The US appliance market posted continued growth in 2014. The Group continued to increase sales in the region by launching new, innovative products in several price segments and under several brands. During the year, Electrolux signed an agreement to acquire GE Appliances, one of the leading appliance manufacturers in the US.
Jack Truong, Head of Major Appliances North America
Electrolux commands a strong position in the US and Canada, particularly for kitchen appliances such as cookers, refrigerators and freezers. The appliances are predominantly sold under the Frigidaire brand in several price segments and under the Electrolux brand in the premium segment. The Group increased sales in North America as a result of product launches and increased investments in marketing.
A high degree of product penetration combined with relatively low population growth has resulted in replacement products dominating the market. The market is also more uniform than most other markets and consolidation is relatively high among manufacturers and retailers. The three largest manufacturers of appliances in the US account for a major part of the market and about 70% of appliances are sold via the four major retailers, Sears, Lowe’s, Home Depot and Best Buy. In 2014, Electrolux strengthened its position with Home Depot, which became a new distribution channel for the Group in 2012.
The appliance market continued to grow and posted growth of about 6% during the year. Growth is closely linked to an improved housing market. During the next few years, growth in housing construction is expected to be particularly strong for single-family homes. Another interesting trend is that the premium segment is growing in pace with the aging population, where the Group has a strong and broad product offering through its Electrolux brand.
During the year, a considerable number of innovative products was launched including a range of new refrigerators and freezers adapted to meet new US energy standards. A comprehensive transition of products was made to comply with the new energy requirements.
Other launches included Frigidaire gallery brand double-wall ovens and a 2-in-1 classic slate freezer under the Frigidaire brand as well as a stainless steel dishwasher with IQ-touch controls and an induction cook-top under the Electrolux brand.
In September 2014, Electrolux signed an agreement to acquire GE Appliances from General Electric, one of the leading manufacturers of kitchen and laundry products in the US. The coordination of the Electrolux Group’s and GE Appliances’ operations is expected to create a stable growth platform for the North American market. GE Appliances has an offering that complements the Frigidaire and the Electrolux brand portfolio in North America. The transaction is subject to regulatory approvals and is expected to close in 2015.
During the year, the production of cooking products was concentrated to the new plant in Memphis, Tennessee in the US and cooking production was discontinued in L’Assomption, Quebec in Canada. The new plant has an efficient manufacturing process utilizing the latest technology.
30%
36%
| 10 | 11 | 12 | 13 | 14 | |
| Net sales | 30969 | 27665 | 30684 | 31864 | 34141 |
| Operating margin | 4.7 | 0.9 | 4.7 | 6.7 | 5 |
Major Appliances showed an organic growth of 2% in 2014 as a result of an improved product mix which mitigated lower sales volumes. Costs related to the comprehensive transition of refrigerators and freezers to comply with the new energy requirements had a negative impact on operating income. In addition, the new cooking facility in Memphis, Tennessee, is still being ramped up, which also impacted operating income.
14,918
During the year, innovative double-wall ovens were produced at the new cooking appliance facility in Memphis, Tennessee. The facility produces ovens using the latest technology that leverages the know-how that Electrolux has gained from its professional products expertise, including such features as Perfect-Taste Temp Probe and Perfect Turkey.
The new Frigidaire Custom Flex Top Freezer with flexible storage possibilities is manufactured in North America using modularization and product innovation that were developed in the Electrolux manufacturing facility in Thailand.