Transcript
Page 1: Electrolux Interim Report Q3 2010 Presentation

Q3 Results, October 27, 2010Q3 Results, October 27, 2010Hans Stråberg,President and CEOJonas Samuelson, CFOPeter Nyquist, SVP IR

Hans Stråberg,President and CEOJonas Samuelson, CFOPeter Nyquist, SVP IR

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Target of 6% within reachEBIT margin (YTD) at 6.1%

Approaching a record year

Building foundation for growthPotential acquisition of Olympic Group, Egyptian appliances company, will accelerate growth in emerging marketsIncreased presence in Eastern Europe by acquisition of washing-machine factory in UkraineIncreased exposure to emerging markets by strong organic growth in Asia/Pacific

Continued strong mixFrigidaire launch in North AmericaLaunch phase initiated in EuropeStrong product launches in Latin America

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Q3 Highlights

7,58,1

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10 Net sales decreased by 2.3% in comparable currencies EBIT amounted to SEK 1,977m– Raw-material headwinds– Increased marketing

spend– Mix improvement– Cost savings– Price promotions

8.1%7.5%Margin

27,61726,326Sales

2,2341,977EBIT*

Q3 2009Q3 2010(SEKm)

2009

EBIT (SEKm) Margin (%)

2010

*) EBIT excluding items affecting comparability

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Q3 Operating cash flow

Q3 cash flow reflects normal seasonal pattern

Stronger second half – Increased production

– Build-up of inventories

– Higher sales

Q309 reflected low production and low inventory levels

Higher level of investments compared to last year

-1 500

-1 000

-500

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Operations (excl.assets and liab.)

Change inassets and

liabilities

Investments Operating cashflow

Q3, 2009 Q3, 2010

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Olympic Group – acceleratinggrowth in emerging markets

>13%EBITDA (adj.)

~SEK 2.5bnSales

Olympic Group

Increase our presence in emerging marketsImprove ability to grow in North Africa andthe Middle EastOG is currently licensing our brandsCost-competitive sourcing base

~30%Market share, Egypt

>10%Market growth, Egypt

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Consumer DurablesEurope

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EBIT (SEKm) Margin (%)

9.0%9.9%Margin

11,32210,210Sales

1,0141,014EBIT

Q3 2009Q3 2010(SEKm)

2009 2010

Lower sales– Decline in private label sales– Price pressure

Strong EBIT improvement– Strong mix – increased sales

within built-in segment– Cost savings – previous cost

measures– Positive one-off effect

Increased marketing spend– Launch of AEG-branded

products in Europe

Strong results for floor-care products – mix improvement

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Quarterly comparison, year over year

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10%

Flat market in Europe; but Eastern Europe has started growing

East. Europe

West. Europe

2006 2007 2008 2009

6%

-4%

Q1

10%

-5%

Q4

5%

-1%

Q3

5%

1%

Q2

14%

1%

Q1

7%

5%

Q4

6%

1%

Q3

9%

1%

Q2

1%

4%

Q1

5%

-4%

Q2 Q3

-5%

4%

Q4

-8%

-15%

Q1

-9%

-31%

Q2

-9%

-30%

Q3

-4%

-26%

Q4

-2%

-17%

Q1

1%

-7%

2010

Q2

0%

1%

Q3

0%

5%

Page 8: Electrolux Interim Report Q3 2010 Presentation
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Consumer DurablesNorth America

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8 Market-demand decline – Incentive program ended in Q2

Net sales decreased by 4%– Exited unprofitable volumes

EBIT amounted to SEK 439m– Higher raw-material costs– Price promotions

Lower sales and operating income for floor-care products

2009

EBIT (SEKm) Margin (%)

2010

7.9%5.3%Margin

8,8698,353Sales

705439EBIT

Q3 2009Q3 2010(SEKm)

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Quarterly comparison, year-over-year

-20%-15%-10%

-5%0%5%

10%15%

After three quarters of growth, the market in North America declined in the third quarter

2006 2007 2008Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2009Q2 Q3 Q4 Q1

2010Q2 Q3

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Consumer DurablesLatin America

5,7

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2,5

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2009

EBIT (mSEK) Margin (%)

2010

8.3%5.7%Margin

3,8134,069Sales

318231EBIT

Q3 2009Q3 2010(SEKm)

Stable market demand in Brazil– Rest of Latin America showed

strong growth

Operating income amounted to SEK 231m– Negative customer mix– Increased raw-material costs– Increased marketing spend

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Consumer DurablesAsia/Pacific

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2009

EBIT (SEKm) Margin (%)

2010

8.3%12.1%Margin

1,9822,192Sales

164265EBIT

Q3 2009Q3 2010(SEKm)

Australia: Market stabilization and improved EBIT– Improved product mix– Positive currency impact– Improved efficiency– Increased raw-material costs

Southeast Asia and China– Market-share gain in strong

markets– Positive impact of cost-cutting

measures

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Professional Products

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2009

EBIT (SEKm) Margin (%)

2010

10.6%13.5%Margin

1,6291,501Sales

173202EBIT

Q3 2009Q3 2010(SEKm)

Food-service– Increased market demand– Higher capacity utilization– Improved customer mix– Cost savings

Laundry products– Stabilization of market demand– Improved cost efficiency– Price increases

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Top line developmentProduct mix; continues to have a positive impactMarket volumes; flat year-over-yearElectrolux volumes; still impacted from exiting low-profit business in NAPrice pressure; temporary price cuts driven by promotion in NA

Fourth quarter

Cost developmentCost savings; positive impact from the restructuring programRaw-material prices; still a negative year-over-year effectIncreased marketing and brand spend

Take into accountSimilar seasonal pattern as last year; slightly weaker Q4

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…one quarter remains, and I am confident that 2010 will be the year we reach our target of an operating margin of 6%.

Full year 2010

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Factors affecting forward-looking statements

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 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.