Electrolux 2013 Annual Report Download - page 17
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Operating margin
6%
4x
X=
>20%
Return on
net assets
4%
Growth
Value Creation
Capital turnover-rate Over the past ten years, Electrolux shareholders have received an average total return of approximately 13%.
The company’s capacity to create healthy cash flows and to enhance operational efficiency represented a
strong contributing factor to this value creation. There is further potential for profitability by raising margins.
According to the strategy, innovative products are to contribute to higher profitability and a margin of not less
than 6%. A capital turnover-rate of not less than 4 combined with an operating margin of 6% yield a minimum
return of 20%. Further potential for value creation is possible if Electrolux can increase sales while retaining this
profitability level. The objective is annual organic growth of at least 4%.
*Financial goals are excluding items affecting comparability.
Return on net assets
of at least 20%
Focusing on growth with sustained profitability and a small but
effective capital base enables Electrolux to achieve a high long-
term return on capital. With an operating margin that achieves
the target of 6% and a capital turnover-rate of at least four times,
Electrolux would achieve a return on net assets (RONA) of at
least 20%. The figure reported for 2013 was 14.0%. The acquisi-
tions in 2011 of Olympic Group in Egypt and CTI in Chile have
impacted the return on net assets negatively.
Return on net assets
Average growth of
at least 4% annually
In order to reach the growth goal, the Group continues to
strengthen its positions in the premium segment, expand in
profitable high-growth product categories, increase sales in
growth regions and develop service and after-market opera-
tions. More rapid implementation of the growth strategy allows
organic growth to be complemented by acquisitions. In 2013,
sales declined by –0.8%, due to changes in exchange rates.
The organic sales growth was 4.5%, while currencies had a
negative impact of –5.3%.
Sales growth
>20 %14 %>4 %4.5 %
SEKm
0
5,000
10,000
15,000
20,000
25,000
30,000
1312111009
Net assets
Return on net assets
Goal 20%
%
10
15
20
25
30
35
40
SEKm
0
20,000
40,000
60,000
80,000
100,000
120,000
1312111009
Net sales
Organic sales growth1)
Goal 4%
%
-5
-3
-1
1
3
5
7
Goal Result 2013 Goal Result 2013
1) In local currencies and
comparable operating unites
Financial goals over a business cycle, excluding items affecting comparability
15ANNUAL REPORT 2013