- Net sales for 2009 declined by 5% in comparable currencies.
- Sales volumes declined due to weak demand on most of Electrolux main markets.
- Operating income increased to SEK 3,761m (1,188).
- Operating income improved on the basis of cost savings, higher prices, improved mix and lower costs for raw materials.
- Income for the period was SEK 2,607m (366).
- Earnings per share amounted to SEK 9.18 (1.29).
Net sales
Net sales for the Electrolux Group in 2009 amounted to SEK 109,132m, as against SEK 104,792m in the previous year. Sales were adversely impacted by lower volumes, while higher prices and an improved mix had a positive impact. In comparable currencies, net sales declined by 4.8%.
Operating income
Operating income for 2009 increased to SEK 3,761m (1,188), corresponding to 3.4% (1.1) of net sales.
Previous price increases, an improved mix, lower costs for raw materials and cost-efficiency measures contributed to the improvement in income. Operating income in the first quarter of 2009 was negatively impacted by the North American launch in the net amount of SEK –200m. In 2008, non recurring items were charged against operating income in the total amount of approximately SEK 1,945m, see table Impact of cost-reduction measures and non-recurring items in 2008 and the US launch of Electrolux.
Items affecting comparability
In addition to the non-recurring items described above, operating income includes costs for the restructuring program initiated in 2004, see Consolidated income statement, section Structural changes. These costs, amounting to SEK –1,561m
(–355), are reported as items affecting comparability. Excluding items affecting comparability, operating income amounted to SEK 5,322m (1,543).
Excluding items affecting comparability and the items described in the table above, operating income for 2009 increased by approximately SEK 2,034m, compared to the previous year.
Depreciation and amortization
Depreciation and amortization in 2009 amounted to SEK 3,442m (3,010).
Financial net
Net financial items decreased to SEK –277m (–535). The improvement is mainly due to lower interest rates on borrowings and lower net borrowings.
Income after financial items
Income after financial items increased to SEK 3,484m (653), corresponding to 3.2% (0.6) of net sales.
Taxes
Total taxes in 2009 amounted to SEK –877m (–287), corresponding to 25.2% (44.0) of income after financial items. The tax rate for 2009 was positively impacted by reversal of a tax provision following a tax settlement in Europe. The tax rate in 2008 was negatively impacted by the low level of earnings.
Income for the period and earnings per share
Income for the period amounted to SEK 2,607m (366), corresponding to SEK 9.18 (1.29) in earnings per share before dilution.
Effects of changes in exchange rates
Changes in exchange rates in comparison with the previous year, including both translation and transaction effects, had an impact of SEK –295m on operating income.
Transaction effects net of hedging contracts amounted to SEK –333m, and referred mainly to the strengthening of the euro and the US dollar against several other currencies. Translation of income statements in subsidiaries had an effect of SEK 38m.
The effect of changes in exchange rates on income after financial items amounted to SEK –278m.
For additional information on effects of changes in exchange rates, see section on foreign exchange risk in Note 2.
Value created
Value creation is the primary financial performance indicator for measuring and evaluating financial performance within the Group. The model links operating income and asset efficiency with the cost of the capital employed in operations. The model measures and evaluates profitability, by business area, product line, region or operation.
Total value created in 2009 increased over the previous year to SEK 2,884m (–1,040). The WACC rate for 2009 was 12% (12). The capital-turnover rate was 5.37, as against 4.87 in 2008.
For the definition of value created, see Note 30.
Market overview
Some of Electrolux main markets started to show some recovery during the fourth quarter of 2009, although compared to a very weak fourth quarter of 2008. The North American market rose slightly after thirteen consecutive quarters with decline. In the fourth quarter, industry shipments of core appliances in the US increased by 4%. Demand in some markets in Europe, as Germany, France, and Italy showed some stabilization. However, most of Electrolux main markets continued to show a decline although at a lower rate than in previous quarters. The European market has been falling for nine consecutive quarters. Eastern Europe showed a continued downturn in the fourth quarter, declining by 17%. Demand in Western Europe declined by 2% and the total market in Europe by 7%. The market in Brazil continued to increase in the fourth quarter due to temporary tax reductions on domestically-produced appliances.
There are no indications of a strong recovery in any of the Group’s main markets, and therefore we only expect a modest improvement from the currently low level of market demand for appliances in 2010.