Electrolux Interim Report Q1 2010

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Highlights of the first quarter of 2010. Net sales amounted to SEK 25,133m (25,818) and income for the period was SEK 911m (-346), or SEK 3.20 (-1.22) per share. Net sales increased by 4.1% in comparable currencies, due to higher sales volumes.

Transcript

theas

SEKm Q1 2010 Q1 2009Change

%

Net sales 25,133 25,818 -2.7

Operating income 1,231 -386 n/a

Margin, % 4.9 -1.5

Income after financial items 1,211 -493 n/a

Income for the period 911 -346 n/a

Earnings per share, SEK1) 3.20 -1.22

Return on net assets, % 24.8 -7.3

Excluding items affecting comparability

Items affecting comparability -95 -424

Operating income 1,326 38 n/a

Margin, % 5.3 0.1

Income after financial items 1,306 -69 n/a

Income for the period 981 60 n/a

Earnings per share, SEK1) 3.45 0.21

Return on net assets, % 25.0 0.7

1) Basic, based on an average of 284.5 (283.6) million shares for the first quarter, excluding shares held by Electrolux. For earnings per share after dilution, see page 10.

For definitions, see page 19.

For further information, please contact Peter Nyquist, Head of Investor Relations and Financial Information, at +46 8 738 60 03.

AB ELECTROLUX (PUBL)Postal address Media hotline Investor Relations E-mailSE-105 45 Stockholm, Sweden +46 8 657 65 07 +46 8 738 60 03 ir@electrolux.se Visiting address Telefax Website Reg. No.S:t Gransgatan 143 +46 8 738 74 61 www.electrolux.com 556009-4178

Contents

Net sales and income 2

Market overview 3

Business areas 3

Cash flow 6

Financial position 6

Structural changes 7

Changes in Group Management 7

Financial statements 10

Stockholm, April 27, 2010

Highlights of the first quarter of 2010

Net sales amounted to SEK 25,133m (25,818) and income for the period was SEK 911m (-346), or SEK 3.20 (-1.22) per share.

Net sales increased by 4.1% in comparable currencies, due to higher sales volumes.

Operating income amounted to SEK 1,326m (38), corresponding to a margin of 5.3%, excluding items affecting comparability.

Strong improvements in mix for appliances in North America and within floor-care operations as a result of product launches.

The US market showed a solid recovery in the first quarter.

Significant margin improvements in Asia/Pacific and Latin America.

Increased efficiency in operations had a positive effect on income.

Changes in exchange rates had a positive effect on income.

Lower costs for raw materials contributed to the improvement in income. However, costs for raw materials were higher than in the fourth quarter of 2009.

Interim reportJanuary - March 2010

Net sales and income

First quarter of 2010Net sales for the Electrolux Group in the first quarter of 2010 amoun-ted to SEK 25,133m (25,818). Higher sales volumes due to strong sales growth in Latin America had a positive impact on sales, while changes in exchange rates had a negative impact. Net sales increased by 4.1% in comparable currencies. Change in net sales

% Q1 2010

Changes in exchange rates -6.8

Changes in volume/price/mix 4.1

Total -2.7

Operating incomeOperating income for the first quarter of 2010 increased to SEK 1,231m (-386) and income after financial items to SEK 1,211m (-493). A positive development of price and mix, previous restruc-turing and cost-saving initiatives as well as lower costs for raw materials contributed to the improvement in income. Income for the period amounted to SEK 911m (-346), corresponding to SEK 3.20 (-1.22) in earnings per share.

Operating income for the first quarter of 2009 was negatively impacted by the launch of Electrolux in North America in the net amount of SEK -200m.

Items affecting comparabilityOperating income for the first quarter of 2010 includes items affec-ting comparability in the amount of SEK -95m (-424), referring to restructuring provisions related to the discontinuation of the Groups production of cookers in Motala, Sweden, see page 7 and table on page 10. Excluding items affecting comparability, operating income amounted to SEK 1,326m (38).

Effects of changes in exchange ratesChanges in exchange rates compared to the previous year, inclu-ding both translation and transaction effects, had a positive impact of approximately SEK 330m on operating income for the first quar-ter of 2010, compared to the same period in the previous year. Tran-saction effects net of hedging contracts amounted to approximately SEK 340m, and referred mainly to the strengthening of the Australian dollar and the Brazilian real against the US dollar. Translation of income statements in subsidiaries had an impact of approximately SEK -10m.

The effect of changes in exchange rates on income after financial items amounted to approximately SEK 330m.

Financial netNet financial items for the first quarter of 2010 decreased to SEK -20m, compared to SEK -107m for the corresponding period in the previous year. The improvement is mainly due to lower interest rates on borrowings and lower net borrowings.

Share of sales by business area, for the first quarter of 2010 Operating income and margin*

* Excluding items affec-ting comparability.

2,400

1,800

1,200

600

0

600

SEKm

12

9

6

3

0

3

%

EBIT EBIT margin

2009 2010Q1 Q2 Q3 Q4 Q1

Consumer Durables, 94%

Europe, Middle East and Africa, 38%

North America, 32%

Latin America, 16%

Asia/Pacific, 8%

Professional Products, 6%

2

Interim report January - March 2010

3

Interim report January - March 2010

Market overview

Electrolux main markets showed solid recoveries during the first quarter of 2010. The North American market rose for the second consecutive quarter following thirteen quarters of decline. Industry shipments of core appliances in the US in the first quarter of 2010, rose by 7%.

The European market showed a stable trend in the first quarter following ten consecutive quarters of decline. Total demand in Europe was in line with the previous year while demand in Western Europe rose by 1%. Important markets, such as Germany, France, Italy and Spain showed positive trends during the quarter. Demand in Eastern Europe continued to decline, falling by 7%, although at a lower rate than in the previous quarter.

The market in Brazil showed a strong increase in the first quarter despite discontinuation of tax credits for domestically produced appliances.

Looking ahead, market demand for appliances in the Groups main markets is expected to continue to grow throughout the rest of 2010.

Business areas

Changes in net sales and operating income by business area in comparable currencies are given on page 14.

As of the first quarter of 2010, the operations within Rest of world i.e., the Middle East and Africa will be reported within Consumer Durables Europe. Operations in the Middle East and Africa were previously part of the business area Consumer Durables Asia/Paci-fic and Rest of world.

The new reporting structure reflects an organizational change as of 2010, with Major Appliances Europe responsible for the Middle East and Africa. The change had a positive effect of approximately SEK 40m on operating income for Consumer Durables Europe and a corresponding negative effect for Consumer Durables Asia/Paci-fic in the first quarter of 2010.

Quarterly net sales, operating income and operating margin in 2009 are shown according to the new and former reporting struc-ture on page 16.

Consumer Durables Europe, Middle East and Africa

SEKm Q1 2010 Q1 2009Full year

2009

Net sales 9,719 10,568 44,073

Operating income 620* 160* 2,349

Operating margin, % 6.4 1.5 5.3

* Whereof Middle East and Africa account for approximately SEK 40m.

Industry shipments of core appliances in Europe

Units, year-over-year, % Q1 2010

Western Europe 1

Eastern Europe (excluding Turkey) -7

Total Europe 0

Core appliancesDemand for appliances in Europe stabilized during the first quarter of 2010, and was in line with the same quarter of last year, following ten quarters of decline. Shipments in Western Europe showed an increase of 1%. Demand increased, however, from a very low level, in several of the Groups main markets, such as Germany, Spain, Italy and France. In the Nordic countries and the UK, demand con-tinued to decline. Shipments of appliances in Eastern Europe fell by 7%. Demand in Russia declined by more than 10%.

Group sales continued to decline in the first quarter as a result of lower sales volumes under private label brands. Sales of appliances under private labels were lower as the retailer Quelle of Germany, one of the Groups major retailers, went into bankruptcy at the end of 2009. At the same time, Electrolux strengthened its position in the built-in product category due mainly to the cooperation with IKEA, which had a positive effect on mix.

Operating income rose substantially in the first quarter compared to the same period of last year, due mainly to positive price and mix developments as well as previous personnel cutbacks and cost-cutting measures. Lower costs for raw materials also contributed to the improvement in income.

Floor-care productsDemand for vacuum cleaners in Europe declined somewhat in the first quarter of 2010 in comparison with the same period of last year. Group sales declined as a result of lower sales volumes for pro-ducts in the lower-price segments. Sales of premium products were higher, however. Operating income rose substantially, due mainly to an improved product mix and favorable changes in exchange rates. The product mix improved as a result of previous product launches within the premium segment, such as the UltraOne premium vacuum cleaner.

Consumer Durables Europe, Middle East and Africa Industry shipments of core appliances in Europe*

* Units, year-over-year, %.

SEKm

Q2 Q3

EBIT EBIT margin

900 9

6

3

0

3

6

9

600

300

0

300

900

600

%

2009 2010

Q1Q4Q1

Western Europe Eastern Europe

10

0

10

20

40

30

%

2009 2010

Q1 Q2 Q3 Q4

50

Q1

2

Interim report January - March 2010

3

Interim report January - March 2010

Consumer Durables North America

SEKm Q1 2010 Q1 2009Full year

2009

Net sales 7,995 9,144 35,726

Operating income 360 -177 1,476

Operating margin, % 4.5 -1.9 4.1

Industry shipments of core appliances in the US

Units, year-over-year, % Q1 2010

Core appliances 7

Major appliances -4

Core appliances Market demand for appliances in the US continued to increase in the first quarter of 2010. Demand has risen for two consecutive quarters in comparison with the corresponding periods in the pre-vious year, following more than three years of decline. Demand increased by 7% in the first quarter in comparison with the same period in 2009.

The Groups sales were unchanged in comparable currencies in the first quarter in comparison with the same period of last year. Since the end of 2009, the Group has discontinued unprofitable sales volumes under private labels, which had an adverse effect on sales volumes. At the same time, sales under the Electrolux and Frigidaire brands have risen, which have partly offset the reduction of volume.

Operating income improved substantially in the first quarter of 2010 in comparison with the same period of last year. The product mix improved on the basis of the strong sales trend for the Electrolux and Frigidaire brands. Improved prices and higher pro-duction efficiency also had a positive effect on income. Costs for raw materials rose in the first quarter in comparison with both first and fourth quarters of 2009.

Operating income for the first quarter of 2009 was negatively impacted in the amount of approximately SEK -200m related to the launch of the Electrolux brand.

Floor-care productsMarket demand for vacuum cleaners in North America is estimated to have increased in the first quarter in comparison with the same period of last year. Group sales rose in comparable currencies as a result of higher sales volumes and market shares increased. Ope-rating income improved substantially, due mainly to an improved product mix following the phase-out of sales of low-margin pro-ducts.

Consumer Durables North AmericaIndustry shipments of core appliances in the US*

800

600

400

200

0

200

400

SEKm %

2009 2010

Q2 Q3

EBIT EBIT margin

8

6

4

2

0

2

4

Q4 Q1Q1

5

0

5

10

15

20

10

%

2009 2010

Q1 Q2 Q3

Q4 Q1

* Units, year-over-year, %.

4

Interim report January - March 2010

5

Interim report January - March 2010

Consumer Durables Latin America

SEKm Q1 2010 Q1 2009Full year

2009

Net sales 3,998 2,625 14,165

Operating income 220 50 878

Operating margin, % 5.5 1.9 6.2

Market demand for appliances in Latin America is estimated to have shown a strong increase in the first quarter of 2010 in comparison with the same quarter of last year, as a result of a continued strong growth in Brazil. Although tax credits for domestically-produced appliances in Brazil have been discontinued, the Brazilian market showed strong growth. Demand in most of the other markets in Latin America also showed an increase.

Electrolux sales volumes continued to rise in the first quarter of 2010 as compared to the same period of last year. The Groups market shares were stable. Operating income improved as a result of higher volumes and improved customer and product mixes, as well as lower costs for raw materials and favorable changes in exchange rates. Launches of new products contributed to the posi-tive trend for the product mix.

Consumer Durables Asia/Pacific

SEKm Q1 2010 Q1 2009Full year

2009

Net sales 1,912 1,752 8,033

Operating income 160* 25* 458

Operating margin, % 8.4 1.4 5.7

* Whereof the change of reporting structure regarding Rest of world had a negative impact by approximately SEK -40m.

Australia and New ZealandDemand for appliances in Australia continued to decline in the first quarter of 2010 in comparison with the same period of last year.

Group sales declined as a result of lower volumes, but market shares remained unchanged. Operating income improved mainly on the basis of an improved product mix, changes in exchange rates and improved cost efficiency.

Southeast Asia and China Market demand in Southeast Asia is estimated to have shown a strong increase in the first quarter of 2010 in comparison with the same period of last year.

Electrolux sales in Southeast Asia showed strong growth in seve-ral markets, and the Group continued to gain market shares. Pro-duct launches and higher sales for air-conditioners contributed to

Consumer Durables Latin America Professional ProductsConsumer Durables Asia/Pacific

the strong development. Operations in Southeast Asia showed continued good profitability. The operation in China was positively affected by implemented cost-cutting measures and the continued repositioning of the Electrolux brand.

Professional Prod...