Focus remained strong on the most profitable product categories and the Group continued to gain market shares under premium brands and operating income improved.
Dan Arler, Head of Major Appliances Europe, Middle East and Africa
Major appliances EMEA has reached the Targeted Growth phase, the third step on the path to profitable growth. This is based on a well-established portfolio management approach, a strong product pipeline, and a lean and efficient manufacturing and cost base. The market positions are strong in the built-in, cooking and laundry categories, as well as in most geographies.
From this strong base, Electrolux is leveraging selected growth areas such as built-in kitchen appliances and laundry products. Other examples are further growth in South Africa through the acquisition of Kwikot Group and the up-scaling of the profitable hoods business by integration with the acquired hoods manufacturer Best, to build an even more competitive offering.
The product mix has improved as a result of new product launches and continual strong focus on the most profitable product categories and the market shares has increased under premium brands. The comprehensive launch of new kitchen and laundry product ranges under the AEG brand continued.
Initiatives to increase efficiency within operations and manufacturing continued, and further intensified to offset raw-material cost increases. Efforts within the Electrolux Continuous Improvements Program, a cross-functional approach to raise customer value and reduce costs, led to increased cost-efficiency in many areas.
Quality improvements progressed ahead of plans, and as a result warranty costs were significantly reduced. The continued reduction in capital tied up in day-to-day operations supported funding for further business development.
During the year Electrolux completed the acquisitions of Kwikot and Best. The Kwikot Group is South Africa’s leading manufacturer of water heaters, and the acquisition broadens Electrolux offering in the Home Comfort product range and creates a strong platform for continued growth in Africa. Best is a European manufacturer of innovative and well-designed kitchen hoods. The acquisition reinforces Electrolux capabilities for design, R&D and manufacturing of kitchen hoods. Kwikot and Best had a positive impact of 2.1% on sales in 2017.
EMEA is the Group’s largest market and Electrolux has a broad offering under three main brands: Electrolux, AEG and Zanussi. The Group has top three market positions in most geographies, with overall leadership in the Nordics. The positions are particularly strong in kitchen appliances, such as cookers, hobs and built-in appliances.
In 2017, the total European appliance market increased by 1%. Demand in Western Europe was stable. Market demand increased across most markets while demand in the UK declined. Demand in Eastern Europe rose by 4%. Intense competition between a large number of manufacturers, brands and retailers resulted in continued price pressure. Key competitors comprise Whirlpool, B/S/H and Samsung.
In the Middle East and Africa, the Group has a market presence in Egypt but holds a smaller position in other parts of the region but with considerable potential. The weak macroeconomic situation in Egypt has had a negative impact on the appliances market during 2017. Africa and the Middle East comprise a large number of countries with significant variation in terms of wealth and degree of urbanization. A common theme is that demand for appliances rises in parallel with growing prosperity. Electrolux has a growth strategy targeting primarily Egypt, Saudi Arabia and a number of countries in the Lower Gulf Region.
32%
7.2%
Launches of new innovative product ranges and focus on the most profitable product categories improved the product mix. The business area gained market shares under premium brands.
Operating income and margin improved. Mix improvements and increased cost efficiency offset the negative impact of raw-material cost increases and price pressure.
| 13 | 14 | 15 | 16 | 17 | |
| Net sales | 33436 | 34438 | 37179 | 37844 | 38524 |
| Operating margin | -1.4 | 0.7 | 5.8 | 6.7 | 7.2 |
Focus on areas of strength to grow built-in, cooking, laundry, leveraging the Best acquisition and grow in MEA
Lift brand position through the AEG and Electrolux launches
Employ new technologies and ecosystems, including voice control and assisted cooking
During the year, a number of new, innovative products were launched. The AEG connected washing machines and dryers allow consumers to connect, via the My AEG app, for home remote control and monitoring. The AEG 8000 series tumble dryer is an accredited StiWa winner and achieved an early stage Net Promoter Score (NPS) of 100.
The new Electrolux PerfectCare range of washing machines and tumble dryers is equipped with all the advanced care features of the new AEG laundry range, and on top of this a FreshScent feature that allows the consumer to freshen up delicate clothes rather than go through a full washing cycle. This is an industry first.
The SpinView™ rotating shelf helps consumers to easily find what’s at the back of the fridge.
New branded web shops were rolled out across Europe to improve the online shopping experience for consumers.
For more information on the Groups products visit Electrolux consumer websites.