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Annual Report 2004
We’re strengthening
our leadership position...

Table of contents

  • Page 1
    We're strengthening our leadership position... Annual Report 2004

  • Page 2
    ....7 17.3 Return on net assets, % 17.2 23.9 Value creation 2,978 3,449 Net debt/equity ratio 0.05 0.00 Average number of employees 72,382 77,140 1) Proposed by the Board of Directors. 13,235 521 478 1.16 0.76 16,464 647 595 1.44 0.96 USA France Italy UK Germany Sweden Australia Canada Brazil Spain...

  • Page 3
    ... sales growth and higher income in Europe • Continued good performance in North America • Improve cost structure • Increase sourcing among Group operations and from low-cost countries • Continue launching high-end products in US under Husqvarna brand Indoor products Food-service equipment...

  • Page 4
    ...'s website, www.electrolux.com/ir The above reports are also available on request from AB Electrolux, Investor Relations and Financial Information, SE-105 45 Stockholm, Sweden. Contacts Ã...sa Stenqvist Vice President, Investor Relations and Financial Information Michael Andersson Business Analyst...

  • Page 5
    ... • Building the Electrolux brand globally and reducing the number of brands • Continuing to develop our strong relations with major retailers • Cutting costs in production and distribution • Utilizing the Group's size and global presence more effectively Electrolux Annual Report 2004 1

  • Page 6
    Business environment "Fashions and trends in decoration are becoming more important even in the kitchen." 2 Electrolux Annual Report 2004

  • Page 7
    ... the share of households that have cookers, refrigerators and other appliances, is high in our traditional markets in Western Europe and North America. Saturation is considerably lower in both Eastern Hans Stråberg President and CEO Shipments of core appliances in Europe and US Million products...

  • Page 8
    ... share of products from manufacturers in China and Eastern Europe. These companies benefit from low production costs in their home countries, but they also have higher freight costs. Many household appliances are too heavy and bulky to be shipped economically between continents. At the same time...

  • Page 9
    ... for successful relations with retailers is our ability to adapt our service to the needs and desires of different types of customers. Market shares for leading retailers in US Major appliances Sears Retail structure in Europe Major appliances % 90 80 Lowe's 70 60 Best Buy 50 40 Home Depot...

  • Page 10
    Electrolux today 6 Electrolux Annual Report 2004

  • Page 11
    ...to low-cost countries. At the same time, investments in product development are being increased and the number of brands is being reduced. We are well on our way to establishing Electrolux as a leading global brand. Operating margin and return on net assets Operating margin*, % 7 2003 6 2004 5 2001...

  • Page 12
    ..., the decline in operating income refers mainly to floor-care products in North America and appliances in Australia and Asia. Income for appliances in Europe was also somewhat lower than in 2003. Income for appliances in North America decreased in Swedish kronor but 8 Electrolux Annual Report 2004

  • Page 13
    ...0 0 00 01 02 03 04 0 Net sales, SEKm Operating margin, % * Excluding items affecting comparability. Operating margin declined in 2004, mainly due to higher material costs and increased investments in brand-building and R&D. Income after financial items, SEKm Return on equity, % * Excluding items...

  • Page 14
    Product development 10 Electrolux Annual Report 2004

  • Page 15
    ... over the next few years, reaching about 2% of sales from about 1.7% in 2004. In order to achieve better precision, and to reduce development time for new products, we've worked hard to improve the internal process for product development. All development activities within the Group are now based on...

  • Page 16
    ... a new dishwasher with a see-through window and smart programming, is being introduced in Europe in 2005 in the higher-price segment. In 2005 new built-in products are being launched under the AEG-Electrolux brand. The products have received several design awards. 12 Electrolux Annual Report 2004

  • Page 17
    ... a new series, the Electrolux ICON Professional, in stainless steel and a more robust design. This double oven with stay-cool glass doors and fully extendable oven racks is an addition to the exclusive Electolux ICON series, which was originally launched in 2004. Electrolux Annual Report 2004 13

  • Page 18
    ...-care range in the US. This vacuum cleaner delivers extremely clean exhaust air. In 2003 and 2004 Electrolux launched several new refrigerators in China. Among them is this one, which received the prestigious IF China Design Award. In January 2005 Electrolux launched the Electrolux ICON outdoor...

  • Page 19
    .... The new Husqvarna ProFlex 21 AWD is the first garden tractor to feature all-wheel drive, which remarkably increases the trafficability. In 2005 Electrolux launched the lawn mower Flymo easibag that collects and packs grass cuttings in a biodegradable bag. Electrolux Annual Report 2004 15

  • Page 20
    ... and double-brand all AEG products as AEG-Electrolux. The Electrolux brand's share of Group sales 60-70% 40% 10% 2000 2004 Goal Electrolux brand in North America In 2004 we launched the Electrolux brand for appliances in North America. The first products are Electrolux ICONTM, a high-price range...

  • Page 21
    ...our strongest local brands. In 2004 we started double branding of REX-Electrolux with a campaign showing that the Group's global resources support REX products. The endorsement enables us to use the strength of REX in the local market and also strengthen Electrolux. Although our competitors invested...

  • Page 22
    .... During 2004 we decided to close four plants for appliances, two for floor-care products and one for professional laundry equipment. We also shut down part of production at two units in Australia. Following these changes the Group will have 43 production units for appliances and floor-care products...

  • Page 23
    ...* •Tumble machines Poland •Washing Poland •Dishwashers machines Thailand •Washing China •Hobs/hoods ) *) Expansion of capacity in existing plant. In 2003 and 2004 investments were authorized for a new plant in Mexico and six new plants in Eastern Europe and Asia. *Part of production...

  • Page 24
    ... share of new products was considerably higher in 2004, and we achieved a better product mix in both Europe and the US. Implemented restructuring also contributed to improving performance for operations such as floor-care products in North America and appliances in Australia during the latter part...

  • Page 25
    ... comparability Margin, % Income after financial items Net income Net income per share, SEK 2) Dividend per share, SEK Return on equity, % Return on net assets, % Value creation Net debt/equity ratio Operating cash flow Capital expenditure Average number of employees 2004 120,651 4,714 3.9 6,674...

  • Page 26
    ... exchange rates • Operating income declined by 34.3% to SEK 4,714m (7,175), mainly due to costs for relocation of production • Net income decreased by 34.1% to SEK 3,148m (4,778) • Net income per share declined by 30.8% to SEK 10.55 (15.25) Net sales Net sales for the Electrolux Group in 2004...

  • Page 27
    ...Board of Directors for 2004 Consolidated income statement Amounts in SEKm, unless otherwise stated Net sales Cost of goods sold Gross operating income Selling expenses Administrative expenses Other operating income Other operating expenses Items affecting comparability Operating income 1) Financial...

  • Page 28
    ... and write-downs Refrigerator plant in Greenville, USA (Q1 2004) Vacuum-cleaner plant in Västervik, Sweden (Q3, Q2 2004) Floor-care products, North America (Q3 2004) Appliances, Australia (Q3 2004) Cooker factory in Reims, France (Q4 2004) Tumble dryer plant, Denmark (Q4 2004) Reversal of unused...

  • Page 29
    ...the new Swedish accounting standard RR 29, Employee benefits, which is based on the International Accounting Standard IAS 19. This involved a one-time charge of SEK 1,602m net of taxes, to the Group's opening equity, and had no effect on the income statement or on cash flow. Adjustment of assets and...

  • Page 30
    ...of the new accounting standard for employee benefits. Inventories amounted to SEK 15,742m (14,945) at year-end, and accounts receivable to SEK 20,627m (21,172), corresponding to Liquid funds % of annualized net sales Net liquidity Fixed-interest term, days Effective annual yield, % 8,702 7.7 2,799...

  • Page 31
    Report by the Board of Directors for 2004 Consolidated balance sheet Amounts in SEKm, unless otherwise stated Note Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2002 Assets Fixed assets Intangible assets Tangible assets Financial assets Deferred tax assets Total fixed assets Current assets Inventories, etc...

  • Page 32
    ... The Financial Policy also describes the management of risks relating to pension fund assets. Management of financial risks has largely been centralized to Group Treasury in Stockholm, Sweden. Local financial issues are managed by four regional treasury centers located in Europe, North America, Asia...

  • Page 33
    ... on pension liabilities, see Note 23 Provision for pensions and similar commitments, on page 60. 3) Net after divestment of shares under the employee stock option program. 4) Non-recurring effect of implementing the new accounting standard RR 29, Employee benefits. Electrolux Annual Report 2004 29

  • Page 34
    ... net sales. R&D projects during the year mainly referred to new products and design projects within appliances including development of new platforms. Major projects were new products within cooking and washing in North America and new products within the floorcare operation. 30 Electrolux Annual...

  • Page 35
    ...Financing Change in short-term loans Change in long-term loans Dividend Redemption and repurchase 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...

  • Page 36
    ...dryers, washing machines, dishwashers, room air-conditioners and microwave ovens, as well as floorcare products and garden equipment. In 2004, major appliances accounted for 76% (76) of sales, while outdoor products accounted for 17% (16) and floor-care products for 7% (8). Operations in Europe Key...

  • Page 37
    ... segment. This product range will be expanded in 2005 and 2006. Quick facts - North America Products Key brands Location of major plants Major competitors Appliances Electrolux, Frigidaire Appliances Electrolux, AEG**, Zanussi*, REX* Electrolux, AEG** Italy, Hungary, Sweden, Germany Hungary...

  • Page 38
    ...- Consumer Outdoor Products Outdoor power equipment Key brands Location of major plants Major competitors Europe Husqvarna, Flymo, Partner, McCulloch Husqvarna, Poulan, Poulan Pro, Weed Eater Sweden, UK, Italy GGP North America USA Toro, John Deere, MTD 34 Electrolux Annual Report 2004 For...

  • Page 39
    ... year. Operating income improved somewhat on the basis of implemented price increases and lower production costs, despite the negative impact of changes in exchange rates. Lawn and garden equipment Power cutters and diamond tools Share of total Group sales 13% Outdoor products 8% Net sales...

  • Page 40
    ... main brands for laundry products, Dubix, Nyborg and Wascator, to Electrolux was completed during the year. Quick facts - Indoor Products Products Key brands Location of major plants Major competitors Professional Outdoor Products Key data1) SEKm, unless otherwise stated 2004 2003 2002 Net sales...

  • Page 41
    ... Directors for 2004 Operations by business area SEKm, unless otherwise stated 2004 Change, % 2003 Change, % 2002 Consumer Durables Europe Net sales Operating income Margin, % North America Net sales Operating income Margin, % Rest of the world Net sales Operating income Margin, % Outdoor Products...

  • Page 42
    ... of SEK 152 per share. During the year, senior managers purchased 10,600 Bshares from Electrolux under the terms of the employee stock option programs for a total of approximately SEK 2m, corresponding to an average price of SEK 170 per share. As of December 31, 2004, the company owned a total of 17...

  • Page 43
    .... Cost of compliance Annual sales of Electrolux include approximately 20 million products that are covered by the WEEE Directive. These products include large and small household appliances, floor-care equipment and electrical outdoor equipment. Electrolux Annual Report 2004 Asbestos litigation in...

  • Page 44
    ... average number of employees decreased to 72,382 in 2004, as a result of divestments and structural changes. Environmental activities Electrolux operates 96 manufacturing facilities in 25 countries. Manufacturing operations mainly comprise assembly of components made by suppliers. Other processes...

  • Page 45
    ... long-term share program and a new supplementary pension plan for some of the Swedish members of Group Management. For more information, see Corporate Governance on page 88. Audit committee Three meetings were held in 2004. Key topics at these meetings included review of the financial statements as...

  • Page 46
    ...office, as well as five companies operating on a commission basis for AB Electrolux. Net sales for the Parent Company in 2004 amounted to SEK 6,802m (6,713), of which SEK 3,949m (3,882) referred to sales to Group companies and SEK 2,853m (2,831) to external customers. After appropriations of SEK -6m...

  • Page 47
    ... Retained earnings Total Cash flow statement Amounts in SEKm, unless otherwise stated 2004 2003 Closing balance Dec. 31, 2002 1,694 Net income - Dividend payment - Repurchase of shares - Cancellation of B-shares and reduction of share capital -73 Group contributions - Closing balance Dec. 31, 2003...

  • Page 48
    ... of national legislation. The following should be noted: • As of January 1, 2004, Electrolux applies the new standard from the Swedish Financial Accounting Standards Council, RR 29, "Employee Benefits". RR 29 stipulates how the company shall account for and report employee benefits. The main...

  • Page 49
    ... include mainly costs for corporate functions. Sales between segments are made on market conditions with armslength principles. Definition of Group companies The consolidated financial statements include AB Electrolux and all companies in which the Parent Company at year-end directly or indirectly...

  • Page 50
    ...of an asset's net selling price and value in use. The value in use of an asset is mostly estimated using the discounted cash-ï¬,ows method. The discount rates used in 2004 were in the range of 11 to 28%. For the purposes of assessing impairment, assets are grouped in cash-generating units, which are...

  • Page 51
    ...goods and services have been arranged, accounts payable are valued at contract rates. For the employee stock option programs, the Group provides for employer contributions expected to be paid when the options are exercised. The provision is periodically revalued. Cash ï¬,ow The cash-ï¬,ow statement...

  • Page 52
    ... Policy. The Financial Policy also describes the management of risks relating to pension fund assets. The management of financial risks has largely been centralized to Group Treasury in Stockholm. Local financial issues are managed by four regional treasury centers located in Europe, North America...

  • Page 53
    ... Policy of the Group ensures that management process for customer credits includes customer rating, credit limits, decision levels and management of bad debts. The Board of Directors decides on customer credit limits that exceed SEK 300m. There is a concentration of credit exposures on a number...

  • Page 54
    ... and laundry equipment for professional users. Professional Outdoor Products comprise mainly high-performance chainsaws and professional lawn and garden equipment, as well as power cutters and diamond tools. Within Consumer Durables, the white-goods operation is managed regionally while floor-care...

  • Page 55
    ...(225). The Group's Swedish factories accounted for 7.5% (7.6) of the total value of production. Costs for research and development amounted to SEK 1,566m (1,322) and are included in Cost of goods sold. Note 5 Other operating income Group 2004 2003 2002 2004 Parent Company 2003 2002 Gain on sale of...

  • Page 56
    ... stated Note 7 Items affecting comparability Group 2004 2003 2002 Items affecting comparability in 2004 include costs for the closure of the following plants; The vacuum-cleaner plant in El Paso, USA; the refrigerator plant in Greenville, USA; the vacuum-cleaner plant in Västervik, Sweden...

  • Page 57
    .... Parent Company The deferred tax assets in the Parent Company amounted to SEK 120m (105) and relate to temporary differences. The Group accounts include deferred tax liabilities of SEK 230m (227) related to untaxed reserves in the Parent Company. Note 12 Net income per share 2004 2003...

  • Page 58
    .... 31, 2003 Amortization for the year Sold and acquired during the year Fully amortized Impairment Exchange-rate differences Closing balance Dec. 31, 2004 Net book value Dec. 31, 2003 Net book value Dec. 31, 2004 1) Final purchase-price allocation of Diamant Boart International. 6,479 -25 - -108 -32...

  • Page 59
    ... -1,140 27,954 15,638 16,033 In 2004, tangible fixed assets in operations within Consumer Durables Europe, North America and Rest of the world were impaired. The book values for land were SEK 1,160m (1,160). The tax assessment value for Swedish Group companies was for buildings SEK 329m (328), and...

  • Page 60
    ... accounts receivables and related credit risks. The information in this note highlights and describes the principal financial instruments of the Group regarding specific major terms and conditions when applicable, and the exposure to risk and the fair values at year-end. Liquid funds Liquid funds...

  • Page 61
    ...of credit risk related to customer financing. Collaterals and the right to repossess the inventory also reduce the credit risk in the financing operations. The income from customer financing is subject to interest-rate risk. This risk is immaterial to the Group. Electrolux Annual Report 2004 57

  • Page 62
    ...9 124 238 447 1,908 - - - - 5 5 - - - - 5 5 - - - - 5 5 The sharp reduction of pledged assets in 2003 was mainly due to that the company in India ceased pledging assets, the divestment of the compressor unit in China and renegotiations of bank loans in Germany. 58 Electrolux Annual Report 2004

  • Page 63
    .... The average number of shares during the year has been 298,314,025 (313,270,489). Note 22 Untaxed reserves, Parent Company Dec. 31, 2004 Appropriations Dec. 31, 2003 Appropriations Dec. 31, 2002 Accumulated depreciation in excess of plan on Brands Machinery and equipment Buildings Exchange-rate...

  • Page 64
    ... both, and follow, in general, the local practices. Under defined benefit pension plans, the company enters into a commitment to provide pension benefits based upon final or career average salary, employment period or other factors that are not known until the time of retirement. Under defined...

  • Page 65
    ... of defective products. Warranty is normally granted for 1 to 2 years after the sale. Other provisions include mainly provisions for tax, environmental or other claims, none of which is material to the Group. Note 25 Accrued expenses and prepaid income Group 2004 2003 2002 2004 Parent Company 2003...

  • Page 66
    ... of the average number of employees by country has been submitted to the Swedish Companies Registration Office and is available on request from AB Electrolux, Investor Relations and Financial Information. See also Electrolux website www.electrolux.com/ir Salaries, other remuneration and employer...

  • Page 67
    ...Parent Company comprises the Group's head office as well as a number of units and plants, and employs approximately half of the Group's employees in Sweden. Remuneration to the Board of Directors, the President and other members of Group Management Compensation to the Board of Directors The Annual...

  • Page 68
    ... is linked to a target and a stretch level for variable salary, and the program is capped. In 2004, Electrolux introduced a new performance-based long-term incentive program that replaced the option program for less than 200 senior managers of the Group. The performance share program is Pensions for...

  • Page 69
    ... option programs In 2001, a new program for employee stock options was introduced for less than 200 senior managers. The options can be used to purchase Electrolux B-shares at a strike price that is 10% above the average closing price of the Electrolux B-shares on the Stockholm Stock Exchange during...

  • Page 70
    ... average closing price of the Electrolux B-share on the Stockholm Stock Exchange during a period of ten trading days before the day participants were invited to participate in the program, less the present value of estimated dividend payments for the period until shares are allotted. 2) Total target...

  • Page 71
    ... It was decided at the Annual General Meeting that the company's obligations under the program should be secured by repurchased shares. The discounted value of the targeted number of shares in the 2004 performance share program as of the grant date was SEK 111m. If the target level is attained, the...

  • Page 72
    ... Home Products Inc. Electrolux North America Inc. Electrolux Professional Inc. Electrolux Professional Outdoor Products Inc. Holding, % Brazil Canada China Denmark Finland France Germany Hungary India Italy Luxembourg Mexico The Netherlands Norway Spain Sweden Switzerland United Kingdom USA...

  • Page 73
    ... assets based on separability and contractually related criteria. The purchase price allocation for Diamant Boart, acquired 2002, was finalized during 2003 and intangible assets were recognized in compliance with both Swedish GAAP and US GAAP. No major acquisitions were made during 2004. Product...

  • Page 74
    ...buildings to values in excess of the acquisition cost. Such revaluation is not permitted in accordance with US GAAP. Net sales Operating income Net income Years ended December 31, 2004 2003 2002 the European home comfort operation and the remainder of the leisure appliance product line. Accordingly...

  • Page 75
    ... June 15, 2005. SFAS No. 123 (R) requires all share-based payments to employees, including grants of stock options, to be recognized in the statement of operations based on their fair values. Electrolux is in the process of assessing the impact of SFAS 123 (R). Electrolux Annual Report 2004 71

  • Page 76
    ... Consolidated net income Net income as reported in the consolidated income statement Adjustments before taxes Acquisitions Goodwill and other intangible assets Development costs Restructuring and other provisions Pensions Derivatives and hedging Capitalization of computer software Securities Stock...

  • Page 77
    ... the Annual General Meeting of the shareholders of AB Electrolux (Corporate Identity Number 556009-4178) We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of AB Electrolux for the year 2004. These...

  • Page 78
    ...sales 6) Net debt/equity ratio Interest coverage ratio Dividend as % of equity 5) Other data Average number of employees Salaries and remuneration Number of shareholders Additional information can be found on the Investor Relations' website, www.electrolux.com/ir 74 Electrolux Annual Report 2004

  • Page 79
    ... own shares, the average number of shares amounted to 313,270,489 and at year-end 307,100,000. 2004: After redemption of shares and repurchase of own shares, the average number of shares amounted to 298,314,025 and at year-end 291,180,908. 5) 2004: Proposed by the Board. 6) Net sales are annualized...

  • Page 80
    ...313.3 327.1 2,978 3,449 3,461 Operating income Income after financial items Net income per share (basic), SEK Average number of shares, million Value creation 1) Exclusive of items affecting comparability, 2004: SEK -1,960m, 2003: SEK -463m, 2002: SEK -434m. 76 Electrolux Annual Report 2004

  • Page 81
    ...,745 Full year 42,703 44,267 45,128 30,767 32,247 35,245 13,479 12,544 14,796 17,579 17,223 18,229 104,528 106,281 113,398 North America Rest of the world Outdoor products Total Consumer Durables Professional Products Indoor Outdoor Total Professional Products 2004 2003 2002 2004 2003 2002...

  • Page 82
    ...5.4 6,365 6.0 6,663 5.9 North America Rest of the world Outdoor products Total Consumer Durables Professional Products Indoor Outdoor Total Professional Products Common Group costs, etc. Items affecting comparability Total Group, including items affecting comparability 2004 Margin, % 2003...

  • Page 83
    ...'s reporting structure will be changed to comprise Indoor and Outdoor Products instead of as previously Consumer Durables and Professional Products. Indoor Products comprise operations in appliances and ï¬,oorcare products, as well as the professional operations in food-service equipment and laundry...

  • Page 84
    ...International Financial Reporting Standards (IFRS), also known as IAS, in accordance with the European Union regulation. Swedish Accounting Standards have gradually incorporated IAS and, consequently, several IFRS issued prior to 2004 have already been implemented in Sweden. However, a number of new...

  • Page 85
    ... value. Electrolux Value Creation model Net sales - Cost of goods sold - Marketing and administration costs = Operating income, EBIT1) - WACC x Average net assets1) = Value creation Other key ratios Organic growth Sales growth, adjusted for acquisitions, divestments and changes in exchange rates...

  • Page 86
    ...a value of over SEK 3 billion. The shareholders were paid for the redeemed shares on June 30. During 2004, Electrolux repurchased 750,000 B-shares. 10,600 B-shares were sold during the year to senior managers under the terms of the employee stock-option programs. As of December 31, 2004, the company...

  • Page 87
    ... of a vote. Each share has a par value of SEK 5.00. The share capital has declined by SEK 76m in 2004 and amounted at year-end to SEK 1,544.6m. Distribution of shareholdings in AB Electrolux Shareholding Number of shareholders % of shareholders Shareholders by country 2004 Sweden USA UK Other % 61...

  • Page 88
    ... number of shares after buy-backs. 9) Market capitalization excluding buy-backs, plus net borrowings and minority interests, divided by operating income. 10) Trading price in relation to net income per share after full dilution. Price and trading volume of Electrolux B-shares on the Stockholm Stock...

  • Page 89
    ... the company. It is defined as sales revenues less the cost of purchased goods and services. Distribution of value added in 2004 Electrolux listed in Dow Jones Sustainability Index Salaries and employer contributions 74% Retained in the Group 15% Dividend payments to shareholders Taxes Interest...

  • Page 90
    ...IT Board Tax Board Business Sector Boards Brand Leadership Group Global Product Councils Purchasing Board Human Resources Executive Board Major external regulations affecting governance of Electrolux: • Swedish Companies Act • Listing agreement with Stockholm Stock Exchange • Swedish Code for...

  • Page 91
    ... proposal for The Board of Directors The Board of Directors decides on issues such as Group strategy, financing, investments, acquisitions and divestments of companies, organization and major policies. The Board's work is governed by regulations that include the Swedish Companies Act, the Articles...

  • Page 92
    ... and establishment of new operations as well as acquisitions and divestments. In addition, a business sector head usually presents current strategic issues for the sector. For more information about the Board of Directors' activities during the year, see the Report by the Board of Directors on page...

  • Page 93
    ... Indoor Products Major Appliances Europe and Asia/Pacific Johan Bygge Major Appliances North and Latin America Keith R. McLoughlin Floor Care and Small Appliances Magnus Yngen Human Resources and Organizational Development Harry de Vos Outdoor Products Consumer Outdoor Products Bengt Andersson...

  • Page 94
    ... Appliances North and Latin America, and the CFO. The new team is mainly focusing on increasing the integration of branding, design, product development, manufacturing and purchasing. Six Group processes In order to ensure a systematic approach to improving operational efficiency and the internal...

  • Page 95
    ...adherence from all employees and Board members of the Electrolux Group, in all markets and at all times. The Code formalizes the principles by which the Group conducts its relations with employees, shareholders, business partners and others. Electrolux encourages suppliers, sales agents, consultants...

  • Page 96
    ... AB, Beijer Alma AB. Previously Executive Vice President of the Fourth Swedish National Pension Fund, 1988-1993. Holding in AB Electrolux: 500 B-shares. Gunilla Brandt Born 1953. Representative of the Federation of Salaried Employees in Industry and Services. Elected 2004. Holding in AB Electrolux...

  • Page 97
    ... Ström Ola Bertilsson Peggy Bruzelius Bert Gustafsson Annika Ã-gren Karel Vuursteen Ulf Carlsson Hans StrÃ¥berg Malin Björnberg For more information about the Board of Directors and their activities, see Corporate Governance on page 87. Gunilla Brandt Electrolux Annual Report 2004 93

  • Page 98
    ... Major Appliances outside Europe and North America, Senior Executive VicePresident, AB Electrolux, 2002. Head of Consumer Outdoor Products outside North America, 2001-2003. Also Head of Major Appliances Europe as of November 2004. Board Member: First Swedish National Pension Fund, The Bank of Sweden...

  • Page 99
    ... Rystedt Lars Göran Johansson Johan Bygge Cecilia Vieweg Harry de Vos Keith R. McLoughlin Hans Stråberg Detlef Münchow Bengt Andersson For more information about the Group's organization and structure, see Corporate Governance on page 89. Electrolux Annual Report 2004 95

  • Page 100
    ... challenges reduces risk, enhances positive brand awareness, strengthens employee satisfaction and ensures good relations with local communities in which the Group operates. The Electrolux Environmental Policy We want our products, services and production to be part of a sustainable society. We are...

  • Page 101
    ... in production The Electrolux Environmental Management System (EMS) is a vital tool for achieving and maintaining high standards for clean manufacturing. The Group intends to implement EMS for the entire operation in each business sector. The Group's policy stipulates that all manufacturing units...

  • Page 102
    ...of units sold Share of gross profit 88% Within major appliances in Europe, the products with the best environmental performance accounted for 15% of total sold units in 2004, and 22% of gross profit. Life-cycle cost Water Price Detergents Service Energy 8% 42% 28% 8% 14% Fleet-average energy...

  • Page 103
    ... company, European Recycling Platform (ERP). The company's task is to establish and manage a pan-European recycling scheme for electrical products covered by the WEEE-Directive. In December 2004, ERP signed a contract with two main contractors, CCR Logistics Systems AG of Germany and Geodis Group...

  • Page 104
    ... of such national recycling systems. Cost of compliance Annual sales of Electrolux include approximately 20 million products that are covered by the WEEE Directive. These products include large and small household appliances, ï¬,oor-care equipment and electrical outdoor equipment. Electrolux will...

  • Page 105
    ...of Conduct training program aimed primarily at managers of human resources and purchasing was initiated. External third-party monitoring A process for reviewing internal Code of Conduct performance was initiated in 2003 and continued throughout 2004. All 12 production units in Asia and Latin America...

  • Page 106
    ... supports the United Nations Global Compact (www.unglobalcompact.org), which cover human rights, labor standards and the environment. In 2004, a new Global Compact principle against corruption was added to the original nine. All the principles are in line with Electrolux policies, including the...

  • Page 107
    ...in the Annual General Meeting must • be registered in the share register kept by VPC AB (Swedish Central Securities Depository & Clearing Organization) on Friday, April 8, 2005, and • give notice of intent to participate, thereby stating the number of assistants attending, to Electrolux no later...

  • Page 108
    ...the United States and in Europe, small appliances generally and for consumer outdoor products in Europe. Electrolux faces strong competitors, who may prove to have greater resources in a given business area, and the likely emergence of new competitors, particularly from Asia and Eastern Europe. Some...

  • Page 109
    ... and guidelines, such as those related to employee safety, employee relations, product safety and exchange controls. Electrolux expects that sales to, as well as manufacturing in, and sourcing from, emerging markets, in particular in China, Southeast Asia, as well as Eastern Europe and Mexico, will...

  • Page 110
    ... sales. Operational failures in its value chain processes could result in quality problems or potential product, labor safety, regulatory or environmental risks. Such risks are particularly present in relation to Electrolux production facilities which are located all over the world and have a high...

  • Page 111
    ...In February 2005, the Electrolux Board announced its intention to spin-off the Group's Outdoor Products operations as a separate unit to create the best possible framework for continued profitable growth for this operation, as well as to create value for shareholders. Electrolux aims to achieve the...

  • Page 112
    ...is printed on Galerie Art Gloss, a paper that meets the criteria of the Nordic Environmental Label. Cover 300 g, inside pages 150 g. Production: Electrolux Investor Relations and Intellecta Communication AB. Printing: Intellecta Tryckindustri, Solna, Sweden, 2005. 108 Electrolux Annual Report 2004

  • Page 113
    ...prices, significant loss of business from major retailers, the success in developing new products and marketing initiatives, developments in product liability litigation, progress in achieving operational and capital efficiency goals, the success in identifying growth opportunities and acquisition...

  • Page 114
    AB Electrolux (publ) Mailing address SE-105 45 Stockholm, Sweden Visiting address S:t Göransgatan 143, Stockholm Telephone: +46 8 738 60 00 Telefax: +46 8 656 44 78 Website: www.electrolux.com 5991414-07/8