Electrolux 2013 Annual Report Download - page 62

Major Appliances
Latin America
Electrolux operations in Latin America
are continuing to grow. The Group’s mar-
ket shares were further expanded in
2013 due to the rapid pace of product
development and extensive launches of
new, innovative products. Brazil is the
Group’s largest market and accounted
for about 70% of Electrolux sales during
the year. The significance and contribu-
tions of other Latin American markets are
on the rise, reinforced by the 2011 acqui-
sition of Chilean CTI.
Growth and innovation
The Latin American market is relatively
consolidated. In Brazil, the three largest
manufacturers – Electrolux, Whirlpool
and Mabe – account for more than 70%
of appliances sales. As a result of high
import duties and logistical costs, the
bulk of products sold are produced
domestically. Consolidation is also
strong among retailers in the region.
These factors reinforce the strength and
potential of established, nimble competi-
tors in the region. During the year, most
Latin American currencies weakened
against the US dollar, resulting in
increased costs for the import of
semi-finished and finished goods and
thus a need for price hikes. Brazil
accounts for about 50% of the total mar-
ket. Other major markets include Mexico
and Argentina.
The Latin American market for appli-
ances has grown in recent years. The
reason for this is the rising purchasing
power of households, which primarily
demand more basic cookers, refrigera-
tors and washing machines. Demand for
products in the upper-price segments is
also increasing among the rapidly
emerging middle class. Despite the slow-
down in the Brazilian economy over the
past two years, demand for appliances in
Brazil has risen as a result of the govern-
ment’s tax-reduction program for the
purchase of domestically manufactured
appliances. This program was gradually
reduced during 2013, which was one of
the factors behind the decline in demand
in the latter part of the year.
The strong position of Electrolux in
several Latin American countries,
long-established relationships with the
major retailers and a far-reaching distri-
bution network provide a solid platform
for profitable growth in the region.
Electrolux can continue its expansion
in Latin America in parallel with a growing
middle class through its substantial
investments in consumer-driven product
development, production capacity and
distribution. A large number of new prod-
ucts was launched in several markets in
2013, achieving highly favorable results in
customer satisfaction surveys. The new
Electrolux Bottom Freezer was developed
in Brazil, and a full 88% of surveyed con-
sumers stated a preference for the prod-
uct over the closest competitor. Other
examples of new launches were the Silent
Washer washing machine under the
Electrolux brand and The Blossom
Refrigerator under the Frigidaire brand.
Operational excellence
During the year, the Latin American oper-
ations continued toward the objective of
operating to a single standard of perfor-
mance excellence. Programs were car-
ried out throughout the region to
empower the workforce, reduce costs
and increase productivity. For example,
the Electrolux Manufacturing System
(EMS) was implemented at the plant in
Santiago, Chile, In São Carlos, Brazil, an
automated process was introduced for
the production of washing machines.
Share of net sales 2013
19%
Share of operating income
24%
Market position
• Electrolux has a leading position in Brazil and
Argentina, and the number one position in
Chile
Net sales and operating margin 2013
Electrolux is growing rapidly in Latin America and the Group holds consid-
erable market shares in the region. The Electrolux brand occupies a strong
position through its innovative products and close collaboration with market-
leading retail chains.
Ruy Hirschheimer
Head of Major Appliances Latin America
SEKm
0
5,000
10,000
15,000
20,000
25,000
1312111009
Net sales
Operating margin
%
0.0
1.5
3.0
4.5
6.0
7.5
Comments on performance
Sales for Electrolux in Latin America continued
to increase during the year as a result of price
increases and an improved product mix. How-
ever, operating income for the year declined,
primarily due to negative exchange rate
effects. During the year, most Latin American
currencies weakened against the US dollar,
resulting in increased costs for the import of
semi-finished and finished goods. This was to
some extent mitigated by price increases.
Priorities moving forward
• Expansion of product offering
• Continued growth in Brazil
• Strengthening of positions in other markets
60 ANNUAL REPORT 2013
Business areas