Electrolux 2015 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... the best appliance company as measured by our customers Customer value is derived from the products and services Electrolux provides. Innovative products, closely based on the Group's professional expertise, are launched at an ever increasing pace across the globe. Cover: Electrolux Grand Cuisine...

  • Page 3

  • Page 4
    Electrolux vision is to be the best appliance company as measured by our employees Growth, innovation and operational excellence always begin with people. Dedicated employees from diverse backgrounds play a crucial role in creating an innovative culture.

  • Page 5

  • Page 6

  • Page 7
    Electrolux vision is to be the best appliance company as measured by our shareholders The combination of continuous growth, high profitability, a stable cash flow, and an optimal capital base generates a high total return for shareholders.

  • Page 8
    ... and Business areas Market information Electrolux market data Major Appliances EMEA Major Appliances North America Major Appliances Latin America Major Appliances Asia/Pacific Small Appliances Professional Products 6 8 10 12 14 18 20 22 26 30 32 34 38 40 42 Electrolux is a global leader in home...

  • Page 9
    ... businesses, with products such as refrigerators, dishwashers, washing machines, cookers, vacuum cleaners, air conditioners and small domestic appliances. Kitchen Electrolux sells cookers, hobs, ovens, hoods, microwave ovens, refrigerators, freezers and dishwashers for households and professional...

  • Page 10
    ... new President and CEO of Electrolux as of February 1, 2016. Business areas Professional Products Small Appliances Major Appliances Asia/Pacific 5% Major Appliances Europe, Middle East and Africa 30% The Electrolux brand 7% 7% SHARE OF GROUP SALES Major Appliances Latin America 15% Major...

  • Page 11
    ... *proposed by the board In , Electrolux sponsored and co-hosted Taste Festivals across Europe, the Middle East and Australia. The festivals are a chance for consumers to taste food, cook on the latest appliances and engage directly with some of the best chefs in the world. ELECTROLUX ANNUAL REPORT

  • Page 12
    ...margins. Professional Products demonstrated a solid, positive trend throughout the year. Sales increased in several markets within food-service equipment and laundry solutions. Strategic initiatives to grow in new markets and segments have contributed to the positive trend. ELECTROLUX ANNUAL REPORT

  • Page 13
    ... vision, with the contribution from 58,000 dedicated employees globally, to be the best appliance company in the world as measured by our customers, employees and shareholders. Stockholm, February 2016 Jonas Samuelson President and Chief Executive Officer ELECTROLUX 2 ¡2e Â,¢£¤Â, T 2015 11

  • Page 14
    ... among employees. Shareholders - Through the combination of continuous growth, high profitability and a small but efficient capital base, Electrolux shareholders will receive a total return well above the cost of capital. The objective is also to develop smarter, more accessible, resource-efficient...

  • Page 15
    ...be We will be the best appliance company in the world, as measured by our customers, employees and shareholders. Mission - financial goals what we want to achieVe 6% Operating margin of at least 6% 4x Capital turnover-rate of at least 4 times 20% Return on net assets of at least 20% 4% Organic...

  • Page 16
    ... markets such as Latin America, and severe currency headwinds had a negative impact on operating income for . Capital turnover Electrolux strives to achieve an optimal capital structure in relation to the Group's goals for profitability and growth. In recent years, efforts to reduce working...

  • Page 17
    ... the mix. Acquisitions had an impact on sales of . %. Return on net assets SEKm Average net assets Return on net assets Goal % Sales growth SEKm Net sales Ohganic sales ghowth Goal % GOAL RESULT GOAL RESULT >20% Financial goals over a business cycle. 11% >4% 2.2% ELECTROLUX ANNUAL REPORT

  • Page 18
    Celebrate the food that brings us together #WhereiEat

  • Page 19
    Strategic development #WhereiEat On instagram, Electrolux is celebrating the food that brings us together and we are now highlighting food trends from around the world. follow us twitter.com/hashtag/whereieat

  • Page 20
    ... part of the growth strategy. Innovation A key factor in the Electrolux consumer-oriented product-development process is the close collaboration between marketing, R&D and design, as is the transfer of know-how from the professional business to consumer products. Over a number of years, the Group...

  • Page 21
    ...launched the new limited edition Electrolux Ergorapido vacuum cleaner with embedded Swarovski crystals produced especially for the Russian and Eastern European markets. The ultra-luxury kitchen range Electrolux Grand Cuisine is the first professional cooking system designed specifically for home use...

  • Page 22
    .... A key part of this expansion is through resource-efficient products. In Latin America and Asia/Pacific, new products in appliances, vacuum cleaners and small domestic appliances are being launched continuously. In , growth markets accounted for % of Group sales. In the Asian markets, ELECTROLUX...

  • Page 23
    ...launched in several markets. Share of Group sales Kitchen % Professional kitchen % Laundry % Professional laundry % Small appliances % Adjacent product categories % Kitchen product categories Cold (refrigerators, freezers) % Hot (cookers, hobs, ovens) % Dish % Professional food-service equipment...

  • Page 24
    ... its position in core markets. For simplification purposes, the global market for household appliances can be split into two parts. In mature markets (Western Europe, North America, Japan and Australia/New Zealand), population growth is low and sales are dominated by replacement products. However...

  • Page 25
    ... Eastern Europe, Latin America, Southeast Asia, China 87% 360 420 3,900 160 1,800 600 Population in Electrolux core markets Western Europe North America, Australia, New Zealand, Japan 13% Electrolux net sales in core markets SEKm , , , , , Europe North America Pacific Electrolux net sales...

  • Page 26
    .... An extensive product range makes Electrolux a leading manufacturer of refrigerators, dishwashers, washing machines, cookers, air conditioners, vacuum cleaners and small domestic appliances, and the only player that offers complete solutions for both consumers and professional users. Employees and...

  • Page 27
    ... identified major global potential for air-conditioning equipment and water heaters. To build increased consumer awareness of the value of efficient products, Electrolux focuses on efficiency and other environmental benefits in its global marketing. Market surveys in Australia, Brazil, France, China...

  • Page 28
    ... to launch by 30%

  • Page 29
    ... demand for energy and cost-efficient appliances. In 2015, the Green Range represented 20% of products sold and 32% of gross profit. A key challenge is to rapidly transfer innovation from the premium to the mass-market segment. UVUWXY`VUX abbcaV YUd`YT 2015 Develop best-in-class products 70...

  • Page 30
    ...sales. The long-term objective is to increase the share of a product's sales value that comprises service, consumables and sales of accessories to a minimum of 10%. Connected appliances New technology opens opportunities for new solutions, such as the remote control of kitchen and laundry equipment...

  • Page 31
    ... In 2015, Electrolux launched the Frigidaire Cool Connect, the Group's first connected air conditioner, and the AEG ProCombi Plus, the market's first steam oven with an in-built camera which was presented at IFA in Berlin, Germany, the world's leading trade show for consumer electronics and home...

  • Page 32
    ...Luxury North America Latin America Europe Asia/Pacific Electrolux Grand Cuisine, Molteni Electrolux AEG Premium Electrolux Electrolux Electrolux Mass Market Frigidaire Eureka Electrolux Frigidaire Zanussi Regional brands Westinghouse* Regional brands Global and strong strategic brands...

  • Page 33
    ...products. Some examples include the Electrolux steam ovens, washing machines with heatpump technology, the semi-professional myPRO washing machine for smaller companies, new innovative small household appliances and the Electrolux Grand Cuisine brand, which offers professional food-service equipment...

  • Page 34
    ... crucial to realizing the Group's strategy. Electrolux can grow profitably while simultaneously contributing to society by making smarter and more resource-efficient solutions accessible to an increasing number of people around the world. The objective is to steadily become better at meeting people...

  • Page 35
    ... LINDO washing machines and tumble dryers are examples of highly energy-efficient (A+++) products intended for the mass market. Be a force for good Through the Group's global reach and local presence, there are opportunities to make a positive difference, benefiting the local communities, Electrolux...

  • Page 36
    ...being built on a number of shared modules within the Group, savings can be made at the purchasing stage and, in parallel, increased automation will lead to reduced direct labor costs. Increased pace of innovation. Modularization unlocks resources for investment in product development. Time to market...

  • Page 37
    ...Europe and North America, to new production centers. Electrolux has closed some 20 plants, downsized many others and opened new production centers, mainly in low-cost areas. These new production centers have been established both to reduce costs and to support strategic growth markets in Asia, Latin...

  • Page 38
    ... been reduced. Efficient sales and administration Efficiency within sales and administration is driven by items including shared IT systems and service centers for finance and accounting. Efficient, shared processes are being developed for the launch of new products. Legal entities are reviewed and...

  • Page 39
    ... its core markets to annually reduce emissions by 3%. Water shortages are a major problem in many regions. Electrolux has a long-term commitment to help improve management of limited water resources. Together with the World Wildlife Fund, Electrolux mapped water-related risks associated with Group...

  • Page 40
    ... Group strategy to team strategic priorities while engaging their teams in execution. The power of one team To grow profitably and launch new innovative products, Electrolux depends on people who work together and support each other in the drive towards the Group's goals. Teamship is the Electrolux...

  • Page 41
    ... Product Award, Purchasing Award, Sales Award, Sustainability Award, Quality Award Electrolux presents an annual Supplier Award at a separate event. Employees by geographic area Europe, % North America, % Australia, New Zealand and Japan, % Africa and Middle East, % Latin America, % Southeast Asia...

  • Page 42
    ... more than 90-year history, three core values have consistently united the aims of all people in Electrolux: Passion for Innovation, Customer Obsession and Drive for Results. Passion for Innovation Innovation is key to our success. We are constantly looking for new opportunities and new ways to go...

  • Page 43
    ELECTROLUX ANNUAL REPORT 2015 41

  • Page 44
    ...Customer Obsession, and Drive for Results, and these comprise the core values of Electrolux operations still today. 1912 Lux I 2015 Electrolux UltraOne Green 2014 Electrolux Ergorapido 1901 AB Lux was founded. 1919 Cooperation between AB Lux and Axel Wenner-Gren begins. The Lux I vacuum cleaner...

  • Page 45
    ... launched new refrigerators featuring the very best professional technology to create optimal air humidity and preserve fresh food for longer. 2015 Electrolux Steam oven 1986 Electrolux acquires the third largest appliance company in the US, White Consolidated, with brands such as Frigidaire...

  • Page 46
    Fresh inspiration with every breakfast, lunch and dinner #nowyourecooking

  • Page 47
    Markets and Business areas #nowyourecooking We believe that the journey is half the picnic. No matter if it's preparing a leisurely breakfast or an immovable feast - we all need a little inspiration in getting there. follow us nowyourecooking.tumblr.com

  • Page 48
    Market information Core markets Western Europe North dmerica dustralia, New Zealand and Japan The European market is fragmented and characterized by widely varying consumer patterns between countries and a large number of manufacturers, brands and retailers. Structural overcapacity and price ...

  • Page 49
    ... refrigerators, washing machines and air-conditioners as prosperity rises. Energy-efficient products and premium brands are growing in popularity. Market demand for major appliances Million units 100 20 Market value USD billion Market value USD billion Market value USD billion Major appliances...

  • Page 50
    ... food-service and laundry equipment, %  Major appliance-, 86%  Small appliance-, 8%  Profe--ional food--ervice and laundry equipment, 6% Consumer brands Consumer brands Consumer brands Electrolux market shares % core appliances % ï¬,oor care Professional: Leadership position...

  • Page 51
    ...  Small appliances, 6%  Major appliances, 69%  Small appliances, 23%  Professional food-service and laundry equipment, 8% Consumer brands Consumer brands Consumer brands Electrolux market shares in Eastern Europe % core appliances % ï¬,oor care Professional: Leadership position with...

  • Page 52
    ... market shares in important segments, such as the built-in kitchen and premium-laundry product categories. During the year, several new innovative products were launched, such as new energy-efficient tumble dryers with heat-pump technology under the AEG brand. The Group's focus on development...

  • Page 53
    ... The air-conditioners are being sold in Saudi Arabia, UAE, Qatar, Oman, Bahrain, Kuwait, Jordan and Lebanon. Market demand for major appliances 2015 compared to 2014 Electrolux markets EMEA Average number of employees 2015 20,767 Western Europe Eastern Europe Egypt fgfhijkgUX ANNUAL jflkjT 2015...

  • Page 54
    ... and customer service. SHARE OF NET SALES ORGANIC GROWTH MARKET POSITION 35% NET SALES AND OPERATING MARGIN SEKm Net sales Operating margin 4.9% COMMENTS ON PERFORMANCE Major Appliances North America reported an organic sales growth of 4.9% in 2015. Sales volumes for most product categories...

  • Page 55
    ... kitchen. This high-end sub-brand of the Frigidaire family in North America is positioned between the Frigidaire Gallery and the premium segment of Electrolux. Market demand for major appliances 2015 compared to 2014 Electrolux markets North America Average number of employees 2015 14,923 North...

  • Page 56
    ..., Head of Major Appliances Latin America The Electrolux brand occupies a strong position in Latin America through its innovative products and close collaboration with market-leading retail chains. Brazil is the Group's largest market in the region and accounted for about 60% of Electrolux sales...

  • Page 57
    ... product on and off and set the correct program for the particular wash. That means more freedom for consumers to do other activities while the washer and dryer is operating. Market demand for major appliances 2015 compared to 2014 Electrolux markets Latin America Average number of employees 2015...

  • Page 58
    ... in recent years. Kenneth L. Ng, Head of Major Appliances Asia/Pacific About half of Electrolux appliance sales in the region is in Australia, where the Group is the market leader. The Electrolux brand is positioned in the premium segment with a focus on innovation, energy and water efficiency, and...

  • Page 59
    ...the kitchen design. Built-in ovens are sold under several brands, and continue to receive best-in-class ratings by consumer associations. Market demand for major appliances 2015 compared to 2014 Electrolux markets Asia/Pacific Average number of employees 2015 3,874 Australia Southeast Asia China...

  • Page 60
    ... and energy-efficient vacuum cleaners in the upper-price segments. In recent years, a comprehensive transition of Electrolux vacuum cleaners has been made to comply with new energy-labeling requirements in Europe. A global range of premium small domestic appliances products has been developed and...

  • Page 61
    ...develop products in these categories, for example, the Electrolux Expressionist range launched in several markets globally. Market demand for vacuum cleaners 2015 compared to 2014 Electrolux markets Small Appliances Average number of employees 2015 2,548 Europe North America ¢£ECTROLUX ANNUAL...

  • Page 62
    ... in China, was acquired. Alberto Zanata, Head of Professional Products North America represents slightly more than 35% and Europe 25% of the global market demand for professional food and laundry products. Of the Group's professional products sales, about 60% stem from food-service equipment and...

  • Page 63
    ... same time strengthen energy efficiency, save water and reduce CO2 emissions. Market demand for professional products 2015 compared to 2014 Electrolux markets Professional Products Average number of employees 2015 2,625 Europe Emerging markets North America ¦§ECTROLUX ANNUAL REPORT 2015 61

  • Page 64
    Learn from the best chefs in the world #Secretingridient

  • Page 65
    The Electrolux share and Risk management #Secretingridient Share your passion for great taste and learn from the best chefs in the world. follow us twitter.com/ElectroluxTaste

  • Page 66
    ..., divided by the average number of shares after buy-backs. excluding buy-backs, plus net borrowings and non-controlling interests, divided by operating income. 8) Trading price in relation to earnings per share. 9) Continuing operations. 7) Market capitalization 64 ¨©ECTROLUX ANNUAL REPORT 2015

  • Page 67
    ... professional laundry in new business segments • Electrolux showcase "My Smart Home" at IFA 2015 in Berlin • World's first connected steam oven with camera is introduced • Agreement to acquire Veetsan in China • Launch of Westinghouse cooking appliances in Australia • North America...

  • Page 68
    ...electroluxgroup.com Shareholders by country P/E ratio and dividend yield % Sweden, % USA, % UK, % Belgium, % Other, % P/E ratio, excluding items affecting comparability until Dividend yield, % As of December 31, 2015, approximately 52% of the total share capital was owned by foreign investors...

  • Page 69
    ...shares. 2) MSCI's Global Industry Classification Standard (used for securities). Market share 2014 2015 Nasdaq Stockholm BATS Chi-X BOAT Turqouise Posit Other Total Source: Fidessa. 45.0 39.7 5.4 5.4 1.2 3.3 100.0 41.0 42.3 5.7 5.6 1.5 3.9 100.0 Average daily trading value of Electrolux shares...

  • Page 70
    ..., CEO Keith McLoughlin presented the company's vision to be the best appliance company in the world, along with the Group's key strategic pillars on how to achieve this goal. Electrolux continues to execute its strategy and support the creation of long-term sustainable economic value and return for...

  • Page 71
    ... Price/Mix Europe % Latin America % Currency % Asia % Cost savings % Other % % % % Q&A How does the demand picture look in your core markets? In 2015, Electrolux core markets showed good demand while growth markets continued to weaken throughout the year. Demand for appliances in North America...

  • Page 72
    ... products, strong brands and cost-efficient operations. Realizing this potential requires effective and controlled risk management. Sensitivity analysis year-end 2015 Risk Change +/Pre-tax earnings impact, SEKm Variations in demand Market demand for core appliances in Western Europe increased...

  • Page 73
    ... year. Electrolux has a comprehensive process for evaluating credits and monitoring the financial situation of customers. Authority for approving and responsibility to manage credit limits are regulated by the Group's credit policy. A global credit insurance program is in place for many countries...

  • Page 74
    ... USD/MXN NORTH AMERICA Electrolux is a net importer into the market with flows mainly from China and production conducted in Mexico. Since most imports are invoiced in USD, the currency exposure is limited. Canada is an exception as Electrolux imports products into that market. LATIN AMERICA Most...

  • Page 75
    .... Main translation effects: USD/SEK, EUR/SEK. Transaction net exposure excluding hedges, forecast 2016 , , North America Europe Asia/Pasific Latin America N D AU D Y K D K T B EU R B S P CN CH L BR MX DK CZ CA US GB RU AR TH CL P Ã'Ã'ECTROLUX ANNUAL REPORT 2015 73

  • Page 76
    Report by the Board of Directors and Notes AB Electrolux (publ), 556009-4178 Annual Report 2015, page 75-135

  • Page 77
    Report by the Board of Directors Net sales amounted to SEK 123,511m (112,143). Sales increased by 10.1%, of which 2.2% was organic sales growth, 0.1% acquisitions and 7.8% currency translation. Sales growth for Major Appliances North America, Major Appliances EMEA and Professional Products. ...

  • Page 78
    ... income. Professional Products showed a good development during the year. Sources: Europe: Electrolux estimates, US: AHAM. For other markets there are no comprehensive market statistics. Financial goals over a business cycle Sales growth SEKm Net sales Organic sales growth Goal, % Operating...

  • Page 79
    ... overview by business area SEKm 2014 2015 Change, % Net sales Operating income Major Appliances Europe, Middle East and Africa Major Appliances North America Major Appliances Latin America Major Appliances Asia/Pacific Small Appliances Professional Products Common Group costs, etc.1) Operating...

  • Page 80
    ...83) per share. Net sales Net sales for the Electrolux Group in 2015 amounted to SEK 123,511m (112,143). The organic sales growth was 2.2%. Major Appliances North America, Major Appliances EMEA and Professional Products reported organic sales growth. The product mix improved and prices increased in...

  • Page 81
    ... income statement SEKm Note 2014 2015 Net sales Cost of goods sold Gross operating income Selling expenses Administrative expenses Other operating income Other operating expenses Operating income Financial income Financial expenses Financial items, net Income after financial items Taxes Income...

  • Page 82
    ... as professional users. Products for consumers comprise major appliances, i.e., refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners and microwave ovens, floor-care products and small domestic appliances. Professional products comprise food-service equipment...

  • Page 83
    ...America Market demand for core appliances in North America increased by 6% year-over-year in 2015. Market demand for major appliances, including microwave ovens and home-comfort products, such as room air-conditioners, increased by 8%. Electrolux operations in North America reported an organic sales...

  • Page 84
    ... and New Zealand reported organic growth, mainly due to higher sales volumes as a result of launches of new products. A new range of appliances under the Westinghouse brand was launched during the year. Price increases also contributed to this positive sales trend. Key figures SEKm 2014 2015 The...

  • Page 85
    ...by business area and reported as items affecting comparability. Professional Products Overall market demand for professional food service and professional laundry equipment improved in 2015. Demand in Electrolux core markets in Western Europe was stable. The U.S. and emerging markets displayed year...

  • Page 86
    .... Electrolux has also a committed revolving credit facility of USD 300m, approximately SEK 2,500m, maturing in 2018. Capital turnover-rate, times/year Times ... % Average net assets Return on net assets The capital turnover-rate increased to 5.0 times (4.5) in 2015. 84 õöECTROLUX ANNUAL REPORT...

  • Page 87
    Consolidated balance sheet SEKm Note December 31, 2014 December 31, 2015 ASSETS Non-current assets Property, plant and equipment Goodwill Other intangible assets Investments in associates Deferred tax assets Financial assets Pension plan assets Other non-current assets Total non-current assets ...

  • Page 88
    board of directors' report Cont. Financial position Net debt Net debt SEKm Dec. 31, 2014 Dec. 31, 2015 Borrowings Liquid funds Financial net debt Net provisions for post-employment benefits Net debt Net debt/equity ratio Equity Equity per share, SEK Return on equity, % Equity/assets ratio, % 14,...

  • Page 89
    ...Opening balance, January 1, 2014 Income for the period Available for sale instruments Cash flow hedges Exchange differences on translation of foreign operations Remeasurement of provisions for post-employment benefits Income tax relating to other comprehensive income Other comprehensive income, net...

  • Page 90
    ... net sales North America 7,241 3,563 -3,312 7,492 -747 -91 6,654 -513 -1,277 4,864 -1,870 2,994 % of net sales Latin America % of net sales Asia/Pacific % of net sales Small Appliances % of net sales Professional Products % of net sales Other Total % of net sales EBITDA1) Change in operating assets...

  • Page 91
    ... cash flow statement SEKm Note 2014 2015 Operations Operating income Depreciation and amortization Restructuring provisions Other non-cash items Financial items paid, net1) Taxes paid Cash flow from operations, excluding change in operating assets and liabilities Change in operating assets and...

  • Page 92
    ...Small Appliances. Once the program is completed, Small Appliances will have financial flexibility to continue to invest in profitable product categories. Major Appliances Europe, Middle East and Africa North America Latin America Asia/Pacific Small Appliances Professional Products Other Total Group...

  • Page 93
    ... information visit, www.electroluxgroup.com In January 2016, Daniel Arler was appointed new Head of Major Appliances Europe, Middle East and Africa and Alan Shaw was appointed new Head of Major Appliances North America. Daniel Adler has since 2012 been Senior Vice President of the Kitchen product...

  • Page 94
    ...2015. Investor AB BlackRock, Inc. JP Morgan Asset Management Nordea Investment Management Alecta Pension Insurance Norges Bank Investment Management Swedbank Robur Funds AMF Insurance & Funds Unionen Kuwait Investment Authority Total, ten largest shareholders Board of Directors and Group Management...

  • Page 95
    ... adapt the Group's capital structure, thus contributing to increased shareholder value and to use these shares to finance potential company acquisitions and as a hedge for the company's sharerelated incentive programs. In accordance with the proposal by the Board of Directors, the 2015 AGM decided...

  • Page 96
    board of directors' report Risks and uncertainty factors Electrolux ability to increase profitability and shareholder value is based on three elements: innovative products, strong brands and cost-efficient operations. Realizing this potential requires effective and controlled risk management. ...

  • Page 97
    ... internal Open Labor Market, and the web-based Employee Engagement Survey. Code of Conduct The Group has a Code of Conduct that defines high employment standards for all Electrolux employees in all countries and business areas. It incorporates issues such as child and forced labor, health and safety...

  • Page 98
    ... targets for the Group established by the Board for (i) earnings per share, (ii) return on net assets and (iii) organic sales growth, for the 2016 financial year. The proposed program will include up to 250 senior managers and key employees. Allocation of performance-based shares, if any, will...

  • Page 99
    ...or items that pose a material financial risk are reported to Group level in accordance with Group policy. No such significant item was reported in 2015. Electrolux products are affected by legislation in various markets, principally involving energy consumption, producer responsibility for recycling...

  • Page 100
    ... 18 1,848 -39 -37 3 -1 -74 2,324 The Parent Company comprises the functions of the Group's head office, as well as five companies operating on a commission basis for AB Electrolux. Net sales for the Parent Company, AB Electrolux, for the full year of 2015 amounted to SEK 33,179m (29,508), of which...

  • Page 101
    Parent Company balance sheet SEKm Note December 31, 2014 December 31, 2015 ASSETS Non-current assets Intangible assets Property, plant and equipment Deferred tax assets Financial assets Total non-current assets Current assets Inventories Receivables from subsidiaries Trade receivables Tax-...

  • Page 102
    ...' report Parent Company change in equity Restricted equity SEKm Share capital Statutory reserve Non-restricted equity Fair value reserve Retained earnings Total equity Opening balance, January 1, 2014 Income for the period Available for sale instruments Cash flow hedges Income tax relating to...

  • Page 103
    Parent Company cash flow statement SEKm 2014 2015 Operations Income after financial items Depreciation and amortization Capital gain/loss included in operating income Share-based compensation Group contributions Taxes paid Cash flow from operations, excluding change in operating assets and ...

  • Page 104
    ... Other non-current assets Inventories Other current assets Trade receivables Financial instruments Assets pledged for liabilities to credit institutions Share capital, number of shares and earnings per share Untaxed reserves, Parent Company Post-employment benefits Other provisions Other liabilities...

  • Page 105
    ...values. Definition of Group companies The consolidated financial statements include AB Electrolux and all companies over which the Parent Company has control, i.e., the power to direct the activities; exposure to variable return and the ability to use its power. When the Group ceases to have control...

  • Page 106
    ... doubtful accounts at year-end 2015 was SEK 500m. Post-employment benefits Electrolux sponsors defined benefit pension plans for some of its employees in certain countries. The pension calculations are based on actuarial assumptions about, e.g., mortality rates, future salary and pension increases...

  • Page 107
    ... of risks relating to pension fund assets. The management of financial risks has largely been centralized to Group Treasury in Stockholm. Local financial issues are also managed by three regional treasury centers located in Singapore, North America, and Latin America. Interest-rate risk on liquid...

  • Page 108
    ... notes Capital structure and credit rating The Group defines its capital as equity stated in the balance sheet including non-controlling interests. On December 31, 2015, the Group's capital was SEK 15,005m (16,468). The Group's objective is to have a capital structure resulting in an efficient...

  • Page 109
    ... comprise mainly of refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air-conditioners and microwave ovens. Small appliances include vacuum cleaners and other small appliances. Professional Products consists of two operating segments, food-service equipment and laundry...

  • Page 110
    ...) 2015 Net assets December 31, 20141) 2015 Major Appliances Europe, Middle East and Africa Major Appliances North America Major Appliances Latin America Major Appliances Asia/Pacific Small Appliances Professional Products Other2) Liquid funds Interest-bearing liabilities Pension assets/liablities...

  • Page 111
    ... Major Appliances Latin America and Major Appliances Asia/Pacific and additional rationalization of the manufacturing footprint in Major Appliances Europe, Middle East and Africa. Note 5 Other operating income Group 2014 2015 Parent Company 2014 2015 Gain on sale of property, plant and equipment...

  • Page 112
    ..., nor restrictions. Note 9 Financial income and financial expenses Group 2014 2015 Parent Company 2014 2015 The theoretical tax rate for the Group is calculated on the basis of the weighted total Group net sales per country, multiplied by the local statutory tax rates. Non-recognized deductible...

  • Page 113
    ...of energy-efficient appliances amounting to SEK 499m (463) and to foreign tax credits in US of SEK 506m (178). Note 11 Other comprehensive income Group 2014 2015 Items that will not be reclassified to income for the period: Remeasurement of provisions for post-employment benefits Opening balance...

  • Page 114
    ... the impairments relates to the business area Major Appliances North America. Machinery and technical Buildings installations Plants under construction and advances Parent Company Land and land improvements Other equipment Total Acquisition costs Opening balance, January 1, 2014 Acquired during...

  • Page 115
    ... of trademark and discount rate 2014 Goodwill Electrolux trademark Discount rate, % Goodwill 2015 Electrolux trademark Discount rate, % Major Appliances Europe, Middle East and Africa Major Appliances North America Major Appliances Latin America Major Appliances Asia/Pacific Other Total 1,916 428...

  • Page 116
    ... assets Group Other intangible assets Product development Program software Total other intangible assets Parent Company Trademarks, program software, etc. Goodwill Other Acquisition costs Opening balance, January 1, 2014 Acquired during the year Acquisition of operations Internally developed...

  • Page 117
    ...fair value of trade receivables equals their carrying amount as the impact of discounting is not significant. Electrolux has a significant credit exposure on a number of major customers, primarily in the US, Latin America and Europe. Receivables concentrated to customers with credit limits amounting...

  • Page 118
    ..., 2014 2015 Additional and complementary information is presented in the following notes to the Annual Report: Note 2, Financial risk management, describes the Group's risk policies in general and regarding the principal financial instruments of Electrolux in more detail. Note 17, Trade receivables...

  • Page 119
    ... in the Group's balance sheet. Short-term borrowings pertain mainly to countries with capital restrictions. The average maturity of the Group's long-term borrowings including long-term borrowings with maturities within 12 months was 2.8 years (2.8), at the end of 2015. The table below presents the...

  • Page 120
    ... balance sheet. The Group's customer-financing activities are performed in order to provide sales support and are directed mainly to independent retailers in Scandinavia. The majority of the financing is shorter than 12 months. There is no major concentration of credit risk related to customer...

  • Page 121
    ...19 Assets pledged for liabilities to credit institutions Group December 31, 2014 2015 Parent Company December 31, 2014 2015 Real-estate mortgages Other Total 35 6 41 21 6 27 - - - - - - The major part of real-estate mortgages is related to Brazil. In the process of finalizing the tax amounts...

  • Page 122
    ...provision for post-employment benefits, reversal of the cost for share-based payments recognized in income, income from sales of own shares and the amount recognized for the common dividend. Earnings per share 2014 2015 The equity attributable to equity holders of the Parent Company consists of the...

  • Page 123
    ...The pension plans in France and Italy are mainly unfunded. The Norwegian pension plans are funded and in Canada there are both funded and unfunded pension plans. A mix of final salary and career average exists in these countries. Some plans are open for new entrants. ™d ECTROLUX ANNUAL REPORT 2015...

  • Page 124
    ... in the financial statements relating to defined benefit obligations. Information by country, December 31, 2014 USA USA Medical UK Sweden Germany Switzer- land Other Total Amounts included in the balance sheet Present value of funded and unfunded obligations Fair value of plan assets (after change...

  • Page 125
    ...inflation change feeds through to other inflation-dependant assumptions, i.e., pension increases and salary growth. In 2016, the Group expects to pay a total of SEK 303m in contributions to the pension funds and as payments of benefits directly to the employees. kl ECTROLUX ANNUAL REPORT 2015 123

  • Page 126
    ... 2014 Current service cost Interest cost Benefits paid Closing balance, December 31, 2015 Change in fair value of plan assets 1,467 41 87 -68 1,527 49 57 -71 1,562 427 8 25 -31 429 4 16 -29 420 1,894 49 112 -99 1,956 53 73 -100 1,982 Funded Opening balance, January 1, 2014 Actual return on plan...

  • Page 127
    ... (74). 2014 2015 Current service cost Interest cost Total expenses for defined benefit pension plans Insurance premiums Total expenses for defined contribution plans Special employer's contribution tax Cost for credit insurance FPG Total pension expenses Compensation from the pension fund Total...

  • Page 128
    ... additional purchase price of up to CNY 37m will be paid over the next 3 years if certain performance and other related criteria are met. The acquired entity's annual net sales are approximately CNY 90m (approximately 115m). In 2014, the Group closed a deal acquiring the BeefEater barbecue business...

  • Page 129
    ... specification of the average number of employees by country has been submitted to the Swedish Companies Registration Office and is available upon request from AB Electrolux, Investor Relations. See also Electrolux website www.electroluxgroup.com. Europe North America Latin America Rest of world...

  • Page 130
    ... fixed salary including vacation pay plus the average variable salary for the last three years. Accrued capital is subject to a real rate of return of 3.5% per year. Group Management members employed 2012 and later receive a pension entitlement where the aggregated contribution is 35% of annual base...

  • Page 131
    ... with the long-term strategy of the company. The allocation of shares in the 2013, 2014 and 2015 programs is determined by the position level and the outcome of three financial objectives; (1) annual growth in earnings per share, (2) return on net assets and (3) organic sales growth. For the 2013...

  • Page 132
    ...SEK 140.86 for 2014, and SEK 220,36 for 2015 calculated as the average closing price of the Electrolux Class B share on the Nasdaq Stockholm during a period of ten trading days before the day participants were invited to participate in the program, adjusted for net present value of dividends for the...

  • Page 133
    ...in Sweden. Both companies are unlisted and the respective Electrolux participation remained unchanged during the year. Subsidiaries Holding, % Major Group companies Argentina Australia Austria Belgium Brazil Canada Chile China Denmark Egypt Finland France Frimetal S.A Electrolux Home Products Pty...

  • Page 134
    ... net sales In computation of key ratios where capital is related to net sales, the latter are annualized and converted at year-end exchange rates and adjusted for acquired and divested operations. Net assets Total assets exclusive of liquid funds, pension plan assets and interest-bearing financial...

  • Page 135
    ... Board of Directors has hereby considered, among other things, the Company's and the Group's historical development, the budgeted development and the state of the market. If financial instruments currently valued at actual value in accordance with Chapter 4 Section 14a of the Swedish Annual Accounts...

  • Page 136
    ...statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the Parent Company and the Group. 134 •Â-ECTROLUX ANNUAL REPORT 2015

  • Page 137
    ... of the Board of Directors and the President be discharged from liability for the financial year. Stockholm, February 19, 2016 PricewaterhouseCoopers AB Anders Lundin Authorized Public Accountant Partner in Charge Anna Rosendal Authorized Public Accountant Â-˜ ECTROLUX ANNUAL REPORT 2015 135

  • Page 138
    ...assets Net assets Working capital Trade receivables Inventories Accounts payable Equity Interest-bearing liabilities Provisions for post-employment benefits, net Net borrowings Data per share Income for the period, SEK Equity, SEK Dividend, SEK6) Trading price of B-shares at year-end, SEK Key ratios...

  • Page 139
    ... 2015: 52,916 13,137 58,800 284.7 284.7 59,478 13,785 51,800 285.9 286.1 60,754 13,521 51,500 286.2 286.2 60,038 14,278 46,500 286.3 286.3 58,265 15,858 45,485 287.1 287.4 2.5 4.6 -4.5 -1.8 -0.7 -2.9 Proposed by the Board. 7) Net sales are annualized. ž ECTROLUX ANNUAL REPORT 2015 137

  • Page 140
    ...year 2014 2014 Q1 2015 Q2 2015 Q3 2015 Q4 Full year 2015 2015 Net sales Operating income Margin, % Income after financial items Income for the period Earnings per share, SEK1) Items affecting comparability included above2) Number of shares after buy-backs, million Average number of shares after buy...

  • Page 141
    ..., % Major Appliances North America Net sales Operating income1) Margin, % Major Appliances Latin America Net sales Operating income1) Margin, % Major Appliances Asia/Pacific Net sales Operating income1) Margin, % Small Appliances Net sales Operating income1) Margin, % Professional Products Net sales...

  • Page 142
    ...dishwashers, washing machines, cookers, vacuum cleaners, air-conditioners and small domestic appliances. Under esteemed brands including Electrolux, AEG, Zanussi, Frigidaire and Electrolux Grand Cuisine, the Group sells more than 60 million products to customers in more than 150 countries every year...

  • Page 143
    ...whistleblowing system. Shares and shareholders The Electrolux share is listed on Nasdaq Stockholm. At year-end 2015, Electrolux had 45,485 shareholders according to the share register kept by Euroclear Sweden AB. Of the total share capital, 42% was owned by Swedish institutions and mutual funds, 52...

  • Page 144
    ... in the total number of Board members). A report regarding the work of the Nomination Committee was presented at the AGM 2015. Further information regarding the Nomination Committee and its work can be found on the Group's website; www.electroluxgroup.com/corporate-governance. Nomination Committee...

  • Page 145
    ...not in relation to major shareholders of Electrolux. Jonas Samuelson, President and CEO as from February 1, 2016, has no major shareholdings, nor is he a part-owner in companies having significant business relations with Electrolux. The Board's tasks The main task of the Board is to manage the Group...

  • Page 146
    .... Major issues addressed by the Board during 2015 • • Dividend payment for the fiscal year 2014. Electrolux growth strategy. Acquisition of Veetsan, one of the largest manufacturers of professional dishwashers in China. Preparations for the planned acquisition of the appliances business of...

  • Page 147
    ...for Group Management for 2016. The Head of Human Resources and Organizational Development participated in the meetings and was responsible for meeting preparations. Audit Committee The main task of the Audit Committee is to oversee the processes of Electrolux financial reporting and internal control...

  • Page 148
    ...financial statements of its subsidiaries, the consolidated financial statements for the Electrolux Group and the administration of AB Electrolux. The auditors also conduct a review of the report for the third quarter. The audit is conducted in accordance with the Swedish Companies Act, International...

  • Page 149
    ... a global effective tax rate of the Group of 25.4%. More than two thirds of the total corporate income taxes in 2015 related to the Group's activities in emerging markets. For more information on Electrolux tax policy visit www.electroluxgroup.com. A sustainable business The company takes...

  • Page 150
    ... business areas Small Appliances and Professional Products are global. There are six group staff units that support all business areas: Finance, Legal Affairs, Human Resources and Organizational Development, Marketing and Branding, Global Operations and Communications. There are a number of internal...

  • Page 151
    Major issues addressed by the President and Group Management in 2015 Electrolux growth strategy. Preparations for the planned acquisition of the appliances business of General Electric in the U.S. In December 2015 General Electric terminated the agreement and the acquisition will therefore not ...

  • Page 152
    ..., North America, and Senior Vice President and Global Biscuits Category Head with MondelÄ"z International (former part of Kraft Foods), 2011-2015. President of Danone Biscuits/ Kraft Foods China, 2006-2011. Senior positions in Danone in the UK and New Zealand. Various positions in consumer goods in...

  • Page 153
    ... Corporation and Digital Equipment Corporation, 1985-1996. President and CEO of Axel Johnson AB, 2007-2015. Executive Vice-President and Chief Financial Officer of Axel Johnson AB, 2000- 2007. Head of Research of Aros Securities AB, 19982000. Various positions within ABB Financial Services AB...

  • Page 154
    ... 2011. Head of Major Appliances Europe, Middle East and Africa and Executive Vice President of AB Electrolux, 2011-2016. President and CEO of AB Electrolux, 2016. Board Member of Polygon AB. Business Development and General Management positions within Electrolux Major Appliances Latin America, 1997...

  • Page 155
    ... since 2015. Alan Shaw Head of Major Appliances North America, Executive Vice President of AB Electrolux. Born 1963. USA. B.S. in Economics and Political science, M.B.A. in Marketing. In Group Management since 2016. Product management positions at Whirlpool Corporation, 19871991. Marketing Director...

  • Page 156
    ...applicable process, for example "Order to Cash". Workplace Code of Conduct Minimum standards in the area of environment, health and safety, labor standards and human rights. The Workplace Code of Conduct is mandatory for Electrolux units as well as suppliers. 154 ÙÚECTROLUX Û ANNUAL REPORT 2015...

  • Page 157
    ... management and the Internal Audit function and determine to what extent they can rely upon the work within the ECS for Group audit and statutory audit purposes. The Audit Committee reviews reports regarding internal control and processes for financial reporting. The Group's Internal Audit function...

  • Page 158
    ....electroluxgroup.com/ir. Auditor's report on the Corporate Governance Statement To the annual meeting of the shareholders of AB Electrolux (publ), corporate identity number 556009-4178 It is the Board of Directors who is responsible for the Corporate Governance Statement for the year 2015 on pages...

  • Page 159
    ...Group's website; www.electroluxgroup.com/agm2016 • by telephone +46 8 402 92 79, on weekdays between 9 am and 4 pm • by mail to AB Electrolux c/o Euroclear Sweden AB Box 191 SE-101 23 Stockholm Sweden Notice should include the shareholder's name, personal identity or registration number, address...

  • Page 160
    ... wins seven Red Dot awards Design awards In 2015, Electrolux received several prestigious design awards, such as Red dot design, iF design, Good Design Australia, Plus X Award and Green Product Award. Electrolux Masterpiece collection During 2015 the Masterpiece Collection has won all the most...

  • Page 161
    ...by encouraging good kitchen habits in a fun way. Bloom is a unique kettle that utilizes steam - an otherwise wasted form of energy - and recycles it through three separate pods in a safe and accessible way for children. More information: electroluxdesignlab.com çè ECTROLUX ANNUAL REPORT 2015 159

  • Page 162
    ... items as the Electrolux share and corporate governance as well as a platform for financial statistics. The platform allows visitors to view graphic detailing of Electrolux development on an annual or quarterly basis. Electrolux Annual Report 2015 Consolidated Results 2015 Stockholm, January 28...

  • Page 163
    ...Larsson Offsettryck 298 Electrolux, AEG and Zanussi are the registered trademarks of AB Electrolux. For further information about trademarks, please contact Electrolux Group Intellectual Property, Trademark. Concept, text and production by Electrolux Investor Relations and Hallvarsson & Halvarsson...

  • Page 164
    AB Electrolux (publ), 556009-4178 Mailing address: SE-105 45 Stockholm, Sweden Visiting address: S:t Göransgatan 143, Stockholm Telephone: +46 8 738 60 00 Website: www.electroluxgroup.com On the web: www.electroluxgroup.com/annualreport2015