In 2014, market demand for core appliances in North America increased by 6% year-over-year. Overall market demand in Europe increased by 2%, after several years of soft demand.Demand in Western Europe rose by 2%, while Eastern Europe was unchanged. The market in Eastern Europe was impacted by the uncertainty in Russia and the Ukraine by the end of the year. Market demand in Australia, Southeast Asia and China declined. Demand for appliances in Brazil and most other Latin American markets also declined.
| 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | |
| Market demand for core appliances in Europe | 66 | 67 | 68 | 71 | 74 | 75 | 78 | 80 | 77 | 69 | 71 | 71 | 71 | 70 | 72 |
A total of approximately 72 million core appliances were sold in Europe in 2014, which is about 10% lower than the record year of 2007.
| 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | |
| Market demand for core appliances in the US | 39 | 39 | 42 | 43 | 47 | 48 | 48 | 45 | 40 | 37 | 39 | 37 | 36 | 39 | 42 |
Sources: US: AHAM. Europe: GfK. For other markets there are no comprehensive market statistics.
A total of approximately 42 million core appliances were sold in the US in 2014, corresponding to the level of 2002 and about 13% lower than the top levels in 2005 and 2006.
Electrolux sales increased by 2.7% of which 1.1% was organic growth and 1.6% referred to changes in exchange rates. The organic growth was mainly a result of mix improvements and price increases. Most business areas showed mix improvements in 2014, a result of launches of new products and strong focus on the most profitable product categories and sales channels.
Operating income for Major Appliances EMEA showed strong earnings recovery in 2014 as a result of structural costs savings and mix improvements. Major Appliances Latin America and Professional Products also increased results. Weak markets and lower volumes impacted earnings for Small Appliances and Major Appliances Asia/Pacific. Earnings for Major Appliances North America were negatively impacted by cost increases related to the transition of products to comply with new energy requirements and the ramp up of the new cooking plant in Memphis, Tennessee in the US.
Price increases in several regions, overall cost savings and the ongoing global initiatives to reduce complexity and improve competitiveness within manufacturing contributed to the favorable development of operating income in 2014.
| SEKm | 2013 | 2014 | Change, % |
|---|---|---|---|
| Net sales | 109,151 | 112,143 | 2.7 |
| Change in net sales, %, whereof | |||
| Organic growth | — | — | 1.1 |
| Changes in exchange rates | — | — | 1.6 |
| Operating income | |||
| Major Appliances Europe, Middle East and Africa | 347 | 1,444 | 316 |
| Major Appliances North America | 2,136 | 1,714 | –20 |
| Major Appliances Latin America | 979 | 1,079 | 10 |
| Major Appliances Asia/Pacific | 467 | 448 | –4 |
| Small Appliances | 391 | 200 | –49 |
| Professional Products | 510 | 671 | 32 |
| Common Group costs, etc. | –775 | –776 | 0 |
| Operating income excluding items affecting comparability | 4,055 | 4,780 | 18 |
| Margin, % | 3.7 | 4.3 | |
| Items affecting comparability | –2,475 | –1,199 | |
| Operating income | 1,580 | 3,581 | 127 |
| Margin, % | 1.4 | 3.2 |
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 organic sales growth in 2014 was 1.1%, operating margin reached 4.3%, the capital turnover-rate was 4.0 and the return on net assets was 17.1%, excluding items affecting comparability.
In 2014, Electrolux continued the work to reduce overhead costs and increase production competitiveness, these actions related mainly to Major Appliances EMEA but also to other business areas and Group staff. In 2014, SEK 1.2 billion was reported as items affecting comparability within operating income, see page 86.
In September 2014, Electrolux announced it has entered into an agreement to acquire the appliance business of General Electric (“GE Appliances”), one of the premier manufacturers of kitchen and laundry products in the US, for a cash consideration of USD 3.3 billion. The acquisition enhances Electrolux position as a global player in home appliances, offering an unparalleled opportunity to invest in innovation and growth, which will benefit consumers, retailers, employees and shareholders. Completion of the transaction is mainly subject to regulatory approvals. The acquisition is expected to close during 2015, see page 87.
Electrolux is continuously expanding its product offering. Examples from 2014 include the launch of new steam ovens with a sous-vide function and induction hobs using new technology in Europe. BeefEater Barbecues was acquired in Australia, which increased the Group’s barbecue offering, a key segment in kitchen products in Australia. In North America, a number of innovative products were launched under the Frigidaire and Electrolux brands. During the year, the launch of new kitchen and laundry products continued in China. In Latin America and Asia/Pacific, new products in appliances, vacuum cleaners and small domestic appliances are being launched continuously.
| 10 | 11 | 12 | 13 | 14 | |
| Net sales | 106326 | 101598 | 109994 | 109151 | 112143 |
| Organic sales growth<sup>1)</sup> | 1.5 | 0.2 | 5.5 | 4.5 | 1.1 |
| Goal 4% | 4 | 4 | 4 | 4 | 4 |
1) In comparable currencies.
| 10 | 11 | 12 | 13 | 14 | |
| Operating income | 6494 | 3155 | 5032 | 4055 | 4780 |
| Operating margin | 6.1 | 3.1 | 4.6 | 3.7 | 4.3 |
| Goal 6% | 6 | 6 | 6 | 6 | 6 |
Key ratios are excluding items affecting comparability.
| 10 | 11 | 12 | 13 | 14 | |
| Capital turnover-rate | 5.1 | 4.3 | 3.9 | 3.8 | 4 |
| Goal 4 times | 4 | 4 | 4 | 4 | 4 |
| 10 | 11 | 12 | 13 | 14 | |
| Average net assets | 20940 | 23354 | 28112 | 28915 | 27941 |
| Return on net assets | 31 | 13.5 | 17.9 | 14 | 17.1 |
| Goal 20% | 20 | 20 | 20 | 20 | 20 |
Key ratios are excluding items affecting comparability.