Electrolux 2003 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2003 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 98

  • 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
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

Electrolux Annual Report 2003 19
Group sales increased by 3.3% adjusted for changes in exchange rates and
acquisitions and divestments. Operating income increased by 1.5% in comparable
currencies. Information on changes in sales and operating income by business
area compared with the previous year can be found on page 33.
Sales and income, SEKm 2003 Change 2002
Net sales 124,077 –6.8% 133,150
Operating income*7,638 –6.5% 8,165
Margin, % 6.2 6.1
Income after financial items*7,469 –6.4% 7,979
Margin, % 6.0 6.0
Net income per share, SEK*16.75 –0.9% 16.90
Value creation 3,449 –12 3,461
* Excluding items affecting comparability.
Good performance by most operations in 2003
Higher demand for Consumer Durables
Demand for Consumer Durables increased in most of the Group’s
markets during the year, with the exception of Brazil. Market
conditions for Professional Products remained weak, particularly
in food-service equipment, diamond tools and power cutters.
Operating margin improved
Adjusted for changes in exchange rates, acquisitions and divest-
ments, Group sales increased by 3.3%. Operating margin improved
to 6.2% (6.1), excluding items affecting comparability. Operating
income was adversely affected by changes in exchange rates in
the amount of SEK 930m, of which two thirds referred to transla-
tion effects. These effects were traceable mainly to the strength-
ening of the Swedish krona against the US dollar.
Increased downward pressure on prices within Consumer
Durables was offset by greater manufacturing efficiency, savings
from restructuring, and lower costs for materials and components.
All key ratios improved or were in line with the previous year.
The balance sheet improved further.
Cash flow not as strong as in 2002
Cash flow was weaker than in 2002. This was mainly due to an
increase in accounts receivable, and a decrease in accounts
payable from the high level in the previous year. In both 2001 and
2002 we succeeded in substantially reducing working capital,
which was at a historically low level at year-end 2002.
Higher margin for appliances in Europe and US
Appliances and consumer outdoor products in North America
showed strong growth and higher operating income in USD.
Margin improved for both operations. Appliances and floor-care
products in Europe also performed well. In addition, Professional
Outdoor Products showed continued good growth, and margin
improved slightly from the high level of the previous year.
On the other hand, floor-care products in North America showed
a substantial decline in operating income due to an unfavorable
product mix and downward pressure on prices. Income and margin
in the fourth quarter improved after a particularly weak third quarter,
however. The operation in food-service equipment also showed a
downturn following weak demand in the European market.
A substantial decline in operating income was noted for appli-
ances outside Europe and North America. Here also we saw an
improvement in the fourth quarter, when income was positive. The
new management in both India and China is acting decisively to
improve performance.
Actions to improve underperformers
The restructuring measures announced in December 2002 were
implemented according to plan. Production within appliances in
India and China was consolidated to fewer plants, and operations
were focused on core areas. We also divested the compressor
operation, which had shown weak profitability for several years.
In North America, the plant for air conditioners was closed
during the third quarter, and these products are now sourced
externally. In January 2004, we decided that one of our two refrig-
erator plants in the US will be closed in 2005. In February 2004, we
started an evaluation regarding a potential closure of the vacuum-
cleaner plant in Sweden, and a move of production to the plant in
Hungary.
Investments in new plants
In order to further improve our cost-efficiency in manufacturing,
we decided to invest in several new plants in low-cost countries.
This will enable further consolidation of production, and also
support future growth in several markets.
Building the Electrolux brand
During the year we double-branded Electrolux with strong local
brands in 8 additional countries in Europe. In November, the
Electrolux-brand was introduced for floor-care products
in the US, and was very well received. A new range of high-end
Electrolux-branded appliances will be introduced in the US during
2004.
Summary of 2003