Electrolux Interim Report Q2 2012

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Net sales amounted to SEK 27,763m (24,143) and income for the period was SEK 763m (561), or SEK 2.67 (1.97) per share.

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  • 1.XXInterim reportJanuary June 2012Stockholm, July 19, 2012 Highlights of the second quarter of 2012 Read moreNet sales amounted to SEK 27,763m (24,143) and income for the period was SEK763m (561),or SEK 2.67 (1.97) per share.2Net sales improved by 15%, of which 5.8% was organic growth, 5.6 % acquisitions and3.6% changes in exchange rates.2Strong organic growth, especially in Latin America and Asia, contributed to thefavorable development of net sales.5Europe gained market share in all product categories for core appliances.4Operating income improved to SEK 1,150m (745), corresponding to a margin of 4.1% (3.1).2Higher sales prices in North America had a positive impact on operating income.4mprovements in volume, price and mix contributed positively to results in Latin America.I5Higher costs for raw materials continued to impact earnings negatively, but to a lesser extentthan in previous quarters. These higher costs were offset by operational efficiency. 4Strong cash flow in the quarter. 7Financial overviewFirst half First halfSEKm1) Q2 2012 Q2 2011Change, %20122011Change, %Net sales27,76324,143 15 53,638 47,579 13Operating income1,150 745 542,0931,441 45Margin, %4.1 3.1 3.93.0 Income after financial items993 696 431,7851,333 34Income for the period 763 561 361,3221,018 30Earnings per share, SEK 2) 2.671.97 4.63 3.58Operating cash flow3) 3,606 1,4381513,5634626711)Key ratios are excluding items affecting comparability. There were no items affecting comparability in the second quarter and first half of 2012 and 2011. Items affect-ing comparability includes costs for restructuring programs to make the Groups production competitive in the long term, see page 8 and 11.2)Basic, based on an average of 286.1 (284.7) million shares for the second quarter and 285.7 (284,7) million shares for the first half of 2012, excluding shares held byElectrolux.3) Excluding financial items paid, taxes paid and acquisitions and divestments of operations.For earnings per share after dilution, see page 11.Nullupid qui voluptium sum di as siFor definitions, see page 21. For further information, please contact Peter Nyquist, Senior Vice President, Head of Investor Relations and Financial Information, at +46 8 738 60 03.About ElectroluxElectrolux is a global leader in household appliances and appliances for professional use, selling more than 40 million products to customers in more than 150 marketsevery year. The company focuses on innovative solutions that are thoughtfully designed, based on extensive consumer insight, to meet the real needs of consumers andprofessionals. Electrolux products include refrigerators, dishwashers, washing machines, cookers, air-conditioners and small appliances such as vacuum cleaners soldunder esteemed brands like Electrolux, AEG, Eureka and Frigidaire. In 2011, Electrolux had sales of SEK 102 billion and 58,000 employees.For more information go to www.electrolux.com/press and www.electrolux.com/news.

2. 2Interim report January June 2012Market overviewMarket demand for appliances in some of Electrolux mature mar-Market demand for appliances in Europe in 2012 is expected to bekets continued to decline in the second quarter year-over-year, while flat or decline by up to 2%. Market demand for core appliances indemand in emerging markets continued to grow. North America is expected to be flat or increase by up to 2%. Market demand for core appliances in Western Europe declined by4%. Demand for core appliances in North America was unchangedyear-over-year. Market demand in Australia is estimated to havedeclined in the quarter. Market demand in Eastern Europe increased by 3% and demandin Latin America and Southeast Asia continued to show stronggrowth.The second quarter in summary First half First halfSEKmQ2 2012Q2 2011Change, % 20122011 Change, %Net sales 27,76324,143 15.053,63847,579 12.7Change in net sales, %, whereofAcquisitions 5.65.7Organic growth 5.84.7Changes in exchange rates 3.62.3Operating incomeMajor Appliances Europe, Middle East and Africa215 15638496 467 6Major Appliances North America 512 138 271671 67901Major Appliances Latin America 316 114 177594 253 135Major Appliances Asia/Pacific172 1773327 3517Small Appliances312335124 1379Professional Products155 274 43287 451 36Other, common Group costs, etc.251 137 8340628542Operating income excluding items affecting comparability 1,150 745542,093 1,44145Margin, % 4.1 3.1 3.9 3.0Items affecting comparability Operating income 1,150 745542,093 1,44145Margin, % 4.1 3.1 3.9 3.0 Organic growth, especially in emerging markets, contrib-captured in all categories within appliances. The acquisitions of CTI uted to the favorable development of net sales. in Chile and Olympic Group in Egypt impacted net sales by 5.6%. Changes in exchange rates had a positive impact of 3.6%. Strong performance for the operations in North America Operating income improved to SEK 1,150m (745), corresponding and Latin America.to a margin of 4.1% (3.1). The development of the operations in North Market share gains for appliances in Europe.America and Latin America was especially strong. Price increases, previous cost-saving activities and the ongoing global initiatives to Strong operating cash flow. reduce costs are contributing to the results. Continued weakNet sales for the Electrolux Group in the second quarter of 2012 demand and lower sales volumes in some of Electrolux most impor-improved by 15.0%. Organic growth was 5.8%. Sales growth intant markets and higher costs for raw materials continued to impactsuch emerging markets as Latin America, Southeast Asia and East- earnings negatively.ern Europe contributed to this positive development. Although the The Groups ongoing structural efforts to improve capital effi-weak market conditions continued in Electrolux mature markets, the ciency have contributed to the favorable development of workingGroup was able to gain market share. In Europe, market share werecapital and the strong cash flow in the quarter, see page 7.Industry shipments of core appliances in Europe*Industry shipments of core appliances in the US*% % 30 5 20 Q3 Q4 0 Q1Q2Q3 Q4Q1Q2 1050 Q1 Q2Q3 Q4 Q1 Q210 102011 201220152011 2012Western Europe Eastern Europe* Units, year-over-year, %. * Units, year-over-year, %. 3. 3Interim report January June 2012Effects of changes in exchange rates Events during the second quarter 2012Changes in exchange rates affected operating income negativelywith SEK 80m year-over-year. The impact from transaction effectsJuly 3, Electrolux products to be sold at The Home Depotwas SEK 345m, results from hedging operations SEK 235m andThe Home Depot, the worlds largest home improvement specialitytranslation effects SEK 30m. The impact from transaction and retailer, will begin selling Electrolux major appliances in the Unitedhedging operations referred mainly to the operations in Latin Amer-States.ica and the strengthening of the US dollar against the Brazilian real. In a staged roll-out, Electrolux major appliances, under the Frigidaire, Frigidaire Gallery and Electrolux brands, will be available for pur- chase at The Home Depot. The product line will include ovens,Financial net refrigerators, freezers, dishwashers and laundry machines. For moreNet financial items for the second quarter of 2012 amounted to information go to www.electrolux.com/pressSEK157m (49). Net financial items have been impacted by higheraverage interest rate and increased net debt due to last yearsacquisitions.Income for the periodIncome for the period amounted to SEK 763m (561), correspondingto SEK 2.67 (1.97) in earnings per share.First half of 2012Net sales for the Electrolux Group in the first half of 2012 amountedto SEK 53,638m (47,579). Net sales improved by 12.7%, of which4.7% referred to organic growth, 5.7% to acquisitions and 2.3% tochanges in exchange rates. Operating income improved to SEK 2,093m (1,441), correspond-ing to a margin of 3.9% (3.0). Income after financial items amountedto SEK 1,785m (1,333). Income for the period was SEK 1,322m(1,018), corresponding to SEK 4.63 (3.58) in earnings per share.Operating income and margin*Share of sales by business area for the second quarter of 2012SEKm%Consumer Durables, 95% 1,50015Europe, Middle East and Africa, 31%North America, 29% 1,20012Latin America, 19% 9009 Asia/Pacific, 8%Small Appliances, 8%600 6Professional Products, 5%300 3 0 Q1 0 Q2 Q3 Q4 Q1 Q2 2011 2012EBITEBIT margin * Excluding items affecting comparability. 4. 4 Interim report January June 2012Business areasMajor Appliances Europe, Middle East and Africa First half First half Full yearSEKm Q2 2012Q2 2011 20122011 2011Net sales8,216 7,66016,48115,316 34,029Operating income 215 156 496 467709Operating margin, %2.62.0 3.03.0 2.1Industry shipments of core appliances, Europe,units, year-over-year, %Western Europe42323Eastern Europe (excluding Turkey)312 412 9Total Europe2 11 1 0Market demand for appliances in Europe declined by 2% during the together with the previous launch of AEG products, have all contrib-second quarter of 2012 year-over-year. The Western European mar- uted to the positive development.ket declined by 4% as a result of weak demand in Spain, Italy and Operating income increased in the second quarter year-over-yearFrance. Demand in the UK and the Nordic countries rose slightly. and included a one-off asset sale of SEK 50m in Spain. Higher vol-Demand in Eastern Europe rose by 3%, which was at a lower rate umes and cost savings were partially offset by a negative countrycompared with earlier quarters, primarily as a result of a slowdownand product mix. Transition costs ahead of the comprehensive re-in the market growth in Russia and a decline in the Southeast Euro-launch of the products under the Electrolux brand also impactedpean countries.earnings negatively. The country mix deteriorated as a result of Group sales increased year-over-year as a result of higher saleshigher sales in Eastern Europe and lower sales in Southern Europe.volumes in most main markets and market share continued toThe contribution from the acquisition of Olympic Group in Egyptincrease in all major product categories. The launch of the next gen-in the preceding year was slightly negative for the quarter.eration of high-end appliances under the Electrolux brand and there-launch of Zanussi products in the mass-market segment,Major Appliances North America First half First half Full yearSEKm Q2 2012Q2 2011 20122011 2011Net sales8,599 7,54415,70614,272 27,665Operating income 512 138 67167250Operating margin, % 6.0 1.8 4.30.5 0.9Industry shipments of appliances in the US,units, year-over-year, %Core appliances0 10454Microwave ovens and home comfort products 5 4 Total Major Appliances254 11Market demand in North America for core appliances was egories within core appliances and the Group gained market share.unchanged during the second quarter of 2012 compared with thePrices were increased in April and August last year as well as incorresponding year-earlier period. Demand in cooking productsFebruary 2012. Average sales prices showed a sequential improve-and dishwashers increased while other product categories declined. ment in the second quarter over the first quarter of 2012.Market demand for microwave ovens and home comfort products,Operating income for the second quarter improved substantiallysuch as room air-conditioners declined by 5%. In total, major appli- year-over-year due to higher sales prices. Improved efficiency withinances decreased by 2% in the quarter.manufacturing and supply chain as well as more selective promo- Group sales in North America increased in comparable curren-tion activities made a positive contribution to the operating income.cies in the second quarter year-over-year primarily due to higherIncreased costs for raw materials, sourced products and weakerprices. In addition, sales volumes increased in several product cat- volumes continued to have a negative impact on results.Major Appliances Europe, Middle East and AfricaMajor Appliances North AmericaSEKm % SEKm% 800 86006 65005 6004004 400 430032002 200 21001 0 000 Q1 Q2Q3 Q4Q1Q2Q1 Q2Q3 Q4 Q1Q2100 1 200 2200 2 2011 20122011 2012 4004EBIT EBIT marginEBIT EBIT margin 5. 5 Interim report January June 2012Major Appliances Latin America First halfFirst half Full yearSEKm Q2 2012Q2 2011 2012 2011 2011Net sales5,1833,708 10,332 7,70617,810Operating income 316114594 253 820Operating margin, % 6.13.15.7 3.3 4.6Market demand for core appliances in Latin America is estimated to Latin American markets outside Brazil increased to about 30% (20)have continued increasing in the second quarter of 2012 year-over- of total sales, mainly due to the acquisition of CTI in Chile.year. Demand for core appliances in Brazil continued to grow due to Operating income improved significantly, mainly due to the acqui-tax incentives on domestically-produced appliances. This incentive sition of CTI, but also due to higher sales volumes as well as higherprogram has been extended to the end of August 2012. prices and an improved product and customer mix.Sales for the Latin American operations increased in the quarteryear-over-year as a result of strong volume growth. Sales in otherMajor Appliances Asia/Pacific First halfFirst half Full yearSEKm Q2 2012Q2 2011 2012 2011 2011Net sales2,1981,945 4,0393,6917,852Operating income 172177 327351736Operating margin, % 7.89.1 8.1 9.5 9.4Australia and New ZealandSoutheast Asia and ChinaMarket demand for appliances in Australia is estimated to have contin- Market demand in Southeast Asia is estimated to have continuedued declining in the second quarter of 2012 year-over-year. Groupshowing growth in the second quarter of 2012 year-over-year.sales declined during the quarter, primarily as a result of continuedDemand in China declined as a result of the discontinuing of previ-price pressure in the market. Electrolux sales volumes declined butous government stimuli for appliances at year-end and also due toless than the market, and the Group gained market shares.the fact that there has been an announcement of a similar program Operating income deteriorated year-over-year, mainly as a conse-starting in June/July 2012.quence of reduced sales prices and lower volumes. Higher costsElectrolux sales in Southeast Asia and China continued to displaydue to forthcoming product launches also impacted operatingstrong growth and the Groups market shares are estimated to haveincome negatively in the quarter.grown.The operations in Southeast Asia continued to demonstrate favorable profitability.Major Appliances Latin America Major Appliances Asia/PacificSEKm % SEKm% 35010 30015 280824012 21061809 14041206702 603 0000 Q1Q2Q3Q4Q1 Q2Q1 Q2 Q3Q4Q1 Q2 20112012 20112012EBITEBIT marginEBITEBIT margin 6. 6Interim report January June 2012Small Appliances First halfFirst half Full yearSEKmQ2 2012Q2 20112012 2011 2011Net sales 2,105 1,794 4,2103,724 8,359Operating income31 23 124137 543Operating margin, %1.5 1.32.93...