Operations by business area

• Continued weak demand in Electrolux key markets in Europe and in North America.
• The North American market showed some recovery in the fourth quarter after thirteen quarters of decline.
• The European market has been falling for nine consecutive quarters. This had an adverse affect on sales volumes.
• Net sales declined by 5% in comparable currencies.
• Sales were adversely impacted by lower volumes, while higher prices and mix improvements had a positive impact.
• Substantial increase in operating income across all regions.
• Cost savings, higher prices, lower costs for raw materials and an improved mix contributed strongly to the improvement in income.
• Average number of employees declined to 50,633 (55,177).

The Group’s operations include products for consumers as well as professional users. Products for consumers comprise major appliances, i.e., refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners and microwave ovens, as well as floor-care products. Professional products comprise food-service equipment for hotels, restaurants and institutions, as well as laundry equipment for apartment-house laundry rooms, launderettes, hotels and other professional users.

In 2009, appliances accounted for 85% (85) of sales, professional products for 7% (7) and floor-care products for 8% (8).

Consumer Durables, Europe

Major appliances

Total industry shipments of major appliances in Europe in 2009 declined in volume by 11% over 2008. Shipments declined by 25% in Eastern Europe and by 6% in Western Europe. Demand continued to decline in several of the Group’s major markets, including the UK, Spain and the Nordic region. Demand in some markets in Europe showed some stabilization in the fourth quarter. Group sales declined, due to lower volumes.

Operating income was substantially higher in 2009 in comparison with 2008. Factors contributing to the improvement included a positive price and mix development and lower costs for raw materials. Personnel cutbacks and other cost-cutting measures during the year also contributed to the improvement in income.

Quelle of Germany, one of the Group’s major retailers, went into bankruptcy in the fourth quarter of 2009. This reduced the Group’s sales of appliances under private labels. At the same time, Electrolux strengthened its position in the market for built-in products.

Floor-care products

Demand for vacuum cleaners in Europe in 2009 was lower than in 2008. Group sales declined as a result of lower sales volumes, and operating income was lower. The decline in income was offset to some extent by an improved product mix, lower product costs, and cost savings. Launches of premium products as the vacuum cleaner UltraOne contributed to the improvement in product mix.

Consumer Durables, North America

Core appliances

Market demand for core appliances in the US in 2009 declined by 8%. Hovewer, demand showed an increase in the fourth quarter of 2009, following thirteen consecutive quarters of decline.

Group sales in comparable currencies were lower in 2009, in comparison with 2008. However, a positive price and mix development provided some compensation for lower sales volumes. Sales volumes were negatively impacted by increased competition within the laundry-product category.

Operating income rose considerably, despite lower volumes. Factors contributing to the improvement in income included a positive price and mix development, higher internal efficiency and lower costs for raw materials. Income was also positively affected by higher productivity at the Group’s plants despite lower utilization of capacity.

The re-launch of new products under the Frigidaire brand during the year contributed to mix improvements, as well as the Electrolux brand which increased market share in the kitchen product category.

Floor-care products

Market demand for vacuum cleaners in North America was lower than in the previous year. Group sales increased somewhat as a result of higher volumes, primarily in the low- and mid-range price segments. Operating income and margin were in line with 2008. Income was positively affected by cost-cutting measures and lower product costs.

Consumer Durables, Latin America

Market demand for appliances in Latin America is estimated to have risen in 2009 in comparison with 2008, on the basis of strong growth in Brazil. The increase in Brazil resulted from the Brazilian government’s stimulus package, in the form of lower taxes on domestically-produced appliances. Lower interest rates and greater access to credit also contributed to increased consumption. Market demand declined in most of the other Latin American markets.

The Group’s sales volumes showed a continued increase in 2009 in comparison with 2008. Sales were substantially higher, and the Group captured additional market shares in Brazil. Operating income improved on the basis of positive price and mix development and lower costs for raw materials. Operating margin declined following the weak performance in the first quarter.

Launches of new products during the year contributed to the improvement in the product mix. For the second consecutive year, operating income for the Latin American operation was at a record high.

Consumer Durables, Asia/Pacific and Rest of world

Australia and New Zealand

Market demand for appliances in Australia in 2009 is estimated to have been lower than in 2008. Group sales rose on the basis of higher sales volumes and maintained price levels. Operating income showed an improvement as a result of positive development of raw materials and sales prices as well as cost-cutting programs.

Southeast Asia and China

Market demand in Southeast Asia is estimated to have been unchanged in 2009 compared to last year.

Group sales in Southeast Asia showed strong growth in several markets, and the Group captured market shares. The operation in Southeast Asia continued to show good profitability.

The operation in China was positively affected by implemented restructuring measures as well as the repositioning of the Electrolux brand.

Professional Products

Estimates of market demand for food-service equipment indicate a decline in 2009 in comparison with the previous year.

Group sales of food-service equipment declined as a result of lower sales volumes and operating income deteriorated.

Estimates of market demand for laundry equipment indicate a decline in 2009 in comparison with the previous year.

Group sales of laundry equipment were lower in 2009 in comparison with 2008, as a result of lower sales volumes. Operating income improved, however, on the basis of lower costs for raw materials, favorable exchange rates, price increases and lower costs for production and administration.

Operating income in the fourth quarter of 2008 was adversely impacted by cost-reduction measures in the amount of SEK –1,045m.