Electrolux 2008 Annual Report Download

Download and view the complete annual report

Please find the complete 2008 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.

Page out of 62

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62

Annual Report 2008 Operations and strategy
1
90 years of leading innovations
and design

Table of contents

  • Page 1
    Annual Report 2008 1 Operations and strategy 90 years of leading innovations and design

  • Page 2
    ...fic Professional Products Electrolux launch in North America Strategy Product development Brand New products Growth Cost efficiency Success in Australia Sustainability Our people Remuneration Financial review Electrolux 90 years Board of Directors and Auditors Group Management Events and reporting...

  • Page 3
    ..., to meet the real needs of consumers and professionals. Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners and cookers sold under esteemed brands such as Electrolux, AEG-Electrolux, Eureka and Frigidaire. In 2008, Electrolux had sales of SEK 105 billion and...

  • Page 4
    ...market growth. Professional Products 7% SEK 774m Operating income and margin for Professional Products improved in 2008 compared to the previous year, as a consequence of increased sales volumes, price increases and relocation of production to Thailand. Operating income of 2008 was the best ever...

  • Page 5
    ... markets. Electrolux gained market shares in North America through the new Electrolux-branded appliances in the premium segment. Income improvements for appliances in Latin America and Asia/Pacific as well as for Professional Products and ï¬,oor-care operations. Increased investments in energy...

  • Page 6
    avsnitt annual report 2008 | part 1 | ceo statement A strategy for difficult times and for continuing change A strong balance sheet and an effective strategy give Electrolux a strong position in the current economic downturn, and the company is well prepared for a market recovery. Our long-term ...

  • Page 7
    ... products that make tasks such as preparing and storing food simpler and more healthful. In addition, the high rate of innovation in the industry in terms of new functions and new design is stimulating consumers to replace their old household appliances at an increasingly faster rate. Electrolux...

  • Page 8
    ... and spareparts, 7% Professional Products, 7% Food-service equipment, 5% Laundry equipment, 2% In 2008, Electrolux sold more than 40 million products. Almost half of them sold products were sold under the global Electrolux brand. Consumer Products comprises products for kitchens, fabric care and...

  • Page 9
    ...share of kitchen products Global interest in cooking % Dish 12% 57% 39% 49% Cold (refrigerators, freezers) Hot (cookers, hobs, ovens) 40 30 20 10 0 Western Europe Central Europe North America Latin America Developed Asia Developing Asia Almost every third consumer worldwide is actively seeking...

  • Page 10
    ... the North American market, Electroluxbranded kitchen products are sold in the high-price segment and Frigidaire-branded in the mass-market segment. Electrolux also produces appliances that are sold by retail chains under their own brands. Innovative products drive growth Refrigerators and freezers...

  • Page 11
    ..., www.dreamkitchen.com.cn, application was developed to support the launch of Electrolux built-in range in Asia/Pacific. On the website, users can build their own dream kitchens by selecting different appliances and place them in various kitchen environments. It is also possible to change cabinets...

  • Page 12
    ...under the Frigidaire brand in the low and medium-price segments, and under the Electrolux brand in the high-price segment since 2008. In Australia, these products are sold under the Electrolux, Westinghouse and Simpson brands. Products with new functions drive growth In addition to capacity, washing...

  • Page 13
    avsnitt Experience on the web in North America - Virtual laundry The virtual laundry room, www.electroluxappliances.com, gives in-depth insights to the benefits of the new Electrolux laundry range for the North American market. The consumer is invited to browse through videos and demos but also to...

  • Page 14
    ...the Group's vacuum cleaners are sold under the Eureka brand, but sales of more exclusive Electrolux-branded models are increasing. Innovative products drive growth Electrolux is committed to continuous development of innovative products with attractive design, which consumers are prepared to pay for...

  • Page 15
    avsnitt Experience on the web in Europe - Electrolux Maximus The extended product presentation of the vacuum cleaner Electrolux Maximus, www.electrolux.sk, on the web is designed to provide all information that the consumer is looking for. By interacting with the vacuum cleaner, the user is able to...

  • Page 16
    ... behavior and a low level of consolidation among producers have led to downward pressure on prices in recent years. Retailers The European market is dominated by many small, local and independent retail chains focused on electrical and electronic products as well as kitchen equipment. Strong organic...

  • Page 17
    ... in Eastern Europe, excl. Turkey Change y/y, % 10 8 6 4 2 0 âˆ'2 04 05 06 07 08 Quick facts 100% of Electrolux vacuum cleaners are made in low-cost countries. 100% Market shares 18% core appliances 14% ï¬,oor-care products In the spring of 2008, appliances in Europe rolled out its Green range...

  • Page 18
    ...-side refrigerators are popular among North American consumers. Retailers Approximately 60% of all appliances in the US are sold through four large retailers; Lowe's, Sears, Home Depot and Best Buy. Sears and Home Depot also have strong positions in Canada. Vacuum cleaners are sold primarily through...

  • Page 19
    ... with new housing have decreased. Retailers and competitors Estimated value segments on US market CORE APPLIANCES Major retailers • Sears • Lowe's • Home Depot • Best Buy Major competitors • Whirlpool • General Electric VACUUM CLEANERS Major retailers • Lowe's • Sears • Wal...

  • Page 20
    annual report 2008 | part 1 | business areas | consumer durables | latin america Consumer Durables Latin America Brazil is the Group's main market in Latin America. Electrolux is the second largest producer of appliances in Brazil and the largest producer of vacuum cleaners. The Electrolux brand ...

  • Page 21
    ... by approximately 156% in local currency. In 2008, products that had been launched within the past three years accounted for approximately 70% of Electrolux sales in Brazil. Market, retailers and competitors Net sales in Latin America, 2004-2008 CORE APPLIANCES Major market • Brazil Major...

  • Page 22
    ... countries is mainly in the low-price segment and results primarily from an improved standard of living. The market for appliances in China, which is the second largest market in Asia, amounted to approximately SEK 46 billion in 2008. There is no obvious market leader for appliances within the...

  • Page 23
    Quick facts Electrolux has launched a new series of energyefficient refrigerators in Australia and New Zealand. Electrolux-branded models commanded the 12 top ratings on the Australian Government's energy rating website for all two-door fridges/freezers. Electrolux sales in Vietnam increased by ...

  • Page 24
    ... position Brands Electrolux products for professional food service are sold mainly under the Electrolux brand. Molteni is a niche brand for exclusive Opportunities within professional products Market value, food service SEK billion Market value, laundry SEK billion 75 60 45 30 15 0 North Europe...

  • Page 25
    Electrolux Green & Clean dishwashers for professional users are labelled "Green Spirit". The dishwashers consume less water, energy and detergents than comparable products. Very low noise level improves the working environment. 21

  • Page 26
    ... sold under the Electrolux brand, except in the US where the Wascomat brand is used by the distributor. Products and market position The Electrolux product offering includes washing machines, tumble-dryers and equipment for ironing. In Europe, Asia and North America, dealers account for the largest...

  • Page 27
    ... Food service Laundry Professional washers from Electrolux annually wash 18 million tons of garments, linen and alike. In Australia, the campaign "Everything we learn here, we apply here" shows how Consumer Durables and Professional Products learn from each other. million Europe North America...

  • Page 28
    In 2008, a comprehensive launch of approximately 150 Electrolux-branded appliances was implemented in the North American market. The goal is to achieve a substantial long-term position in the growing and profitable premium segment. The launch was the biggest ever for the Group in North America. 24

  • Page 29
    25

  • Page 30
    ..., from initial contact with a consumer to installation and service of sold products. Planning of marketing campaigns is integrated at an early phase of product development, and all activities are coordinated for maximum impact. This creates a uniform, powerful image of Electrolux across all...

  • Page 31
    ... Latin America, Australia, Southeast Asia and Professional Products. A more efficient marketing organization has been established in Europe. Improved product offering in the US has enabled an estimated market share of about 5% in the profitable premium segment. Electrolux strategy is the tool for...

  • Page 32
    ... when specifications and design have been decided upon. Designers use computers to try different solutions and also work with realistic product models. PRIMARY DEVELOPMENT STRATEGIC MARKET PLAN IDENTIFICATION OF CONSUMER OPPORTUNITIES CONCEPT DEVELOPMENT PRODUCT DEVELOPMENT COMMERCIAL LAUNCH...

  • Page 33
    ..., the launch of laundry products under the Electrolux brand for the North American market began with a grand customer event in Las Vegas, US. Range management Continous updates prolong the life of a product. The vacuum cleaner Electrolux Ergorapido is an example of a product that year after year...

  • Page 34
    ...Group appliances and vacuum cleaners in Latin America and in Southeast Asia are Electroluxbranded. In Europe, these products have a 56% share that is growing steadily. In North America and Australia, the share of Electrolux-branded products is increasing from a low level. Largest ever product launch...

  • Page 35
    ... and purchase products. Online tools and solutions will be increasingly more important for marketing and sales of Electrolux products. Electrolux has a strong position on the web and is investing actively to reinforce it, one example being the investments in North America. Out of consumers buying...

  • Page 36
    ... of innovative Electrolux laundry appliances for the North American market. All the new washing machines and tumble-dryers are front-loaded. They feature greater capacity than most other competing machines and are energy-labeled with Energy Star. The launch of these new products began with...

  • Page 37
    ... energy-efficient technologies for preparing food. Electrolux is a pioneer in the North American market, and introduced induction hobs several years ago as part of the Electrolux ICON™ series. The models launched under the Electrolux brand in 2008 received good market acceptance. Induction hobs...

  • Page 38
    ... markets generates opportunities for continued expansion. For example, the strong position that Electrolux has achieved for front-loaded washing machines in Southeast Asia is the basis for expanding operations in terms of kitchen appliances. New product categories are developing Electrolux works...

  • Page 39
    .... Electrolux Ergorapido created the new category of cordless vacuum cleaners for lighter cleaning, and satisfied a need that exists in all markets. More than 2.8 million Ergorapido units have been sold to date. Higher sales through kitchen suppliers Kitchen specialists in Europe, Australia, the...

  • Page 40
    ... of washing machines and tumble-dryers for the North American market. This plant and the plant for refrigerators that was opened in 2006 in Juarez now employ about 2,700 people. Program for more efficient production Since 2005, the Group has worked through the Electrolux Manufacturing System (EMS...

  • Page 41
    ... quality with EMS Maintaining high quality in the Electrolux products is a prerequisite for competing successfully in the premium segment for appliances in North America. The refrigerators and laundry appliances that have been launched there are manufactured in the Group's new plants in Mexico. Like...

  • Page 42
    ...the Electrolux brand. The Electrolux E:line built-in cooking series has acheived accelerated market share growth in an important, profitable product category for the Group. The Electrolux brand has also been positioned in the rapidly growing segment for front-loaded washing machines. Image-building...

  • Page 43
    ...Electrolux Iron Aid condensor dryer. Alex Perry put Iron Aid to the test when he dried one of his most delicate fashion creations in this machine, and it came out in perfect condition. The launch gained significant media attention for the Electrolux brand in the fasion press and Internet blog sites...

  • Page 44
    annual report 2008 | part 1 | sustainability Delivering lasting value With a sustainable business approach, Electrolux aims to increase trust among consumers, employees, investors and regulators. The Group's environmental and social performance and energy-efficient products help build strong ...

  • Page 45
    ... goal of the Responsible Sourcing program is to build transparent business relationships and improve labor and environmental conditions. Suppliers are monitored by Group sustainability auditors based in Asia/Pacific, Eastern Europe and Latin America as well as through external audits. The program...

  • Page 46
    annual report 2008 | part 1 | sustainability Green range Electrolux is a global leader in development of innovative products with outstanding environmental performance. Under the Green range banner, each business sector is promoting a product offering that is water and energy-efficient, and ...

  • Page 47
    ...The Electrolux Green Spirit range offers best-in-class environmental performance to professional users. These appliances meet end-user demands for more efficient use of energy, gas and water, as well as lower consumption of detergents in dishwashers. More than 95% of the materials in these products...

  • Page 48
    ... participated in the review process, a greater number than ever before. Succession planning is a vital component Succession planning is a vital component of Talent Management. The Electrolux People Vision is to have an innovative culture with diverse, outstanding employees that drive change and go...

  • Page 49
    ... approach to, and management of, total remuneration will serve in shareholders best interests as well as engage our talented and committed executive team in what is a very demanding market. Employees, by geographical areas Gender distribution Europe, 51% North America, 27% South America, 13% Asia...

  • Page 50
    ... dishwashers, appliances Europe Capital gain, real estate, appliances Europe Cost for litigation, appliances North America Total -1,045 -470 -360 -120 130 -80 -1,945 1) Basic. 2) The Board of Directors proposes that no dividend will be paid for 2008. Downturn in the market Most of Electrolux main...

  • Page 51
    ...industry shipments of appliances in the US market had its peak level, core appliances has declined by 16%. In the fourth quarter of 2008, industry shipments in the US declined by 14%. The European market has been falling for five consecutive quarters, with Eastern Europe showing a dramatic downturn...

  • Page 52
    ... for appliances in China indicate a growth in 2008, in comparison with 2007. Market demand increased, primarily in the low-price segment, where the Group has reduced its presence. The operation in China continues to report a loss. Professional Products Sales of food-service equipment in 2008...

  • Page 53
    ... Swedish investors. Major shareholders Share capital, % Voting rights, % SEKm Inventories Trade receivables Accounts payable Provisions Prepaid and accrued income and expenses Taxes and other assets and liabilities Working capital Property, plant and equipment Goodwill Other non-current assets...

  • Page 54
    ... charging station to recharge. Electrolux today Insight into consumer behavior is the basis for all product development within the Group. Electrolux developed Ergorapido, a cordless vacuum cleaner, for people who want the vacuum cleaner easily available. Sleek in design and lightweight, Ergorapido...

  • Page 55
    ... also more attractive. Looking at the Model xxx vacuum cleaner, Wenner-Gren said to Guild: "You have given Electrolux products attractive design and perfect form." Electrolux today Electrolux today One of the main consumer problems associated with freezers, extensive research shows, is defrosting...

  • Page 56
    ...and CEO of ABB Financial Services AB, 1991-1997. Holdings in AB Electrolux: 6,500 B-shares. Hasse Johansson Born 1949. M. Sc. in Electrical Engineering. Elected 2008. Executive Vice President and Head of Research and Development of Scania AB since 2001. Previous positions: Founder of Mecel AB (part...

  • Page 57
    ... Banken AB. Holdings in AB Electrolux: 0 shares. Björn Irle PricewaterhouseCoopers AB Born 1965. Authorized Public Accountant. Holdings in AB Electrolux: 0 shares. Holdings in AB Electrolux as of December 31, 2008. For additional information on the Board of Directors, see page 99 in part 2. 53

  • Page 58
    ... Management since 1998. Joined Electrolux in 1983. Head of product area Dishwashers and Washing Machines, 1987. Head of product division Floor Care Products, 1992. Executive Vice-President of Frigidaire Home Products, USA, 1995. Head of Floor Care Products and Small Appliances and Executive Vice...

  • Page 59
    ..., 1990-1992. General Counsel of Volvo Car Corporation, 1992- 1997. Attorney and partner of Wahlin Advokatbyrå, 1998. Joined Electrolux in 1999 as Senior Vice-President and General Counsel, with responsibility for legal, intellectual property, risk management and security matters. Board Member of...

  • Page 60
    ... information about, for instance, the Electrolux shares, financial statistics and corporate governance. On the website you can also read more about our sustainability work. Electrolux Annual Report 2008 consists of two parts: • Operations and strategy • Financial review, Sustainability report...

  • Page 61
    ...Our brands Sustainability Corporate governance Annual General Meeting Financial statistics Share development Dividend Ownership structure Shareholder information Latest press releases Latest interim report Current share price www.electrolux.com/ir Investor Relations Tel. +46 8 738 60 03. E-mail...

  • Page 62
    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 8 738 74 61 Website: www.electrolux.com 599 14 14-17/7