Electrolux 2006 Annual Report Download - page 38

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risk
Managing risk to
maximize returns
Electrolux is exposed to risks in the course of daily operations. Limiting and controlling risks enable
business opportunities to be realized in the interest of maximizing returns. The Group is exposed to
two main types of risks, related to either business operations or fi nancial operations. Operational
risks are normally managed by the Group’s operative units, and fi n ancial risks by the central
Treasury Department.
• Price competition
• Customer exposure
• Restructuring
• Commodity prices
Operational risks
• Foreign-exchange risks
• Interest-rate risks
• Pension commitments
Financial risks
and commitments
• Regulatory risks
Other risks
Examples of management of risks
• Financial policy • Code of Ethics
• Credit policy • Environmental policy
• Pension policy
For additional information on the risks mentioned above, and certain other risks faced by the Group, see Risk factors on page 129.
» Cost structure 2006
Cost item % of total cost
Personell 19
Depreciation 3
Fixed costs 22
Raw materials and components 48
Product development 2
Transport 5
Brand investment 2
Variable costs 57
Other 21
Total 100
Raw materials and
components account
for almost half of total
Group costs.
» Sensitivity analysis
Pre-tax earnings
Risk Change impact, SEKm
Raw material
Steel 10% +/- 1000
Plastics 10% +/- 500
Currencies1) and interest rates
GBP/SEK -10% - 354
CAD/SEK -10% - 222
USD/SEK -10% + 389
EUR/SEK -10% + 260
Interest rate 1 percentage point +/- 40
1) Includes both translation and transaction effects.
34