Electrolux 1997 Annual Report Download - page 18

Household Appliances
Operations in Western Europe
The market for white goods in Western
Europe improved gradually and showed
an increase in volume of about 4%
for the full year, referring mainly to
Scandinavia, Spain, the UK and France.
In Germany, which accounts for about
30% of total market volume in Europe,
demand was somewhat weaker than in
1996. The West European market for
1997 is estimated at about 46.3 (44.4)
million units.
Group sales were higher than in
the previous year. Market share was
largely unchanged. Operating income
improved despite lower volume and
a less favorable product mix in the
German market.
Operations in the US
The American white-goods market
increased in volume by almost 2%.
All product areas showed growth, the
largest increases being for dishwashers,
washing machines, spin-driers and freez-
ers. Demand for room air-conditioners
declined considerably as a result of a
cool summer.
The market for core appliances in
the US, i.e. deliveries from domestic
producers plus imports, excluding
microwave ovens and room air-condi-
tioners, amounted to 32.9 (32.3) mil-
lion units in 1997.
The Group achieved good sales
growth in white goods and strengthened
its market position. Sales of room air-
conditioners were considerably lower
than in the previous year, however.
A marked improvement in operating
income for the US operation was
reported on the basis of higher capacity
utilization and lower operating costs.
Operations in Brazil
From the second quarter onward, the
white-goods market in Brazil declined
sharply for refrigerators and freezers,
which account for the largest share of
Group sales. The total market showed
an 8% decrease in volume for all pro-
duct areas. However, demand for refrig-
erators declined by 15% and freezers by
27%. In the previous year, the total
market increased by more than 20%.
The Group’s sales in Brazil declined and
income was substantially lower than the
high level for the previous year. Income
was also adversely affected during the
fourth quarter by a charge of approxi-
mately SEK 130m for adjustment to
the deteriorated market situation.
The Group’s market share was
largely unchanged from 1996. In the
course of the year the Prosdócimo
brand was replaced by Electrolux.
The Group increased its stake in
the Brazilian company through a public
offer in November, increasing its share
of capital from 50% to more than 90%.
Structural changes
Within the framework of the current
restructuring program, it was decided
that two refrigerator plants would be
shut down, one in the UK with about
600 employees, and one in Finland
with about 200 employees. It was also
decided that a freezer unit in Hungary
would be shut down and that produc-
tion of washing machines and spin-driers
in Germany would be rationalized.
The two latter decisions affect about
250 employees. The above changes
will be implemented at various dates
during 1998 and 1999.
A number of changes were imple-
mented in functions for marketing, sales
and logistics to obtain greater efficiency
and improved customer service. During
the past two years, the total number of
employees in these functions has been
reduced by about 1,000, or more than
10%. In several countries, organizations
for different brands have been coordi-
nated in a common sales company. It
was also decided that about 15 ware-
houses would be shut down.
Acquisition in Romania
At the end of the year the Group
acquired S.C. Samus S.A, the leading
producer of cookers in Romania. The
company has annual sales of approxi-
mately SEK 150m and about 2,200
employees. In addition to a strong posi-
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Electrolux Annual Report 1997
The new AEG dishwasher has a built-in
water-sensor that enables automatic selec-
tion of the program that gives the best
washing results with minimal consumption
of water and energy.
The Group’s latest Frigidaire-brand dishwashers
in the US feature lower consumption of water
and lower noise levels than comparable American
products.