Electrolux Interim Report Q3 2010 Presentation

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Highlights of the third quarter of 2010. Net sales amounted to SEK 26,326m (27,617) and income for the period was SEK 1,381m (1,631), or SEK 4.85 (5.74) per share. Net sales decreased by 2.3% in comparable currencies.


<p>Electrolux Interim Report Q3 2010 - Results presentation</p> <p>Q3 Results, October 27, 2010</p> <p>Q3 Results, October 27, 2010</p> <p>Hans Strberg,President and CEOJonas Samuelson, CFOPeter Nyquist, SVP IR</p> <p>Hans Strberg,President and CEOJonas Samuelson, CFOPeter Nyquist, SVP IR</p> <p>2Target of 6% within reach EBIT margin (YTD) at 6.1%</p> <p>Approaching a record year</p> <p>Building foundation for growth Potential acquisition of Olympic Group, Egyptian appliances company, </p> <p>will accelerate growth in emerging markets Increased presence in Eastern Europe by acquisition of washing-</p> <p>machine factory in Ukraine Increased exposure to emerging markets by strong organic growth in </p> <p>Asia/PacificContinued strong mix Frigidaire launch in North America Launch phase initiated in Europe Strong product launches in Latin America</p> <p>3Q3 Highlights</p> <p>7,58,1</p> <p>0</p> <p>500</p> <p>1000</p> <p>1500</p> <p>2000</p> <p>2500</p> <p>-4</p> <p>-2</p> <p>0</p> <p>2</p> <p>4</p> <p>6</p> <p>8</p> <p>10 Net sales decreased by 2.3% in comparable currencies </p> <p> EBIT amounted to SEK 1,977m</p> <p> Raw-material headwinds Increased marketing </p> <p>spend Mix improvement Cost savings Price promotions</p> <p>8.1%7.5%Margin</p> <p>27,61726,326Sales</p> <p>2,2341,977EBIT*</p> <p>Q3 2009Q3 2010(SEKm)</p> <p>2009</p> <p>EBIT (SEKm) Margin (%)</p> <p>2010</p> <p>*) EBIT excluding items affecting comparability</p> <p>4Q3 Operating cash flow</p> <p> Q3 cash flow reflects normal seasonal pattern</p> <p> Stronger second half Increased production</p> <p> Build-up of inventories</p> <p> Higher sales</p> <p> Q309 reflected low production and low inventory levels</p> <p> Higher level of investments compared to last year</p> <p>-1 500</p> <p>-1 000</p> <p>-500</p> <p>0</p> <p>500</p> <p>1 000</p> <p>1 500</p> <p>2 000</p> <p>2 500</p> <p>3 000</p> <p>3 500</p> <p>4 000</p> <p>Operations (excl.assets and liab.)</p> <p>Change inassets and</p> <p>liabilities</p> <p>Investments Operating cashflow</p> <p>Q3, 2009 Q3, 2010</p> <p>5Olympic Group acceleratinggrowth in emerging markets</p> <p>&gt;13%EBITDA (adj.)</p> <p>~SEK 2.5bnSales</p> <p>Olympic Group</p> <p> Increase our presence in emerging markets Improve ability to grow in North Africa and</p> <p>the Middle East OG is currently licensing our brands Cost-competitive sourcing base</p> <p>~30%Market share, Egypt</p> <p>&gt;10%Market growth, Egypt</p> <p>6Consumer DurablesEurope</p> <p>9,9</p> <p>9,0</p> <p>0</p> <p>500</p> <p>1000</p> <p>1500</p> <p>0</p> <p>2</p> <p>4</p> <p>6</p> <p>8</p> <p>10</p> <p>12</p> <p>EBIT (SEKm) Margin (%)</p> <p>9.0%9.9%Margin</p> <p>11,32210,210Sales</p> <p>1,0141,014EBIT</p> <p>Q3 2009Q3 2010(SEKm)</p> <p>2009 2010</p> <p> Lower sales Decline in private label sales Price pressure</p> <p> Strong EBIT improvement Strong mix increased sales </p> <p>within built-in segment Cost savings previous cost </p> <p>measures Positive one-off effect</p> <p> Increased marketing spend Launch of AEG-branded </p> <p>products in Europe </p> <p> Strong results for floor-care products mix improvement</p> <p>7Quarterly comparison, year over year </p> <p>-15%</p> <p>-10%</p> <p>-5%</p> <p>0%</p> <p>5%</p> <p>10%</p> <p>Flat market in Europe; but Eastern Europe has started growing</p> <p>East. Europe</p> <p>West. Europe</p> <p>2006 2007 2008 2009</p> <p>6%</p> <p>-4%</p> <p>Q1</p> <p>10%</p> <p>-5%</p> <p>Q4</p> <p>5%</p> <p>-1%</p> <p>Q3</p> <p>5%</p> <p>1%</p> <p>Q2</p> <p>14%</p> <p>1%</p> <p>Q1</p> <p>7%</p> <p>5%</p> <p>Q4</p> <p>6%</p> <p>1%</p> <p>Q3</p> <p>9%</p> <p>1%</p> <p>Q2</p> <p>1%</p> <p>4%</p> <p>Q1</p> <p>5%</p> <p>-4%</p> <p>Q2 Q3</p> <p>-5%</p> <p>4%</p> <p>Q4</p> <p>-8%</p> <p>-15%</p> <p>Q1</p> <p>-9%</p> <p>-31%</p> <p>Q2</p> <p>-9%</p> <p>-30%</p> <p>Q3</p> <p>-4%</p> <p>-26%</p> <p>Q4</p> <p>-2%</p> <p>-17%</p> <p>Q1</p> <p>1%</p> <p>-7%</p> <p>2010</p> <p>Q2</p> <p>0%</p> <p>1%</p> <p>Q3</p> <p>0%</p> <p>5%</p> <p>10</p> <p>Consumer DurablesNorth America</p> <p>5,3</p> <p>7,9</p> <p>-200</p> <p>0</p> <p>200</p> <p>400</p> <p>600</p> <p>800</p> <p>-2</p> <p>0</p> <p>2</p> <p>4</p> <p>6</p> <p>8 Market-demand decline Incentive program ended in Q2</p> <p> Net sales decreased by 4% Exited unprofitable volumes</p> <p> EBIT amounted to SEK 439m</p> <p> Higher raw-material costs Price promotions</p> <p> Lower sales and operating income for floor-care products</p> <p>2009</p> <p>EBIT (SEKm) Margin (%)</p> <p>2010</p> <p>7.9%5.3%Margin</p> <p>8,8698,353Sales</p> <p>705439EBIT</p> <p>Q3 2009Q3 2010(SEKm)</p> <p>11</p> <p>Quarterly comparison, year-over-year </p> <p>-20%-15%-10%</p> <p>-5%0%5%</p> <p>10%15%</p> <p>After three quarters of growth, the market in North America declined in the third quarter</p> <p>2006 2007 2008Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1</p> <p>2009Q2 Q3 Q4 Q1</p> <p>2010Q2 Q3</p> <p>12</p> <p>Consumer DurablesLatin America</p> <p>5,7</p> <p>8,3</p> <p>0</p> <p>100</p> <p>200</p> <p>300</p> <p>400</p> <p>0,0</p> <p>2,5</p> <p>5,0</p> <p>7,5</p> <p>10,0</p> <p>2009</p> <p>EBIT (mSEK) Margin (%)</p> <p>2010</p> <p>8.3%5.7%Margin</p> <p>3,8134,069Sales</p> <p>318231EBIT</p> <p>Q3 2009Q3 2010(SEKm)</p> <p> Stable market demand in Brazil</p> <p> Rest of Latin America showed strong growth </p> <p> Operating income amounted to SEK 231m</p> <p> Negative customer mix Increased raw-material costs Increased marketing spend</p> <p>14</p> <p>Consumer DurablesAsia/Pacific</p> <p>12,1</p> <p>8,3</p> <p>0</p> <p>50</p> <p>100</p> <p>150</p> <p>200</p> <p>250</p> <p>300</p> <p>0,0</p> <p>2,0</p> <p>4,0</p> <p>6,0</p> <p>8,0</p> <p>10,0</p> <p>12,0</p> <p>14,0</p> <p>2009</p> <p>EBIT (SEKm) Margin (%)</p> <p>2010</p> <p>8.3%12.1%Margin</p> <p>1,9822,192Sales</p> <p>164265EBIT</p> <p>Q3 2009Q3 2010(SEKm)</p> <p> Australia: Market stabilization and improved EBIT</p> <p> Improved product mix Positive currency impact Improved efficiency Increased raw-material costs</p> <p> Southeast Asia and China Market-share gain in strong </p> <p>markets Positive impact of cost-cutting </p> <p>measures</p> <p>15</p> <p>Professional Products</p> <p>13,5</p> <p>10,6</p> <p>0</p> <p>50</p> <p>100</p> <p>150</p> <p>200</p> <p>250</p> <p>0,0</p> <p>3,0</p> <p>6,0</p> <p>9,0</p> <p>12,0</p> <p>15,0</p> <p>2009</p> <p>EBIT (SEKm) Margin (%)</p> <p>2010</p> <p>10.6%13.5%Margin</p> <p>1,6291,501Sales</p> <p>173202EBIT</p> <p>Q3 2009Q3 2010(SEKm)</p> <p> Food-service Increased market demand Higher capacity utilization Improved customer mix Cost savings</p> <p> Laundry products Stabilization of market demand Improved cost efficiency Price increases</p> <p>16</p> <p>Top line development Product mix; continues to have a positive impact Market volumes; flat year-over-year Electrolux volumes; still impacted from exiting low-profit business in NA</p> <p> Price pressure; temporary price cuts driven by promotion in NA </p> <p>Fourth quarter</p> <p>Cost development Cost savings; positive impact from the restructuring program Raw-material prices; still a negative year-over-year effect Increased marketing and brand spendTake into account Similar seasonal pattern as last year; slightly weaker Q4</p> <p>17</p> <p>one quarter remains, and I am confident that 2010 will be the year we reach our target of an operating margin of 6%.</p> <p>Full year 2010</p> <p>18</p> <p>19</p> <p>Factors affecting forward-looking statements</p> <p>Factors affecting forward-looking statementsThis presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Such statements include, among others, the financial goals and targets of Electrolux for future periods and future business and financial plans. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. These factors include, but may not be limited to the following: consumer demand and market conditions in the geographical areas and industries in </p> <p>which Electrolux operates, effects of currency fluctuations, competitive pressures to reduce prices, significant loss of business from major retailers, the success in developing new products and marketing initiatives, developments in product liability litigation, progress in achieving operational and capital efficiency goals, the success in identifying growth opportunities and acquisition candidates and the integration of these opportunities with existing businesses, progress in achieving structural and supply-chain reorganization goals. </p>