

Electrolux cut its forecast for North America for 2012, saying it expected demand for core appliances to fall by up to 1 percent, having previously expected up 2 percent growth. It repeated its forecast for European demand to fall by up to two percent.

Production changes in Europe meant it would aim to cease production of top-load washing machines at its plant in Revin, France and aimed to downsize and specialize other production, starting with a plant for refrigerators in Mariestad, Sweden, and a plant for cooking products in Schwanden, Switzerland.

Handelsbanken Capital Markets analyst Rasmus Engberg said the earnings were in line with expectations and was not surprised by the gloomier forecast for North America.

"We have industry figures from the first nine months, so we know where volumes are, so it was expected," he said.

($1 = 6.5735 Swedish crowns)

(Reporting by Patrick Lannin and Veronica Ek; Editing by Dan Lalor)