Electrolux 1998 Annual Report Download - page 22

Outdoor Products
20
Electrolux Annual Report 1998
•Weaker market for chain saws,
higher demand for garden
equipment
•Unchanged operating income for
Husqvarna, margin remains high
•Considerable improvement in
income for Flymo
•Sales and operating income higher
for this business area, margin
unchanged
•Acquisition of McCulloch’s
operation in Europe, divestment
of operation in agricultural
implements
Outdoor Products comprises chain saws
for both professional users and the
consumer market, as well as electric-
and gasoline-driven garden equipment
such as garden tractors, lawn mowers,
lawn trimmers and leaf blowers.
Operations are run through
Husqvarna and Flymo, with production
units in Europe, and Frigidaire Home
Products in the US. The US operation
accounted for almost 60% of sales in
this business area during 1998.
Husqvarna sells a complete range of
outdoor products focused on the high
end of the world market, such as chain
saws for professional users. Flymo
concentrates on electric-driven garden
products for the European market,
and the operation in Frigidaire Home
Products includes mainly garden tractors,
lawn mowers, lawn trimmers and leaf
blowers, as well as light-duty chain saws.
In February 1999 an agreement was
reached for acquisition of the European
operation of McCulloch, an American
company that produces light-duty chain
saws, lawn trimmers, hedge trimmers
and leaf blowers. In 1998 this operation
reported sales of USD 81 million
(approximately SEK 650m) and had
250 employees. The agreement gives
Electrolux the right to the McCulloch
brand outside North America. McCulloch’s
consumer products are complementary
to the Group’s Husqvarna products.
Substantial synergies can be achieved in
both sales and production.
Market position
Electrolux is the world leader in chain
saws, with a global market share of
over 40%. The Group is the world’s
largest producer of lawn mowers,
garden tractors, lawn trimmers and
other portable garden equipment.
Operations in 1998
Demand for professional chain saws in
1998 was somewhat lower than in 1997.
The decline is traceable mainly to Asia
and Oceania, but the market in Western
Europe also declined considerably
during the second half of the year.
Demand in the US remained good.
Husqvarna’s sales were on a level with
1997. Operating income was unchanged,
and margin remained high.
The US market declined in volume
for light-duty chain saws. However,
demand in America increased for such
products as garden tractors, lawn
mowers and trimmers. Total sales of
outdoor products for Frigidaire Home
Products were higher than in 1997.
Operating income was largely un-
changed and margin declined.
Good market growth was also
reported for garden equipment in
Europe. Flymo achieved considerably
higher sales of lawn mowers, and a
marked improvement in operating
income from the previous year’s
low level.
Key data 19981) 19971) 1996 1995 1994
Net sales, SEKm 19,295 18,087 15,061 15,902 15,237
Operating income, SEKm2) 1,788 1,680 1,331 1,500 1,588
Operating margin, %2) 9.3 9.3 8.8 9.4 10.4
Net assets, SEKm 8,703 7,034 7,367 7,474 7,460
Return on net assets, %2) 21.1 22.6 18.3 18.7 19.9
Average number of employees 9,982 9,839 9,396 10,157 9,874
Capital expenditure, SEKm 550 637 405 504 467
1998 Share 1997 Share
Net sales by product line SEKm % SEKm %
Forestry and garden equipment 19,295 100.0 17,820 98.5
Agricultural implements – – 267 1.5
Total 19,295 100.0 18,087 100.0
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.
16.4%
Share of total Group sales
Operating income, SEKm
94 95 96 97* 98*
Operating income and
return on net assets
%
24
20
16
12
4
8
0
1,800
1,500
1,200
900
600
300
0
SEKm
94 95 96 97 98
Net sales
24,000
20,000
16,000
12,000
8,000
4,000
0
SEKm
Return on net assets, %
*Excluding items affecting comparability