The U.S. appliances market posted continued growth. A number of new innovative products were launched during the year and Electrolux sales increased in most product categories. Earnings recovered, mainly as a result of efficiency measures within production.
Alan Shaw is Head of Major Appliances North America as of February 1, 2016.
Electrolux has a strong offering in the US and Canada, particularly for such kitchen appliances 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 also sells appliances under retailers’ own brands.
The market is dominated by replacement products as a result of high product penetration and low population growth. The market is more consolidated than many other markets but competition is intense between several national and global manufacturers. Global competition has intensified and an increasing number of international companies are now offering entire appliance-product lines. Consolidation among retailers is relatively high and almost 70% of appliances are sold through the four major retailers Sears, Lowe’s, Home Depot and Best Buy. Contract sales is another key channel in this market and its growth has kept pace with rising housing starts and sales.
The appliance market continued to expand and posted growth of about 6% during the year.
Continued improvement of the macroeconomic climate together with increased housing starts and rising purchasing power has driven growth. In addition, the premium segment is growing in pace with the aging population, where the Group has a broad offering under its Electrolux brand.
Sales of Electrolux appliances in North America posted organic growth of 5%, with increases noted in most product categories. Profitability recovered for refrigerators and freezers after earnings were negatively impacted in the first half of the year by adaptations to the new U.S. energy standards implemented in 2014.
A number of new innovative products were launched during the year, including the important launch of a completely new range of appliances under the Frigidaire Professional brand. The range supplements other offerings from Electrolux and is positioned between Frigidaire Gallery in the mass-market segment and Electrolux in the premium segment.
The Group also launched its first connected air-conditioner, the Frigidaire Cool Connect.
The planned acquisition by Electrolux of GE Appliances was not completed as General Electric terminated the agreement in December 2015, see page 91.
Measures were implemented to accelerate the ramp-up and streamline production at the new cooking plant in Memphis, Tennessee. In the second half of the year, the plant achieved significant improvements in terms of production volumes and operational reliability. The action program will continue in 2016 with a strong focus on further increasing efficiency and lowering manufacturing costs.
The efficiency program at the refrigerator plant in Anderson, South Carolina, and the refrigerator plant in St Cloud, Minnesota, has led to significant improvements in areas including volume, cost levels, quality and customer service.
Major Appliances North America reported an organic sales growth of 4.9% in 2015. Sales volumes for most product categories increased.
Operating income declined year-over-year. Price/mix improvements and higher sales volumes contributed to earnings, while production inefficiencies and the transition of freezers and refrigerators to comply with the new energy requirements had a negative impact on results for 2015.
Electrolux has introduced the first refrigerator with customizable door on the market. Often considered a traditional design, the new top freezer refrigerator addresses a long-standing consumer need to provide better organization in this product.The refrigerator’s full door is customizable with bins and shelving that can move, slide or be added to. Top freezer refrigerators, which represent 50% of the refrigeration market, have seen little innovation in decades.
Frigidaire Professional is a complete range of appliances with a professional-inspired look and performance, designed to fit in a standard kitchen. This high-end sub-brand of the Frigidaire family in North America is positioned between the Frigidaire Gallery and the premium segment of Electrolux.