Annual Report 2009 2 Financial review
 

Cash flow

  • Extra payments of SEK 3,935m to Group pension funds reduced balance-sheet risk exposure to pension commitments.
  • Strong cash flow, excluding extra contributions to pension funds, generated by improvements in operating income and working capital.
  • Ongoing structural efforts to reduce tied-up capital contributed to the strong cash flow.
  • Capital expenditure declined to SEK 2,223m, as against SEK 3,158m in 2008.
  • R&D costs decreased to 1.8% (2.0) of net sales.

 

Operating cash flow

Cash flow from operations and investments in 2009 showed a strong improvement amounting to SEK 5,330m (1,194). Exclusive of extra contribution to pension funds, cash flow amounted to SEK 9,265m.

In the fourth quarter, SEK 3,935m was paid to the Group’s pension funds. This included payments to pension funds in Germany, the US and the UK. The payments have reduced the Group’s pension net debt, limited risk exposure and volatility in pension liabilities.

The strong cash flow was generated by the improvement in income from operations and by changes in operating assets and liabilities. The Group’s ongoing structural efforts to reduce tied-up capital contributed to the strong cash flow in 2009. Inventory levels declined steadily during the year. The Group’s inventories, trade receivables and accounts payable developed favorably in relation to net sales, see table Working capital and net assets in Financial position.

Outlays for the ongoing restructuring and cost-cutting programs amounted to approximately SEK 1,130m.

Capital expenditure

Capital expenditure in property, plant and equipment in 2009 decreased to SEK 2,223m (3,158). Capital expenditure corresponded to 2.0% (3.0) of net sales. Investments during 2009 referred mainly to manufacturing systems for new products, and to reinvestment. In 2008, investments included new plants in connection with relocation of production. In 2008, production started at the new plant for front-loaded washing machines in Juarez, Mexico.

Costs for R&D

Costs for research and development in 2009, including capitalization of SEK 370m (544), amounted to SEK 1,991m (2,092), corresponding to 1.8% (2.0) of net sales. R&D projects during the year mainly referred to development of new products and design projects within appliances in Europe, North America and Latin America as well as within floor-care operations.

For definitions, see Note 30.

Cash flow and change in net borrowings

Charts

Capital expenditure

Capital expenditure in 2009 decreased to SEK 2,223m (3,158).

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