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, water heaters, heat pumps, small domestic appliances as well as consumables, accessories and service are other important areas for Electrolux.
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.
| Major Appliances Europe. Middle East and Africa, 31% | 31 |
| Major Appliances North America, 35% | 35 |
| Major Appliances Latin America, 13% | 13 |
| Major Appliances Asia/Pacific, 8% | 8 |
| Small Appliances, 7% | 7 |
| Professional Products, 6% | 6 |
A compact blast chiller for domestic use was one of several cooking innovations presented by Electrolux at the Eurocucina kitchen fair in Milan, Italy. As the chosen supplier to half of Europe’s Michelin-star restaurants, Electrolux is uniquely positioned to translate expertise from professional chefs into products that help consumers achieve great-tasting meals at home.
Electrolux has acquired Vintec, an Australia and Singapore-based company, which supplies a wide range of climate-controlled wine cabinets throughout the Asia Pacific region. Vintec has annual sales of more than AUD 22 million (approximately SEK 139 million). About two thirds of sales are in Australia, where Vintec also engages over 9,000 consumers through the Vintec Club. Operations are included in the business area Major Appliances Asia/Pacifc.
Electrolux unveiled a new look for the AEG brand with the launch of two product ranges. The AEG Mastery Range of kitchen products, offering the world’s first responsive kitchen experience, and a new laundry range. The AEG Mastery Range is a complete range of appliances with innovative features. The new laundry range offers combinations of washing machines and dryers, promising to keep colors, textures and protecting the fibers in the clothes like never before.
Electrolux has been named Industry Leader of the Household Durables category in the prestigious Dow Jones Sustainability World Index (DJSI World), for the tenth consecutive year. This year’s assessment, published by RobecoSAM, showed a notably big improvement for Electrolux in the area of corporate citizenship and philanthropy.
Electrolux has set up Electrolux Food Foundation with an initial SEK 10 million investment. The Group has also entered a Feed the Planet partnership together with Worldchefs and AIESEC.
Electrolux has agreed to acquire South Africa’s leading water heater producer Kwikot Group (Kwikot Proprietary Limited and its affiliates), for a total enterprise value of ZAR 3.18 billion (approximately SEK 2 billion). The acquisition broadens Electrolux home comfort product range and offers a strong platform for growth opportunities in Africa. The acquisition is subject to regulatory approvals being obtained latest June 30, 2017.
Electrolux has made a strategic decision to focus its North American Small Appliances business on its strongest categories, as part of a process to improve the global competitiveness of the business area. In line with this decision, Electrolux has divested its North American vacuum-cleaner brand Eureka to Midea Group Co., Ltd.
Electrolux has agreed to acquire Anova, the U.S. based provider of the Anova Precision Cooker, an innovative connected device for sous vide cooking that enables restaurant-quality results in the home. Net sales in 2016 amounted to around USD 40 million. The up front cash consideration in the transaction is USD 115 million, with an additional amount of up to USD 135 million depending on future financial performance. The company has approximately 70 employees and contractors globally and is headquartered in San Francisco, California. Sales are primarily carried out online directly to consumer and through major retailers. The acquisition is subject to regulatory approvals, and is expected to be closed during the first quarter of 2017.
For more information, visit www.electroluxgroup.com
Market demand in Western Europe increased by 3% and demand increased in most markets, with growth being particularly strong in the Nordic countries, Benelux and Spain. Demand also increased in most markets in Eastern Europe, and demand improved by 4%. The overall market demand in Europe improved by 3% in 2016.
Electrolux operations in EMEA reported organic sales growth of 4% in 2016. This growth was a result of higher sales volumes and an improved product mix. The Group gained market shares under premium brands as a result of a strong focus on the most profitable product categories.
Operating income and margin improved as a result of product-mix improvements, increased cost efficiency and higher sales volumes. This positive trend in earnings offset continued price pressure and currency headwinds related mainly to the depreciation of the Egyptian pound in November 2016 and the depreciation of the British pound. The depreciation of the Egyptian pound had an impact of SEK –310m, mainly related to the revaluation of balance-sheet items in Egypt.
In the fourth quarter of 2016, Electrolux agreed to acquire South Africa’s leading water-heater producer Kwikot Group. The acquisition broadens Electrolux home-comfort product range and offers a strong platform for growth opportunities in Africa.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 37,844 | 37,179 |
| Organic growth, % | 3.5 | 4.4 |
| Operating income | 2,546 | 2,167 |
| Operating margin, % | 6.7 | 5.8 |
| Net assets | 860 | 2,420 |
| Return on net assets, % | 101.5 | 48.9 |
| Capital expenditure | 1,402 | 1,163 |
| Average number of employees | 20,216 | 20,767 |
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 34278 | 33436 | 34438 | 37179 | 37844 |
| Operating margin | 0.5 | -1.4 | 0.7 | 5.8 | 6.7 |
Market demand for core appliances in North America increased by 6% year-over-year in 2016. Market demand for major appliances, including microwave ovens and home-comfort products, such as room air-conditioners, increased by 3%.
Electrolux operations in North America reported an organic sales decline of 1%, driven by lower sales under private labels and price pressure in the market. Sales volumes of core appliances under own brands grew.
Operating income increased significantly, mainly as a result of improved efficiency in operations as well as lower costs for raw materials.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 43,402 | 43,053 |
| Organic growth, %1) | –0.9 | 4.9 |
| Operating income | 2,671 | 1,580 |
| Operating margin, % | 6.2 | 3.7 |
| Net assets | 2,700 | 4,854 |
| Return on net assets, % | 75.7 | 29.0 |
| Capital expenditure | 673 | 913 |
| Average number of employees | 14,838 | 14,923 |
1) The organic growth in 2016 was negatively impacted by 0.2%, related to the transfer of operations under the Kelvinator brand in North America to the business area Professional Products.
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 30684 | 31864 | 34141 | 43053 | 43402 |
| Operating margin | 4.4 | 6.7 | 5 | 3.7 | 6.2 |
In 2016, the weak macro-economic environment in Brazil continued to impact market demand for core appliances, which declined significantly year-over-year. Market demand has deteriorated for two consecutive years. Demand in Argentina also declined.
The weak market trend impacted Electrolux operations in Latin America and organic sales declined by 11% during 2016. Significantly lower sales volumes and a less favorable mix were somewhat offset by higher prices.
Operating income deteriorated. Cost measures to adapt to lower demand, structurally reduce costs and mitigate under-absorption of fixed costs in production were being undertaken. Price increases have offset currency headwinds in the region.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 15,419 | 18,546 |
| Organic growth, % | –10.8 | –1.5 |
| Operating income | –68 | 463 |
| Operating margin, % | –0.4 | 2.5 |
| Net assets | 6,216 | 5,799 |
| Return on net assets, % | –1.1 | 6.8 |
| Capital expenditure | 600 | 736 |
| Average number of employees | 10,459 | 12,279 |
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 22044 | 20695 | 20041 | 18546 | 15419 |
| Operating margin | 7.2 | 4.7 | 5.3 | 2.5 | -0.4 |
Overall market demand for core appliances in Australia, Southeast Asia and China is estimated to have increased during 2016.
Electrolux reported an organic sales growth of 1% in 2016. Sales in Australia and New Zealand increased mainly as a result of an improved mix development. Sales in Southeast Asia also improved as a result of higher sales volumes across most product categories. In China, Electrolux reduced sales to exit unprofitable product categories and channels. The acquisition of the wine-cabinet company Vintec had a positive impact of 0.5% on sales.
Operating income and margin improved significantly year-over-year, primarily due to a favorable mix development and increased cost efficiency in Australia and New Zealand. The favorable sales growth in Southeast Asia also contributed to earnings.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 9,380 | 9,229 |
| Organic growth, % | 1.3 | –5.1 |
| Acquisitions, % | 0.5 | 0.8 |
| Operating income | 626 | 364 |
| Operating margin, % | 6.7 | 3.9 |
| Net assets | 1,842 | 1,600 |
| Return on net assets, % | 34.6 | 18.1 |
| Capital expenditure | 271 | 340 |
| Average number of employees | 3,493 | 3,874 |
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 8405 | 8653 | 8803 | 9229 | 9380 |
| Operating margin | 8.9 | 1.3 | 5 | 3.9 | 6.7 |
Market demand for corded vacuum cleaners in Europe is estimated to have declined in 2016, while demand for cordless hand-held vacuum cleaners increased significantly. Demand for corded vacuum cleaners in North America increased.
Electrolux organic sales declined by 8% in 2016. This is in line with the program initiated in 2015 to restore profitability. This program included downsizing of activities and active product-portfolio management and exiting unprofitable product categories. Operations in Europe and Southeast Asia displayed sales growth, while other regions declined.
Operating income improved. Increased efficiency and a favorable product-mix development contributed to earnings in 2016.
As a part of the program to restore profitability, a strategic decision to focus the North American Small Appliances business on its strongest categories was taken in 2016 and the Eureka brand in the US was divested. The net impact of the divestment was offset by costs related to measures to restore profitability.
As of 2017, the business area has the global responsibility to develop the Electrolux offering within - healthy wellbeing in your home- and grow the Electrolux presence in floor care, air care and water care. Therefore, the business area’s name will change to Home Care & Small Domestic Appliances. There will be no changes in the financial reporting.
Operating income for 2015 included charges of SEK 190m for the cost-reduction program described above.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 8,183 | 8,958 |
| Organic growth, % | –8.2 | –3.8 |
| Operating income | 238 | –63 |
| Operating margin, % | 2.9 | –0.7 |
| Net assets | 796 | 1,300 |
| Return on net assets, % | 18.6 | –4.4 |
| Capital expenditure | 171 | 181 |
| Average number of employees | 2,348 | 2,548 |
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 9011 | 8952 | 8678 | 8958 | 8183 |
| Operating margin | 5.1 | 3.5 | 2.3 | -0.7 | 2.9 |
Overall market demand for professional food-service and professional laundry equipment improved year-over-year. Demand in Electrolux core markets in Western Europe increased slightly. The US and Japan also posted year-over-year growth.
Electrolux organic growth was 4%. Sales of both laundry equipment and food-service equipment increased. Sales grew in several markets and were particularly strong in Western Europe, the US and Japan. A strong product offering in both food-service and laundry equipment contributed to the positive sales trend in most markets.
Operating income and margin improved year-over-year. Higher sales volumes had a positive impact on operating income. Investments in product development to strengthen the positions in new segments and markets continued.
| SEKm | 2016 | 2015 |
|---|---|---|
| Net sales | 6,865 | 6,546 |
| Organic growth, % 1) | 4.4 | 2.8 |
| Acquisitions, % | 0.6 | 1.2 |
| Operating income | 954 | 862 |
| Operating margin, % | 13.9 | 13.2 |
| Net assets | 843 | 882 |
| Return on net assets, % | 108.1 | 85.7 |
| Capital expenditure | 124 | 99 |
| Average number of employees | 2,767 | 2,625 |
1) The organic growth in 2016 was positively impacted by 1.3%, related to the transfer of operations under the Kelvinator brand in North America from the business area Major Appliances North America.
| 12 | 13 | 14 | 15 | 16 | |
| Net sales | 5571 | 5550 | 6041 | 6546 | 6865 |
| Operating margin | 10.6 | 9.2 | 11.1 | 13.2 | 13.9 |