Electrolux 2005 Annual Report Download - page 31
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operating income as items affecting comparability in the fourth
quarter. Of the total amount, SEK 720m refers to write-down of
assets.
In December 2005, it was also decided that an investigation
would be initiated regarding a potential closure of the compact-
appliances factory in Torsvik, Sweden. The factory has 190
employees. Restructuring costs for a potential closure will be
communicated when the investigation is completed.
In February 2006, the Board decided to invest in a new plant
for front-load washing machines and tumble-dryers in Juarez,
Mexico. The investment is estimated at approximately
SEK 1,090m and the plant will employ 800 people. The Board
has also decided to downsize production at the plant in Webster
City, Iowa, during the end of 2007 and the beginning of 2008.
The downsizing refers to production of front-load washing
machines and tumble-dryers that will be transferred to the new
plant in Mexico. The downsizing will affect approximately 700
employees and the cost is estimated at approximately SEK 40m.
During the year, the vacuum-cleaner plant in Västervik, Swe-
den, and the cooker plant in Reims, France, were closed. Pro-
duction at the refrigerator plant in Greenville, USA, was gradually
moved to the new plant in Juarez, Mexico. The plant in Greenville
will be closed by the end of the first half of 2006. Production at
the new plant in Mexico should be running at full capacity during
the second half of 2006.
Key data excluding items affecting comparability
Excluding the above items affecting comparability, operating
income for 2005 increased by 2.9% to SEK 6,962m (6,767),
which corresponds to 5.4% (5.6) of net sales. Income after finan-
cial items decreased by 2.8% to SEK 6,235m (6,412), which cor-
responds to 4.8% (5.3) of net sales. Income for the period
increased by 1.4% to SEK 4,610m (4,546), corresponding to an
increase of 3.8% in earnings per share to SEK 15.82 (15.24).
Excluding items affecting comparability, the tax rate was
26.1% (29.1). The return on equity was 18.3% (18.3) and the
return on net assets was 20.6% (21.9).
Key data excluding items affecting comparability 1)
SEKm 2005 Change 2004
Net sales 129,469 7% 120,651
Operating income 6,962 3% 6,767
Margin, % 5.4 5.6
Income after financial items 6,235 –3% 6,412
Income for the period 4,610 1% 4,546
Earnings per share, SEK 2) 15.82 4% 15.24
Dividend per share, SEK 7.50 3) 7.00
Return on equity, % 18.3 18.3
Return on net assets, % 20.6 21.9
Value created 2,913 –141 3,054
Net debt/equity ratio 0.11 0.05
Operating cash flow 1,083 –67% 3,224
Capital expenditure 4,765 6% 4,515
Average number of employees 69,523 –4% 72,382
1) For key data, including items affecting comparability, see page 23.
2) Before dilution.
3) Proposed by the Board of Directors.
Value created
Value creation is the primary financial performance indicator for
measuring and evaluating financial performance within the
Group. The model links operating income and asset efficiency
with the cost of the capital employed in operations. The model
measures and evaluates profitability by region, business area,
product line, or operation.
Total value created in 2005 was in line with the previous year
and amounted to SEK 2,913m (3,054). The capital-turnover rate
was 3.84, as against 3.90 in the previous year.
The WACC rate for 2005 was computed at 12% (12).
For a definition of value created, see Note 32 on page 83.
Report by the Board of Directors for 2005