Annual Report 2018

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Annual Review 2018

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Electrolux 2018

Good progress in a challenging environment
Price increases, improved product mix and cost efficiencies partly offset lower volumes and significant headwinds, primarily from raw material and currency. Most business areas showed organic sales growth and a large number of new innovative products were launched.

Key highlights 2018

  • Sales growth of 1.7% (0.5).
  • Operating margin excluding non-recurring items of 5.4% (6.1).
  • Earnings resilience despite strong external headwinds.
  • Healthy cash flow generation and strong balance sheet.
  • Two strategic acquisitions in Professional Products completed.

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Electrolux in 2018

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Sales growth was 1.7%. Organic growth across most business areas driven by price increases and mix improvements. Net contribution from aquisitions and divestments was 0.4%

Operating margin excluding non-recurring items was 5.4%. Price increases, improved product mix and cost efficiencies partly offset lower volumes and significant headwinds, primarily from raw material and currency.

Operating cash flow after investments amounted to SEK 3.6bn. Acquisitions and divestments impacted cash flow negatively by SEK 0.6bn.

Key figures 2018

Sales Growth

1.7

percent

Operating Margin1)

5.4

percent

Operating cash flow2)

3,649

SEKm

Dividend3)

8.50

SEK per share

1) Excl. non-recurring items.
2) After investments.
3) Proposed by the Board.

NET SALES & OPERATING MARGIN
150125100755025
0
112.2
123.5
121.1
120.8
124.1
4.4
4.0
5.2
6.1
5.4
12108642
0
1415161718
Net Sales, SEKbn
Operating margin excl.
non-recurring items %
RETURN ON NET ASSETS
30252015105
0
25.2
24.8
21
20.6
23.4
14.2
11
29.9
36
22.7
605040302010
0
1415161718
Average net assets, SEKbn
Return on net assets, %

Sales by region

Core markets

Growth markets

BUSINESS AREAS
Major Appliances Europe, Middle East and Africa, 34%
Major Appliances North America, 31%
Major Appliances Latin America, 14%
Major Appliances Asia/Pacific, 7%
Home Care & SDA, 6%
Professional Products, 7%
SHARE OF GROUP SALES

Targets

The Electrolux Group's financial targets contribute to maintaining and strengthening the company's leading, global position in the industry and generate a healthy total return for Electrolux shareholders.

6%
Operating Margin
4x
Capital turnover rate
>20%
Return on net assets
4%
Sales growth
=
Value creation

An average annual total return of approximately 14%. Over the past ten years, Electrolux shareholders have received an average annual total return of approximately 14%. The Group’s capacity to create healthy cash flow and to enhance operational efficiency plays a major role in contributing to this value creation. There is further potential for profitability by increasing margins.

Outstanding consumer experiences contributes to higher profitability. Based on the strategic framework, innovative products for outstanding consumer experiences are to contribute to higher profitability and a margin of at least 6%. A capital turnover-rate of at least 4 times combined with an operating margin of at least 6% should yield a minimum return on net assets of 20%.

Continued profitable growth Further potential for value creation is possible if Electrolux can increase sales and improve its profitability level. The business has to achieve a sustainable profitability level before further investments are made in targeted profitable growth. The objective is an average annual sales growth of 4%.

For more information on the Electrolux business model and path to profitable growth, see Strategy.

Targets and 2018 execution

Operating margin

Target1)
6%
Result
4.3%

Capital turnover

Target1)
4x
Result
5.3x

Employee engagement2)

Target
80
Result
72

Sales growth

Target1)
4%
Result
1.7%

Return on net asset

Target1)
>20%
Result
22.7%

Sustainability

Target3)
-50%
Result
-31%

1)  Financial targets are over a
business cycle

2) Engagement index

3) Halving the climate impact,
million tonne's CO2, by 2020
relative to 2005 levels

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Annual Report 2018

PDF of legal Annual Report with financial statements.

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Annual Review 2018

PDF version of this site.

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