Electrolux 2005 Annual Report Download - page 39
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Please find page 39 of the 2005 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.Report by the Board of Directors for 2005
Electrolux Annual Report 2005 35
During the year, the Group continued to work on improving the
product mix, by discontinuing production of less profi table prod-
ucts and by launching new products primarily in the higher price
segments. New product launches included the new Electrolux
ICON Professional appliances series in the US, the M2 Insight
cooker in Europe, the TwinClean vacuum cleaner in several
regions and the cooker Revolux in Brazil.
Early in 2006, a new communications platform for Electrolux
was introduced in order to intensify the focus on consumer
insight-based innovation and product development. It defines
Electrolux as the Thoughtful Design Innovator and introduces the
communications platform “Electrolux – Thinking of you”.
Operations in Europe
Key data 1)
Consumer Durables, Europe
SEKm 2005 2004
Net sales 43,755 42,703
Operating income 2,602 3,130
Operating margin, % 5.9 7.3
Net assets 6,062 6,165
Return on net assets, % 39.0 46.0
Capital expenditure 1,872 1,561
Average number of employees 25,250 26,146
1) Excluding items affecting comparability.
Major appliances
Total industry shipments of core appliances in Europe in 2005
increased in volume by 1.4% over 2004. Shipments in Western
Europe were in line with the previous year, while Eastern Europe
showed an increase of 5.9%. A total of 75.0 (74.0) million units
(excluding microwave owens) were estimated to have been
shipped in the European market during 2005, of which 56.8
(56.4) million units were in Western Europe.
Group sales of major appliances in Europe in 2005 increased
somewhat over the previous year as a result of higher sales vol-
umes in Eastern Europe and an improved product mix. Sales in
Western Europe declined due to lower demand and downward
pressure on prices in several markets. The private-label market in
Germany was weak in 2005. Operating income and margin
decreased, partly as a result of higher costs for materials.
In the course of the year, operating margin steadily improved
due to cost reductions and improved product mix.
Restructuring and relocation of production
During the year, it was decided that several plants for appliances
in Europe would be either closed or downsized. Decisions were
made to close the appliance plants in Fuenmayor, Spain, and
Nuremberg, Germany. The plant in Fuenmayor will be closed in
2006. Production in Nuremberg is expected to be discontinued
by the end of 2007. Decisions were also made to downsize pro-
duction at the refrigerator plants in Florence, Italy, and Mariestad,
Sweden, during 2006.
In 2005, a charge of approximately SEK 2,600m for the above
measures was taken against operating income within items
affecting comparability. Of this amount SEK 867m referred to
write-down of assets. The restructuring measures involve per-
sonnel cutbacks of approximately 2,550 employees.
In December, it was decided that an investigation would be
initiated regarding a potential closure of the compact appliances
factory in Torsvik, Sweden.
During the first quarter of 2005 the cooker plant in Reims,
France, was closed.
See page 26 for more information on restructuring.
Quick facts
Consumer Durables, Europe Location of Major
Products Key brands major plants competitors
Major appliances Electrolux, Italy, Bosch-
AEG-Electrolux, Hungary, Siemens,
Zanussi- Sweden, Whirlpool,
Electrolux, Germany Indesit
REX-Electrolux
Floor-care products Electrolux, Hungary Bosch-
AEG-Electrolux Siemens,
Miele,
Hoover,
Dyson
Floor-care products
Demand for floor-care products in Europe rose somewhat over the
previous year, with the low-price segments growing and the high-
price segments declining. Group sales for the full year declined
slightly, reflecting its exposure to the decline in the high-price seg-
ments. Operating income and margin for the full year showed a
considerable improvement, mainly due to restructuring.
Sales and operating income during the fourth quarter rose
considerably as a result of launches of new products and an
improved product mix.
Relocation of production
In the beginning of 2005, the vacuum-cleaner plant in Västervik,
Sweden, was closed and production was transferred to the plant
in Hungary.