Focus on the strongest product categories, brands and sales channels combined with complexity and cost reductions results in significant earnings improvement and a long-term competitive business model.
Jonas Samuelson, Head of Major Appliances Europe, Middle East and Africa
Europe comprises the Group’s largest market and Electrolux has a broad offering under the three main brands: Electrolux, AEG and Zanussi. In many countries and segments, the Group has significant market shares with a particularly strong position in kitchen appliances, such as cookers, hobs and built-in appliances.
Demand for appliances has been in decline for several years in Western Europe but stabilized in 2014. For some time, the market in Western Europe has been characterized by overcapacity and price pressure. One of the key reasons for this is that it is a fragmented market with a large number of manufacturers, brands and retailers.
Africa and the Middle East comprise a large number of countries with significant differences in terms of wealth and degree of urbanization. However, a common theme is that demand for appliances rises in parallel with growing prosperity. Electrolux has a focused growth strategy targeting primarily Egypt, Saudi Arabia and the Lower Gulf countries.
During the past two years, Electrolux has focused its innovation and marketing activities in Europe on its premium brands, Electrolux and AEG in the strongest product categories, primarily built-in kitchen appliances, with a particular focus on cooking products, as well as premium laundry products.
The built-in product ranges have been renewed, with launches of innovative products leveraging our 90 years of expertise in professional appliances, particularly focused in the areas of combi-steam ovens, where Electrolux is the market leader, and in induction cooking. A new range of laundry products, including washers, dryers and combination washer/dryers has been introduced, combining unparalleled clothes care with class-leading energy efficiencies. Growth and mix improvements in these product categories have been key contributors to the earnings improvement in 2014.
Connected products comprise another key trend this year. At the IFA trade show, Electrolux showcased a revolutionary connected-oven, see page 25.
As consumers rely increasingly on digital touch points for information and purchasing of appliances in addition to the traditional retail channels, the importance of strong brands and consistent and compelling communication in all consumer interaction points is increasing. Hence, focus has been increased on the premium brands Electrolux and AEG, in the key touch points of digital and in-store communication.
During the year, the program of extensive refocusing of operations on the strongest and most profitable product categories, brands and sales channels has allowed substantial cost reductions in other areas of the business.
Significant savings measures to reduce complexity in the administrative and sales operations were implemented during the year. Activities to increase production competitiveness continued. A comprehensive agreement to improve the competitiveness of the operations in Italy was reached with social partners. A laundry factory in France was divested. Discussions were initiated with employee representatives regarding production at two plants one in Sweden and one in Switzerland and a decision was taken to cease production at the plant in Switzerland.
Operating income improved significantly as a result of the ongoing structural measures to reduce costs and increase efficiency as well as product mix improvements.
Active product portfolio management and a strong focus on the most profitable product categories improved the product mix.
Electrolux Grand Cuisine and Poggenpohl have introduced a pioneering concept kitchen: the Fourth Wall. It is a kitchen without boundaries, where gastronomy, creativity and interior design come together to inspire. It is a kitchen where professional cooking meets luxury living. The concept aims to elevate both brands to a position that is perceived as being more premium and luxury by emphasizing culinary leadership.
Electrolux has a broad and innovative range of steam ovens on the market. Having worked with the best chefs in the world for over 90 years, Electrolux is convinced that steam is the future of cooking. Innovative CombiSteam ovens have been launched in Europe under the Electrolux and AEG brands.
With the AEG Maxi Sense Hob, it is possible to use up to three pots and pans simultaneously on the large FreeZone induction cooking area and an additional two on the power zones, with individual control of the temperature. Pots and pans can be freely moved around the cooker when preparing food.
The AEG ProTex dryer is fitted with the revolutionary AbsoluteCare technology, marking the first time sensitive garments like wool and silk can be dried with no shrinkage compared to line drying. It has been awarded the Apparel Care Blue label from Woolmark, the world’s most respected authority on wool care. Additionally, heat pump technology achieves up to 70% energy savings compared to traditional condense dryers.