Electrolux 2014 Annual Report Download - page 48

Europe, Middle East
and Africa
Focus on the strongest product categories, brands and sales channels
combined with complexity and cost reductions results in significant
earnings improvement and a long-term competitive business model.
Jonas Samuelson, Head of Major Appliances Europe, Middle East and Africa
 
Europe comprises the Group’s largest
market and Electrolux has a broad
offering under the three main brands:
Electrolux, AEG and Zanussi. In many
countries and segments, the Group
has significant market shares with a
particularly strong position in kitchen
appliances, such as cookers, hobs and
built-in appliances.
Demand for appliances has been
in decline for several years in Western
Europe but stabilized in . For some
time, the market in Western Europe has
been characterized by overcapacity
and price pressure. One of the key
reasons for this is that it is a fragmented
market with a large number of manu-
facturers, brands and retailers.
Africa and the Middle East com-
prise a large number of countries with
significant differences in terms of wealth
and degree of urbanization. However,
a common theme is that demand for
appliances rises in parallel with growing
prosperity. Electrolux has a focused
growth strategy targeting primarily
Egypt, Saudi Arabia and the Lower Gulf
countries.
Growth and innovation
During the past two years, Electrolux
has focused its innovation and market-
ing activities in Europe on its premium
brands, Electrolux and AEG in the
strongest product categories, primarily
built-in kitchen appliances, with a par-
ticular focus on cooking products, as
well as premium laundry products.
The built-in product ranges have
been renewed, with launches of inno-
vative products leveraging our  years
of expertise in professional appliances,
particularly focused in the areas of
combi-steam ovens, where Electrolux
is the market leader, and in induction
cooking. A new range of laundry
products, including washers, dryers and
combination washer/dryers has been
introduced, combining unparalleled
clothes care with class-leading energy
efficiencies. Growth and mix improve-
ments in these product categories have
been key contributors to the earnings
improvement in .
Connected products comprise
another key trend this year. At the IFA
trade show, Electrolux showcased a
revolutionary connected-oven, see
page .
As consumers rely increasingly on
digital touch points for information
and purchasing of appliances in addi-
tion to the traditional retail channels,
the importance of strong brands and
consistent and compelling commu-
nication in all consumer interaction
points is increasing. Hence, focus has
been increased on the premium brands
Electrolux and AEG, in the key touch
points of digital and in-store communi-
cation.
Operational excellence
During the year, the program of exten-
sive refocusing of operations on the
strongest and most profitable product
categories, brands and sales channels
has allowed substantial cost reductions
in other areas of the business.
Significant savings measures to
reduce complexity in the administrative
and sales operations were implemented
during the year. Activities to increase
production competitiveness contin-
ued. A comprehensive agreement to
improve the competitiveness of the
operations in Italy was reached with
social partners. A laundry factory in
France was divested. Discussions were
initiated with employee representatives
regarding production at two plants one
in Sweden and one in Switzerland and a
decision was taken to cease production
at the plant in Switzerland.
SHARE OF NET SALES 
31%
COMMENTS
ON PERFORMANCE
Operating income improved significantly as
a result of the ongoing structural measures
to reduce costs and increase efficiency as
well as product mix improvements.
Active product portfolio management
and a strong focus on the most profitable
product categories improved the product
mix.
PRIORITIES
MOVING FORWARD
• Consumer relevant innovation in the
strongest product categories and brands
• Reduce complexity and increase speed
to market
• Further improved cost and manufacturing
competitiveness
SHARE OF OPERATING INCOME
30%
MARKET POSITION
• Core appliances % in Western Europe
• Core appliances % in Eastern Europe
• A leading position in markets in
Northern Africa and the Middle East
NET SALES AND
OPERATING MARGIN
SEKm
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Net sales Operating margin
%
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 ELECTROLUX ANNUAL REPORT 
   