Electrolux 2011 Annual Report Download - page 54

Financial goals over a business cycle
The nancial goals of Electrolux are intended to enable the generation of shareholder value. In addition to maintain-
ing and strengthening the Group’s leading global position in the industry, achieving these goals contributes to generat-
ing a healthy total return for Electrolux shareholders. The weak demand trend in the Group’s major markets resulted
in the achievement of only one of the four goals in 2011.
annual report 2011 strategy
>4
>6 %
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 facili-
ties in low-cost areas, and production has been dis continued
in high-cost areas. In recent years, efforts to reduce working
capital have been intensified. This has involved reviewing all
aspects, from supplier contracts and inventory management
to invoicing of customers. It has resulted in a lower level of
structural working capital in the Group, meaning the share
of capital that is not affected by changes in business condi-
tions, and a stronger cash flow. Reducing the amount of
capital tied up in operations creates opportunities for rapid
and profitable growth. The capital-turnover rate amounted to
4.3 in 2011, which surpassed the goal.
Capital-turnover rate
0807
6.0
4.5
3.0
1.5
0
09 10 11
The capital-turnover rate was
4.3 (5.1) and was above target.
The decline in capital-turnover
for 2010 relates to extra pension
contributions of SEK 4 billion.
Capital-turnover rates for 2011
have been impacted by the
acquisitions of Olympic Group
and CTI in 2011.
Operating margin
0807
7.5
6.0
4.5
3.0
1.5
009 10 11
%
Operating margin excl.
non-recurring items
Operating margin, excluding
items affecting comparability and
non-recurring costs, amounted
to 3.9% (6.1). Weak demand in
mature markets, price pressure
and increased costs for raw
materials had a negative impact.
Operating margin
of at least 6%
In 2011, Electrolux achieved an operating margin of 3.9%,
excluding items affecting comparability and non-recurring
costs. The lower operating margin compared with the pre-
ceding year was due to weaker demand in mature markets,
price pressure, higher costs for raw materials and non-recur-
ring costs. Electrolux aims to improve its profitability by main-
taining its focus on innovative products, strong brands, oper-
ational excellence and higher sales in profitable product
categories and rapidly growing markets. The Group’s operat-
ing margin will continue to fluctuate due to changes in general
economic conditions and trends in the household-appliances
market. Electrolux specifies an average goal for its operating
margin measured over a business cycle.
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