Electrolux holds a strong position in several Latin American countries, and has long-established relationships with the major retailers and a far-reaching distribution network, which provide a solid platform for profitable growth in the region.
Ruy Hirschheimer, Head of Major Appliances Latin America
Electrolux operations in Latin America trended favorably despite a weakening market growth. The Electrolux brand occupies a strong position through its innovative products and close collaboration with market-leading retail chains. Brazil is the Group’s largest market in the region and accounted for about 70% of Electrolux sales. In Brazil, Electrolux is the market leader in a large number of product categories.
The Latin American market is dominated by a few large manufacturers. In Brazil, Electrolux holds a leading position in appliances. Import duties and logistical costs mean that the bulk of products are produced domestically. The trend of consolidation is also high among retailers. Together, these factors contribute to strengthening the potential of established manufacturers in the region. Brazil accounts for about 50% of the total market. Other major markets include Chile, Mexico and Argentina.
During the year, most Latin American currencies continued to weaken against the USD, resulting in increased costs for imports of semi-finished and finished products. Price increases mitigated the negative currency impact.
The Latin American appliance market has grown for a number of years. The reason for this has been the rising purchasing power of households, which primarily demand more basic cookers, refrigerators and washing machines. In addition, demand for products in the upper-price segments has increased among the rapidly emerging middle class. However, in 2014 demand weakened.
Electrolux is continuing to expand in Latin America through substantial investments in product development, production capacity and distribution. In 2014, the bulk of the product offering in larger-capacity washing machines and refrigerators and cookers was renewed.
Smaller capacity refrigerators, portable air-conditioning devices and larger capacity ovens were launched to further strengthen market shares in new product categories. During the year, Electrolux expanded its service offering by, for example, establishing a service center in Bogotá, Colombia.
Production efficiency was further enhanced through increased coordination and benchmarking between the production facilities in Santiago in Chile, Rosario in Argentina and São Carlos in Brazil utilizing, for example, the framework for the Electrolux Manufacturing System (EMS). Moreover, a program for more efficient and sustainable use of resources was introduced at all units in Latin America.
Major Appliances Latin America showed an organic sales growth of 3% in 2014, driven by higher sales prices and a favorable product mix.
Operating income improved year-over-year. Price increases have offset continued currency headwinds and a high rate of inflation and measures have been taken to adjust the cost base to lower demand.
Electrolux has launched the world’s first minibar with a smoked glass door that allows full visibility of the products stored inside — all packaged in an elegant, innovative and sophisticated design. The minibar is practical and ideal for displaying products to guests.
The new interactive refrigerator and freezer from Electrolux has two unique applications — Healthy Living and Cookbook, which include a complete nutritional program and more than 650 gourmet recipes for various occasions. All of this has been created to promote healthy cooking and creativity in the kitchens among consumers.