Annual Report 2013


2013 – solid performance in a tough environment

In 2013 we continued to deliver above our growth target and delivered 4.5% in organic sales growth. The good sales and earnings momentum in North America continued and growth was also strong on the emerging markets, in Australia and for Professional Products. The European market continued to be very challenging during the year and the Latin American markets slowed down during the second half, which impacted the earnings of these two business areas. Since 2011, the Group has now grown organically and through acquisitions with 15% in local currencies. We will continue this profitable growth path going forward in order to achieve our vision to be the best appliance company as measured by our customers, our employees and our shareholders.

Short facts Electrolux

Organic growth 2013

Sales growth,
since 2011

Growth markets,
of sales

Operating margin

4.5% 15% +35% 3.7%

Our vision, mission and strategy

Our vision is to be the best appliance company as measured by our customers, our employees and our shareholders. Our mission is to achieve an EBIT margin of at least 6% with an asset turnover of 4 times, giving a return on net assets in excess of 20%. Combined with a growth target of 4% over a business cycle, this will create significant economic value and provide a continuous increased return to all our stakeholders.

The way we want to achieve this – the strategy – is based on four cornerstones; profitable growth, innovation, operational excellence and people.

These four strategic cornerstones are described thoroughly throughout this report. What we see now is that after 10 years of heavy manufacturing footprint restructuring and no growth, our investments in new products, new markets, global operations, the combination of product development, design and marketing in the innovation triangle and other initiatives, started to give us growth at the end of 2011. This has continued through 2012 and 2013, and it will continue in the future. We are on the right path.

A challenging year with necessary changes

All business areas active in the European market, especially Major Appliances EMEA, has suffered from the weak demand situation. During the year it became obvious that we needed to take action to restore profitability, and in October we announced our plans. Firstly, the manufacturing footprint program, started back in 2004, will continue with its final stage. Secondly, we need to reduce our overhead cost structure to current market conditions. Most of this affects Major Appliances EMEA, but it also covers other business areas and Group staff functions. Some of the activities started already in the fourth quarter 2013, and other will occur during 2014 as we finalize studies and negotiations in different regions. We plan to have all activities implemented by the end of 2016. The indicative charge for this round of restructuring and overhead cost adjustment is SEK 3.4bn with estimated annual savings of SEK 1.8bn when finalized. 2013 has also been a year with a very challenging currency development for the Group with negative currency effects on earnings amounting to SEK 1.5bn.

Achievements 2013

Despite the challenges in 2013, I would like to point out some important major achievements during the year.

In Major Appliances EMEA we have in 24 months renewed the product programs for all the three main brands AEG, Zanussi and Electrolux. The last one was the Electrolux Inspiration Range, which by the end of 2013 has been launched in all markets in Europe.

In Major Appliances North America we had a number of product launches. New distribution channels were also successfully opened that are crucial for reaching new segments of the market. The new cooking plant in Memphis, USA, the world’s largest and most efficient, was officially opened during the year and sales started in October.

In Major Appliances Latin America the largest market, Brazil, slowed down during the second half of the year, but we adjusted the cost structure accordingly without slowing down the high level of new product launches, and continued to have positive organic sales growth. The acquired Group CTI, which covers Chile and Argentina, continued to develop very well in terms of growth and profit above the average for the business area.

In Major Appliances Asia Pacific a complete new product range was launched in China that will take our market presence to a new level. Growth in both China and South East Asia has been very strong over the last years and will continue to be so. A stronger presence in the emerging markets is one of our important objectives in the Group. I am also very pleased with the fact that our ­operations in Australia and New Zealand showed good sales growth during the second half of the year after a tough preceding period.

In business area Small Appliances, growth was especially strong in Latin America and Asia, and for Asia it also included the mature markets of Japan and Korea. The number of new product launches was also at record high levels.

In business area Professional Products we saw a continued pressure from weak demand on their traditional markets in Southern Europe. However, a very well performed investment in growth on new markets gave a strong sales development in North America and on several emerging markets which more than compensated for the slow European demand.

For Group staff functions I would like to mention the continued good progress of the Innovation Triangle (product development, design and marketing) giving the Group a higher rate of new product launches and the good performance of Global Operations (R&D, manufacturing and purchasing) that continued to give us good savings in all areas.


As a global player that both manufactures and sells products in rapidly evolving markets, we also have an important social responsibility. Among other tasks, we must work even harder to introduce the rigorous environmental, ethical and moral standards we have at Electrolux in all of our operations. This is our duty as a leading, and the most global, company in the appliance industry.

Going forward

Looking ahead, we will continue on our profitable growth path. The most important source of growth is a continuous flow of new, relevant, best-in-class products, and we will invest substantially in innovation, design and marketing to sustain this. We also need to continue to increase our market presence in the emerging markets. Today 35% of our sales is in emerging markets and our ambition is to reach 50% within a few years. To fund these activities we have to intensify even more our efforts for operational excellence, both for a competitive product cost and an efficient S, G & A. And, of course, behind all this is our people and our ability to be good business leaders. We have all the pieces in place and we will continue to execute. Electrolux has delivered double digit total returns to shareholders, compounded annually, for decades. The current management team takes the responsibility to continue that performance quite seriously.

This Group wouldn’t be able to achieve any of all this without our people and the values that form the basis for our work. We have had a lot of challenges during 2013, especially in the areas of the Group where we execute structural changes, but the team has handled it very well. We have an incredibly diverse talented group of people in this company who are committed to create and deliver continuous value to our customers, our shareholders, and society.

To our customers: Thank you for your business in 2013, and you can expect that Electrolux will bring substantial value to you to earn more of your business in 2014.

To our shareholders: Thank you for your continued support and you can expect strong sustainable returns through the business cycles from your company.

To our employees: Thank you for your hard work and contributions in 2013, and thanks-in-advance for a terrific 2014!

Stockholm, February 2014

Keith McLoughlin

President and Chief Executive Officer


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