Initiatives in 2011

In a turbulent environment

The operations of Electrolux are exposed to a number of strong external factors that affect the Group’s opportunities to increase profitability and return, and thus its ability to achieve the Group’s financial goals. In 2011, profitability was negatively impacted primarily by the following factors.



Higher costs for raw materials

Raw materials account for a large share of the Group’s costs. In 2011, Electrolux purchased components and raw materials for approximately SEK 41 billion, of which the latter represented approximately SEK 20 billion. The raw materials to which the Group is primarily exposed comprise steel, plastics, copper and aluminum, of which the share of the total attributable to plastics has increased over the past few years. Raw material market prices rose at the start of 2011 to thereafter decline. The total cost of raw materials in 2011 was about SEK 2 billion higher than in 2010.

Price development, plastics and steel

Price pressure in the major
Electrolux markets

Strong price competition has been evident in most of the Group’s markets for a prolonged period, and has been particularly severe in low-price segments, in product segments where there is substantial overcapacity and in markets with low levels of consolidation among manufacturers. In 2011, price pressure was intensive in the Group’s mature markets. Sales campaigns continued to dominate the market in North America in parallel with a gradual decline in the price of appliances in Europe.

Shipments of core appliances in Europe, excl. Turkey

Weak demand in mature markets
The major markets of Electrolux are Europe and North America. The substantial global increase in demand for household appliances experienced since 2005 was attributable to strong expansion in various growth markets, principally Asia. Demand for appliances in mature markets declined during the same period. This trend continued during 2011. In Western Europe, demand declined by 3%. Deliveries of appliances totaled 52 million units, down by 12% on the record year of 2006. In North America, demand decreased by 4%. Overall, approximately 37 million appliances were sold, which corresponded to levels in 1998 and was about 23% lower than top levels set in 2006.

Shipments of core appliances in US