Electrolux 1996 Annual Report Download - page 19

• Weaker demand in Europe in most
product areas
• Substantial fall in operating income
for food-service equipment due to
lower sales volume and non-recurring
costs
• Continued restructuring to improve
profitability
• Organizational changes aimed at
greater coordination of product lines
Electrolux is the European leader in food-
service equipment and the second largest
producer in the world. In 1996, food-serv-
ice equipment accounted for almost half
of sales in this business area.
The Group is also the world market
leader in laundry equipment for apartment-
house laundry rooms, coin bars, hotels
and institutions. The product range also
includes heavy-duty units for industrial
laundries as well as products for dyeing and
textile processing. The Group is one of the
world’s largest producers of refrigeration
and freezing equipment for food retailers,
as well as vacuum cleaners and wet/dry
cleaners for professional users.
Most of this business area’s sales are
currently in Western Europe, where
demand has been declining for some years
in virtually all countries as a result of weak
economic activity including lower public
investment. Operations are currently being
restructured in order to improve profit-
ability. The Group is also intensifying its
efforts to expand in new growth markets
within this business area.
Operations in 1996
The European market for food-service
equipment continued to weaken during the
year. Group sales declined particularly in
France, Italy and Sweden. Operating
income for this product line fell sharply as
a result of lower sales volumes and costs
referring to ongoing restructuring of both
production and the marketing organization.
In industrial laundry equipment, demand
for lighter units was largely unchanged
from last year, but sales increased in such
areas as the Nordic countries, the UK,
Spain and Japan. However, intensified price
competition together with lower demand
for and sales of heavy-duty units led to
a decline in operating income, although
from a high level.
The market situation for both refriger-
ation and cleaning equipment remained
weak. Operating income for commercial
refrigeration equipment improved on the
basis of reduced production costs and a
profit contribution from Refripar’s Brazil-
ian operation in this product area. Com-
mercial cleaning equipment reported lower
income, however, as a result of relatively
weak sales as well as cost s referring to
changes in the US operation and establish-
ment of operations in new markets.
New coordinated organization
All operations in this business area were
coordinated at the close of 1995 under
a single management in order to obtain
synergy effects as well as a more cohesive
structure. In 1996, the focus was on
creating a new organization for the entire
business area, particularly in terms of
marketing and specific support functions.
In several countries, units within different
product lines have been combined in a
single company.
15
Electrolux Annual Report 1996
Commercial Appliances
Key data 1996 1995 1994 1993 1992
Sales, SEKm 10,869 11,081 10,467 10,531 8,898
Operating income after depreciation, SEKm 190 391 397 318 251
Operating margin, %1) 1.7 3.5 3.8 3.0 2.8
Net assets, SEKm1) 3,901 3,450 3,476 3,975 3,574
Return on net assets, %1) 4.9 10.5 10.7 7.9 6.7
Capital expenditure, SEKm 300 364 237 191 211
Average number of employees 9,062 9,379 8,958 9,370 10,150
1) For a definition of this item, see page 48 1996 1995
Sales by product line SEKm % SEKm %
Food-service equipment 5,107 47.0 5,669 51.2
Industrial laundry equipment 2,435 22.4 2,577 23.2
Commercial refrigeration equipment 2,393 22.0 1,886 17.0
Commercial cleaning equipment 934 8.6 949 8.6
Total 10,869 100.0 11,081 100.0
9692 93 94 95
9692 93 94 95
0
2,000
4,000
6,000
8,000
10,000
12,000
0
100
200
300
400
9.9%
Sales, SEKm
Share of total Group sales
Operating income after depreciation, SEKm
1. The new Wascator FLE400 FC washing machine.
2. Sales Maker is a patented system for displaying
chilled products.
3. Euroclean’s new, silent IQ 215 wet/dry cleaner.
4. The new Electrolux combi-ovens.
5. The Schiphol open-wall cabinet features top
performance and product display.