Electrolux 1998 Annual Report Download - page 27

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Electrolux Annual Report 1998
Group sales for this product area
increased over the previous year. Higher
sales volumes and implemented
restructuring led to a considerable
improvement in operating income and
margin for the European white-goods
operation. A fire at the refrigerator
plant in Hungary and a sharp decline
in deliveries to Russia had an adverse
effect on both sales and income for the
last two quarters of 1998.
The white-goods market in the US
increased by almost 9% in volume.
Frigidaire Home Products achieved
strong growth in volume, which
together with greater internal efficiency
led to a marked improvement in
operating income.
The market for white goods in
Brazil declined in volume by about
17%. Group sales in the Brazilian
market were lower than in 1997, which
together with the costs of personnel
cutbacks and charges for doubtful
accounts receivable led to a substantial
decline in income.
Overall, the Group’s operation in
white goods showed a considerable
improvement in operating income in
comparison with the previous year.
Other household appliances also
achieved higher operating income,
mainly on the basis of greater sales
volumes and improved income for the
operations in room air-conditioners,
leisure appliances and components.
Floor-care products in the US also
reported a substantial rise in operating
income as a result of higher internal
efficiency.
Total sales for the Household
Appliances business area increased in
comparison with 1997. Operating
income and margin improved
considerably.
Professional Appliances
Demand for food-service equipment in
Europe was largely unchanged from
1997. Group sales in this product area
were somewhat higher. There was a
marked improvement in operating
income as a result of implemented
restructuring, although from a very low
level in the previous year. The operation
in food and beverage vending machines
continued to show strong growth in
sales and income.
Demand for professional laundry
equipment increased in several
European countries, but weakened in
the US and the ASEAN countries. Total
sales for this product line were lower
than in 1997, mainly due to the
divestment of the operation in heavy-
duty laundry equipment. Operating
income declined somewhat, although
margin remained unchanged.
Sales of refrigeration equipment
rose in both Europe and new markets
in Latin America and Asia. Higher
volumes together with implemented
restructuring led to an improvement in
operating income for this product line
from the low level of the previous year.
Overall, sales for Professional
Appliances were largely unchanged
from the previous year. There was a
marked increase in operating income,
and margin more than doubled.
Outdoor Products
Demand for chain saws for professional
users was somewhat lower for the full
year than in 1997. The decline is
traceable mainly to Asia and Oceania,
but the market in Western Europe also
weakened considerably during the
second half. Demand in the US
remained good. Sales for Husqvarna
were largely on a level with 1997.
Operating income was unchanged
and margin remained high.
The US market for hobby chain
saws showed some decline. However,
demand for garden equipment in the
American market increased within
several areas. Total sales for the Group’s
US operation in outdoor products were
higher than in 1997. Operating income
was largely unchanged, however, and
operating margin was lower.
Increased demand for garden
equipment in Europe together with
launches of new products generated
good growth in sales for Flymo.
Operating income improved consider-
ably from a low level.
Total sales and operating income
improved for the Outdoor Products
business area compared to 1997, and
margin was unchanged.
1998 Share 1997 Share
Net sales by business area SEKm % SEKm %
Household Appliances 84,581 72.0 81,419 72.1
Professional Appliances 11,574 9.8 11,413 10.1
Outdoor Products 19,295 16.4 18,087 16.0
Other1) 2,074 1.8 2,081 1.8
Total 117,524 100.0 113,000 100.0
1) Gotthard Nilsson, etc.
Operating income by business area 1998 Share 1997 Share
Excluding items affecting comparability SEKm % SEKm %
Household Appliances1) 4,065 67.0 2,943 64.7
Margin, % 4.8 3.6
Professional Appliances 723 11.9 340 7.5
Margin, % 6.2 3.0
Outdoor Products 1,788 29.5 1,680 36.9
Margin, % 9.3 9.3
Other2) –76 –1.2 67 1.5
Common Group costs3) –436 –7.2 –480 –10.6
Total 6,064 100.0 4,550 100.0
1) Including a charge of SEK 175m in 1998 referring to Brazil and Asia.
A corresponding charge of SEK 150m was taken in 1997.
2) Includes the operation in Gotthard Nilsson, costs in the financial operation, etc.
In 1997 this item also included a capital gain of approximately SEK 50m on the divestment
of the operation in goods protection.
3) As of the first quarter of 1998 these items are not distributed among the different business areas.
The figures for the previous year have been adjusted accordingly.