Electrolux 2011 Annual Report Download - page 101

annual report 2011 board of directors report
Structural changes and acquisitions
Actions to improve operational excellence
At Electrolux Capital Markets Day in November 2011, manage-
ment presented the Group’s strategy to create sustainable eco-
nomic value by; capitalizing on profitable growth opportunities,
speeding up the product-innovation cycle and continuing to
improve operational excellence.
To improve cost efficiency, a number of cost-savings activities
are being implemented. Electrolux has been tangibly affected by
the decline in consumer confidence in mature markets. To adapt
the manufacturing capacity, further restructuring measures within
manufacturing will be implemented which are estimated to gener-
ate annual savings of SEK 1.6 billion as of 2016. Costs for these
measures amount to approximately SEK 3.5 billion.
At the same time, overhead costs will be reduced by approxi-
mately SEK 680m. Activities to reduce staffing levels in all regions
were initiated in the fourth quarter of 2011 and will continue in
2012. Costs for these actions amounting to SEK 635m were
charged against operating income in the fourth quarter, see table
on page 6.
Activities to capitalize on the Group’s shared global strength
and scope to escalate the pace in unlocking global synergies,
increase modularization and optimize purchasing are being
im plemented. Costs for these activities amount to a total of about
SEK 1 billion in 2011 and 2012. The annual savings are estimated
to approximately SEK 3 billion as of 2015.
In total, these actions to improve operational excellence will
provide annual savings of SEK 5.3 billion. Costs for these activities
amount to SEK 5.1 billion.
Improving efficiency within dish-washing production
To optimize and improve global efficiency and capacity utilization
within the Group’s dish-washing manufacturing, one production
line of dishwashers at the manufacturing facility in Kinston, North
Carolina in the US, will be discontinued. The production will be
transferred to one of the Group’s production facilities in Europe.
The costs for these activities of SEK 104m were charged to oper-
ating income in 2011, within items affecting comparability. The
plant in Kinston will continue to produce dishwashers for the
North American market.
Acquisition of Chilean appliances company CTI
During the fourth quarter, Electrolux completed the acquisition of
the Chilean appliances company Compañia Tecno Industrial S.A.
(CTI) and its subsidiaries. In Chile, CTI group manufactures refrig-
erators, stoves, washing machines and heaters, sold under the
brands Fensa and Mademsa, and is the leading manufacturer
with a volume market share of 36%. CTI group also holds a lead-
ing position in Argentina with the GAFA brand and in Chile, Somela
is the largest supplier of small domestic appliances. CTI group
has 2,200 employees and two manufacturing sites in Chile and
one site in Argentina.
The acquisition is part of Electrolux strategy to grow in emerg-
ing markets. The acquisition makes Electrolux the largest supplier
of appliances in Chile and Argentina, and further enhances
Electrolux position as a leading appliances company in the fast-
growing Latin American markets.
Items affecting comparability
Restructuring provisions and write-downs 2011 2010
SEKm
Appliances plant in Kinston, North Carolina, USA –104 —
Appliances plant in L’Assomption, Canada — –426
Workforce reduction in manufacturing, Europe –54 –356
Appliances plant in Revin, France – –71
Appliances plant in Forli, Italy – –136
Appliances plant in Motala, Sweden – –95
Reversal of unused restructuring provisions 20 20
Total –138 –1,064
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