Electrolux 1998 Annual Report Download - page 20

Professional Appliances
18
Electrolux Annual Report 1998
• Largely unchanged demand in
most product areas
• Marked improvement in operating
income for food-service
equipment
• Strong increase in operating
income and profitability for this
business area
• Divestment of operations in
cleaning equipment and heavy-
duty laundry equipment
The product lines in this business area
include food-service equipment, laundry
equipment and refrigeration equipment.
Food-service equipment is the largest single
product line, accounting for more than half
of sales. It includes kitchen equipment for
hotels, restaurants and institutions, as well
as food and beverage vending machines
and equipment for bakeries.
Laundry equipment comprises washing
machines, tumble-dryers and mangles for
apartment-house laundry rooms, laun-
derettes, hotels and institutions. Refrig-
eration equipment comprises cabinets for
food retailers as well as visicoolers for the
soft-drink sector.
As of January 1, 1998 the Group
divested Senkingwerk, which produces
heavy-duty laundry equipment. As of
October 1, the operation in cleaning
equipment was also divested.
Market position
Electrolux is the world leader in laundry
equipment. The Group is the world’s
second largest producer of food-service
equipment, and is the European market
leader. Electrolux is also one of the
world’s largest producers of refrigeration
equipment for the global market.
Operations in 1998
Demand for food-service equipment in
Europe was largely unchanged. Group
sales increased, mainly in Eastern
Europe, France and Finland. There was a
marked improvement in operating
Key data 19981) 19971) 1996 1995 1994
Net sales, SEKm 11,574 11,413 10,869 11,081 10,467
Operating income, SEKm2) 723 340 213 432 427
Operating margin, %2) 6.2 3.0 2.0 3.9 4.1
Net assets, SEKm 3,191 3,526 3,901 3,450 3,476
Return on net assets, %2) 21.2 8.9 5.5 11.6 11.5
Average number of employees 8,732 9,125 9,062 9,379 8,958
Capital expenditure, SEKm 215 274 300 364 237
1998 Share 1997 Share
Net sales by product line SEKm % SEKm %
Food-service equipment 5,891 50.9 5,407 47.4
Laundry equipment3) 2,380 20.6 2,610 22.9
Refrigeration equipment 2,564 22.1 2,316 20.3
Cleaning equipment4) 739 6.4 1,080 9.4
Total 11,574 100.0 11,413 100.0
1) Excluding items affecting comparability.
2) As of 1998 common Group costs are reported separately and not distributed among
the business areas. The figures for the previous years have been adjusted accordingly.
3) Senkingwerk had annual sales of approximately SEK 200m and about 170 employees.
4) Cleaning equipment had annual sales of approximately SEK 850m and about 850 employees.
9.8%
Share of total Group sales
94 95 96 97 98
Operating income, SEKm
Return on net assets, %
*Excluding items affecting comparability
94 95 96 97* 98*
Net sales
12,000
10,000
8,000
6,000
4,000
2,000
0
SEKm
Operating income and
return on net assets
750
625
500
375
250
125
0
SEKm %
24
20
16
12
4
8
0
income and margin as a result of
restructuring, although from a low level
in 1997. Sales and income for food and
beverage vending machines continued to
show strong growth.
Demand for laundry equipment rose
somewhat in Europe, but declined in the
US and the ASEAN countries. This
product line achieved higher sales
volume in several European countries.
Overall sales were lower than in 1997,
however, mainly as a result of the
divestment of the operation in heavy-
duty laundry equipment. Operating
income was lower, while margin
remained good.
Market conditions in Europe also
improved for refrigeration equipment. In
the US, demand was on a level with
1997 in the segments where the Group
operates. The ASEAN countries showed
a considerable decline, however. Sales for
this product line increased, mainly in
Eastern Europe, China and the US.
Higher sales volumes and implemented
internal changes led to an improvement
in operating income from the previous
year’s low level.
Structural changes
Seven plants were closed within the
framework of the restructuring program,
in Sweden, Germany, Austria, the US
and Canada. Since the start of the re-
structuring program eleven plants with
a total of about 650 employees and
seven warehouses have been closed.