Electrolux 2008 Annual Report Download - page 51

Earnings per share1)
gained market share in the premium segment. This market share
is estimated at approximately 5%.
The launch had a negative impact on operating income for
2008 in the amount of SEK –470m, as it initially included a consid-
erable investment in marketing.
Consolidated income statement
SEKm 2008 2007
Net sales 104,792 104,732
Cost of goods sold –86,795 –85,466
Gross operating income 17,997 19,266
Selling expenses –11,788 –10,219
Administrative expenses –4,839 – 4,417
Other operating income/expenses 173 207
Items affecting comparability –355 –362
Operating income 1,188 4,475
Margin, % 1.1 4.3
Financial items, net –535 –440
Income after financial items 653 4,035
Margin, % 0.6 3.9
Taxes –287 –1,110
Income for the period 366 2,925
Attributable to:
Equity holders of the Parent Company 366 2,925
Minority interests in income for the period — —
Total 366 2,925
Cost-saving activities and restructuring
Electrolux has throughout 2008 introduced a number of cost-
saving activities, including reduction of the number of employees.
In light of the sharp market decline in the second half of November
and in December, it was decided to reduce the number of employ-
ees by more than 3,000 in the fourth quarter of 2008 and in 2009.
All operations on a global basis are affected.
The costs for these actions, approximately SEK 1.0 billion, were
charged against operating income before items affecting compa-
Excluding
items affecting
comparability
Including
items affecting
comparability
SEK
16
12
8
4
00804 05 06 07
Excluding items affecting comparability and non-recurring items
described in the table on the previous page, operating income for
2008 amounted to approximately SEK 3,500m.
Market overview
Most of Electrolux main markets for appliances showed a decline
in the fourth quarter of 2008. The North American market has
declined for ten consecutive quarters. Since 2005, when 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 in the fourth quarter, declin-
ing by 15%. Demand in Western Europe declined by 8% in the
fourth quarter. The total European market has declined since
2007 by 4%. After a long period of strong growth, the Latin Amer-
ican market for appliances decreased in the fourth quarter of
2008.
There are no indications of an immediate improvement in any of
the Group’s main markets, and, therefore, market demand for
appliances around the world is expected to decline further in
2009.
As there is a great uncertainty of the degree of decline, it is cur-
rently very difficult to forecast Electrolux earnings for 2009. Con-
sequently, Electrolux will not give an outlook for operating income
for 2009.
Launch of premium products in the US
In April 2008, Electrolux was introduced as a major appliance
brand in North America. The plan with the launch is to gain a sig-
nificant long-term presence in the premium segment, which
shows considerably higher profitability than the mass-market
segment where the Group holds a strong position today. The new
products received good market acceptance, and the Group
Net debt/equity and equity/assets ratios
50
%
40
30
20
10
1.0
0.8
0.6
0.4
0.2
0
0
99 90 01 02 03 04 05 06 07 08
Equity/assets ratio
Net debt/equity ratio
Earnings per share declined to
SEK 2.32 (11.66) in 2008, exclud-
ing items affecting comparability.
1) Earnings per share for 2006 and
2007 refer to continuing operations
The net debt/equity ratio
increased to 0.28 (0.29)
and the equity/assets ratio
decreased to 25.6% (26.9)
in 2008.
47