Electrolux 2008 Annual Report Download - page 52

annual report 2008 | part 1 | financial review in brief
Net sales by business area
Consumer Durables, 93%
Europe, 43%
North America, 31%
Latin America, 10%
Asia/Pacific and
Rest of world, 9%
Professional Products, 7%
rability in the fourth quarter of 2008, see table below. The savings
are expected to amount to approximately SEK 1.1 billion on a
yearly basis, with full effect as of 2010.
Cost-saving program in the fourth quarter of 2008
SEKm, approximately
Reduction,
number of
employees Charge
Consumer Durables, Europe 1,000 800
Consumer Durables, North America 700 45
Consumer Durables, Latin America 500 10
Consumer Durables, Asia/Pacific and Rest
of world 630 110
Professional Products 230 40
Group staff 60 40
Total 3,120 1,045
The costs for the actions above were charged to operating income
in 2008. This had an adverse effect on operating income for each
business area and particularly for Consumer Durables, Europe.
Consumer Durables, Europe
Group sales and operating income 2008 declined substantially as
a result of the weak trends in several of the Group’s most profit-
able markets in Europe. Demand declined in major markets, such
as Italy, the UK and the Nordic region.
Lower volumes and temporary shutdowns of production to
adjust inventories to lower demand, a less favorable product mix,
and costs related to restructuring had an adverse effect on oper-
ating income.
Demand for vacuum cleaners in Europe during 2008 was lower
than in 2007. Group sales declined as a result of lower sales vol-
umes. Operating income and margin improved substantially on
the basis of an improved product mix.
Consumer Durables, North America
On the basis of price increases and an improved product mix,
Group sales of appliances in North America, in comparable curren-
cies, were on a level with the previous year, despite lower sales
volumes. Sales volumes declined on the basis of weak demand in
the market. Operating income was lower as a result of higher costs
for raw materials, costs related to the launch of Electrolux for appli-
ances in the premium segment, lower volumes and temporary
shutdowns of production to adjust inventories to lower demand.
Market demand for vacuum cleaners in the US showed a steep
decline in 2008. Operating income and margin declined.
Consumer Durables, Latin America
The Group’s sales volumes in Latin America showed strong
growth for the full year 2008, rising by approximately 16%, and
market shares increased within several product categories.
Electrolux sales in Latin America rose by approximately 18%. Both
operating income and margin improved considerably on the basis
of higher sales volumes, a better customer mix, particularly in
Brazil, and higher productivity in the Group’s plants. Operating
income for 2008 was the best ever for the Group’s operation in
Latin America.
Consumer Durables, Asia/Pacific
The Group’s sales volumes and market shares increased. Operat-
ing income and margin in Australia improved, primarily on the
basis of implemented cost-saving programs and relocation of
production to low-cost countries.
Operations in Southeast Asia showed strong growth in all mar-
kets during 2008. The rate of growth declined somewhat during
the fourth quarter. Electrolux gained market shares across the
region and continued to show good profitability.
Market statistics for appliances in China indicate a growth in
2008, in comparison with 2007. Market demand increased, pri-
marily 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 increased on the basis
of higher sales volumes. Electrolux gained market share in several
key markets. Operating income improved substantially.
Sales of laundry equipment declined somewhat in 2008 com-
pared to 2007, as a result of lower sales volumes. Operating
income improved substantially, mainly on the basis of previous
price increases, lower administration costs and the effects of relo-
cating production to Thailand.
Operating income for Professional Products in 2008 was one of
the highest ever achieved.
Operating income by business area
SEKm 2008 2007
Consumer Durables, Europe –22 2,067
Margin, % 0.0 4.5
Consumer Durables, North America 222 1,711
Margin, % 0.7 5.1
Consumer Durables, Latin America 715 514
Margin, % 6.5 5.6
Consumer Durables, Asia/Pacific and Rest of world 369 330
Margin, % 4.0 3.6
Professional Products 774 584
Margin, % 10.4 8.2
Common Group costs, etc. –515 –369
Operating income, excluding items affecting comparability 1,543 4,837
Margin, % 1.5 4.6
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