Electrolux 2003 Annual Report Download - page 34

32 Electrolux Annual Report 2003
Report by the Board of Directors for 2003
Operations by business area
Demand increased during the year in most of the Group’s product
areas in both Europe and North America. Market conditions in
Asia and Australia improved, while demand in Brazil showed a
significant downturn.
The strengthening of the Swedish krona against most curren-
cies during the year had a negative impact on sales and income,
particularly for Consumer Durables in North America and Profes-
sional Outdoor Products.
The markets for Consumer Durables in both Europe and the US
were characterized by an increased downward pressure on prices.
This was offset, however, by improved manufacturing efficiencies,
savings from restructuring and lower costs for materials and
components.
Sales and operating income for Consumer Durables increased in
comparable currencies, but declined in Swedish krona. Operating
margin was largely unchanged compared with the previous year.
Sales for Professional Products declined, mainly as a result of
the divestment of the compressor and motor operations within
Indoor Products. Operating income was lower than in the previous
year, but margin improved.
Consumer Durables
Total industry shipments of core appliances in Europe increased in
volume by approximately 4% in 2003 compared with the previous
year. Western Europe showed an increase of approximately 3%,
while the market in Eastern Europe increased by approximately 10%.
Group sales of appliances in Europe increased in volume with
good growth particularly in Eastern Europe, Spain and the UK.
Operating income and margin was in line with the previous year.
Operating income was negatively affected by unfavorable currency
trends and downward pressure on prices, while higher volumes
and improved manufacturing efficiency had a positive impact.
In the US, industry shipments of core appliances increased in
volume by approximately 4%. Shipments of major appliances, i.e.,
including room air-conditioners and microwave ovens, rose by
approximately 8%.
Group sales of appliances in North America showed good growth
in USD. Operating income and margin increased as a result of
higher volumes, lower costs for materials and improved manufac-
turing efficiency.
Demand for core appliances in Brazil showed a considerable
downturn for the year as a whole. However, shipments in the
fourth quarter were largely unchanged compared with the same
period in 2002. Group sales of appliances showed good growth in
local currency, but declined in Swedish krona. Operating income
improved from the previous year, but was still negative.
Group sales of appliances in India and China were substantially
lower than in 2002, as a result of implemented restructuring and
focusing of operations on core areas. Income for both operations
remained negative, but improved from the previous year, mainly
in the fourth quarter.
The Australian market for appliances showed an upturn. Both
sales and income for the Group’s Australian operation declined,
however. Margin was in line with the previous year.
Overall, operating income for the appliance operation outside
Europe and North America declined substantially and was nega-
tive. However, income for the seasonally strong fourth quarter
showed an improvement over last year and was positive.
The market for floor-care products in Europe showed good
growth in volume, particularly in the lower price segments. Sales
for the Group’s European operation declined somewhat. Operating
income improved, mainly as a result of a better product mix and
implemented restructuring.
Demand for floor-care products in the US showed some growth
over the previous year. Sales for the Group’s American operation
declined somewhat in local currency. Operating income showed
a considerable downturn, mainly as a result of an unfavorable
product mix and increased downward pressure on prices.
Demand for consumer outdoor products in Europe was weaker
than in 2002, mainly due to unfavorable weather. Group sales in
Europe declined somewhat, and operating income improved.
Demand for garden equipment in North America showed an
upturn. The Group achieved good sales growth in USD. Operating
income increased substantially as a result of higher volumes and
improved manufacturing efficiency.
Overall, sales for the Consumer Durables business area were
lower than in the previous year due to changes in exchange rates.
Operating income declined, and margin was unchanged.
Professional Indoor Products
Demand for food-service equipment was considerably lower than
in the previous year, particularly in some key markets in Southern
Europe and the Nordic region. Group sales declined and operating
income showed a substantial downturn.
Sales for laundry equipment declined somewhat due to lower
demand in the US and Japan. Operating income decreased, mainly
as a result of changes in exchange rates. Operating margin was
somewhat lower than in the previous year.
Total sales for Professional Indoor Products were lower than
in the previous year, mainly as a result of the divestment of the
compressor operation as of August 1, 2003. Operating income
declined, but with an unchanged margin.
Professional Outdoor Products
Demand for professional chainsaws is estimated to have shown
some growth in both Europe and North America, however, mainly
referring to lower-specified products. Group sales of chainsaws
showed good growth in volume over the previous year.
Sales of professional lawn and garden products showed good
growth, while sales of diamond tools and power cutters declined
for comparable units as a result of continued weak market demand.
Overall, sales for Professional Outdoor Products were higher
than in the previous year. Operating income improved somewhat,
and margin was largely unchanged.
For definitions, see page 77.