Electrolux Interim Report Q4 2009

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Highlights of the fourth quarter of 2009. Net sales amounted to SEK 28,215m (28,663) and income for the period was SEK 664m (-474), or SEK 2.34 (-1.68) per share. Net sales declined by 1% in comparable currencies, due to continued weak markets.

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ENG_Elux_Q40129.indd

theas

SEKm Q4 2009 Q4 2008Change

%

2009 2008Change

%

Net sales 28,215 28,663 -1.6 109,132 104,792 4.1

Operating income 805 -347 n/a 3,761 1,188 216.6

Margin, % 2.9 -1.2 3.4 1.1

Income after financial items 801 -530 n/a 3,484 653 433.5

Income for the period 664 -474 n/a 2,607 366 612.3

Earnings per share, SEK1) 2.34 -1.68 9.18 1.29

Return on net assets, % - - 19.4 5.8

Excluding items affecting comparability

Items affecting comparability -1,218 42 -1,561 -355

Operating income 2,023 -389 n/a 5,322 1,543 244.9

Margin, % 7.2 -1.4 4.9 1.5

Income after financial items 2,019 -572 n/a 5,045 1,008 400.5

Income for the period 1,583 -516 n/a 3,851 656 487.0

Earnings per share, SEK1) 5.57 -1.82 13.56 2.32

Return on net assets, % - - 26.2 7.2

1) Basic, based on an average of 284.4 (283.6) million shares for the fourth quarter and 284.0 (283.1) million shares for the full year of 2009, excluding shares held by Electrolux. For earnings per share after dilution, see page 11.

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

Proposed dividend 8

Financial statements 11

Stockholm, February 3, 2010

Highlights of the fourth quarter of 2009

Net sales amounted to SEK 28,215m (28,663) and income for the period was SEK 664m (-474), or SEK 2.34 (-1.68) per share.

Net sales declined by 1% in comparable currencies, due to continued weak markets.

Price and mix continued to have a positive effect on sales.

Operating income amounted to SEK 2,023m (-389), corresponding to a margin of 7.2%, excluding items affecting comparability.

Results improved across all business areas.

Lower costs for raw materials positively impacted income. However, costs for raw materials increased in the quarter compared to the third quarter of 2009.

Cost savings, sales prices and lower costs for raw materials contributed strongly to the improvement in income.

Extra contributions of SEK 3,935m to Group pension funds in fourth quarter resulting in appropriate funding levels and reduced balance-sheet risk exposure to pension commitments.

Continued strong operating cash flow in the quarter, excluding extra pension contributions, resulted in a very strong cash flow for 2009.

The Board proposes a dividend for 2009 of SEK 4.00 (0.00) per share.

Consolidated results 2009

Net sales and income

Fourth quarter of 2009Net sales for the Electrolux Group in the fourth quarter of 2009 amounted to SEK 28,215m (28,663). Sales were adversely impac-ted by lower volumes, while price and mix had a positive impact. Net sales decreased by 1% in comparable currencies. Change in net sales

% Q4 2009 2009

Changes in Group structure 0.0 0.0

Changes in exchange rates -1.0 8.9

Changes in volume/price/mix -0.6 -4.8

Total -1.6 4.1

Operating incomeOperating income for the fourth quarter of 2009 increased to SEK 805m (-347) and income after financial items to SEK 801m (-530). Lower costs for raw materials had a positive impact on ope-rating income. However, costs for raw materials increased in the fourth quarter compared to the third quarter of 2009. Previous price increases and cost savings also contributed to the improve-ment in income. Income for the period amounted to SEK 664m (-474), corresponding to SEK 2.34 (-1.68) in earnings per share.

In the light of the sharp market decline by the end of 2008, a costs savings program was initiated in the fourth quarter to reduce the number of employees by approximately 3,000. All operations on a global basis were affected. In the fourth quarter of 2008, non-re-curring items were charged against operating income in the total amount of approximately SEK -1,115m, see table below.

Impact of Electrolux US launch and cost-reduction measures SEKm, approximately Q4 2009 Q4 2008

Net impact of the launch of Electrolux, appliances North America - -70

Cost-savings program:

Consumer Durables, Europe - -800

Consumer Durables, North America - -45

Consumer Durables, Latin America - -10

Consumer Durables, Asia/Pacific - -110

Professional Products - -40

Group staff - -40

Total - -1,115

Items affecting comparabilityOperating income for the fourth quarter of 2009 includes items affecting comparability in the amount of SEK -1,218m (42), referring to restructuring provisions related to appliances plants and conso-lidation of corporate operations in North America, see page 7 and table on page 11. Excluding items affecting comparability, operating income amounted to SEK 2,023m (-389).

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 SEK 304m on operating income for the fourth quarter of 2009, compared to the same period in the previous year. Transaction effects net of hedging contracts amounted to SEK 358m, and refer-red 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 SEK -54m.

The effect of changes in exchange rates on income after financial items amounted to SEK 311m.

Financial netNet financial items for the fourth quarter of 2009 amounted to SEK -4m, compared to SEK -183m for the corresponding period in the previous year. The improvement is mainly due to lower interest rates on borrowings and lower net borrowings.

Full year of 2009Net sales for the Electrolux Group in 2009 amounted to SEK 109,132m, as against SEK 104,792m in the previous year. Sales were adversely impacted by lower volumes, while higher pri-ces and an improved mix had a positive impact. In comparable cur-rencies, net sales declined by 5%.

Operating incomeOperating income for 2009 increased to SEK 3,761m (1,188) and income after financial items to SEK 3,484m (653). Previous price increases, an improved mix, lower costs for raw materials and cost efficiency measures contributed to the improvement in income. Income for the period increased to SEK 2,607m (366), correspon-ding to SEK 9.18 (1.29) in earnings per share.

Operating income in the first quarter of 2009 was negatively impacted by the North American launch in the net amount of SEK -200m. In 2008, non-recurring items were charged against operating income in the total amount of approximately SEK -1,945m, see table below.

Impact of cost-reduction measures, Electrolux North American launch and non-recurring items

SEKm, approximately 2009 2008

Cost-reduction measures due to sharp decline in demand - -1,045

Net impact of the launch of Electrolux, applian-ces North America -200 -470

Cost-cutting program, appliances Europe - -360

Cost for a component problem for dishwashers,appliances Europe - -120

Capital gain, real estate, appliances Europe - 130

Cost for litigation, appliances North America - -80

Total -200 -1,945

Share of sales by business area, for the full year of 2009 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

2008 2009Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Consumer Durables, 93%

Europe, 38%

North America, 33%

Latin America, 13%

Asia/Pacific and Rest of world, 9%

Professional Products, 7%

2

Consolidated results 2009

3

Consolidated results 2009

Items affecting comparabilityOperating income for 2009 includes items affecting comparability in the amount of SEK -1,561m (-355), see table on page 11. Excluding items affecting comparability, operating income for 2009 increased to SEK 5,322m (1,543) and income after financial items to SEK 5,045m (1,008). Income for the period was SEK 3,851m (656), corresponding to SEK 13.56 (2.32) in earnings per share.

Effects of changes in exchange ratesChanges in exchange rates compared to the previous year, including both translation and transaction effects, had an impact of SEK -295m on operating income for 2009. Transaction effects net of hedging contracts amounted to SEK -333m, and referred mainly to changes in exchange rates related to the US dollar and the euro against seve-ral other currencies. Translation of income statements in subsidiaries had an effect of SEK 38m.

The effect of changes in exchange rates on income after financial items amounted to SEK -278m.

Financial netNet financial items for the full year of 2009 decreased to SEK -277m, compared to SEK -535m for 2008. The improvement is mainly due to lower interest rates on borrowings and lower net borrowings.

TaxesTotal taxes in 2009 amounted to SEK -877m (-287), corresponding to 25.2% (44.0) of income after financial items. The tax rate for 2009 was positively impacted by reversal of a tax provision follo-wing a tax settlement in Europe. The tax rate in 2008 was negatively impacted by the low level of earnings.

Market overview

Some of Electrolux main markets started to show some recovery during the fourth quarter of 2009, although compared to a very weak fourth quarter of 2008. The North American market rose slightly after thirteen consecutive quarters with decline. In the fourth quarter, industry shipments of core appliances in the US increased by 4%. Demand in some markets in Europe, as Germany, France, and Italy showed some stabilization. However, most of Electrolux main markets continued to show a decline although at a lower rate than in previous quarters. The European market has been falling for nine consecutive quarters. Eastern Europe showed a continued downturn in the fourth quarter, declining by 17%. Demand in Wes-tern Europe declined by 2% and the total market in Europe by 7%. The market in Brazil continued to increase in the fourth quarter due to temporary tax reductions on domestically-produced applian-ces.

There are no indications of a strong recovery in any of the Groups main markets, and therefore we only expect a modest improvement from the currently low level of market demand for appliances in 2010.

Business areas

Changes in net sales and operating income by business area in comparable currencies are given on page 15.

Consumer Durables, Europe

SEKm Q4 2009 Q4 2008 2009 2008

Net sales 11,285 11,972 42,300 44,342

Operating income 829 -638 2,188 -22

Operating margin, % 7.3 -5.3 5.2 0.0

Operating income for the fourth quarter and the full year of 2008 includes non-recurring items and provisions for cost-cutting pro-grams in the net amounts of SEK -800m and SEK -1,150m, respec-tively, see page 2.

Industry shipments of core appliances in Europe

Units, year-over-year, % Q4 2009 2009

Western Europe -2 -6

Eastern Europe (excluding Turkey) -17 -25

Total Europe -7 -11

Core appliancesDemand for appliances in Europe during the fourth quarter of 2009 continued to decline in comparison with the same period in 2008. The rate of decline was lower than in the first three quarters, how-ever. Demand declined by 7% compared to the last quarter of 2008. Shipments in Western Europe fell by 2% and demand continued to decline in several of the Groups major markets, including the UK, Spain and the Nordic region. Demand rose in Germany, France and Italy. Industry shipments of appliances in Eastern Europe declined by 17%.

Group sales showed a continued decline in both the fourth quar-ter and the full year of 2009, due to lower volumes, resulting from the weak market.

Operating income was substantially higher for both the fourth quarter and the full year in comparison with 2008. Factors contribu-ting to the improvement included a positive price and mix develop-ment and lower costs for raw materials. However, costs for raw materials increased in the fourth quarter compared to the previous quarter. Personnel cutbacks and other cost-cutting measures during the year also contributed to the improvement in income.

Quelle of Germany, one of the Groups major retailers, went into bankruptcy in the fourth quarter of 2009. This reduced the Groups sales of appliances under private labels. At the same time, Electrolux strengthened its position in the market for built-in pro-ducts.

Consumer Durables, Europe 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

%

2008 2009

Q1Q4Q1 Q2 Q3 Q4

Western Europe Eastern Europe

10

0

10

20

40

30

%

2008 2009

Q1 Q2 Q3 Q4

50

Q2 Q3Q1 Q4

2

Consolidated results 2009

3

Consolidated results 2009

Floor-care productsDemand for vacuum cleaners in Europe continued to decline in the fourth quarter and the full year of 2009 in comparison with 2008. The downturn in the fourth quarter was lower than in the first three quarters, however.

Group sales in the fourth quarter were in line with the correspon-ding period in 2008, despite lower volumes, as sales in the premium segment increased. Operating income improved substantially due to an improved product mix. Mainly as a result of the launches of the premium vacuum cleaner UltraOne at the beginning of the year as well as other premium products during the second half of 2009.

Demand for vacuum cleaners in the full year of 2009 was lower than in 2008. Group sales declined as a result of lower sales volu-mes, and operating income was lower. The decline in income was offset to some extent by an improved product mix, lower product costs, and cost savings.

Consumer Durables, North America

SEKm Q4 2009 Q4 2008 2009 2008

Net sales 7,865 8,928 35,726 32,801

Operating income 450 -43 1,476 222

Operating margin, % 5.7 -0.5 4.1 0.7

Operating income for 2008 includes the net impact of the launch in North America of the Electrolux brand, costs related to cost-cutting measures, and other non-recurring items in the amounts of SEK -115m for the fourth quarter and SEK -595m for the full year, see page 2.

Industry shipments of core appliances in the US

Units, year-over-year, % Q4 2009 2009

Core appliances 4 -8

Major appliances 2 -14

Core appliances Market demand for core appliances in the US showed an increase in the fourth quarter of 2009, following thirteen consecutive quar-ters of decline. Demand increased by 4% in the fourth quarter...