Electrolux 2000 Annual Report Download

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Annual Report 2000
The Electrolux Group. The world’s No.1 choice.
Our goal is to make daily life easier
and more convenient for consumers as
well as professional users.
Every year, people in more than
150 countries buy more than
55 million of our products.

Table of contents

  • Page 1
    Annual Report 2000 Every year, people in more than 150 countries buy more than 55 million of our products. Our goal is to make daily life easier and more convenient for consumers as well as professional users. The Electrolux Group. The world's No.1 choice.

  • Page 2
    ... and CEO 20 Business area Consumer Durables 24 Business area Professional Products 26 Electrolux IT Solutions 28 Report by the Board of Directors for 2000 38 Consolidated income statement 39 Consolidated balance sheet 40 Consolidated cash flow statement 41 Parent company income...

  • Page 3
    ...lux w ith yo u e m y view s on El ar sh to ty ni rtu po slig ht ly different I w elco m e the op e have chosen a w e se ill w u yo ough as once ag ain, alth year's repo rt. ap proach fo r this eholders, te value fo r shar ea cr e w w ho very m uc h on is new...to have As CEO it is bo th tro lux. I w ...

  • Page 4
    ... changed company. With sales of SEK 124 billion in 2000, Electrolux is the world's Group sales 2000: SEK 124,493m Operating income 2000: SEK 8,050m1) largest producer of appliances and equipment for kitchen, cleaning and outdoor use, such as refrigerators, cookers, washing machines, chainsaws, lawn...

  • Page 5
    ... Indoor Products White goods Vacuum cleaners Room air-conditioners M ARKET POSITION White goods Market leader in Europe, third largest producer in US, second largest in Brazil. Floor-care products World leader, largest producer in Europe, second largest in US. Outdoor Products Light-duty chainsaws...

  • Page 6
    ... program that has increased efficiency and reduced costs. We have also divested 14 non-core operations which together accounted for annual sales of more than SEK 20 billion, operating income of about SEK 1 billion, and about 22,000 employees. Work on restructuring the Group and improving internal...

  • Page 7
    ... equipment Recycling & production of secondary aluminium Vending machines Direct sales operation Professional refrigeration equipment Heavy-duty laundry equipment Mixers for professional kitchens 120,000 +61% +20 % +34 % Professional Outdoor Products Professional Indoor Products 100,000 Consumer...

  • Page 8
    ... Product management, R&D New brand policy Marketing Territory management We have reversed the trend Value creation SEKm 5,000 4,000 3,000 Higher operating margin/ lower cost Cost reductions Improved product mix SG&A costs New pan-European structure Demand flow/supply chain New products/ product...

  • Page 9
    ... of organization and other adjustments in 2001 within Consumer Durables Acquisition of rights to Electrolux brand in North America Agreement for acquisition of Email Ltd, Australia's largest appliance company. • • • • • Key data Amounts in SEKm, unless otherwise stated 2000 1999...

  • Page 10
    ...higher income for Consumer Durables and Professional Outdoor. We continued to achieve good growth in sales and income in all product areas in North America, where we enlarged our market shares. I am also glad to report that Consumer Durables outside Europe and North America achieved positive ...

  • Page 11
    ...trading price of Electrolux shares during 2000 was a disappointment, but it was in line with trends for many other companies in the appliance and consumer durables sectors. Following authorization by the AGM in April, we launched a program for repurchasing our own shares. The program authorizes buy...

  • Page 12
    ... Increase the rate of product renewal, and reduce time to market • Implement our new brand strategy, i.e. improve brand management and concentrate on brands that create value for the Group • Drive down costs in the supply chain and improve customer Average annual sales growth for Electrolux in...

  • Page 13
    ... role in providing consumers with the information they need about our products. Demand for service and consumer information on the Web is also increasing rapidly. In 2001 we will open 50 new home pages for different Electrolux brands in 23 countries, with detailed product information and interactive...

  • Page 14
    ... use. The battery-driven Auto Mower from Husqvarna cuts the lawn automatically. The new generation of washer extractors from Electrolux Wascator can be mounted on a base frame for easier loading. The Zoe washing machine represents a new design language for household appliances. The Oxygen vaccum...

  • Page 15
    ... investment projects include new series of washing machines and frostfree refrigerators for the European market, as well as a new high-efficiency compressor. • The share of total investment referring to new products is rising steadily, and now amounts to almost 30 %. The Electrolux ER 8100B was...

  • Page 16
    ...own and competitors brands. The research data show that consumers pay more for strong brands. In the example above from a major European market a 10% increase in brand strength corresponds to a 7% increase in retail price. The launch of the new AEG washing machine last year is a good example of how...

  • Page 17
    ... -11 nc es in ea larg est ch co untr y. Group sales to top 20 accounts % 40 Sears 30 Retail share, USA Core appliances Lowe's 20 Best Buy 10 Home Depot Dealer & Other 0 1998 2000 0 10 20 1996 30 40 2000 50 60 % In recent years the Group 's key accounts have grown faster than the market. 12...

  • Page 18
    ..., and in the Sales of white goods in North America rose by about 35% in 1997 -2000, while inventories were reduced from 20% to 8% of sales. Costs have been substantially reduced throughout the supply chain. new organization for Electrolux Home Products in Europe as of 2001, management of flows and...

  • Page 19
    .... Internet in the supply chain At www.electrolux.net, customers in a number of markets can place orders, check order status and available stocks, and browse product catalogues - round the clock, 365 days a year. WebRix enables suppliers to connect to the Group 's internal systems for cost-efficient...

  • Page 20
    ...1999 2000 Net sales Value added per employee SEK 400,000 375,000 350,000 325,000 300,000 275,000 250,000 recruitment and development of managers is decisive for the company's future growth and profitability. We also have to ensure Since 1999, Electrolux has had an open internal labor market for all...

  • Page 21
    ... a With this review of the Group 's strategy, I hope I have been able to show you that Electrolux today is a changed company, and can become even more successful and profitable - a company that can truly live up to being "The world's No.1 choice." Michael Treschow President and CEO REPORT B Y TH...

  • Page 22
    Consumer Durables

  • Page 23
    ... mainly white goods, i.e. refrigerators, freezers, cookers, washing machines and dishwashers, room air-conditioners and microwave ovens. In 2000 these products accounted for more than 75% of sales. This business area also includes floor-care products as well as garden equipment and light-duty...

  • Page 24
    ...-duty chainsaws, while market volume declined for products such as electric trimmers, lawn mowers and tractors. The Group reported good sales growth in most product areas and a considerable improvement in operating income. Data on the Email operation Purchase price Net sales Operating income Number...

  • Page 25
    ... affecting comparability. As of 1998, common Group costs are reported separately and are not distributed among business areas. 75,000 Net sales by product line, SEKm White goods 1) Floor-care products Garden equipment Other Total 1) 2000 Share % 1999 Share % 1998 Share % 50,000 72,861 8,633...

  • Page 26
    Professional Products

  • Page 27
    ... for food-service equipment and leisure appliances • Lower income for laundry equipment and components OUTDOOR • Higher demand for chainsaws • Good growth in sales and operating income for Husqvarna operation • Acquisition of US companies in turf-care equipment and diamond tools The Group...

  • Page 28
    ...-care equipment, power cutters and diamond tools also reported favorable trends for sales and operating income. A C Q U IS ITIO N S The Group has a market share of about 40% for chainsaws for professional users. As of September 1, 2000 the Group acquired the American company Bluebird International...

  • Page 29
    .... As of 1998, common Group costs are reported separately and are not distributed among business areas. 20,000 Net sales by product line, SEKm Food-service equipment Laundry equipment Leisure appliances Components Divested operations 1) 2000 Share % 1999 Share % 1998 Share % 4,942 2,183 5,296...

  • Page 30
    ... SEK 120,029m (115,127) was outside Sweden. O f the 4.1% increase in sales, changes in the Group's structure accounted for -3.2%, changes in exchange rates for + 3.6%, and volume/ price/ mix for + 3.7%. For changes in Group structure, see page 33. INCOM E Key data, SEKm 2000 1999 2000 excl. 1999...

  • Page 31
    ... fo r c o st ad just m ent s Restructuring actions, Consumer Durables, SEKm Alignment of pan-European organization, Electrolux Home Products, Europe Alignment of organization and logistics structure, Electrolux Home Products, North America Consolidation of production structure, floor-care products...

  • Page 32
    ... in 1999. Demand for outdoor products in the US increased for gas-powered trimmers and light-duty chainsaws, while market volume decreased for other products such as electric trimmers, lawn mowers and tractors.The Group reported good growth in sales for most product categories and a considerable...

  • Page 33
    ...by the strong dollar, as the Husqvarna-operation exported significant volumes of chainsaws from Sweden to North America. The operations in turf-care equipment and power cutters also reported favorable trends for sales and operating income. FINANCIAL POSITION EQUITY Group equity at year-end amounted...

  • Page 34
    ... by the Board of Directors for 2000 Major ongoing projects include new production processes for energy-efficient refrigerators at two sites in the US, as well as development of a platform for a new series of washing machines and a new high-performance compressor in Europe.Two of the above projects...

  • Page 35
    ...LES In May the Group acquired the right to the Electrolux brand and corporate name in Canada and the US from Electrolux LCC, an American company engaged in direct sales of floor-care products.The purchase price was USD 50m.The seller has the right to use the name on vacuum cleaners and after-market...

  • Page 36
    ....The short-term rating from Standard & Poor's is A-2 in general and K-1 for loans under the Swedish Commercial Paper program. INTEREST- RATE RISK This risk refers to the effects of changes in market interest rates on Group net income. Electrolux distinguishes between the interest-rate risks in long...

  • Page 37
    ... of the Group's head office as well as nine companies that operate on commission for AB Electrolux. Net sales for the parent company in 2000 amounted to SEK 7,344m (6,685), of which SEK 4,191m (3,732) referred to sales to Group companies and SEK 3,153m (2,953) to sales to external customers. After...

  • Page 38
    ... program. Both purchases and sales could be implemented through offers directed to all shareholders, or by transactions on any stock exchange or regulated market where the Company's shares are quoted, at a price per share within the at each time registered interval between the highest buying price...

  • Page 39
    ... working procedures also cover the financial policy to be applied by the Group. The Board has also established the practice of referring specific matters to an ad hoc committee for review and subsequent proposal to the Board. Such a committee was formed in order to implement the project for the new...

  • Page 40
    Consolidated income statement 2000 SEKm 1999 SEKm 2000 EURm 1999 EURm Net sales Cost of goods ... 5) (Notes 2, 6, 25) (Note 7) (Note 7) (Note 8) (Note 9) Net income per share, SEK, EUR Exchange rate: EUR 1 = SEK 8.83 (8.55) (Note 10) 12.40 11.40 1.40 1.33 38 ELECTROLUX ANNUAL REPORT 2 0 0 0

  • Page 41
    ... 787 _____ 2,742 1,302 75 289 899 _____ 2,565 9,549 112 (Note 21) (Note 21) (Note 22) 7,265 _____ 24,330 87,289 Contingent liabilities Exchange rate: EUR 1 = SEK 8.83 (8.55) (Note 23) 1,325 ELECTROLUX ANNUAL REPORT 2 0 0 0 39

  • Page 42
    ... of shares Cash flow from financing Total cash flow Liquid funds at beginning of year Exchange-rate differences referring to liquid funds Liquid funds at year-end Change in net borrowings Total cash flow excl. change in loans Net borrowings at beginning of year Exchange-rate differences referring to...

  • Page 43
    Parent company income statement 2000 SEKm 1999 SEKm 2000 EURm 1999 EURm Net sales Cost of goods sold Gross operating income Selling expense Administrative expense Other operating income Other operating expense Operating income Group... (Note 7) (Note 18) (Note 8) ELECTROLUX ANNUAL REPORT 2 0 0 0 41

  • Page 44
    ... 24 _____ 48 1,183 805 563 197 _____ 2,748 47 69 6 104 _____ 226 4,615 551 (Note 22) 720 _____ 2,159 41,670 Contingent liabilities Exchange rate: EUR 1 = SEK 8.83 (8.55) (Note 23) 7,870 42 ELECTROLUX ANNUAL REPORT 2 0 0 0

  • Page 45
    ... paid, cash Repurchase of shares Cash flow from financing Total cash flow Liquid funds at beginning of year Liquid funds at year-end Change in net borrowings Total cash flow excl. change in loans Net borrowings at beginning of year Net borrowings at year-end Exchange rate: EUR 1 = SEK 8.83 (8.55...

  • Page 46
    ... economies to be reported in their entirety in the consolidated income statement. Hedging of net investment The parent company uses forward contracts and loans in foreign currencies as hedges for the net foreign investment. Exchange-rate differences related to these contracts and loans have...

  • Page 47
    ... foreign subsidiaries are reported in the parent company at the rate prevailing on the date when the loan or contract arose. In the consolidated accounts, these loans and forward contracts are valued at year-end rates and the Shares and participations in major associated companies are accounted for...

  • Page 48
    ...337 Note 5. I T E M S A F F E C T I N G C O M PA R A B I L I T Y (SEKm) Allocation of SPP pension surplus Capital gain, professional refrigeration Restructuring, Consumer Durables Restructuring, Professional Products Capital gain, vending machines Provision for pension litigation Total Group _____...

  • Page 49
    ... of own shares. 2000 1999 4,457 12.40 4,175 11.40 Note 11. I N TA N G I B L E A S S E T S (SEKm) Opening balance Acquired during the year Sold during the year Depreciation for the year Exchange-rate differences Closing balance Group _____ Goodwill Other Total Parent company _____ Brands, etc...

  • Page 50
    ... 22,388 Tax assessment value, Swedish Group companies: Buildings SEK 407m (495), land SEK 104m (113). Parent company Acquisition costs Opening balance Acquired during the year Transfer of work in progress and advances Sales, scrapping, etc. Closing balance Accumulated depreciation according to plan...

  • Page 51
    ... Parent company Opening balance Transfer of retained earnings Dividend payment Repurchase of shares Net income Closing balance 1,831 - - - - 1,831 2,731 - - - - 2,731 5,733 2,734 -1,282 -3,193 - 3,992 2,734 -2,734 - - 6,504 6,504 13,029 - -1,282 -3,193 6,504 15,058 ELECTROLUX ANNUAL REPORT...

  • Page 52
    ...,000 B-shares, with a total par value of SEK 125m. Opening balance Closing balance Note 18. U N TA X E D R E S E R V E S , PA R E N T C O M PA N Y (SEKm) Tax equalization reserve (L-fund) Accumulated depreciation in excess of plan on: Brands Machinery and equipment Buildings Exchange-rate reserve...

  • Page 53
    ... T I E S (SEKm) Short-term loans Long-term loans Interest-bearing pensions Total Group _____ 2000 1999 8,849 16,299 250 25,398 2000 SEKm 6,727 16,...N D P R E PA I D I N C O M E (SEKm) Group _____ Parent company _____ 2000 1999 2000 1999 Accrued holiday pay Other accrued payroll costs Accrued...

  • Page 54
    ... (92,916), of whom 58,962 (63,362) were men and 28,166 (29,554) were women. Group _____ 2000 1999 Number of employees by geographical area Europe North America Rest of the world Total 2000 Salaries, other remuneration and employer contributions (SEKm) 49,671 22,879 14,578 87,128 52,032 23,174...

  • Page 55
    ... 12 months after the date of allotment.The options can be used to purchase Electrolux B-shares at a strike The Board has decided to grant Wolfgang König, the new Head of white goods outside North America, 118,400 synthetic employee stock options with the right to receive a cash amount for each...

  • Page 56
    ... Rica Shanghai-Zanussi Elettromeccanica Co. Ltd, China Eureka Forbes Ltd, India Sidème S.A., France Saudi Refrig Mfg, Saudi Arabia A/O Khimki Husqvarna, Russia Viking Financial Services, USA Zanussi Elettromeccanica Wanbao Refrig Tech Co. Ltd, China IVG Bulka-Lehel GmbH, Germany e2 Home AB, Sweden...

  • Page 57
    ... Professional Ltd Electrolux Household Appliances Ltd White Consolidated Industries, Inc. Electrolux North America Inc. WCI Outdoor Products Inc. Holding, % Belgium Brazil Canada China Denmark Finland France Germany Hungary India Italy Luxembourg Mexico The Netherlands Norway Spain Sweden...

  • Page 58
    ...future salary increases, discount rates and inflation. Additionally, SFAS No. 87 requires that a specific actuarial method (the projected unit credit method) be used. Certain pension commitments in Sweden are administered through a mutually agreed upon pension plan for Swedish white-collar employees...

  • Page 59
    ... THAT APPLICATION OF US GAAP W OULD HAVE ON CONSOLIDATED NET INCOM E, EQUITY AND THE BALANCE SHEET. A. Co nso lid at ed net inc o m e (SEKm ) 2000 1999 Net income as reported in the consolidated income statement Adjustments before taxes: Acquisitions Restructuring and other provisions Pensions...

  • Page 60
    Proposed distribution of earnings According to the consolidated financial statements, the Group's unappropriated earnings amount to SEK 12,643m. No allocation to restricted equity is required. Thousands of kronor The Board of Directors and the President propose that net income for the year and ...

  • Page 61
    ... principles in Sweden. We recommend to the Annual General Meeting of the shareholders, that the income statements and the balance sheets of the Parent Company and the Group be adopted, that the profit of the Parent Company be dealt with in accordance with the proposal in the administration report...

  • Page 62
    ...with new issues, the number of shares is computed as the average number of shares for the year. In computation of key ratios where capital is related to net sales, the latter are annualized and converted at year-end exchange rates, so that due consideration is given to changes in exchange rates and...

  • Page 63
    ...,000 -2.7 -2.9 0.3 1.0 7) Net sales are annualized. 8) Last price paid for B-shares. 9) As of 1992, adjusted for exchange-rate effects. 10) As of 1992, calculated as annual average. -4.9 -3.7 2.4 -5.3 0.0 -1.8 11) 2000: After buy-backs of own shares, the average number of shares amounted to 359...

  • Page 64
    Quarterly figures Net sales and income Net sales, SEKm 1st qtr 2nd qtr 3rd qtr 4th qtr ...SEKm Net income, SEKm Net income per share, SEK Value creation, SEKm 1) Exclusive of items affecting comparability, 2000: SEK -448m, 1999: SEK -216m, 1998: SEK 964m. 62 ELECTROLUX ANNUAL REPORT 2 0 0 0

  • Page 65
    ... -342 -4.5 1,577 9.0 1,902 9.3 1,153 14.3 983 13.8 -459 -462 -448 -216 North America Rest of the world P R O F E S S I O N A L P R O D U C T S , Indoor P R O F E S S I O N A L P R O D U C T S , Outdoor Common Group costs, etc. Items affecting comparability ELECTROLUX ANNUAL REPORT 2 0 0 0 63

  • Page 66
    ... option program for senior managers was introduced in 1998.The program entitles an allotment of options which are redeemed for shares at a fixed price.The value of the options is linked to the trading price of the Electrolux B-share. For further information, see Note 25. DIVIDEND AND DIVIDEND POLICY...

  • Page 67
    ...garservice Major shareholders in AB Electrolux USA 26% Number of Bshares Total Share Voting number of capital, rights, shares % % Sweden 58% UK 7% Other 9% As of December 31, 2000, 42% of the total share capital was owned by foreign investors. Fourth Swedish National Pension Fund - 23,592,000...

  • Page 68
    ...: Swedish Trade Council. European Chairman Transatlantic Business Dialogue (TABD)* for the year 2001. Board Member: Atlas Copco AB, Investor AB. Elected 1997. Holding in AB Electrolux: 2,000 B-shares. Thomas Halvorsen Born 1949, B.A. President, Fourth Swedish National Pension Fund. Board Member...

  • Page 69
    ...Björnberg Born 1959. Representative of the Federation of Salaried Employees in Industry and Services. Elected 1999. Holding in AB Electrolux: 0 shares. Gunnar Jansson Born 1954. Representative of the Swedish Confederation of Trade Unions. Deputy Member, 1996-1998. Ordinary Member, 1999. Holding in...

  • Page 70
    ... appliances Born 1957, M. Eng. Joined Electrolux in 1983. Head of product area dishwashers and washing machines 1987-1992. Head of product division floor-care products, Västervik, 1992-1995. Executive Vice-President Frigidaire Home Products, USA, 1995-1998. Executive Vice-President AB Electrolux...

  • Page 71
    ... of New markets, Components and Direct sales 1997 until his retirement in June 2000. President and CEO Communication and Public Affairs Legal Controlling, Accounting, Taxes, Auditing, IT Treasury Organizational Development and Management Resources C ONSUM ER D URABLES White goods and Outdoor...

  • Page 72
    ... labels are mandated for refrigerators, freezers, washing machines, tumbledryers, combined washer/ tumble-dryers, and dishwashers. A directive for energylabeling of ovens is expected in 2001, and will probably go into effect the following year. A number of European countries outside the EU have...

  • Page 73
    ... Europe North America North America New Markets New Markets Combined refrigerator/freezers Dishwashers Freezers Refrigerators Washing machines Chest freezers The graph shows improvement in energy efficiency 2000 compared to 1999. Data has been used from slightly more than 95% of all Group products...

  • Page 74
    ... the first company in the world to receive ISO TR 14025 certification for environmental declarations for complex products.These declarations refer to eight refrigerators and freezers that are produced in Mariestad, Sweden under the Electrolux brand. Electrolux shares have been chosen by a number of...

  • Page 75
    ..., Dag Hammarskjölds Väg 3, Stockholm. PARTIC IPATION D IVID EN D REGISTRATION Shareholders who intend to participate in the Annual General Meeting must be registered with VPC AB (Securities R egister Center) on Thursday, April 12, 2001. Shareholders whose shares are registered through banks or...

  • Page 76
    The Electrolux Group. The world's No.1 choice. AB Electrolux SE-105 45 Stockholm, Sweden Visiting address S:t Göransgatan 143, Stockholm Telephone +46 8 738 60 00 Telefax +46 8 656 44 78 www.electrolux.com 5991413- 68/ 2