Electrolux 2010 Annual Report Download - page 51

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Capital-turnover rate of at least four
Electrolux strives for an optimal capital structure in relation to the
Group’s goals for profitability and growth. Extensive investment has
been made in new, modern production facilities in low-cost areas,
and production has been discontinued in high-cost areas.
In recent years, work on reducing working capital has been inten-
sified. This has involved reviewing all aspects from supplier con-
tracts and inventory management to invoicing of customers. It has
resulted in a lower level of structural working capital, that is, the
share of capital that is not affected by changes in business condi-
tions, as well as a stronger cash flow. When demand and sales
accelerate again, even greater focus will be required on limiting the
degree of capital intensity within the Group through, for example,
more efficient outsourcing of products and components. Reducing
the amount of capital tied up in operations creates opportunities for
rapid and profitable growth.
The capital -turnover rate amounted to 5.1 during 2010, which sur-
passed the goal.
CAPITAL
TURNOVER
RATE
20
18
16
14
12
10
2007 2008 2009 2010
Net operating capital, % of sales
Improvement in working capital
• Significant improvement in work-
ing capital strongly contributed
to high cash flow
• Structural reduction of inventory
level
• Reduction of past due receivables
• Improved accounts payable
Capital-turnover rate
0
1.5
3.0
4.5
6.0
06 07 08 09 10
The decline in capital-turnover
between 2009 and 2010 relates
primarily to extra pension contri-
butions of SEK 4 billion at the end
of 2009.
4
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