Electrolux 2011 Annual Report Download - page 32

Africa, Middle East and Eastern
Europe – acquisition for expansion
The acquisition of the Egyptian Olympic Group creates a leading position for Electrolux in
appliances in the fast-expanding markets in North Africa and the Middle East. Electrolux has
grown rapidly in Eastern Europe and currently commands major market shares for appliances
and vacuum cleaners in the region.
Africa and the Middle East comprise 75 countries with considerable
variation in terms of wealth and degree of urbanization. South Africa
and Turkey are the largest markets in the region. The population in
Africa is growing at an exponential rate, and the number of house-
holds is rising even more rapidly because many people are of the
age when it is time to find their own home. The degree of penetration
is low in most product categories, but is displaying high growth due
to the rapid rise in purchasing power. Refrigerators are one of the
first products required when the prosperity of a country increases.
In Eastern Europe, where Russia is the largest market, both average
prosperity and penetration are higher. A large market for replace-
ment products is emerging in several product categories, such as
cookers, laundry equipment and refrigerators/freezers.
Multitude of manufacturers and retailers
With a wide geographical distribution and varying degrees of pur-
chasing power, it is difficult for manufacturers and retailers to cap-
ture large market shares in Africa and the Middle East. Turkey has
several large domestic manufacturers that have also established
strong positions in nearby regions. The markets of Eastern Europe
are dominated by Western manufacturers, while the retailer network
is domestic.
The Group’s position
The acquisition of the Egyptian Olympic Group gives Electrolux a
leading position in appliances in North Africa and the Middle East.
Electrolux has grown rapidly in the Eastern European markets
in recent decades. At present, Electrolux commands 14% of the
appliances market in Eastern Europe and is the market leader in
Hungary, the Czech Republic and the Baltic countries. In other coun-
tries in the region, Electrolux is one of the three largest appliances
companies. The 2010 acquisition of a washing-machine factory in
the Ukraine has helped strengthen the Group’s competitiveness in
Russia and the Ukraine.
With Olympic Group, Electrolux can grow faster
Olympic Group is a leading major appliance company in the rapidly
expanding markets in North Africa and the Middle East. Olympic
Group, which has been the local partner of Electrolux in the region
for a period of almost 30 years, has about 7,100 employees and
manufactures such items as refrigerators, cookers, water heaters
and washing machines. Integrating Olympic into the operations of
Electrolux will facilitate even more rapid growth in the region. In
Egypt, for example, with its 80 million inhabitants, GDP per capita
has doubled since 2005 and a growing number can afford to pur-
chase their first appliances or change to new appliances.
Fast-growing product categories
In Africa and the Middle East, all product categories are expanding
at a high rate, primarily refrigerators, cookers and washing machines.
Many Eastern European households can now afford to replace old
appliances and even invest in new, more exclusive kitchen products.
This trend increases demand for built-in products, a segment in
which Electrolux is the leader. The improvement in the standard of
living in the region has also ensured that demand for such products
as dishwashers and tumble-dryers is rising fast.
annual report 2011 growth markets
9%
Professional food-service and
laundry equipment
Major appliances
Small appliances
With the acquisition of the Egyptian appli-
ances company Olympic Group net sales in
the region will increase.
07
15,000
10,000
5,000
008 09 10 11
SEKm
Net sales in Africa, Middle East and
Eastern Europe
100
80
60
40
20
0
Cookers
Refrigerators
Washing machines
Tumble-dryers
% of households
Product penetration in
Eastern Europe
Demand in Eastern Europe has increased
mainly on the basis of growth in Russia.
03
25
20
15
10
5
0
04 05 06 07 08 09 10 11
Million units
Shipments of core appliances in
Eastern Europe, excl. Turkey
Share of Group sales 2011 Share of sales in the region 2011
Source: Electrolux estimates.
28