Electrolux operations
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Summary of 2010

2010 – a summary of a record year

  • Sales increased by 1.5% in comparable currencies.
  • Strong growth in Latin America and Asia/Pacific offset lower sales volumes in Europe and North America.
  • In 2010, Electrolux reached the margin target of 6% for a full year for the first time.
  • Improvements in product mix and cost savings offset higher costs for raw materials and downward pressure on prices.
  • All business areas outperformed previous year’s operating income.
  • Strong improvements in operating income for the operations in Asia/Pacific and for Professional Products.
  • Solid cash flow generated by operating income.
Five concept vacuum cleaners made of plastic found in the world's oceans are a part of the marketing strategy for Electrolux Green Range of vacuum cleaners.

Operations

Electrolux is a global leader in household appliances and appliances for professional use, selling more than 40 million products to cust omers in more than 150 markets every year.

The company focuses on innovations that are thoughtfully designed, based on extensive consumer insight, to meet the real needs of consumers and professionals.

Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners, cookers and air-conditioners sold under esteemed brands such as Electrolux, AEG, Eureka and Frigidaire.

In 2010 Electrolux had sales of SEK 106 billion and 52,000 employees.

During 2010, a substantial investment in repositioning the AEG brand was conducted in Germany and Austria. Neue Kollektion is an innovative range of built-in and free-standing products that strengthen the brand and differentiate it from other manufacturers in the market.

Strategy

Global brands and rapid launches of new innovative products will be necessery to
achieve a market-leading position. Other crucial factors include cost-efficient production and leveraging global economies of scale.

Electrolux strategy focuses on: Product, Brand, Cost and Profitable growth.

The financial goals set by Electrolux aim to strengthen the Group’s leading, global position in the industry and assist in generating a healthy total yield for Electrolux shareholders. The objective is growth with consistent profitability. One of the financial targets is an operating margin of at least 6% over the cycle.

Financial goals

The financial goals set by Electrolux aim to strengthen the Group’s leading, global position in the industry and assist in generating a healthy total yield for Electrolux shareholders. The objective is growth with consistent profitability. Key ratios are excluding items affecting comparability.

  Operating margin of 6% or greater over a business cycle.
  Capital-turnover rate of 4 or higher.
  Return on net assets of at least 25%.
  Average annual growth of 4% or more.

Action plan

Electrolux can increase the pace of future growth through innovative products, a strong brand in the premium segment and the utilization of global economies of scale. The aim is to grow faster than the market, at least 4% per year, and to achieve this while maintaining profitability. What is required to realize this target?

  • Utilize global initiatives to reduce costs and increase the speed and precision of product development
  • Complete the restructuring program
  • Continue to expand in growth markets, organically and through acquisitions
  • Further increase presence in the premium segment
  • Accelerate growth in profitable product categories
  • Grow through acquisitions in closely-related segments
  • Continue with initiatives to turnaround weak markets and product segments

Sustainability

To be a leader in its industry, Electrolux must lead in sustainability. The Group therefore intensified its work with its sustainability strategy encompassing how the Group runs its operations, designs products, communicates with consumers and strengthens the brand.

Building leadership is a long-term commitment and the Group has demonstrated that it is up to the challenge. In 2010 and for the fourth consecutive year, Electrolux was recognized as leader in the consumer durables industry sector in the prestigious Dow
Jones Sustainability World Index. Electrolux thereby ranks among the top 10% of the 2,500 largest companies for social and environmental performance.

Campaign Green Range

All product development at Electrolux is based on comprehensive insight into the sophisticated needs of consumers. Across the globe, interest is growing in products that are sustainably manufactured, use less energy and water, and can be recycled. As a leading brand of energy- and water-efficient products, both for consumers and professional users, Electrolux can capitalize on this trend.

With its Vac from the Sea campaign, Electrolux has raised people’s awareness of the impact of plastic waste in the world’s oceans at that same time as there is a shortage of recycled plastic. The campaign, which is linked to the strategy surrounding the marketing of the Electrolux Green Range of vacuum cleaners, has strengthened the Group’s leading position in sustainability.

Five concept vacuum cleaners made of plastic found in the world's oceans are a part of the marketing strategy for Electrolux Green Range of vacuum cleaners.

Financial review

Operating income improved substantially and Electrolux achieved in 2010 its operating margin target of 6% for the first time. All operations showed improvements. A better product mix and cost savings had a positive impact on income, compared to 2009.

Net sales increased by 1.5% in comparable currencies. Strong sales growth in Latin America and Asia/Pacific offset lower sales volumes in Europe and North America.

Operating margin, %

Dividend

The Board of Directors proposes a dividend for 2010 of SEK 6.50 per share. The proposed dividend corresponds to approximately 40% of income for the period, excluding items affecting comparability.

The Group’s goal is for the dividend to correspond to at least 30% of income for the period, excluding items affecting comparability. Historically, the Electrolux dividend rate has been considerably higher than 30%. Electrolux has a long tradition of high total distribution to shareholders that includes repurchases and redemptions of shares as well as dividends.

The capital market

The Electrolux share is listed on Nasdaq OMX Stockholm. In 2010, the Electrolux share celebrated 80 years of being listed on the Swedish stock exchange.

Over the past ten years, the average total return on an investment in Electrolux shares was 25.5%. The corresponding figure for SIX Return Index was 10.6%.

Corporate governance

Highlights during the year:

  • Hans Stråberg left Electrolux at year-end after nine years as President and Chief Executive Officer. At the same time, he left the Board of Electrolux.
  • Keith McLoughlin has been appointed new President and Chief Executive Officer as of January 1, 2011.
  • Lorna Davis was elected new Board member at the Annual General Meeting on March 30, 2010.
  • Henrik Bergström has been appointed head of Floor Care and Small Appliances and new Group Management member.
  • Three new appointments in Group Management as of February 1, 2011, to accelerate Electrolux strategy.
  • Electrolux B-share was delisted from London Stock Exchange on March 11, 2010.
Electrolux results 2010

Net sales

Operating income1)

Earnings per share1)

Number of employees2)

1) Excluding items affecting comparability
2) Average number of employees.

© Electrolux Group