2015 in summary

• Organic growth of 2.2%, as a result of mix improvements and higher prices.
• Strong performance for Major Appliances EMEA and Professional Products.
• Weak markets, particularly in emerging markets, impacted operating income.
• Severe currency headwinds were to a large extent mitigated by price increases.
• Operating income includes costs of SEK 2,059m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 3.9% (3.2).

Market overview

Market demand for core appliances in Western Europe increased by 5% in 2015. Most markets in Eastern Europe also increased but the overall demand was impacted by continued decline in Russia. Demand in Eastern Europe declined by 17%. In total, the European market increased by 4% excluding Russia. Market demand for core appliances in North America increased by 6%. Market demand for core appliances in Australia increased, while demand in China and Southeast Asia declined. Demand for appliances in Brazil continued to deteriorate and most other Latin American markets also declined.

A total of approximately 72 million core appliances were sold in Europe in 2015, which is about 10% lower than the record year of 2007.

A total of approximately 45 million core appliances were sold in the US in 2015, corresponding to the level of 2007 and about 6% lower than the top levels in 2005 and 2006.

Sources: Europe: Electrolux estimates, US: AHAM. For other markets there are no comprehensive market statistics.

Net sales and operating income

Electrolux sales increased by 10.1% of which 2.2% was organic growth, 0.1% acquisitions and 7.8% currency translation. The organic growth was mainly a result of mix improvements and price increases. Weak market trends in several emerging markets impacted sales in 2015.

Operating income amounted to SEK 2,741m (3,581)corresponding to a margin of 2.2% (3.2). As announced on December 7, 2015, Electrolux planned acquisition of GE Appliances will not be completed as General Electric has terminated the agreement, see page 91. Operating income includes costs of SEK 2,059m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 3.9% (3.2).

Operating income for Major Appliances EMEA continued to improve in 2015. Product-mix improvements, increased sales volumes and increased efficiency contributed to the positive earnings trend. Earnings for Major Appliances North America were impacted by cost increases related to the transition of refrigerators and freezers to comply with new energy requirements and the ramp up of the new cooking plant in Memphis, Tennessee. Earnings improved in the latter part of the year and profitability for food-preservation products was restored. Operations in Latin America were impacted by a sharp decline of market demand. Severe currency headwinds in several markets were to a large extent mitigated by price increases. Reduced activities and inventory write-down in China impacted earnings in Major Appliances Asia/Pacific. Operating income for Small Appliances declined and restructuring measures to restore profitability were initiated and SEK 190m were charged to operating income. Professional Products showed a good development during the year. 

Financial overview by business area

1) Common Group costs for 2015 include a termination fee of USD 175m (SEK 1,493m) and transaction costs of SEK 408m for the terminated acquisition of GE Appliances.

2) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring costs have previously been presented separately in the income statement and excluded in operating income by business area and selective key ratios. For comparability purposes, the figures for 2014 have been restated to include restructuring costs. For a specification, read the press release; Restated figures for Electrolux for 2014, March 30, 2015, on www.electroluxgroup.com. Figures in the graphs for 2011–2014 in this report are including these restructuring costs. For a specification see page 90.

Launches of new products

Electrolux is continuously expanding its product offering. Examples from 2015 include launches of smart connected appliances. The world’s first connected steam oven was introduced in Europe and connected air-conditioners were launched in North America and the Middle East. In Australia, an entire range of new appliances were launched under the Westinghouse brand. Appliances under the Frigidaire Professional brand were launched in a new segment in North America. A number of innovative kitchen and laundry products were launched under the Electrolux and the Zanussi brand in EMEA. In Latin America and Asia/Pacific, new products in appliances, vacuum cleaners and small domestic appliances are being launched continuously.

Cost savings

The previously initiated programs to reduce overhead costs and increase production competitiveness continued during the year. This was mainly related to Major Appliances EMEA, where cost savings and relocation of production contributed to the favorable trend in earnings. Measures were also taken to structurally reduce costs to restore profitability within Small Appliances, see page 83.

Keith McLoughlin has retired from Electrolux and was succeeded by Jonas Samuelson as President and CEO

The Board appointed Jonas Samuelson as new President and CEO of Electrolux as of February 1, 2016. Mr. Samuelson was previously head of the business area Major Appliances Europe, Middle East and Africa.

In January 2016, Daniel Arler was appointed new Head of Major Appliances Europe, Middle East and Africa and Alan Shaw was appointed new Head of Major Appliances North America, see page 91.