The Group’s operations include products for consumers as well as professional users. Products for consumers comprise major appliances, i.e., refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners and microwave ovens, floor-care products and small domestic appliances. Professional products comprise food-service equipment for hotels, restaurants and institutions, as well as laundry equipment for apartment-house laundry rooms, launderettes, hotels and other professional users.
In 2015, major appliances accounted for 88% (87) of net sales, professional products for 5% (5) and small appliances for 7% (8).
| Major Appliances Europe, Middle East and Africa, 30% | 30 |
| Major Appliances North America, 35% | 35 |
| Major Appliances Latin America, 15% | 15 |
| Major Appliances Asia/Pacific, 7% | 7 |
| Small Appliances, 7% | 7 |
| Professional Products, 5% | 5 |
Electrolux entered into an agreement to acquire Shanghai Veetsan Commercial Machinery Co. Ltd., one of the largest manufacturers of professional dishwashers in China, as part of the strategy to further accelerate growth in the professional segment. Veetsan has annual sales of approximately RMB 90 million (SEK 115 million). The operations were consolidated in the Electrolux Group as of the third quarter.
For the ninth consecutive year, Electrolux has been named Industry Leader in the Household Durables category in the prestigious Dow Jones Sustainability World Index (DJSI World). In this annual assessment, published by RobecoSAM, Electrolux demonstrated notably big improvements in the areas of product stewardship, corporate citizenship and human/labor rights.
General Electric (“GE”) notified Electrolux that it has terminated the agreement pursuant to which Electrolux had agreed to acquire the appliance business of GE. The termination was effective as of December 7, 2015. Therefore, the transaction will not be completed, see page 91.
Electrolux has been ranked Industry Leader Household Durables in the RobecoSAM Sustainability Yearbook, an annual rating of the sustainability performance among more than 2,000 of the world’s largest companies. For more information visit www.electroluxgroup.com
Market demand in Western Europe increased by 5% and demand increased in all markets, with growth being particularly strong in Spain, the Nordic countries and the UK. Demand increased in most markets in Eastern Europe, but the overall market demand was impacted by a sharp decline in Russia and declined by 17%. The overall market demand in Europe improved by 4% in 2015, excluding Russia.
Electrolux operations in EMEA recorded an organic sales growth of 4% in 2015. This growth was mainly a result of increased sales volumes and an improved product mix, which more than offset continued price pressure. Sales increased particularly in Western Europe but also in most regions in Eastern Europe. Sales of products under premium brands, built-in kitchen products and laundry products were the main contributors to this positive sales trend and the Group gained market shares in these categories.
Strong focus on the most profitable product categories continued to improve the product mix. Operating income improved significantly mainly as a result of product-mix improvements and increased cost efficiency.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 34,438 | 37,179 |
| Organic growth, % | –0.2 | 4.4 |
| Operating income | 232 | 2,167 |
| Operating margin, % | 0.7 | 5.8 |
| Net assets | 4,340 | 2,420 |
| Return on net assets, % | 4.1 | 48.9 |
| Capital expenditure | 977 | 1,044 |
| Average number of employees | 21,729 | 20,767 |
| Items affecting comparability, included above1) | –1,212 | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 34029 | 34278 | 33436 | 34438 | 37179 |
| Operating margin | 2 | 0.5 | -1.4 | 0.7 | 5.8 |
Market demand for core appliances in North America increased by 6% year-over-year in 2015. Market demand for major appliances, including microwave ovens and home-comfort products, such as room air-conditioners, increased by 8%.
Electrolux operations in North America reported an organic sales growth of 5% in 2015. Sales volumes for most product categories within core appliances as well as room air-conditioners increased.
Operating income declined year-over-year. Price/mix improvements and higher sales volumes contributed to earnings. The comprehensive transition of freezers and refrigerators to comply with the new energy requirements had a negative impact on results for 2015, but profitability was restored in the latter part of the year. Actions to ramp up and improve efficiency within the new cooking plant in Memphis, Tennessee, also continued during the year.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 34,141 | 43,053 |
| Organic growth, % | 2.2 | 4.9 |
| Operating income | 1,714 | 1,580 |
| Operating margin, % | 5.0 | 3.7 |
| Net assets | 6,216 | 4,854 |
| Return on net assets, % | 33.8 | 29.0 |
| Capital expenditure | 853 | 832 |
| Average number of employees | 14,918 | 14,923 |
| Items affecting comparability, included above1) | — | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 27665 | 30684 | 31864 | 34141 | 43053 |
| Operating margin | 0.5 | 4.4 | 6.7 | 5 | 3.7 |
The macro-economic environment in Brazil weakened significantly in 2015 and impacted market demand for core appliances, which declined sharply during the year. Demand in several other Latin American markets, such as Chile, also declined. However, market demand in Argentina increased.
Electrolux operations in Latin America continued to be impacted by weakening market conditions and organic sales declined by 2% in 2015.
Operating income deteriorated, mainly as a result of the continued sharp downturn in the Brazilian market. This was to some extent mitigated by improved financial performance in Argentina. Actions were taken during the year to adjust the cost base to the lower demand. Price increases mitigated continued severe currency headwinds as the US dollar strengthened against several currencies in Latin America.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 20,041 | 18,546 |
| Organic growth, % | 2.8 | –1.5 |
| Operating income | 1,069 | 463 |
| Operating margin, % | 5.3 | 2.5 |
| Net assets | 6,913 | 5,799 |
| Return on net assets, % | 15.9 | 6.8 |
| Capital expenditure | 535 | 601 |
| Average number of employees | 13,096 | 12,279 |
| Items affecting comparability, included above1) | –10 | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 17810 | 22044 | 20695 | 20041 | 18546 |
| Operating margin | 4.6 | 7.2 | 4.7 | 5.3 | 2.5 |
Market demand for major appliances in Australia increased in 2015, while demand in Southeast Asia and China declined.
Sales for the business area declined in 2015, due to lower sales volumes in China. Electrolux operations in China were reduced during the year. Operations in Australia and New Zealand reported organic growth, mainly due to higher sales volumes as a result of launches of new products. A new range of appliances under the Westinghouse brand was launched during the year. Price increases also contributed to this positive sales trend.
The acquisition of the Australian-based barbecue business BeefEater in 2014 had a positive impact of 0.8% on sales.
Operating income declined year-over-year. Lower sales volumes and inventory write-down in China of approximately SEK 115m impacted earnings for 2015. Other regions showed solid results, although increased brand spend to promote new product launches impacted earnings during the year.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 8,803 | 9,229 |
| Organic growth, % | 0.4 | –5.1 |
| Acquisitions, % | 0.6 | 0.8 |
| Operating income | 438 | 364 |
| Operating margin, % | 5.0 | 3.9 |
| Net assets | 2,095 | 1,600 |
| Return on net assets, % | 22.3 | 18.1 |
| Capital expenditure | 349 | 274 |
| Average number of employees | 3,792 | 3,874 |
| Items affecting comparability, included above1) | –10 | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 7852 | 8405 | 8653 | 8803 | 9229 |
| Operating margin | 9.4 | 8.9 | 1.3 | 5 | 3.9 |
Market demand in 2015 for vacuum cleaners in Europe is estimated to have increased while demand in North America is estimated to have decreased.
Electrolux organic sales declined by 4% due to lower sales volumes of vacuum cleaners in Latin America, Asia/Pacific and North America. This was to some extent mitigated by increased sales in Europe.
Operating income declined year-over-year. Restructuring costs, lower sales volumes and a continued negative currency trend impacted earnings negatively during 2015. Measures to restore profitability were taken during the fourth quarter of 2015 and a cost-reduction program was initiated including staff reductions and downsizing of activities, mainly in the U.S., Sweden and China. These actions are expected to reach full effect from end of 2016, with estimated annual cost savings of SEK 120m. Costs related to the program of SEK 190m impacted operating income.
Active product portfolio management and focus on the most profitable product categories improved the product mix in 2015.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 8,678 | 8,958 |
| Organic growth, % | –4.2 | –3.8 |
| Operating income | 200 | –63 |
| Operating margin, % | 2.3 | –0.7 |
| Net assets | 1,464 | 1,300 |
| Return on net assets, % | 12.5 | –4.4 |
| Capital expenditure | 162 | 134 |
| Average number of employees | 2,614 | 2,548 |
| Items affecting comparability, included above1) | — | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 8359 | 9011 | 8952 | 8678 | 8958 |
| Operating margin | 6.5 | 5.1 | 3.5 | 2.3 | -0.7 |
Overall market demand for professional food service and professional laundry equipment improved in 2015. Demand in Electrolux core markets in Western Europe was stable. The U.S. and emerging markets displayed year-over-year growth.
Electrolux reported an organic sales growth of 3% in 2015. Sales increased in several markets for both food-service equipment and laundry products. The Group’s strategic initiatives to grow in new markets and segments as well as new product launches contributed to the sales trend. An example is the successful launch in Europe during the year of MyPro washing machines and tumble dryers for small businesses, a new segment for Electrolux. The acquisition of the manufacturer of professional dishwashers in China, Veetsan Commercial Machinery Co. Ltd., had a positive impact of 1% on sales.
Operating income and margin showed a strong improvement compared to the previous year as a result of higher volumes, increased operational efficiency and higher prices.
| SEKm | 2014 | 2015 |
|---|---|---|
| Net sales | 6,041 | 6,546 |
| Organic growth, % | 5.6 | 2.8 |
| Acquisitions, % | — | 1.2 |
| Operating income | 671 | 862 |
| Operating margin, % | 11.1 | 13.2 |
| Net assets | 919 | 882 |
| Return on net assets, % | 70.1 | 85.7 |
| Capital expenditure | 75 | 98 |
| Average number of employees | 2,582 | 2,625 |
| Items affecting comparability, included above1) | — | — |
1) Restructuring costs, previously not included in operating income by business area and reported as items affecting comparability.
| 11 | 12 | 13 | 14 | 15 | |
| Net sales | 5882 | 5571 | 5550 | 6041 | 6546 |
| Operating margin | 14.3 | 10.6 | 9.2 | 11.1 | 13.2 |