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
2
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
3
Q3 Highlights
7,58,1
0
500
1000
1500
2000
2500
-4
-2
0
2
4
6
8
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
4
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
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Operations (excl.assets and liab.)
Change inassets and
liabilities
Investments Operating cashflow
Q3, 2009 Q3, 2010
5
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
6
Consumer DurablesEurope
9,9
9,0
0
500
1000
1500
0
2
4
6
8
10
12
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
7
Quarterly comparison, year over year
-15%
-10%
-5%
0%
5%
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%
10
Consumer DurablesNorth America
5,3
7,9
-200
0
200
400
600
800
-2
0
2
4
6
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)
11
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
12
Consumer DurablesLatin America
5,7
8,3
0
100
200
300
400
0,0
2,5
5,0
7,5
10,0
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
14
Consumer DurablesAsia/Pacific
12,1
8,3
0
50
100
150
200
250
300
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
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
15
Professional Products
13,5
10,6
0
50
100
150
200
250
0,0
3,0
6,0
9,0
12,0
15,0
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
16
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
17
…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
18
19
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.
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