Electrolux 2009 Annual Report Download - page 37

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For a number of years, Electrolux has been
relocating production to low-cost countries
and reducing the number of employees. Pro-
duction has become more efficient, and pur-
chasing costs as well as product costs have
been reduced.
The rate of change accelerated toward the
end of 2008. Two new cost-cutting programs
were initiated in order to adjust to the severe
market downturn, one of them being global
and the other focusing on operations in Europe.
These programs included reducing the number
of employees by more than 3,000. Although
capacity utilization was only 60% in 2009,
the Group achieved higher profitability. The
recession has also involved downward pres-
sure on prices for steel and other materials,
which has resulted in lower costs for raw
materials.
Structural
measures
and adjust-
ment of cost
levels…
…and a focus
on strong cash
flow…
The Group’s strong cash flow is the result of
long-term efforts that involve managing opera-
tions with a focus on working capital. Tempo-
rary suspension of production has enabled
adjustment of inventories to match existing
demand. Routines and contractual terms for
purchasing, invoicing of customers and pro-
duction are being reviewed systematically.
This has contributed to lower structural work-
ing capital, which will remain so when demand
recovers.
Weak demand has also led to lower require-
ments for investment in additional capacity.
In 2009, these investments declined by
approximately 30% compared to the previous
year. The strong cash flow gives Electrolux a
strong financial position and a good potential
for profitable growth.
Electrolux will emerge stronger than ever from
the recession – with the right structure, the
right products and competitive cost levels.
…which have
generated
improved
profitability.
Sales and operating income
Net sales
Operating margin, excluding
items affecting comparability
125,00010
8
6
4
2
0
100,000
75,000
50,000
25,000
005 06 07 08 09
SEKm %
...to a
consumer-driven
company
From a
manufacturing
company...
Products
Brand
Cost
33