Electrolux 2010 Annual Report Download - page 104

Items affecting comparability
Income for the period and earnings per share
Income for the period amounted to SEK 3,997m (2,607), corre-
sponding to SEK 14.04 (9.18) in earnings per share before dilution.
Effects of changes in exchange rates
Changes in exchange rates compared to the previous year,
including translation, transaction effects and hedging contracts,
had a positive impact of approximately SEK 660m on operating
income for 2010. The effects of changes in exchange rates
referred mainly to the operations in Europe, Asia/Pacific and Latin
America. The weakening of the euro against several other curren-
cies and the strengthening of the Australian dollar and the Brazil-
ian real against the US dollar positively affected operating income.
The transaction effects amounted to approximately SEK 740m
and the translation of income statements in subsidiaries to
approximately SEK –130m. In addition, results from hedging con-
tracts had a positive effect of approximately SEK 50m on operat-
ing income.
For additional information on effects of changes in exchange rates, see section
on foreign exchange risk in Note 2 on page 40.
Market overview
Demand in the North American market increased by 5% over the
previous year. The growth derives from a very low level after more
than three years of decline. One contributing factor to the growth
in 2010 was the state-sponsored rebate program for energy-
efficient products in the second quarter.
Total demand in the European market stabilized in 2010 and
increased by 2%, after more than two years of decline, primarily
due to growth in Eastern Europe, where demand increased by
6%. Demand in Western Europe stabilized. The market in Brazil
increased in 2010 in comparison with the previous year. Most
other markets in Latin America also improved.
Market demand for appliances in Europe and North America is
expected to show a modest growth in 2011. Demand in Europe is
expected to increase by approximately 2% and demand in North
America by approximately 3% in 2011.
Structural changes
Electrolux initiated a restructuring program in 2004 to make the
Group’s production competitive in the long term. It will be com-
pleted in 2011 and more than half of production of appliances will
be located in low-cost areas. The total cost of the program will be
approximately SEK 8.5 billion, and the program is expected to
generate annual cost savings of SEK 3.4 billion with full effect as
of 2013. Restructuring provisions and write-downs are reported
as items affecting comparability within operating income.
Throughout 2010, Electrolux introduced restructuring activities
and aquisitions. These activities are described below.
December 2010
Electrolux consolidates cooking manufacturing
in North America
Electrolux is to consolidate its North American cooking manufac-
turing to Tennessee, USA, by building a new plant in Memphis.
This site offers an optimal geographical location towards custom-
ers and suppliers. Electrolux currently operates a factory in
Springfield. The new factory will together with the existing cooker
factory in Springfield establish Tennessee as a cooking produc-
tion centre for Electrolux in North America, enabling Electrolux to
realize synergies in manufacturing, R&D, purchasing, etc.
Production in Memphis is expected to start in mid-2012, and
the factory is expected to be fully operational in 2013. The new
manufacturing site, which represents an investment of
USD 190m, corresponding to approximately SEK 1,300m, will
receive investment support from state, county and city governing
bodies, which is pending their final approval.
Production at Electrolux cooking facility in L’Assomption, Que-
bec, Canada, will be transferred to the new facility in Memphis.
Transfer of production from the factory in L’Assomption will begin
in mid-2012, and the factory will close in the fourth quarter of
2013. The factory has approximately 1,300 employees. The clo-
sure will incur a total cost of approximately SEK 430m, which was
taken as a charge against operating income in the fourth quarter
of 2010, within items affecting comparability.
Restructuring provisions and write-downs1) 2010 2009
SEKm
Appliances, workforce reduction within manufacturing, Europe –356 –
Appliances plant in L’Assomption, Quebec, Canada –426 –
Appliances plant in Revin, France –71 –
Appliances plant in Forli, Italy –136 –
Appliances plant in Motala, Sweden –95 –
Appliances plant in Alcalà, Spain – –440
Appliances plants in Webster City and Jefferson, USA – –560
Office consolidation in USA – –218
Appliances plant in Changsha, China – –162
Appliances plant in Porcia, Italy – –132
Appliances plant in St. Petersburg, Russia – –105
Reversal of unused restructuring provisions 20 56
Total –1,064 –1,561
1) Deducted from cost of goods sold.
Earnings per share
20
15
10
5
009100607 08
Excluding
items affecting
comparability
Including
items affecting
comparability
SEK
annual report 2010 | part 2 | board of directors report
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