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Annual Report 2016 Share development Electrolux and the capital markets Risk management

Electrolux and the capital markets

In its communication with the capital markets, Electrolux aims to supply relevant, reliable, accurate and updated information about the Group’s development and financial position.



Electrolux Capital Markets Day 2016

On February 24, 2016, Electrolux held it’s CMD at the headquarters in Stockholm. More than 100 investors, financial analysts and representatives from media were present to listen to presentations by members of the Group management team, providing a strategic review and overview of the Group’s business performance.



The journey continues

Electrolux President and CEO Jonas Samuelson opened proceedings by introducing new members of the Group management team and speaking of an industry in transition. Two key messages cited by Samuelson included the ‘Consumer being in charge’ and the ‘Digital transformation’. In the context of this industry transition, Electrolux is adjusting the business focus to adapt to the changes in the external environment, at the same time as the overall Group strategy remains.


Focus on consumer experience and profitability

The presentations highlighted consumer experience, connectivity and digitalization as ongoing trends in the appliance industry. But more importantly, how the impact of these trends is accelerating and what new revenue streams can be generated. Moreover, Jan Brockmann, Electrolux Chief Global Operations Officer, presented an insight into operational efficiency and innovation with modularization 2.0 and automation as key priorities in a new era of internal productivity. In connection with this, Jonas Samuelson reiterated the Group’s ambition for all business areas to deliver at least 6% EBIT margin.




Exciting times ahead

Opportunities were also provided for participants to view first hand some exciting developments in the new AEG range. The products unveiled were enthusiastically received by the audience, which was given the opportunity to interact directly with the products. Samuelson also provided a summary of the day concluding “the focus now is on execution.” The strong brand portfolio, strengthened leadership and the creation of a remarkable consumer experience will continue to contribute positively to the Group’s execution of its strategy and ambition to consistently reach its financial targets.




The AGM 2017 will take place on March 23, 2017, at Stockholm Waterfront Congress Centre, Stockholm.

More information and documentation from the AGM 2017 is available at www.electroluxgroup.com/agm2017

Questions in focus by the capital markets

Analysts engage in questions related to the development of the appliance market and the demand in Electrolux core markets. Forecasts of price and mix are important topics on which analysts focus in order to gain a better understanding of the operation on which they can base their longer term projections of Electrolux future performance.

Examples of analyst questions asked at 2016 quarterly telephone conferences

Can you explain the good performance in Europe?

Demand in almost all Western European markets has shown positive growth for several consecutive quarters, while demand in Eastern Europe has been stabilizing. The Group has strengthened its position in built-in-kitchen and in the laundry categories under its premium brands, driving key consumer experience benefits while maintaining good cost efficiency.

How do you mitigate currency headwinds?

We sell products in over 150 countries and have approximately SEK 35 billion of annual currency in- and outflows which causes significant swings. In 2016, total negative currency impact was SEK 1,662 million. A significant part of the impact was related to Latin American currencies but also due to the weakening of the British Pound and the depreciation of the Egyptian Pound. Electrolux was able to offset the negative currency effects through price and mix improvements. 

How do you view the pricing environment in North America?

The underlying trend in North America has been stable over the past couple of years, as appliance manufacturers have generally showed a more disciplined pricing strategy. More recently, however, we have seen the price pressure in North America to have increased somewhat compared to last year. This was a result of aggressive promotional activities in combination with extended promotional holiday sales in the US.

How is your business in China developing?

Our Chinese operations are now stable after repositioning their strategy. We expect to grow organically and improve the business with the introduction of new products and brands with preferred partners, although we are yet a small player in the market. The size of the business is currently at a point where it doesn’t have a significant impact on the overall Asia/Pacific business area. 

How is the Brexit outcome affecting your business?

The UK is an important market for us and we are a major player in the UK construction industry. Recently, we have seen parts of the industry signaling a more cautious view as regards the market outlook which may have an impact on demand in the medium to long run. We intend to focus on defending our position and developing our business going forward despite the risk for softer demand and weaker currency development post-Brexit.

Can you comment on your M&A activities?

Predicting acquisitions is difficult, but we have in recent years worked intensively to develop a good pipeline and are working diligently on various opportunities. In 2016, we acquired the Australian wine cabinet company Vintec in our Asia/Pacific business. During the year we also signed an agreement to acquire the leading water heater company Kwikot in South Africa which will further strengthen our position in MEA, a strategic growth region for Electrolux.

Can you give an update on your expectations for price and mix?

With new innovative product launches, focus on offering best-in-class consumer experiences, strong brands and an active product portfolio management, we expect to continue to further drive mix improvements across our business areas. Although industry pricing is expected to have an overall negative impact on organic growth, we will offset this by improving the product mix. 

What will be the key driving areas for your 
net cost efficiencies?

In general, we have a good run rate of cost achievements over the past several years, with reducing costs through major manufacturing footprint programs which are now in their final phases. Going forward, we expect to improve overall cost efficiency and increase productivity in various areas throughout the Group.

The telephone conferences are available at www.electroluxgroup.com/ir.