Electrolux 2010 Annual Report Download - page 28

Consumer Durables Latin America
annual report 2010 | part 1 | operations | business areas | consumer durables | latin america
Electrolux is the second-largest producer of household appliances in Brazil and the largest
producer of vacuum cleaners. The Group’s sales in all of Latin America increased by more than
20% in 2010, and its position was strengthened in a number of product categories and markets.
The market
The market for household appliances in Latin America was worth
approximately SEK 93 billion in 2010, of which Brazil accounted for
half. Mexico and Argentina are other large markets. The federal
excise tax implemented in Brazil during 2009 for domestically-
produced household appliances was discontinued in January 2010.
This contributed to a substantial increase in demand at the start of
the year. After two weak quarters, demand accelerated towards the
end of the year. Most other Latin American markets saw demand
increase during the year.
Growth in the region is driven by greater household purchasing
power. The rapidly growing middle class in countries including Brazil
and Mexico also generated greater demand for appliances in the
premium segment.
The Latin American market is relatively consolidated. The three
largest producers in Brazil accounted for approximately 75% of
household appliances sales. The majority of appliances sold in Latin
America are produced domestically, due to high import tariffs and
logistic costs.
Retailers
Regional and local retailers are highly consolidated in Latin America.
Three of Brazil’s largest domestic retailers Casas Bahia, Globex and
Pão de Açúcar merged in 2010. The new company Grupo Pão de
Açúcar, has a dominant position on the market. Sales of appliances
are primarily driven by campaigns, since most purchasing decisions
are made in stores where producers maintain their own sales staff.
Greater use of the Internet by customers in recent years has become
increasingly important in the marketing activities of producers.
The Group’s position
Brazil is the Group’s largest market in Latin America and Electrolux
is the country’s second largest supplier of household appliances.
The Electrolux brand is strongly positioned in all segments on the
basis of innovative products and close partnerships with the leading
retail chains. In 2010, almost two-thirds of sales in Brazil consisted
of products launched in the past two years.
The Electrolux strategy is to grow rapidly in Brazil and the other
Latin American markets, including Mexico and Argentina. In Mexico,
products are sold under the Frigidaire and Electrolux brand.
Electrolux sales in Latin America grew by more than 20% in 2010
and market shares strengthened in such countries as Mexico and
Argentina, as well as in numerous product categories. The majority
of Electrolux household appliances sold in Latin America is manufac-
tured in Brazil or Mexico.
Two of three vacuum cleaners sold in Brazil in 2010 carried the
Electrolux brand, and Electrolux vacuum cleaners also have a strong
position in other areas of Latin America. Sales of Electrolux-branded
small appliances, including coffee machines, irons and toasters, are
growing rapidly in the region.
Share of operating income 2010
17%
Share of sales 2010
16% Operating income improved, primarily on the basis of higher volumes and an
improved product mix. The launch of new products and increased sales of
air-conditioning equipment have contributed to a better product mix for the
year.
Net sales in Latin America, excl. Brazil
10
8
0
06 0807 1009
20,000
16,000
12,000
8,000
4,000
0
SEKm
Net sales
Operating
margin
6
4
2
%
3,500
2,800
2,100
1,400
700
0
SEKm
06 07 08 09 10
Mexico, 17%
Venezuela, 11%
Argentina, 15%
Other, 57%
Net sales and operating margin
Electrolux total sales, incl. Consumer
Durables and Professional Products.
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