Electrolux 2013 Annual Report Download - page 60

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Major Appliances
North America
Electrolux commands a strong position
in the US and Canada, particularly for
kitchen appliances, such as cookers,
refrigerators and freezers. The Group’s
appliances are predominantly sold under
the Frigidaire brand in several price seg-
ments and under the Electrolux brand in
the premium segment. The Group
strengthened its market shares in North
America as a result of such activities as
successful product launches, new distri-
bution channels and increased invest-
ments in innovation and marketing.
During the year, Home Depot grew into a
new significant distribution channel.
Growth and innovation
The core appliances market grew by
about 9% during the year. The increase
was mainly related to the improvement in
the US housing market. There is consid-
erable potential for further growth since
demand is still approximately 20% below
historic peak levels. During the next few
years, growth in housing construction is
expected to be particularly strong for
single-family homes. Another interesting
trend is that the premium segment is
growing in parallel with the region’s age-
ing population. In the premium segment,
Electrolux has a strong and broad prod-
uct offering through its Electrolux brand.
The product range was broadened
during the year and a number of innova-
tive products were launched, such as
OrbitClean dish washers and kitchen
appliances with smudge-proof stainless
surfaces under the Frigidaire Gallery
brand and the Perfect Temp drawer for
refrigerators under the Electrolux brand.
North American homes generally have
ample space for many household appli-
ances, including large appliances. The
high degree of product penetration com-
bined with relatively low population
growth has resulted in replacement
products dominating the market. The
market is also more uniform than most
markets, which has led to a relatively high
level of consolidation among manufac-
turers and retailers. The three largest
manufacturers of appliances in the US
account for a major part of the market
and about 70% of appliances are sold
through four national retailers – Best Buy,
Home Depot, Lowe’s and Sears.
Operational exellence
An important part of the Electrolux stra-
tegy to grow profitably is its ability to
quickly and efficiently deliver products to
consumers and retailers. During the year,
Electrolux established a new logistics
system for warehousing and distribution
of products, enabling the company to
rapidly and efficiently serve new, trans-
national distribution channels, such as
Home Depot.
To ensure a more streamlined manu-
facturing process with the latest techno-
logy while maintaining high quality,
Electrolux is consolidating its North
American cooking manufacturing into
the state of Tennessee. The company
has opened a new cooking plant in
Memphis, Tennessee, and is moving
cooking production in the unit in L’As-
somption, Quebec, Canada, to the new
plant. During the year, these facilities
were partially operating in parallel, thus
leading to increased production costs.
Share of net sales 2013
29%
Share of operating income
53%
Market position
• Major Appliances 23%
Net sales and operating margin 2013 Comments on performance
Organic growth in North America increased by
7.6% due to higher volumes of core appli-
ances. Growth in the market, launches of new
products and new distribution channels all had
a positive impact on sales. Operating income
improved on account of continued volume
growth of appliances and improvements in the
price/mix.
Priorities moving forward
• Launch of consumer-driven innovation
and improvement of product mix
• Growth in new customer segments
and new channels
• Continued efforts to cost-efficiently
serve new customers
The US appliance market saw a strong growth in 2013 after several years
of declining demand. Electrolux strengthened its position in the region and
increased sales as a result of new product launches and the addition of new
customers and new sales channels. The focus of Electrolux is to strengthen its
position in the market by offering new innovative products across several
price segments and brands.
Jack Truong
Head of Major Appliances North America
SEKm
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1312111009
%
0.0
1.5
3.0
4.5
6.0
7.5
Net sales
Operating margin
Operating margin
58 ANNUAL REPORT 2013
Business areas