Electrolux 2004 Annual Report Download - page 11
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Electrolux today
Electrolux Annual Report 2004 7
Electrolux is the market leader in most of its product areas and
has strong relations with leading retailers.
The Group has a solid foundation in the form of high volume
in production and product development. Every year, we sell over
55 million products to consumers in more than 150 countries.
Our professional products for indoor and outdoor use are also
sold world-wide. Electrolux is one of the few global companies
in its product areas.
In recent years the Group’s operations have been stream-
lined through restructuring and divestments. Profitability for
appliances has improved in both Europe and the US, and our
market shares have grown. Our financial position has been
strengthened and cash flow has improved. Although operating
income has been negatively affected by restructuring costs,
unfavorable currency trends and higher costs for materials,
the return on equity over the past five years, including items
affecting comparability, has averaged 15.5%, and the return
on net assets 19.6%. The model that we use internally to
calculate the value created within the Group shows that
Electrolux has more than covered its cost of capital every year
since 1998.
We have launched a comprehensive program to cut costs
and reduce complexity within our operations, and to better
utilize the Group’s size. This program includes reducing the
number of plants and product platforms as well as relocating
production 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.
Where does Electrolux
stand today?
Electrolux strongpoints:
•
Global no. 1–2 in most product areas
•
Global presence
•
No. 1–2 with leading retailers in both Europe and North America
•
Leading brands
•
Benefits of scale in production, logistics, and product development
•
High-margin products for professional users
•
Strong balance sheet and cash flow
Cash flow and
working capital
Cash flow improved in 2004, mainly
as a result of lower working capital.
0403020100
Capital structure
SEKm
Operating cash flow, SEKm
Working capital/net sales, % The net debt/equity ratio has improved
in recent years but was slightly higher
at year-end 2004 than in 2003.
Equity/assets ratio, %
Net debt/equity ratio
%
70
60
50
40
30
20
10
0
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
34 35 36 37 38
1997
1998
1999
2000
2001
2002
2003
2004
333231302928272625
Operating margin*, %
1
2
0
3
4
5
6
7
Average net assets/net sales*, %
Operating margin and
return on net assets
* Excluding items affecting comparability.
The graph shows the trend for the Group’s operating
margin since 1997. The light blue line indicates the level
where value is created, based on a 12% Weighted
Average Cost of Capital (WACC) before tax.
03020100 04
8,000
6,000
4,000
2,000
0
–2,000
%
8
6
4
2
0
–2