Electrolux 2013 Annual Report Download - page 77

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Frequently asked
questions by analysts
? Describe the competitive landscape in
the market place developed in 2013 and
its impact on Electrolux?
Price pressure continued to be evident in the European mar-
ket in 2013 while the markets in North America and Latin
America characterized a more stable pricing environment. In
2013, Electrolux continued to improve its price-mix in North
America and successfully implemented price increases in
Latin America.
?How did Electrolux mix develop over the year
and what has been the main driver of that?
Improving our mix through product launches and diligent price
and product management is central in our strategy and to our
growth ambitions while we offer more value to our customers.
We are increasing the sales share of premium and built-in appli-
ances which helps improve the mix and contribute to profitabil-
ity. 2013 has been a year of intensive product launches in which
we completed the launch of the Electrolux-branded premium
brands across Europe and in other core markets. This has
helped improve our product mix in most markets.
? Could you update us on the market in North America
and how your performance has been there?
The North American appliance market showed strong growth
and increased by 9% in 2013. Consumer confidence has
improved and we have also seen housing statistics improving.
During the year, Electrolux continued to strengthen its position
in the main market channels and have gained market shares.
Earnings in North America increased significantly versus previ-
ous year.
?How did your currency exposures affect
your earnings?
Electrolux has approximately SEK 45 billion of currency in and
outflow every year. This leads to a high exposure to currency
risks as the Group operates in over 150 countries. In 2013,
many important currency pairs showed large fluctuations which
affected the Group’s operating income. About one-third of the
negative impact was from Latin American currencies, which
depreciated heavily against the US Dollar. The total negative
impact from both currency transaction and translation to
Electrolux earnings was SEK –1,460 million.
?How will you restore earnings in Europe?
The European market followed the weak trend from last
year and declined by 1% in 2013. Increased competition and price
pressure have resulted in falling profits for many players in Europe.
In response to the challenging market environment, we have
taken initiatives to reduce our cost base, improve our competitive-
ness within manufacturing and focus on increased product mix.
?What investment costs did you have for
marketing, branding and logistics?
As part of Electrolux growth ambitions and to meet the market
demand, the Group is accelerating its product innovation and
launches across all major markets. In North America, invest-
ments related to the new cooking plant in Memphis, Tennessee,
and ramp-up costs for new channel expansion were continued.
In Europe, the launch of the Electrolux branded Inspiration
Range was completed. The biggest launch in 2013 was made in
China, with more than 60 new products for kitchen and laundry.
?Can you provide us with an update on your
restructuring and cost savings programs?
Electrolux has been implementing an extensive restructuring
program since 2004. Plants have been closed in high-cost
areas, including the US, Germany and Australia, and new plants
have been built in Mexico, Eastern Europe and Thailand. In
2013, additional measures were presented to further adapt
capacity in mature markets to lower demand. Savings have
been estimated to SEK 1.8 billion with full effect from 2016 and
total cost to approximately SEK3.4 billion of which
SEK1.5 billion was charged to operating income in 2013.
Analysts engage in questions related to the
development of the appliance market and
the demand in Electrolux core markets.
Price and mix and future outlook are import-
ant topics which analysts focus on in order
to gain better understanding of the opera-
tion for which they can base their longer
term projections of Electrolux future perfor-
mance. The telephone conferences from
previous quarters are available at
www.electrolux.com/ir
Analysts’ questions at 2013 quarterly telephone conferences
Price/Mix, 16%
North America, 16%
Currency, 13%
EBIT Bridge, 11%
Europe, 9%
Marketing, brand & logistics, 8%
Restructuring and cost saving, 8%
Latin America, 6%
Asia, 6%
Other, 8%
75ANNUAL REPORT 2013