Electrolux 2009 Annual Report Download - page 7

Our strategy works
annual report 2009 | part 1 | ceo statement
Despite very tough economic conditions, we succeeded in achieving results for 2009
that were among the best ever for Electrolux. Taking action to enhance our competi-
tiveness and continuing to implement an offensive strategy enables us to strengthen
our profitability and our position.
In my CEO statement a year ago, I noted that we were faced with
a difficult situation. The financial crisis, the strained credit market
that it involved, and the sharp recession had led to a dramatic
deterioration of conditions in our markets.
The downturn in demand in Europe and North America accel-
erated at the end of 2008 and the start of 2009, following a grad-
ual decline over several years. At the same time, there was a sharp
downturn in demand in markets that had previously shown growth.
We therefore prepared for a tough year by focusing on strong
finances and lower costs.
Corrective action in a weak market
Among other things, we launched a comprehensive global pro-
gram for cutting costs, which involved reducing the number of
employees by more than 3,000. We adjusted our inventories to
the lower levels of demand by cutting back production and in
some cases temporarily stopping it. We focused on value instead
of volume and were able to maintain and even raise prices in sev-
eral major markets, which to some extent offset previous increases
in the cost of materials.
We reviewed routines and terms for purchasing, invoicing of
customers, production and inventories, which contributed to a
structural reduction in operating capital and an improved cash
flow. In addition, the Board of Directors made a historic decision
to not pay a dividend for 2008, in order to strengthen the balance
sheet to meet a challenging and uncertain year.
We continued to implement our strategy despite weak demand,
focusing on launches of innovative products under the Electrolux
brand. In combination with a solid financial position, lower costs
and a record-high cash flow, these efforts enabled Electrolux to
stand stronger than ever before.
Focus on the premium segment
Investment in innovative products is becoming increasingly more
important for maintaining a position as an industry leader. The
Group’s investments in product development and marketíng are
aimed primarily at increasing the share of products sold in the
higher price segments. That is where the potential for profitable
growth is greatest. One aspect of this is the accelerating emer-
gence of a global middle class that is demanding household prod-
ucts with attractive design and well-known brands. We will con-
tinue to position Electrolux as a premium brand worldwide, which
gives us a good base for capturing a considerable share of this
market. This gives us a competitive advantage which we are going
to be even better at making use of.
Launches of entire product ranges
The Group’s process for consumer-focused product develop-
ment is also becoming more global. Electrolux products are sold
throughout the world and are found in many millions of homes.
Understanding the needs of consumers as well as how they think,
feel and act when they use our products enables us to achieve
more accurate product development.
In addition, research shows that differences in household needs
in various parts of the world are not as great as one could believe.
A global group like Electrolux can benefit from this by launching
uniform products throughout the world with local variations as
appropriate. We also have a new approach to the launches. We
“We continued to implement our
strategy despite weak demand,
focusing on launches of innovative
products under the Electrolux
brand.”
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