Electrolux 2001 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2001 Electrolux annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 86

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86

The decline in operating income and margin in 2001 was mainly due to:
•Substantial costs for phase-in of a new generation of refrigerators in the US
•Lower sales of outdoor products and air-conditioners as a result of cold
weather and destocking at the retail level
•Weak demand and unfavorable cost structure within components
“Declining demand and
lower income in 2001…
“Declining demand and
lower income in 2001…
Substantial costs for new-generation refrigerators in the US
The appliance operation in North America reported a marked drop in income as a result of lower
volumes and substantial costs for the start-up and phase-in of a new generation of refrigerators
at the plants in Anderson, North Carolina, and Greenville, Michigan.
Costs for factors such as additional staffing, overtime and factory rejects had a negative
effect on operating income of about USD 100m (approximately SEK 1,050m). The situation
gradually normalized during the fourth quarter.
Inventory cutbacks by retailers in North America for both indoor and outdoor products also
had a negative impact on sales and income for Consumer Durables in North America.
Problems for Components
Income for Components declined from last year by almost SEK 400m and was negative. The
decrease referred mainly to the compressor product area and was due to weak demand, down-
ward pressure on prices, higher material costs, and costs related to adjustment of capacity and
inventories.
Most of the Group’s compressor operations are in high-cost European countries and North
America. We are also competing with companies in Asia and Latin America that have lower costs,
and have benefited from changes in currency rates in recent years.
We are implementing an action plan to improve profitability in the compressor operation.
Operating income is expected to improve gradually, but will still be negative in 2002.
Improved income for several operations
Higher operating income and margin were reported for major appliances in Europe and in other
markets outside North America, as well as for food-service equipment and laundry equipment.
Continued good growth in both sales and income was also achieved by Professional Out-
door Products.