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Electrolux — Interim / Quarterly Report 2011
Feb 2, 2012
2907_10-k_2012-02-02_b5b2dd3b-46d9-4908-9348-85503354f64d.pdf
Interim / Quarterly Report
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Consolidated results 2011
Stockholm, February 2, 2012
Highlights of the fourth quarter of 2011
- • Net sales amounted to SEK 28,369m (27,556) and income for the period was SEK 221m (677), or SEK 0.77 (2.38) per share.
- • Operating income amounted to SEK 1,441m (1,714), corresponding to a margin of 5.1% (6.2), excluding items affecting comparability and non-recurring items.
- • Non-recurring costs amounted to SEK 825m, including SEK 635m for overhead reductions and WEEE related costs of SEK 190m for earlier years.
- • Most of the Group's operations showed solid results in a challenging environment.
- • Operations in North America were negatively impacted by lower volumes and higher costs for raw materials.
Highlights of the full year of 2011
- • Net sales increased by 1.9% in comparable currencies.
- • Operating margin, excluding items affecting comparability and non-recurring costs, amounted to 3.9% (6.1).
- • Price pressure and increased costs for raw materials had an adverse impact on operating income.
- • Acquisitions of the appliance companies Olympic Group in Egypt and CTI in Chile.
- • Efforts to reduce working capital have contributed to a solid balance sheet.
- • The Board proposes a dividend for 2011 of SEK 6.50 (6.50) per share.
- • The Board proposes a renewed AGM mandate to repurchase own shares.
| Change | Change | |||||
|---|---|---|---|---|---|---|
| SEKm | Q4 2011 | Q4 2010 | % | 2011 | 2010 | % |
| Net sales | 28,369 | 27,556 | 3 | 101,598 | 106,326 | –4 |
| Operating income | 512 | 952 | –46 | 3,017 | 5,430 | –44 |
| Margin, % | 1.8 | 3.5 | 3.0 | 5.1 | ||
| Income after financial items | 328 | 925 | –65 | 2,780 | 5,306 | –48 |
| Income for the period | 221 | 677 | –67 | 2,064 | 3,997 | –48 |
| Earnings per share, SEK1) | 0.77 | 2.38 | 7.25 | 14.04 | ||
| Return on net assets, % | – | – | 13.7 | 27.8 | ||
| Excluding items affecting comparability | ||||||
| Items affecting comparability | –104 | –762 | –138 | –1,064 | ||
| Operating income | 616 | 1,714 | –64 | 3,155 | 6,494 | –51 |
| Margin, % | 2.2 | 6.2 | 3.1 | 6.1 | ||
| Income after financial items | 432 | 1,687 | –74 | 2,918 | 6,370 | –54 |
| Income for the period | 286 | 1,204 | –76 | 2,148 | 4,739 | –55 |
| Earnings per share, SEK1) | 1.01 | 4.23 | 7.55 | 16.65 | ||
| Return on net assets, % | – | – | 13.5 | 31.0 | ||
| Non-recurring costs in fourth quarter of 2011 | –825 | – | –825 | – | ||
| Operating income excluding non-recurring | ||||||
| costs and items affecting comparability | 1,441 | 1,714 | –16 | 3,980 | 6,494 | –39 |
| Margin, % | 5.1 | 6.2 | 3.9 | 6.1 |
1) Basic, based on an average of 284.7 (284.7) million shares for the fourth quarter and 284.7 (284.6) million shares for the full year of 2011, excluding shares held by Electrolux. For earnings per share after dilution, see page 14. For definitions, see page 24.
For further information, please contact Peter Nyquist, Senior Vice-President, Head of Investor Relations and Financial Information, at +46 8 738 60 03.
AB ELECTROLUX (PUBL) Postal address Media hotline Investor Relations E-mail SE-105 45 Stockholm, Sweden +4 8 657 65 07 +46 8 738 60 03 [email protected] Visiting address Telefax Website Reg. No.
S:t Göransgatan 143 +46 8 738 74 61 www.electrolux.com 556009-4178
| Contents | |
|---|---|
| Net sales and income | 2 |
| Market overview | 3 |
| Business areas | 3 |
| Cash flow | 6 |
| Financial position | 6 |
| Structural changes | 7 |
| Dividend | 9 |
| Acquisitions | 11, 12 |
| Financial statements | 14 |
Net sales and income
Fourth quarter of 2011
Net sales for the Electrolux Group in the fourth quarter of 2011 amounted to SEK 28,369m (27,556). Net sales were unchanged in comparable currencies, excluding changes in Group structure. Changes in exchange rates had a negative impact on net sales. The acquisitions of Olympic Group in Egypt and CTI in Chile had a positive impact on net sales by 5.7%. Olympic Group's and CTI's sales for the fourth quarter are included in the Electrolux net sales.
Change in net sales
| % | Q4 2011 | 2011 |
|---|---|---|
| Changes in Group structure | 5.7 | 1.7 |
| Changes in exchange rates | –2.7 | –6.3 |
| Changes in volume/price/mix | 0.0 | 0.2 |
| Total | 3.0 | –4.4 |
Operating income
Operating income for the fourth quarter amounted to SEK 512m (952) and income after financial items to SEK 328m (925). Lower sales prices and increased costs for raw materials had a negative impact on operating income for the quarter.
Operating income for the fourth quarter of 2011 includes nonrecurring costs amounting to SEK 825m. To improve cost efficency, Electrolux is implementing a number of cost-savings activities, see page 7. Activities to reduce staffing levels in all regions were initiated in the fourth quarter of 2011 and will continue in 2012. Non-recurring costs for these activities have been charged to operating income in the amount of SEK 635m, see table below.
In addition, non-recurring historical WEEE related costs in Hungary for the period of 2005 to 2007 amounting to SEK 190m have been charged to operating income, see table below.
The ongoing global initiatives to further reduce costs by capitalizing on the Group's shared global strength and scope are running according to plan. Costs for the global initiatives amounted to approximately SEK 100m in the fourth quarter and approximately SEK 500m for the full year of 2011.
Items affecting comparability
Operating income for the fourth quarter of 2011 includes items affecting comparability relating to restructuring measures within dish-washing manufacturing amounting to SEK –104m (–762), see table on page 14.
Operating income excluding non-recurring costs and items effecting comparability
Excluding items affecting comparability and the non-recurring costs described above, operating income for the fourth quarter of 2011 amounted to SEK 1,441m (1,714), corresponding to a margin of 5.1% (6.2).
Share of sales by business area for the full year of 2011 Operating income and margin*
Effects of changes in exchange rates
Changes in exchange rates compared to the previous year, including translation, transaction effects and hedging contracts, had a positive impact on operating income for the fourth quarter of 2011, compared to the same period in the previous year, and amounted to approximately SEK 30m.
Transaction effects amounted to approximately SEK –35m. Results from hedging contracts had a positive impact of approximately SEK 85m on operating income, compared to 2010.
Compared to the previous year, translation of income statements in subsidiaries had an impact on operating income of approximately SEK –20m in the quarter.
Financial net
Net financial items for the fourth quarter of 2011 amounted to SEK –184m, compared to SEK –27m for the corresponding period in the previous year. Net financial items have been impacted by higher interest rates and increased net debt. The acquisitions of Olympic Group and CTI have impacted net debt.
Income for the period amounted to SEK 221m (677), corresponding to SEK 0.77 (2.38) in earnings per share.
Full year of 2011
Net sales for the Electrolux Group in 2011 amounted to SEK 101,598m, as against SEK 106,326m in the previous year. In comparable currencies and excluding sales from Olympic Group and CTI, net sales were in line with the previous year. Changes in exchange rates had a negative impact on net sales by –6.3%. Olympic Group and CTI had a positive impact on net sales by 1.7%. Olympic Group and CTI are included in Electrolux consolidated accounts as of September and October, respectively.
Non recurring costs in the fourth quarter and full year of 2011
| SEKm | 2011 |
|---|---|
| Reduction of staffing levels, Europe | 500 |
| WEEE related costs, Europe | 190 |
| Reduction of staffing levels, North America | 15 |
| Reduction of staffing levels, Asia/Pacific | 20 |
| Reduction of staffing levels, Small Appliances | 45 |
| Reduction of staffing levels, Group functions | 55 |
| Total | 825 |
Operating income
Operating income for 2011 decreased to SEK 3,017m (5,430) and income after financial items to SEK 2,780m (5,306). Weak demand in Electrolux main markets, lower sales prices and increased costs for raw materials had an adverse impact on operating income for 2011.
The contribution from the acquired companies Olympic Group and CTI including related aquisition adjustments was slightly nega-
Consumer Durables, 94% Europe, Middle East and Africa, 33%
North America, 27%
Latin America, 18%
Asia/Pacic, 8%
Small Appliances, 8%
* Excluding items affecting comparability.
Professional Products, 6%
tive. Expenses related to the acquisitions amounted to SEK 99m (24) in 2011.
Operating income excluding non-recurring costs and items affecting comparability
Operating income for 2011 includes items affecting comparability in the amount of SEK –138m ( –1,064), referring to restructuring provisions, see table on page 14.
Excluding items affecting comparability and the non-recurring costs described above, operating income for 2011 amounted to SEK 3,980m (6,494), corresponding to a margin of 3.9% (6.1).
Effects of changes in exchange rates
Compared to the previous year, changes in exchange rates for the full year 2011 had a positive impact on operating income, including translation, transaction effects and hedging contracts and amounted to SEK 150m.
The effects of changes in exchange rates referred mainly to the operations in Europe, Latin America and Asia/Pacific. The strengthening of the Australian dollar and the Brazilian Real against the US dollar and weakening of the Euro against several other currencies have positively affected operating income. Transaction effects were positive and amounted to approximately SEK 400m. Results from hedging contracts had a positive impact of approximately SEK 75m on operating income, compared to the previous year.
Compared to the previous year, translation of income statements in subsidiaries had a negative impact on operating income of approximately SEK –325m for the full year of 2011, mainly due to the weakening of the Euro and the US dollar against the Swedish krona.
Financial net
Net financial items for the full year of 2011 declined to SEK –237m, compared to SEK –124m in the previous year. Net financial items have been impacted by higher interest rates and increased net debt.
Income for the period amounted to SEK 2,064m (3,997), corresponding to SEK 7.25 (14.04) in earnings per share.
Market overview
Demand for appliances in the European market increased somewhat during the fourth quarter of 2011, while demand in North America declined by 4%.
The overall European market for appliances increased by 1%, driven by increased demand in Eastern Europe. Demand in Western Europe declined by 3%. Demand declined in for Electrolux important markets in Southern Europe. Eastern Europe increased by 9%.
For the year as a whole, demand in the European market was in line with the previous year, while demand in the North American
Major Appliances Europe, Middle East and Africa Industry shipments of core appliances in Europe*
market declined by 4%.
The market in Brazil increased in the quarter and for the year as a whole in comparison with the same period of last year. Most other markets in Latin America also improved.
Demand for appliances in Europe in 2012 is expected to be flat or or decline by up to two percent. Demand for appliances in North America is expected to be flat or increase by up to two percent.
Business areas
Changes in net sales and operating income by business area in comparable currencies are given on page 18.
Major Appliances Europe, Middle East and Africa
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 9,749 | 9,677 | 34,029 | 36,596 |
| Operating income excluding | ||||
| non-recurring costs | 488 | 447 | 1,399 | 2,297 |
| Operating income | –202 | 447 | 709 | 2,297 |
| Operating margin, % | –2.1 | 4.6 | 2.1 | 6.3 |
Non-recurring costs in the fourth quarter of 2011
| SEKm | Q4 2011 | 2011 |
|---|---|---|
| Reduction of staffing levels | 500 | 500 |
| WEEE related costs | 190 | 190 |
Industry shipments of core appliances in Europe
| Units, year-over-year, % | Q4 2011 | 2011 |
|---|---|---|
| Western Europe | –3 | –3 |
| Eastern Europe (excluding Turkey) | 9 | 9 |
| Total Europe | 1 | 0 |
Demand for appliances in Europe increased by 1% in the fourth quarter of 2011 compared to the corresponding quarter in the preceding year. The Western European market declined by 3%, following deterioration in several major Southern European markets. Demand in Germany, France and Scandinavia rose slightly during the quarter. Demand in Eastern Europe rose by 9%, mainly as a result of increased demand in Russia.
Demand for the overall European market was unchanged for the year as a whole.
The acquired company Olympic Group in Egypt contributed to increased sales during the quarter. Excluding acquisitions, the Group's sales in Europe declined mainly because of lower sales prices and a negative country mix due to higher sales in Eastern Europe and lower sales in Western Europe.
Operating income declined during the fourth quarter and full-year 2011. Non-recurring costs in the total amount of SEK 690m for measures to reduce overheads and historical WEEE related costs in
Hungary for the period of 2005 to 2007 had a negative impact on the result in the fourth quarter. Excluding these non-recurring costs operating income for the quarter improved somewhat over the previous year.
Operating income for the fourth quarter and full year has been impacted by lower sales prices and a negative country mix. Another factor that adversely affected income was higher costs for raw materials. Meanwhile, the product mix improved as a result of the successful launch of new premium products. The contribution from Olympic Group including related acquisition adjustments was slightly negative during the quarter. Read more about the acquisition of Olympic Group on pages 7 and 12.
Major Appliances North America
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 6,271 | 6,752 | 27,665 | 30,969 |
| Operating income excluding | ||||
| non-recurring costs | 91 | 291 | 265 | 1,442 |
| Operating income | 76 | 291 | 250 | 1,442 |
| Operating margin, % | 1.2 | 4.3 | 0.9 | 4.7 |
Non-recurring costs in the fourth quarter of 2011
| SEKm | Q4 2011 | 2011 |
|---|---|---|
| Reduction of staffing levels | 15 | 15 |
Industry shipments of appliances in the US
| Units, year-over-year, % | Q4 2011 | 2011 |
|---|---|---|
| Core appliances | –4 | –4 |
| Major appliances | –3 | –1 |
Market demand in North America for core appliances declined by 4% during the fourth quarter and the year as a whole. Major appliances, including room air-conditioners and microwave ovens, declined by 3% in the quarter and 1% for the year as a whole. Room air-conditioners showed strong growth during the year, rising by almost 20%.
Group sales in North America decreased during the fourth quarter compared to the year-earlier period due to lower sales volumes.
Operating income for the fourth quarter and full year declined compared to the year-earlier period, mainly due to lower sales volumes and reduced capacity utilization in production. In addition, increased costs for raw materials, sourced products and transportation had a negative impact on operating income.
Measures to reduce overheads amounting to SEK 15m were charged to operating income for the quarter.
Major Appliances Latin America
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 6,003 | 4,987 | 17,810 | 16,260 |
| Operating income | 345 | 337 | 820 | 951 |
| Operating margin, % | 5.7 | 6.8 | 4.6 | 5.8 |
Market demand for appliances in Brazil is estimated to have increased in the fourth quarter of 2011 compared to the corresponding year-earlier period. Demand in December was positively impacted by tax reductions on domestically-produced appliances. This government-incentive program is expected to continue in the first quarter of 2012. Several other Latin American markets showed continued favorable growth during the quarter.
The Group's sales rose as a result of higher sales volumes and Electrolux continued to capture market shares in Brazil and in other Latin American markets, the latter of which accounted for about 22% of consolidated sales in Latin America during 2011. Sales have been positively impacted by the acquisition of the Chilean appliances manufacturer CTI.
Operating income improved in the fourth quarter compared to the corresponding period in the preceding year, primarily as a result of higher sales volumes.
Operating income declined for the full-year of 2011 on the basis of a weaker customer mix and increased costs for raw materials. The consolidation that has taken place among several retailers in the Brazilian market had an adverse impact on the customer mix, although to a lesser extent during the second half of 2011. The contribution from the acquisition of CTI including related acquisition adjustments was slightly positive during the quarter. Read more about the acquisition of CTI on pages 7 and 11.
Major Appliances North America Industry shipments of core appliances in the US*
* Units, year-over-year, %.
Major Appliances Asia/Pacific
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 2,180 | 2,069 | 7,852 | 7,679 |
| Operating income excluding | ||||
| non-recurring costs | 233 | 200 | 756 | 793 |
| Operating income | 213 | 200 | 736 | 793 |
| Operating margin, % | 9.8 | 9.7 | 9.4 | 10.3 |
Non-recurring costs in the fourth quarter of 2011
| SEKm | Q4 2011 | 2011 |
|---|---|---|
| Reduction of staffing levels | 20 | 20 |
Australia and New Zealand
Market demand for appliances in Australia is estimated to have increased in the fourth quarter of 2011 compared to the corresponding period in the preceding year. Group sales declined during the fourth quarter and in the full year, primarily as a result of price pressure in the market. The strong Australian dollar enabled producers that import products to reduce their prices.
Operating income declined for the quarter and for full-year 2011, mainly as a consequence of lower sales prices and increased costs for raw materials and sourced products.
Southeast Asia and China
Market demand in Southeast Asia and China is estimated to have continued to grow in the fourth quarter of 2011 compared to the corresponding year-earlier period. Electrolux sales in markets in Southeast Asia and China continued to display strong growth and Electrolux market shares are estimated to have grown. The operations in Southeast Asia continued to demonstrate favorable profitability throughout 2011.
Costs for development of new products and measures to reduce overheads amounting to SEK 20m had a negative impact on income for the whole region.
Small Appliances
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 2,579 | 2,414 | 8,359 | 8,422 |
| Operating income excluding | ||||
| non-recurring costs | 282 | 271 | 588 | 802 |
| Operating income | 237 | 271 | 543 | 802 |
| Operating margin, % | 9.2 | 11.2 | 6.5 | 9.5 |
Non-recurring costs in the fourth quarter of 2011
2010 2011
EBIT EBIT margin
Q1 Q2 Q3 Q4 Q1
| SEKm | Q4 2011 | 2011 |
|---|---|---|
| Reduction of staffing levels | 45 | 45 |
Q2 Q3 Q4
Major Appliances Asia/Pacific Small Appliances Professional Products
300 240
15 12 9 6 3 0 SEKm % 300 240 15 12 9 6 3 0 180 120 60 0 SEKm % 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
EBIT EBIT margin
Market demand for vacuum cleaners in Europe and North America declined in the fourth quarter of 2011.
Group sales increased during the fourth quarter compared to the corresponding period in the preceding year, primarily as a result of higher sales volumes and an improved product mix. The acquisition of CTI's subsidiary Somela, a small domestic appliances manufacturer in Chile, made a positive contribution to sales.
Operating income for the fourth quarter, excluding non-recurring costs, improved primarily due to higher volumes and a positive product mix. Increased sales of premium vacuum cleaners in Europe and the Airspeed product range in North America as well as strong sales growth for cordless handheld vacuum cleaners in most regions had a positive impact on the product mix. Sales volumes of small domestic appliances grew strongly in Europe and Latin America during the quarter. Lower sales prices and increased costs for sourced products continued to have a negative effect on operating income for the quarter.
Operating income decreased for the full year of 2011, primarily due to higher costs for sourced products and lower sales prices.
Measures to reduce overheads amounting to SEK 45m were charged to income for the quarter.
Professional Products
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 1,587 | 1,657 | 5,882 | 6,389 |
| Operating income | 191 | 243 | 841 | 743 |
| Operating margin, % | 12.0 | 14.7 | 14.3 | 11.6 |
Market demand in Europe for food-service equipment is estimated to have declined in the fourth quarter of 2011 compared to the corresponding period in the preceding year.
For the fourth quarter and full year, operating income for foodservice equipment deteriorated due to lower sales volumes primarily in Southern Europe, where Electrolux commands a strong position, and increased raw-material costs. Price increases largely offset the higher costs for raw materials.
Market demand for professional laundry equipment during the fourth quarter is estimated to have declined somewhat in the Group's major markets in Western Europe and consolidated sales volumes fell slightly. Replacement products are accounting for a large share of the current demand in the market at the same time as demand for spare parts is rising.
Operating income for professional laundry equipment in the fourth quarter declined compared to the corresponding period in the preceding year as a result of reduced sales volumes and lower capacity utilization in production. Operating income for full-year 2011 improved however, compared to 2010 as a result of price increases and higher sales volumes, which offset the rising costs of raw materials.
Cash flow
Cash flow from operations and investments in the fourth quarter of 2011 amounted to SEK –2,926m (133).
The cash flow from acquisitions and divestments, mainly referring to the payment of the shares in CTI, amounted to SEK –3,213m in the quarter. Excluding cash flow from acquisitions, cash flow from operations and investments amounted to SEK 287m (133).
The trend for the cash flow and working capital in the fourth quarter of 2011 reflects a normal seasonal pattern with increased sales and declining inventories. The Group's ongoing structural efforts to reduce tied-up capital has contributed to the strong underlying cash flow in the quarter.
Outlays for the ongoing restructuring and cost-cutting programs amounted to approximately SEK –110m in the quarter.
Cash flow from operations and investments in the full-year of 2011 amounted to SEK –4,650m (3,206). The acquisitions of CTI and Olympic Group have impacted cash flow by SEK –5,855m. Excluding acquisitions, cash flow from operations and investments amounted to SEK 906m (3,199). The decline referred mainly to the deterioration in income.
Outlays for the ongoing restructuring and cost-cutting programs amounted to approximately SEK –660m in 2011.
Investments during the fourth quarter and the full year of 2011 referred mainly to investments within manufacturing for new products and production capacity.
Cash flow
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Cash flow from operations, excluding change in operating |
||||
| assets and liabilities | 1,247 | 1,854 | 4,283 | 7,741 |
| Change in operating assets and | ||||
| liabilities | 463 | –55 | 1,116 | –61 |
| Investments | –1,423 | –1,666 | –4,493 | –4,481 |
| Cash flow before acquisitions | ||||
| and divestments | 287 | 133 | 906 | 3,199 |
| Acquisitions and divestemens | –3,213 | – | –5,556 | 7 |
| Cash flow from operations and | ||||
| investments | –2,926 | 133 | –4,650 | 3,206 |
| Dividend | – | – | –1,850 | –1,138 |
| Sale of shares | – | – | – | 18 |
| Total cash flow, excluding change in loans and short-term |
||||
| investments | –2,926 | 133 | –6,500 | 2,086 |
Cash flow from operations and investments
Financial position
Total equity as of December 31, 2011, amounted to SEK 20,644m (20,613), which corresponds to SEK 72.52 (72.41) per share.
Net borrowings
| SEKm | Dec. 31, 2011 |
Dec. 31, 2010 |
|---|---|---|
| Borrowings | 14,206 | 12,096 |
| Liquid funds | 7,839 | 12,805 |
| Net borrowings | 6,367 | –709 |
| Net debt/equity ratio | 0.31 | –0.03 |
| Equity | 20,644 | 20,613 |
| Equity per share, SEK | 72.52 | 72.41 |
| Return on equity, % | 10.4 | 20.6 |
| Return on equity, excluding items | ||
| affecting comparability, % | 10.8 | 24.4 |
| Equity/assets ratio, % | 30.1 | 33.9 |
Net borrowings
Net borrowings amounted to SEK 6,367m (–709). The net debt/ equity ratio was 0.31 (–0.03). The equity/assets ratio was 30.1% (33.9).
Electrolux has issued in total SEK 3,500m in bond loans under the EMTN program during 2011. In the quarter a bilateral loan of SEK 1,000m, maturing 2013, was prolonged to 2017.
During 2011, SEK 1,161m of long-term borrowings were amortized, whereof SEK 250m in the fourth quarter. Long-term borrowings as of December 31, 2011, including long-term borrowings with maturities within 12 months, amounted to SEK 11,669m with average maturities of 3.0 years, compared to SEK 9,590m and 3.3 years at the end of 2010. During 2012 and 2013, long-term borrowings in the amount of approximately SEK 4,100m will mature.
Liquid funds as of December 31, 2011, amounted to SEK 7,839m (12,805), excluding short-term back-up facilities.
During the fourth quarter of 2011, Electrolux replaced an existing EUR 500m revolving credit facility maturing in June 2012. The new committed EUR 500m multi-currency revolving credit facility has a five-year maturity, with extension options for up to two more years. Electrolux also has an additional unused committed credit facility of SEK 3,400m maturing 2017.
Net assets and working capital
Average net assets for the period amounted to SEK 22,091m (19,545). Net assets as of December 31, 2011, amounted to SEK 27,011m (19,904). Net assets have been impacted by the acquisitions of Olympic Group and CTI by SEK 7,401m, see page 17. Adjusted for items affecting comparability, i.e., restructuring provisions, average net assets amounted to SEK 23,354m (20,940), corresponding to 23.0% (19.7) of net sales.
Working capital as of December 31, 2011, amounted to SEK –5,180m (–5,902), corresponding to –4.6% (–5.4) of annualized net sales. The return on net assets was 13.7% (27.8), and 13.5% (31.0), excluding items affecting comparability.
Cash flow and change in net borrowings
Structural changes
Actions to improve operational excellence
At Electrolux Capital Markets Day in November 2011, management presented the Group's strategy to create sustainable economic value by; capitalizing on profitable growth opportunities, speeding up the product-innovation cycle and continuing to improve operational excellence.
To improve operational excellence, a number of cost-savings activities are being implemented.
Electrolux has been tangibly affected by the decline in consumer confidence in the mature markets. To adapt the manufacturing capacity, further restructuring measures within manufacturing will be implemented which are estimated to generate annual savings of SEK 1.6 billion as of 2016. Costs for these measures amount to approximately SEK 3.5 billion.
At the same time, overhead costs will be reduced by approximately SEK 680m. Activities to reduce staffing levels in all regions were initiated in the fourth quarter of 2011 and will continue in 2012. Costs for these actions amounting to SEK 635m were charged against operating income in the fourth quarter, see table on page 2.
Activities to capitalize on the Group's shared global strength and scope to escalate the pace in unlocking global synergies, increase modularization and optimize purchasing are being implemented. Costs for these activities amount to a total of about SEK 1 billion in 2011 and 2012. The annual savings are estimated to approximately SEK 3 billion as of 2015.
In total, these actions to improve operational excellence will provide annual savings of SEK 5.3 billion. Costs for these activities amount to SEK 5.1 billion.
Improving efficiency within dish-washing production
To optimize and improve global efficiency and capacity utilization within the Group's dish-washing manufacturing, one production line of dishwashers at the manufacturing facility in Kinston, North Carolina in the US will be discontinued. The production will be transferred to one of the Group's production facilities in Europe. The costs for these activities of SEK 104m were charged against operating income in the fourth quarter of 2011, within items affecting comparability.
The plant in Kinston will continue to produce dishwashers for the North American market.
Acquisitions
Acquisition of Chilean appliances company CTI
During the fourth quarter, Electrolux completed the acquisition of the Chilean appliances company Compañia Tecno Industrial S.A. (CTI) and its subsidiaries. In Chile, CTI group manufactures refrigerators, stoves, washing machines and heaters, sold under the brands Fensa and Mademsa, and is the leading manufacturer with a volume market share of 36%. CTI group also holds a leading position in Argentina with the GAFA brand and in Chile, Somela is the largest supplier of small domestic appliances. CTI group has 2,200 employees and two manufacturing sites in Chile and one site in Argentina.
The acquisition is part of Electrolux strategy to grow in emerging markets. The acquisition makes Electrolux the largest supplier of appliances in Chile and Argentina, and further enhances Electrolux position as a leading appliances company in the fast-growing Latin American markets.
CTI group is included in the consolidated accounts of Electrolux as of October 1, 2011, within the business areas Major Appliances Latin America and Small Appliances.
The total consideration paid for the acquired shares in CTI group is SEK 3,804m, which was paid in cash in October 2011.
The preliminary purchase price allocation concludes that goodwill amounts to a value of SEK 2,104m.
Expenses related to the acquisition amounted to SEK 56m in 2011 and has been reported as administrative expenses in Electrolux income statement of 2011.
The acquisition is described in more detail on page 11.
Acquisition of Olympic Group
During the third quarter, Electrolux completed the acquisition of the Egyptian major appliances manufacturer Olympic Group for Financial Investments S.A.E. (Olympic Group). Olympic Group is a leading manufacturer of appliances in the Middle East with a volume market share in Egypt of approximately 30%. The company has 7,100 employees and manufactures washing machines, refrigerators, cookers and water heaters. The acquisition is part of Electrolux strategy to grow in emerging markets like Middle East and Africa.
Olympic Group is included in the consolidated accounts of Electrolux as of September 1, 2011, within the business area Major Appliances Europe, Middle East and Africa.
The total consideration for the acquired shares in Olympic Group is SEK 2,556m, which was paid in cash at the beginning of September 2011.
The purchase price allocation concludes that goodwill amounts to a value of SEK 1,495m.
Expenses related to the acquisition amounted to SEK 24m in 2010 and to SEK 43m in 2011 and have been reported as administrative expenses in Electrolux income statement.
The aquisition is described in more detail on page 12.
Relocation of production, items affecting comparability, restructuring measures 2007–2013
| Plant closures and cutbacks | Closed | ||
|---|---|---|---|
| Torsvik | Sweden | Compact appliances | (Q1 2007) |
| Nuremberg | Germany | Dishwashers, washing machines and dryers |
(Q1 2007) |
| Adelaide | Australia | Dishwashers | (Q2 2007) |
| Fredericia | Denmark | Cookers | (Q4 2007) |
| Adelaide | Australia | Washing machines | (Q1 2008) |
| Spennymoor | UK | Cookers | (Q4 2008) |
| Changsha | China | Refrigerators | (Q1 2009) |
| Scandicci | Italy | Refrigerators | (Q2 2009) |
| St. Petersburg | Russia | Washing machines | (Q2 2010) |
| Motala | Sweden | Cookers | (Q1 2011) |
| Webster City | USA | Washing machines | (Q1 2011) |
| Alcalà | Spain | Washing machines | (Q1 2011) |
| Authorized closures | Estimated closure | ||
|---|---|---|---|
| L'Assomption | Canada | Cookers | (Q4 2013) |
| investment | Starting | ||
| Porcia | Italy | Washing machines | (Q4 2010) |
| Memphis | USA | Cookers | (Q2 2012) |
In 2004, Electrolux initiated a restructuring program to make the Group's production competitive in the long term. This program is in its final phase and has so far yielded annual savings of about SEK 3bn. About 35% of manufacturing in high-cost areas have been moved and more than 60% of the Group's household appliances are currently manufactured in low-cost areas that are near rapidly-growing markets for household appliances. In 2011 additional measures were presented to further adapt capacity in mature markets to lower demand. The total cost for the whole program will be approximately SEK 12bn and savings will amount to approximately SEK 5bn annually as of 2016. Restructuring provisions and write-downs are reported as items affecting comparability within operating income.
Changes in Group Management
Stefano Marzano appointed Chief Design Officer
Stefano Marzano has been appointed Chief Design Officer, a new role at Electrolux. As of January 2012, Stefano Marzano is head of a new Group staff function gathering all the design-related competencies in the Group. This enables Electrolux to increase the relevance and speed of innovative product solutions taken to market. Stefano Marzano has had a long career at Royal Philips Electronics, for the past 20 years as Chief Design Officer.
In January 2011, Electrolux appointed Jan Brockmann and MaryKay Kopf to new roles within Group Management as Chief Technology Officer and Chief Marketing Officer, respectively. With the appointment of Stefano Marzano, the formal structure referred to as the Innovation Triangle is completed. This is to get R&D, Marketing and Design functions in synergy during the entire product creation process with an even clearer focus on customers and consumers.
Lars Worsøe Petersen is new Head of Human Resources
Lars Worsøe Petersen is since October new Head of Group Staff Human Resources and Organizational Development. He succeeded Carina Malmgren Heander who is Head of a new Professional-Domestic business unit. Lars Worsøe Petersen has been Head of Group Staff Human Resources at Husqvarna AB.
CFO Jonas Samuelson is new Head of Major Appliances Europe, Middle East and Africa
Since October 2011, Jonas Samuelson is new Head of Major Appliances Europe, Middle East and Africa. Mr. Samuelson's previous position was Chief Financial Officer and Head of Global Operations Major Appliances. He succeeded Enderson Guimarães, who has left Electrolux.
Tomas Eliasson appointed new CFO
Tomas Eliasson has been appointed new Chief Financial Officer. Tomas Eliasson will assume his new position in mid February. Mr. Eliasson is currently Chief Financial Officer and Executive Vice-President of ASSA ABLOY AB.
Jack Truong new Head of Major Appliances North America
Jack Truong is since August new Head of Major Appliances North America. Jack Truong has previously held several senior management positions with the 3M Company in the US, Europe and Asia. Mr. Truong succeeded Kevin Scott, who has left Electrolux.
Other items
Asbestos litigation in the US
Litigation and claims related to asbestos are pending against the Group in the US. Almost all of the cases refer to externally supplied components used in industrial products manufactured by discontinued operations prior to the early 1970s. The cases involve plaintiffs who have made identical allegations against other defendants who are not part of the Electrolux Group.
As of December 31, 2011, the Group had a total of 2,714 (2,800) cases pending, representing approximately 2,843 (approximately 3,050) plaintiffs. During the fourth quarter of 2011, 294 new cases with 294 plaintiffs were filed and 261 pending cases with approximately 380 plaintiffs were resolved.
Additional lawsuits may be filed against Electrolux in the future. It is not possible to predict either the number of future claims or the number of plaintiffs that any future claims may represent. In addition, the outcome of asbestos claims is inherently uncertain and always difficult to predict and Electrolux cannot provide any assurances that the resolution of these types of claims will not have a material adverse effect on its business or on results of operations in the future.
Conversion of shares
According to AB Electrolux articles of association, owners of Class A shares have the right to have such shares converted to Class B shares. In 2011, at the request of shareholders, 850,400 Class A shares were converted to Class B shares.
Conversion of shares reduces the total number of votes in the company. After the conversion, the total number of votes amounts to 38,283,483.
The total number of registered shares in the company amounts to 308,920,308 shares, of which 8,212,725 are Class A shares and 300,707,583 are Class B shares, see table on page 15.
On December 31, 2011, Electrolux owned 24,255,085 shares of Class B, corresponding to 7.9% of all outstanding shares.
Press releases 2011
| January 20 | Electrolux further strengthens organization for | July 10 | Electrolux acquires Olympic Group |
|---|---|---|---|
| Innovation and Marketing | July 19 | Interim report January-June and CEO | |
| February 2 | Consolidated Results 2010 and CEO | Keith McLoughlin's comments | |
| Keith McLoughlin's comments | August 19 | Electrolux confirms discussions with Sigdo Koppers | |
| February 17 | Keith McLoughlin and Ulrika Saxon proposed new | August 22 | Electrolux acquires Chilean appliance company CTI |
| Board members of AB Electrolux | September 9 | Dow Jones Sustainability World Index names Electrolux | |
| March 18 | Electrolux named one of the World's Most Ethical | Durable Household Products sector leader | |
| Companies 2011 | September 9 | Electrolux has completed the acquisition of Olympic Group | |
| March 31 | Electrolux Annual General Meeting 2011 | September 16 Electrolux issues bond loan | |
| April 1 | Bulletin from AB Electrolux Annual General Meeting 2011 | September 28 Jonas Samuelson appointed Head of Major Appliances | |
| April 5 | Change in reporting for Electrolux business areas | Europe and Tomas Eliasson appointed CFO | |
| April 27 | Interim report January-March and CEO | September 29 Lars Worsøe Petersen appointed Head of Human | |
| Keith McLoughlin's comments | Resources and Organizational Development and Carina Malmgren | ||
| May 9 | Electrolux raises the bar in sustainability reporting | Heander will lead a new business unit | |
| June 8 | Electrolux issues bond loan | October 14 | Electrolux has closed the cash tender offers of CTI and Somela |
| June 13 | Electrolux to implement price increases in Europe | October 28 | Interim report January-September and CEO |
| July 1 | Jack Truong appointed Head of Major Appliances North America | Keith McLoughlin's comments |
July 1 Jack Truong appointed Head of Major Appliances North America
Annual General Meeting 2012
The Annual General Meeting of AB Electrolux will be held on Tuesday, March 27, 2012, at Stockholm Waterfront Congress Centre, Nils Ericsons Plan 4, Stockholm, Sweden.
Proposed dividend
The Board of Directors proposes a dividend for 2011 of SEK 6.50 (6.50) per share, for a total dividend payment of approximately
SEK 1,850m (1,850). The proposed dividend corresponds to approximately 85% (40) of income for the period, excluding items affecting comparability. Friday, March 30, 2012, is proposed as record date for the dividend.
The Group's goal is for the dividend to correspond to at least 30% of income for the period, excluding items affecting comparability. Historically, Electrolux dividend rate has been considerably higher than 30%. Electrolux also has a long tradition of high total distribution to shareholders that includes repurchases and redemptions of shares as well as dividends.
Proposal for resolution on acquisition of own shares
Electrolux has previously, on the basis of authorizations by the Annual General Meetings, acquired own shares. The purpose of the repurchase programs has been to 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 share-related incentive programs.
The Board of Directors makes the assessment that it continues to be advantageous for the company to be able to adapt the company's capital structure, thereby contributing to increased shareholder value, and to continue to be able to use repurchased shares on account of potential company acquisitions and the company's share-related incentive programs.
The Board of Directors proposes the Annual General Meeting 2012 to authorize the Board of Directors, for the period until the next Annual General Meeting, to resolve on acquisitions of shares in the company and that the company may acquire as a maximum so many B-shares that, following each acquisition, the company holds at a maximum 10% of all shares issued by the company.
As of February 1, 2012, Electrolux holds 24,255,085 B-shares in Electrolux, corresponding to 7.9% of the total number of shares in the company.
Nomination Committee
In accordance with decision by the Annual General Meeting, Electrolux Nomination Committee shall consist of six members. The members should be one representative of each of the four largest shareholders in terms of voting rights that wish to participate in the committee, together with the Chairman of the Electrolux Board and one additional Board member.
The members of the Nomination Committee have been appointed based on the ownership structure as of August 31, 2011. Petra Hedengran, Investor AB, is the Chairman of the committee. The other owner representatives are Kaj Thorén, Alecta, Marianne Nilsson, Swedbank Robur funds, and Ingrid Bonde, AMF. The committee will also include Marcus Wallenberg and Peggy Bruzelius, Chairman and Deputy Chairman, respectively, of Electrolux.
The Nomination Committee will prepare proposals for the Annual General Meeting in 2012 regarding Chairman of the Annual General Meeting, Board members, Chairman of the Board and remuneration for Board members and, to the extent deemed necessary, proposal regarding amendments of the current instruction for the Nomination Committee.
Shareholders who wish to submit proposals to the Nomination Committee should send an e-mail to [email protected].
Press releases 2011—2012
November 15 Electrolux hosts Capital Markets Day December 13 Electrolux signs revolving credit facility December 20 Electrolux specifies overhead cost savings January 10 Electrolux appoints Stefano Marzano to the new role of Chief Design Officer
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.
Electrolux monitors and minimizes key risks in a structured and proactive manner. Capacity has previously been adjusted in response to weak demand, working capital has undergone structural improvements, the focus on price has been intensified and the purchasing process for raw materials has been further streamlined.
Demand declined in the Group's major markets during 2011, while demand increased in emerging markets as Asia/Pacific. Some of Electrolux markets experienced strong price pressure during the year. Market prices of raw materials rose in the early part of 2011.
The Group's development is strongly affected by external factors, of which the most important in terms of managing risks currently include:
Fluctuations in demand
Demand for appliances is affected by the general business cycle. Deterioration in these conditions may lead to lower sales volumes as well as to a shift of demand to low-price products, which generally have lower margins. Utilization of production capacity may also decline in the short term. The global economic trend is an uncertainty factor in terms of the development in the future.
Price competition
Most of the markets in which Electrolux operates feature strong price competition. This is particularly severe in the low-price segments and in product categories with large over-capacity. The Group's strategy is based on innovative products and brand-building, and is aimed, among other things, at minimizing and offsetting price competition for its products. Price pressure still prevails in the Group's major markets.
Changes in prices for raw materials and components
The Group's exposure to raw materials comprises mainly of steel, plastics, copper and aluminum. Electrolux uses bilateral contracts to manage risks related to steel prices. Some raw materials are purchased at spot prices. There is considerable uncertainty regarding trends for the prices of raw materials.
Exchange-rate exposure
The global presence of Electrolux, with manufacturing and sales in a number of countries, offsets exchange-rate effects to a certain degree. The principal exchange-rate effect arises from transaction flows; when purchasing and/or production are/is carried out in one currency and sales occur in another currency. The Group utilizes currency derivatives to hedge a portion of the currency exposure that arises. The effect of currency hedging is usually that currency movements that occur today have a delayed effect. The major currencies for the Electrolux Group are the USD, EUR, AUD, BRL and GBP. In general, income for Electrolux benefits from a weak USD and EUR and from a strong AUD, BRL and GBP.
Furthermore, Electrolux is affected by translation effects when the Group's sales and operating income are translated into SEK. The translation exposure is primarily related to currencies in those regions where the Group's most substantial operations exist, that is, EUR and USD.
Exposure to customers and suppliers
Electrolux has a comprehensive process for evaluating credits and tracking the financial situation of retailers. Management of credits as well as responsibility and authority for approving credit decisions are regulated by the Group's credit policy. Credit insurance is used in specific cases to reduce credit risks.
The weak trend in the major Electrolux markets in 2011 impacted the Group's retailers who experienced difficult trading conditions but this did not result in any increases in credit losses for Electrolux.
Access to financing
The Group's loan-maturity profile for 2012 and 2013 represents maturities of approximately SEK 4,100m in long-term borrowings.
In addition, Electrolux has two unutilized back-up credit facilities. In 2011, Electrolux replaced an existing comitted revolving credit facility with a new EUR 500m multi-currency revolving credit facility maturing in 2016, with extension options for up to two more years. Electrolux also has an additional committed credit facility of SEK 3,400m maturing 2017.
Risks, risk management and risk exposure are described in more detail in the Annual Report 2010, www.electrolux.com/annualreport2010.
Sensitivity analysis year-end 2011
| Pre-tax earnings | ||
|---|---|---|
| Risk | Change | impact, SEKm |
| Raw materials | ||
| Steel | 10% | +/–900 |
| Plastics | 10% | +/–600 |
| Currencies¹) | ||
| and interest rates | ||
| USD/SEK | –10% | +810 |
| EUR/SEK | –10% | +410 |
| BRL/SEK | –10% | –300 |
| AUD/SEK | –10% | –260 |
| GBP/SEK | –10% | –180 |
| Interest rate | 1 percentage point | +/–60 |
Raw-materials exposure 2011
Carbon steel, 35% Stainless steel, 8% Copper and aluminum, 13% Plastics, 29% Other, 15%
In 2011, Electrolux purchased raw materials for approximately SEK 20bn. Purchases of steel accounted for the largest cost.
1) Include translation and transaction effects.
Compañia Tecno Industrial S.A. (CTI)
On October 14, 2011, Electrolux acquired 7,005,564,670 shares in the Chilean appliances company Compañia Tecno Industrial S.A. (CTI) through a cash tender offer on the Santiago Stock Exchange. The shares acquired represented 97.79% of the voting equity interest in CTI and Electrolux thereby achieved control of the company. Electrolux also acquired 127,909,232 shares, representing 96.90% of the voting equity interest in the subsidiary Somela S.A., through a cash tender offer on the Santiago Stock Exchange.
The cash tender offer was preceded by an agreement with Sigdo Koppers and certain associated parties to buy their shares in the tender offer, corresponding to approximately 64% of the outstanding shares in CTI.
The total consideration paid for the acquisition of the shares in CTI group was SEK 3,804m and was paid in cash in October 2011.
CTI group is included in the consolidated accounts of Electrolux as of October 2011 and is included in the business areas Major Appliances Latin America and Small Appliances. The income statement of Electrolux includes three months of sales and income from CTI group.
The preliminary purchase-price allocation concludes that goodwill amounts to a value of SEK 2,104m. This value may be adjusted when the purchase-price allocation is finalized for, e.g., appraisal of buildings and land. The goodwill is attributable mainly to synergies in product development, production and marketing of household appliances and from gaining market presence in the Southern cone of Latin America that is expected to grow economically going forward. None of the goodwill is expected to be deductible for tax purposes. The goodwill amount has been tested for impairment as a part of the Major Appliances Latin America and Small Appliances business areas.
The purchase agreement with Sigdo Koppers includes the right for Electrolux to be indemnified for certain environmental claims and tax claims, amongst others.
The non-controlling interest in CTI group at acquisition is 2.36% and amounts to a value of SEK 41m. The value of the non-controlling interest is calculated based on the non-controlling interest's proportionate share of CTI group's net assets. Subsequent to the acquisition, Electrolux has acquired a further 22,143,092 shares in CTI group from minority shareholders for a total of SEK 17m.
Expenses related to the acquisition amounted to SEK 56m in 2011 and has been reported as administrative expenses in Electrolux income statement.
Consideration
| SEKm | 2011 |
|---|---|
| Cash paid | 3,804 |
| Total | 3,804 |
Recognized amounts of identifiable assets
acquired and liabilities assumed at fair value
SEKm
| Property, plant and equipment | 382 |
|---|---|
| Intangible assets | 1,012 |
| Inventories | 734 |
| Trade receivables | 763 |
| Other current and non-current assets | 310 |
| Accounts payable | –189 |
| Other operating liabilities | –886 |
| Total identifiable net assets acquired | 2,126 |
| Cash and cash equivalents | 114 |
| Borrowings | –499 |
| Assumed net debt | –385 |
| Non-controlling interests | –41 |
| Goodwill | 2,104 |
| Total | 3,804 |
CTI's and Somela's shares are listed on the Santiago Stock Exchange in Chile.
CTI group's net sales and operating income are not disclosed, as its financial statements have not yet been published.
CTI group
In Chile, CTI group manufactures refrigerators, stoves, washing machines and heaters, sold under the brands Fensa and Mademsa, and is the leading manufacturer with a volume market share of 36%. CTI group also holds a leading position in Argentina with the GAFA brand and in Chile, Somela is the largest supplier of small domestic appliances.
CTI group has 2,200 employees and two manufacturing sites in Chile and one site in Argentina. In 2010, the company had sales of SEK 2.9bn (CLP 203bn).
This acquisition is a part of Electrolux strategy to grow in emerging markets and provides significant revenue and growth synergies. The acquisition makes Electrolux the largest supplier of appliances in Chile and Argentina, and further enhances Electrolux position as a leading appliance company in the fast-growing Latin American markets.
Olympic Group
On September 8, 2011, Electrolux closed its tender offer for the shares in Olympic Group and acquired in total 59,074,122 shares representing 98.33% of the shares and votes in the company. The tender offer was launched in July 2011, following an agreement with Paradise Capital to acquire its 52% majority stake in Olympic Group. The total consideration for 98.33% of the shares in Olympic Group is SEK 2,556m, which was paid in cash at the beginning of September 2011.
Olympic Group is included in the consolidated accounts of Electrolux as of September 1, 2011, within the business area Major Appliances Europe, Middle East and Africa.
Following closing of the tender offer, Electrolux has sold Olympic Group's shares in the companies Namaa and B-Tech and some additional assets to Paradise Capital for a total of SEK 522m, since they were not part of Olympic Group's core business. According to the agreement with Paradise Capital additional assets will be sold in 2012.
Olympic Group also intends to launch a tender offer for the shares held by minority shareholders in Olympic Group's subsidiary Delta Industrial-Ideal S.A.E. at a price of EGP 21.4 per share. The estimated total consideration for these shares will not exceed SEK 116m. The actual consideration to be paid will depend on the number of tendered shares.
Upon the completion of the above transactions, the total net consideration paid for Electrolux 98.33% interest in Olympic Group will be approximately SEK 2,135m.
Expenses related to the acquisition amounted to SEK 24m in 2010 and to SEK 43m in 2011 and have been reported as administrative expenses in Electrolux income statement.
The purchase price allocation concludes that goodwill amounts to a value of SEK 1,495m. The goodwill is attributable mainly to synergies in product development, production and sales and from gaining market presence in the North African region that is expected to grow economically going forward. None of the goodwill is expected to be deductible for tax purposes. The goodwill amount was tested for impairment as a part of the Major Appliances Europe, Middle East and Africa business areas.
Olympic Group has entered into a seven-year management agreement with Paradise Capital to ensure continued technical and management support to Olympic Group against a yearly fee of 2.5% of Olympic Group's net sales. The fee is reported within administrative expenses.
The purchase agreement with Paradise Capital includes customary indemnity provisions which entitles Electrolux to be compensated under circumstances detailed in the agreement.
The non-controlling interest in Olympic Group is 6.1%, including the shares in Olympic Group's subsidiaries currently held by minority shareholders, and amounted to a value of SEK 69m in the acquisition balance. The value of the non-controlling interest is
Olympic Group
Olympic Group is a leading manufacturer of appliances in the Middle East with a volume market share in Egypt of approximately 30%. The company has 7,100 employees and manufactures washing machines, refrigerators, cookers and water heaters.
The acquisition is part of Electrolux strategy to grow in emerging markets like Middle East and Africa. Electrolux and Olympic Group have developed a successful commercial partnership in the region for almost 30 years, which today covers technology, supply of components, distribution and brand licensing.
calculated based on the non-controlling interest's proportionate share of Olympic Group's total net assets.
The following table summarizes the consideration paid for Olympic Group and the fair value of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the value of the non-controlling interest in Olympic Group.
Consideration
| SEKm | 2011 |
|---|---|
| Cash paid | 2,556 |
| Total | 2,556 |
Recognized amounts of identifiable assets acquired and liabilities assumed at fair value
SEKm
| Property, plant and equipment | 555 |
|---|---|
| Intangible assets | 516 |
| Inventories | 577 |
| Trade receivables | 195 |
| Other current and non-current assets | 236 |
| Accounts payable | –223 |
| Other operating liabilities | –574 |
| Current assets classified as held for sale | 537 |
| Total identifiable net assets acquired | 1,819 |
| Cash and cash equivalents | 34 |
| Borrowings | –723 |
| Assumed net debt | –689 |
| Non-controlling interests | –69 |
| Goodwill | 1,495 |
| Total | 2,556 |
Olympic Group's shares are listed on the Egyptian Stock Exchange. Electrolux intends to delist Olympic Group's shares no later than in the first quarter of 2012.
Olympic Group's net sales and operating income are not disclosed, as its financial statements have not yet been published.
Olympic Group, excluding the two companies Namaa and B-Tech, which are not part of the core business and have been divested after the acquisition, had sales of about EGP 2.3bn (SEK 2.5bn) in 2010, and a recurring operating profit of about EGP 265m (SEK 280m). This corresponds to a margin of 11% and a net profit of about EGP 190m (SEK 200m ).
The exchange rate used for translation from EGP to SEK is as of June 30, 2011.
Parent Company AB Electrolux
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 2011 amounted to SEK 6,660m (5,989), of which SEK 3,266m (3,396) referred to sales to Group companies and SEK 3,394m (2,593) to external customers. Income after financial items was SEK 2,904m (3,633), including dividends from subsidiaries in the amount of SEK 2,150m (2,560). Income for the period amounted to SEK 2,745m (3,353).
Capital expenditure in tangible and intangible assets was SEK 483m (562). Liquid funds at the end of the period amounted to SEK 2,206m, as against SEK 5,266m at the start of the year.
Undistributed earnings in the Parent Company at the end of the period amounted to SEK 15,938m, as against SEK 15,089m at the start of the year. Dividend payment to shareholders for 2010 amounted to SEK 1,850m.
The income statement and balance sheet for the Parent Company are presented on page 23.
Stockholm, February 2, 2012
Keith McLoughlin President and CEO
New pension accounting standards as of 2013
Employee Benefits (Amendments)1). IAS 19 prescribes the accounting and disclosure by employers for employee benefits. The amended standard requires an entity to regularly determine the present value of defined benefit obligations and the fair value of plan assets and to recognize the net of those values in the financial statements as a net defined benefit liability. The amended standard removes the option to use the corridor approach (see Note 1 in the Annual Report 2010
for a description) presently used by Electrolux. The standard also requires an entity to apply the discount rate on the net defined benefit liability (asset) in order to calculate the net interest expense (income). The standard thereby removes the use of an expected return on the plan assets. All changes in the net defined benefit liability (asset) will be recognized as they occur, as follows: (i) service cost and net interest in profit or loss; and (ii) remeasurement in other comprehensive income.
The standard will have the following preliminary impact on the presentation of Electrolux financial results and position: All historical actuarial gains or losses will be included in the measurement of the net defined benefit liability. This will initially increase the liabilities of Electrolux and reduce the equity (after deduction for deferred tax). Future changes in the net defined benefit liability from changes in, e.g., discount rate will be presented in other comprehensive income. Electrolux will classify the defined benefit liability as a financial liability and present the net interest on the net liability in the financial net. The removal of the expected return will worsen the net interest with the difference between the expected return and the discount rate applied on the plan assets. For 2011, the changes would have increased the net defined benefit liability by approximately SEK 3,500m and reduced retained earnings by SEK 2,800m.
The modified net interest calculation and the removal of the amortization of the actuarial losses would have decreased the income for the period by approximately SEK 200m. The standard will be applied as of Q1, 2013 with full retrospective application.
1) This amendment has not been adopted by the EU at the writing date.
Accounting and valuation principles
Electrolux applies International Financial Reporting Standards (IFRS) as adopted by the European Union. This report has been prepared in accordance with IAS 34, Interim Financial Reporting, and ÅRL, the Swedish Annual Accounts Act and recommendation RFR 2, Accounting for legal entities, issued by the Swedish Financial Reporting Board. There are no changes in the Group's accounting and valuation principles compared with the accounting and valuation principles described in Note 1 of the Annual Report 2010.
The parent company reports Group contributions in the income statement as of the fourth quarter of 2011. The income statement for 2010 has been restated.
This report has not been audited.
Consolidated income statement
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 28,369 | 27,556 | 101,598 | 106,326 |
| Cost of goods sold | –23,213 | –21,572 | –82,840 | –82,697 |
| Gross operating income | 5,156 | 5,984 | 18,758 | 23,629 |
| Selling expenses | –2,938 | –2,912 | –10,821 | –11,698 |
| Administrative expenses | –1,622 | –1,348 | –4,972 | –5,428 |
| Other operating income/expenses | 20 | –10 | 190 | –9 |
| Items affecting comparability | –104 | –762 | –138 | –1,064 |
| Operating income | 512 | 952 | 3,017 | 5,430 |
| Margin, % | 1.8 | 3.5 | 3.0 | 5.1 |
| Financial items, net | –184 | –27 | –237 | –124 |
| Income after financial items | 328 | 925 | 2,780 | 5,306 |
| Margin, % | 1.2 | 3.4 | 2.7 | 5.0 |
| Taxes | –107 | –248 | –716 | –1,309 |
| Income for the period | 221 | 677 | 2,064 | 3,997 |
| Available for sale instruments | –13 | –63 | –91 | 77 |
| Cash-flow hedges | –28 | 23 | 111 | –117 |
| Exchange differences on translation of foreign operations | –168 | 190 | –223 | –1,108 |
| Income tax relating to other comprehensive income | –6 | 33 | –104 | –30 |
| Other comprehensive income, net of tax | –215 | 183 | –307 | –1,178 |
| Total comprehensive income for the period | 6 | 860 | 1,757 | 2,819 |
| Income for the period attributable to: | ||||
| Equity holders of the Parent Company | 220 | 677 | 2,064 | 3,997 |
| Non-controlling interests | 1 | – | – | – |
| Total | 221 | 677 | 2,064 | 3,997 |
| Total comprehensive income for the period attributable to: | ||||
| Equity holders of the Parent Company | 5 | 860 | 1,752 | 2,819 |
| Non-controlling interests | 1 | – | 5 | – |
| Total | 6 | 860 | 1,757 | 2,819 |
| Earnings per share, SEK | 0.77 | 2.38 | 7.25 | 14.04 |
| Diluted, SEK | 0.77 | 2.36 | 7.21 | 13.97 |
| Number of shares after buy-backs, million | 284.7 | 284.7 | 284.7 | 284.7 |
| Average number of shares after buy-backs, million | 284.7 | 284.7 | 284.7 | 284.6 |
| Diluted, million | 286.0 | 286.4 | 286.1 | 286.0 |
Items affecting comparability
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Restructuring provisions and write-downs | ||||
| Appliances plant in Kinston, USA | –104 | – | –104 | – |
| Appliances plant in L'Assomption, Canada | – | –426 | – | –426 |
| Reduced workforce in Major Appliances, Europe | – | –356 | –54 | –356 |
| Appliances plant in Revin, France | – | – | – | –71 |
| Appliances plant in Forli, Italy | – | – | – | –136 |
| Appliances plant in Motala, Sweden | – | – | – | –95 |
| Reversal of unused restructuring provisions | – | 20 | 20 | 20 |
| Total | –104 | –762 | –138 | –1,064 |
Consolidated balance sheet
| SEKm | Dec. 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 15,613 | 14,630 |
| Goodwill | 6,008 | 2,295 |
| Other intangible assets | 5,146 | 3,276 |
| Investments in associates | 18 | 17 |
| Deferred tax assets | 2,980 | 2,981 |
| Financial assets | 517 | 577 |
| Other non-current assets | 3,036 | 2,836 |
| Total non-current assets | 33,318 | 26,612 |
| Inventories | 11,957 | 11,130 |
| Trade receivables | 19,226 | 19,346 |
| Tax assets | 666 | 367 |
| Derivatives | 252 | 386 |
| Other current assets | 3,662 | 3,569 |
| Short-term investments | 337 | 1,722 |
| Cash and cash equivalents | 6,966 | 10,389 |
| Total current assets | 43,066 | 46,909 |
| Total assets | 76,384 | 73,521 |
| Equity and liabilities Equity attributable to equity holders of the Parent Company |
||
| Share capital | 1,545 | 1,545 |
| Other paid-in capital | 2,905 | 2,905 |
| Other reserves | 324 | 636 |
| Retained earnings | 15,761 | 15,527 |
| Total equity | 20,535 | 20,613 |
| Non controlling interests | 109 | – |
| Total equity | 20,644 | 20,613 |
| Long-term borrowings | 9,639 | 8,413 |
| Deferred tax liabilities | 1,127 | 806 |
| Provisions for post-employment benefits | 2,111 | 2,486 |
| Other provisions | 5,300 | 5,306 |
| Total non-current liabilities | 18,177 | 17,011 |
| Accounts payable | 18,490 | 17,283 |
| Tax liabilities | 1,717 | 1,868 |
| Short-term liabilities | 10,497 | 10,907 |
| Short-term borrowings | 4,170 | 3,139 |
| Derivatives | 324 | 483 |
| Other provisions | 2,365 | 2,217 |
| Total current liabilities | 37,563 | 35,897 |
| Total equity and liabilities | 76,384 | 73,521 |
| Contingent liabilities | 1,276 | 1,062 |
Shares
| Number of shares | Outstanding A-shares |
Outstanding B-shares |
Outstanding shares, total |
Shares held by Electrolux |
Shares held by other shareholders |
|---|---|---|---|---|---|
| Number of shares as of January 1, 2011 | 9,063,125 | 299,857,183 308,920,308 | 24,255,085 | 284,665,223 | |
| Conversion of A-shares into B-shares | –850,400 | 850,400 | |||
| Number of shares as of December 31, 2011 | 8,212,725 | 300,707,583 308,920,308 | 24,255,085 | 284,665,223 | |
| As % of total number of shares | 7.9% | 92.1% |
Consolidated cash flow statement
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Operations | ||||
| Operating income | 512 | 952 | 3,017 | 5,430 |
| Depreciation and amortization | 818 | 849 | 3,173 | 3,328 |
| Capital gain/loss included in operating income | –33 | – | –207 | 4 |
| Restructuring provisions | 628 | 587 | 110 | 294 |
| Share-based compensation | 12 | 23 | 29 | 73 |
| Financial items paid, net | –244 | –77 | –214 | –72 |
| Taxes paid | –446 | –480 | –1,625 | –1,316 |
| Cash flow from operations, excluding change | ||||
| in operating assets and liabilities | 1,247 | 1,854 | 4,283 | 7,741 |
| Change in operating assets and liabilities | ||||
| Change in inventories | 1,649 | 1,090 | 269 | –1,755 |
| Change in trade receivables | –403 | 127 | 244 | –216 |
| Change in other current assets | 653 | –151 | 200 | –977 |
| Change in accounts payable | –232 | –489 | 1,379 | 2,624 |
| Change in other operating liabilities and provisions | –1,204 | –632 | –976 | 263 |
| Cash flow from change in operating assets | ||||
| and liabilities | 463 | –55 | 1,116 | –61 |
| Cash flow from operations | 1,710 | 1,799 | 5,399 | 7,680 |
| Investments | ||||
| Acquisition of operations | –3,821 | – | –6,377 | – |
| Divestment of operations | 608 | – | 821 | 7 |
| Capital expenditure in property, plant and equipment | –1,025 | –1,160 | –3,163 | –3,221 |
| Capitalization of product development | –51 | –123 | –374 | –396 |
| Capitalization of software | –230 | –252 | –744 | –688 |
| Other | –117 | –131 | –212 | –176 |
| Cash flow from investments | –4,636 | –1,666 | –10,049 | –4,474 |
| Cash flow from operations and investments | –2,926 | 133 | –4,650 | 3,206 |
| Financing | ||||
| Change in short-term investments | 388 | 175 | 1,444 | 1,306 |
| Change in short-term borrowings | –519 | 60 | –619 | –1,768 |
| New long-term borrowings | – | 3 | 3,503 | 380 |
| Amortization of long-term borrowings | –250 | –8 | –1,161 | –1,039 |
| Dividend | – | – | –1,850 | –1,138 |
| Sale of shares | – | – | – | 18 |
| Cash flow from financing | –381 | 230 | 1,317 | –2,241 |
| Total cash flow | –3,307 | 363 | –3,333 | 965 |
| Cash and cash equivalents at beginning of period | 10,226 | 9,947 | 10,389 | 9,537 |
| Exchange-rate differences | 47 | 79 | –90 | –113 |
| Cash and cash equivalents at end of period | 6,966 | 10,389 | 6,966 | 10,389 |
Change in consolidated equity
| SEKm | Dec. 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Opening balance | 20,613 | 18,841 |
| Total comprehensive income for the period | 1,757 | 2,819 |
| Share-based payment | 29 | 73 |
| Sale of shares | – | 18 |
| Dividend | –1,850 | –1,138 |
| Dividend to non-controlling interests | –1 | – |
| Acquisition of operations | 96 | – |
| Total transactions with equity holders | –1,726 | –1,047 |
| Closing balance | 20,644 | 20,613 |
Working capital and net assets
| % of annualized | % of annualized | |||
|---|---|---|---|---|
| SEKm | Dec. 31, 2011 | net sales | Dec. 31, 2010 | net sales |
| Inventories | 11,957 | 10.5 | 11,130 | 10.2 |
| Trade receivables | 19,226 | 17.0 | 19,346 | 17.7 |
| Accounts payable | –18,490 | –16.3 | –17,283 | –15.8 |
| Provisions | –9,776 | –10,009 | ||
| Prepaid and accrued income and expenses | –6,598 | –7,095 | ||
| Taxes and other assets and liabilities | –1,499 | –1,991 | ||
| Working capital | –5,180 | –4.6 | –5,902 | –5.4 |
| Property, plant and equipment | 15,613 | 14,630 | ||
| Goodwill | 6,008 | 2,295 | ||
| Other non-current assets | 8,717 | 6,706 | ||
| Deferred tax assets and liabilities | 1,853 | 2,175 | ||
| Net assets | 27,011 | 23.8 | 19,904 | 18.2 |
| Average net assets | 22,091 | 21.7 | 19,545 | 18.4 |
| Average net assets, excluding items affecting | ||||
| comparability | 23,354 | 23.0 | 20,940 | 19.7 |
Key ratios
| Q4 2011 | Q4 2010 | 2011 | 2010 | |
|---|---|---|---|---|
| Net sales, SEKm | 28,369 | 27,556 | 101,598 | 106,326 |
| Operating income, SEKm | 512 | 952 | 3,017 | 5,430 |
| Margin, % | 1.8 | 3.5 | 3.0 | 5.1 |
| EBITDA, SEKm | 1,330 | 1,801 | 6,190 | 8,758 |
| Earnings per share, SEK¹) | 0.77 | 2.38 | 7.25 | 14.04 |
| Return on net assets, % | – | – | 13.7 | 27.8 |
| Return on equity, % | – | – | 10.4 | 20.6 |
| Capital-turnover rate, times/year | – | – | 4.6 | 5.4 |
| Equity per share, SEK | – | – | 72.52 | 72.41 |
| Cash flow from operations, SEKm | 1,710 | 1,799 | 5,399 | 7,680 |
| Capital expenditure, SEKm | –1,025 | –1,160 | –3,163 | –3,221 |
| Net borrowings, SEKm | – | – | 6,367 | –709 |
| Net debt/equity ratio | – | – | 0.31 | –0.03 |
| Equity/assets ratio, % | – | – | 30.1 | 33.9 |
| Average number of employees | 56,912 | 51,803 | 52,916 | 51,544 |
| Excluding items affecting comparability | ||||
| Operating income, SEKm | 616 | 1,714 | 3,155 | 6,494 |
| Margin, % | 2.2 | 6.2 | 3.1 | 6.1 |
| EBITDA, SEKm | 1,434 | 2,563 | 6,328 | 9,822 |
| Earnings per share, SEK¹) | 1.01 | 4.23 | 7.55 | 16.65 |
Return on net assets, % – – 13.5 31.0 Return on equity, % – – 10.8 24.4 Capital-turnover rate, times/year – – 4.3 5.1
1) Basic, based on average number of shares, excluding shares owned by Electrolux, see page 19.
For definitions, see page 24.
Net sales by business area*
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 9,749 | 9,677 | 34,029 | 36,596 |
| Major Appliances North America | 6,271 | 6,752 | 27,665 | 30,969 |
| Major Appliances Latin America | 6,003 | 4,987 | 17,810 | 16,260 |
| Major Appliances Asia/Pacific | 2,180 | 2,069 | 7,852 | 7,679 |
| Small Appliances | 2,579 | 2,414 | 8,359 | 8,422 |
| Professional Products | 1,587 | 1,657 | 5,882 | 6,389 |
| Other | – | – | 1 | 11 |
| Total | 28,369 | 27,556 | 101,598 | 106,326 |
Operating income by business area*
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | –202 | 447 | 709 | 2,297 |
| Margin, % | –2.1 | 4.6 | 2.1 | 6.3 |
| Major Appliances North America | 76 | 291 | 250 | 1,442 |
| Margin, % | 1.2 | 4.3 | 0.9 | 4.7 |
| Major Appliances Latin America | 345 | 337 | 820 | 951 |
| Margin, % | 5.7 | 6.8 | 4.6 | 5.8 |
| Major Appliances Asia/Pacific | 213 | 200 | 736 | 793 |
| Margin, % | 9.8 | 9.7 | 9.4 | 10.3 |
| Small Appliances | 237 | 271 | 543 | 802 |
| Margin, % | 9.2 | 11.2 | 6.5 | 9.5 |
| Professional Products | 191 | 243 | 841 | 743 |
| Margin, % | 12.0 | 14.7 | 14.3 | 11.6 |
| Total business areas | 860 | 1,789 | 3,899 | 7,028 |
| Margin, % | 3.0 | 6.5 | 3.8 | 6.6 |
| Common Group costs, etc. | –244 | –75 | –744 | –534 |
| Items affecting comparability | –104 | –762 | –138 | –1,064 |
| Operating income | 512 | 952 | 3,017 | 5,430 |
* Figures for 2010 have been restated according to the new reporting structure, see pages 20 and 22.
Change in net sales by business area
| Year-over-year, % | Q4 2011 | Q4 2011 in comparable currencies |
2011 | 2011 in comparable currencies |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 0.7 | 3.2 | –7.0 | –2.2 |
| Major Appliances North America | –7.1 | –5.9 | –10.7 | –1.3 |
| Major Appliances Latin America | 20.4 | 27.8 | 9.5 | 16.5 |
| Major Appliances Asia/Pacific | 5.4 | 4.1 | 2.3 | 3.2 |
| Small Appliances | 6.8 | 10.1 | –0.7 | 6.0 |
| Professional Products | –4.2 | –2.8 | –7.9 | –3.7 |
| Total change | 3.0 | 5.7 | –4.4 | 1.9 |
Change in operating income by business area
| Year-over-year, % | Q4 2011 | Q4 2011 in comparable currencies |
2011 | 2011 in comparable currencies |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | –145.2 | –120.0 | –69.1 | –67.2 |
| Major Appliances North America | –73.9 | –72.6 | –82.7 | –81.1 |
| Major Appliances Latin America | 2.4 | 6.3 | –13.8 | –8.1 |
| Major Appliances Asia/Pacific | 6.5 | 8.5 | –7.2 | –7.9 |
| Small Appliances | –12.5 | –8.5 | –32.3 | –29.5 |
| Professional Products | –21.4 | –20.4 | 13.2 | 18.5 |
| Total change, excluding items affecting comparability | –64.1 | –63.8 | –51.4 | –48.9 |
Exchange rates
| SEK | Dec. 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| AUD, average | 6.72 | 6.60 |
| AUD, end of period | 7.02 | 6.92 |
| BRL, average | 3.88 | 4.10 |
| BRL, end of period | 3.68 | 4.08 |
| CAD, average | 6.55 | 6.96 |
| CAD, end of period | 6.77 | 6.80 |
| EUR, average | 9.02 | 9.56 |
| EUR, end of period | 8.93 | 9.01 |
| GBP, average | 10.36 | 11.13 |
| GBP, end of period | 10.65 | 10.52 |
| HUF, average | 0.0322 | 0.0346 |
| HUF, end of period | 0.0287 | 0.0322 |
| USD, average | 6.48 | 7.20 |
| USD, end of period | 6.90 | 6.81 |
Net sales and income per quarter
| SEKm | Q1 | Q2 | Q3 | Q4 | Full year | |
|---|---|---|---|---|---|---|
| Net sales | 2011 | 23,436 | 24,143 | 25,650 | 28,369 | 101,598 |
| 2010 | 25,133 | 27,311 | 26,326 | 27,556 | 106,326 | |
| Operating income | 2011 | 696 | 745 | 1,064 | 512 | 3,017 |
| Margin, % | 3.0 | 3.1 | 4.1 | 1.8 | 3.0 | |
| 2011¹) | 696 | 745 | 1,098 | 616 | 3,155 | |
| Margin, % | 3.0 | 3.1 | 4.3 | 2.2 | 3.1 | |
| 2010 | 1,231 | 1,270 | 1,977 | 952 | 5,430 | |
| Margin, % | 4.9 | 4.7 | 7.5 | 3.5 | 5.1 | |
| 2010¹) | 1,326 | 1,477 | 1,977 | 1,714 | 6,494 | |
| Margin, % | 5.3 | 5.4 | 7.5 | 6.2 | 6.1 | |
| Income after financial items | 2011 | 637 | 696 | 1,119 | 328 | 2,780 |
| Margin, % | 2.7 | 2.9 | 4.4 | 1.2 | 2.7 | |
| 2011¹) | 637 | 696 | 1,153 | 432 | 2,918 | |
| Margin, % | 2.7 | 2.9 | 4.5 | 1.5 | 2.9 | |
| 2010 | 1,211 | 1,269 | 1,901 | 925 | 5,306 | |
| Margin, % | 4.8 | 4.6 | 7.2 | 3.4 | 5.0 | |
| 2010¹) | 1,306 | 1,476 | 1,901 | 1,687 | 6,370 | |
| Margin, % | 5.2 | 5.4 | 7.2 | 6.1 | 6.0 | |
| Income for the period | 2011 | 457 | 561 | 825 | 221 | 2,064 |
| 2010 | 911 | 1,028 | 1,381 | 677 | 3,997 | |
| Earnings per share, SEK ²) | 2011 | 1.61 | 1.97 | 2.90 | 0.77 | 7.25 |
| 2011¹) | 1.61 | 1.97 | 2.96 | 1.01 | 7.55 | |
| 2010 | 3.20 | 3.61 | 4.85 | 2.38 | 14.04 | |
| 2010¹) | 3.45 | 4.12 | 4.85 | 4.23 | 16.65 | |
1) Excluding items affecting comparability.
2) Basic, based on average number of shares, excluding shares owned by Electrolux.
| Number of shares, basic | ||||||
|---|---|---|---|---|---|---|
| Number of shares after buy–backs, million | 2011 | 284.7 | 284.7 | 284.7 | 284.7 | 284.7 |
| 2010 | 284.5 | 284.7 | 284.7 | 284.7 | 284.7 | |
| Average number of shares after buy–backs, million | 2011 | 284.7 | 284.7 | 284.7 | 284.7 | 284.7 |
| 2010 | 284.5 | 284.6 | 284.7 | 284.7 | 284.6 | |
| Items affecting comparability | ||||||
| Restructuring provisions, write–downs and capital | 2011 | – | – | –34 | –104 | –138 |
| loss on divestment, SEKm | 2010 | –95 | –207 | – | –762 | –1,064 |
Net sales by business area per quarter1)
| SEKm | Q1 | Q2 | Q3 | Q4 | Full year | |
|---|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 2011 | 7,656 | 7,660 | 8,964 | 9,749 | 34,029 |
| 2010 | 8,921 | 8,603 | 9,395 | 9,677 | 36,596 | |
| 2009 | 9,680 | 9,634 | 10,507 | 10,679 | 40,500 | |
| Major Appliances North America | 2011 | 6,728 | 7,544 | 7,122 | 6,271 | 27,665 |
| 2010 | 7,305 | 9,308 | 7,604 | 6,752 | 30,969 | |
| 2009 | 8,398 | 9,058 | 8,136 | 7,102 | 32,694 | |
| Major Appliances Latin America | 2011 | 3,998 | 3,708 | 4,101 | 6,003 | 17,810 |
| 2010 | 3,796 | 3,667 | 3,810 | 4,987 | 16,260 | |
| 2009 | 2,437 | 3,122 | 3,571 | 4,172 | 13,302 | |
| Major Appliances Asia/Pacific | 2011 | 1,746 | 1,945 | 1,981 | 2,180 | 7,852 |
| 2010 | 1,666 | 2,035 | 1,909 | 2,069 | 7,679 | |
| 2009 | 1,533 | 1,787 | 1,746 | 1,971 | 7,037 | |
| Small Appliances | 2011 | 1,930 | 1,794 | 2,056 | 2,579 | 8,359 |
| 2010 | 1,936 | 1,966 | 2,106 | 2,414 | 8,422 | |
| 2009 | 2,041 | 2,029 | 2,026 | 2,368 | 8,464 | |
| Professional Products | 2011 | 1,378 | 1,491 | 1,426 | 1,587 | 5,882 |
| 2010 | 1,501 | 1,730 | 1,501 | 1,657 | 6,389 | |
| 2009 | 1,727 | 1,850 | 1,629 | 1,923 | 7,129 | |
Operating income by business area per quarter1)
| SEKm | Q1 | Q2 | Q32) | Q42) | Full year | |
|---|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 2011 | 311 | 156 | 444 | –202 | 709 |
| Margin, % | 4.1 | 2.0 | 5.0 | –2.1 | 2.1 | |
| 2010 | 499 | 453 | 898 | 447 | 2,297 | |
| Margin, % | 5.6 | 5.3 | 9.6 | 4.6 | 6.3 | |
| 2009 | 112 | 255 | 903 | 642 | 1,912 | |
| Margin, % | 1.2 | 2.6 | 8.6 | 6.0 | 4.7 | |
| Major Appliances North America | 2011 | –71 | 138 | 107 | 76 | 250 |
| Margin, % | –1.1 | 1.8 | 1.5 | 1.2 | 0.9 | |
| 2010 | 299 | 439 | 413 | 291 | 1,442 | |
| Margin, % | 4.1 | 4.7 | 5.4 | 4.3 | 4.7 | |
| 2009 | –178 | 478 | 617 | 382 | 1,299 | |
| Margin, % | –2.1 | 5.3 | 7.6 | 5.4 | 4.0 | |
| Major Appliances Latin America | 2011 | 139 | 114 | 222 | 345 | 820 |
| Margin, % | 3.5 | 3.1 | 5.4 | 5.7 | 4.6 | |
| 2010 | 206 | 209 | 199 | 337 | 951 | |
| Margin, % | 5.4 | 5.7 | 5.2 | 6.8 | 5.8 | |
| 2009 | 34 | 133 | 296 | 346 | 809 | |
| Margin, % | 1.4 | 4.3 | 8.3 | 8.3 | 6.1 | |
| Major Appliances Asia/Pacific | 2011 | 174 | 177 | 172 | 213 | 736 |
| Margin, % | 10.0 | 9.1 | 8.7 | 9.8 | 9.4 | |
| 2010 | 145 | 207 | 241 | 200 | 793 | |
| Margin, % | 8.7 | 10.2 | 12.6 | 9.7 | 10.3 | |
| 2009 | 15 | 51 | 147 | 165 | 378 | |
| Margin, % | 1.0 | 2.9 | 8.4 | 8.4 | 5.4 | |
| Small Appliances | 2011 | 114 | 23 | 169 | 237 | 543 |
| Margin, % | 5.9 | 1.3 | 8.2 | 9.2 | 6.5 | |
| 2010 | 211 | 122 | 198 | 271 | 802 | |
| Margin, % | 10.9 | 6.2 | 9.4 | 11.2 | 9.5 | |
| 2009 | 75 | 84 | 238 | 366 | 763 | |
| Margin, % | 3.7 | 4.1 | 11.7 | 15.5 | 9.0 | |
| Professional Products | 2011 | 177 | 274 | 199 | 191 | 841 |
| Margin, % | 12.8 | 18.4 | 14.0 | 12.0 | 14.3 | |
| 2010 | 91 | 207 | 202 | 243 | 743 | |
| Margin, % | 6.1 | 12.0 | 13.5 | 14.7 | 11.6 | |
| 2009 | 105 | 165 | 173 | 225 | 668 | |
| Margin, % | 6.1 | 8.9 | 10.6 | 11.7 | 9.4 | |
| Common Group costs, etc. | 2011 | –148 | –137 | –215 | –244 | –744 |
| 2010 | –125 | –160 | –174 | –75 | –534 | |
| 2009 | –125 | –139 | –140 | –103 | –507 | |
| Items affecting comparability | 2011 | – | – | –34 | –104 | –138 |
| 2010 | –95 | –207 | – | –762 | –1,064 | |
| 2009 | –424 | 25 | 56 | –1,218 | –1,561 |
1) As of the first quarter of 2011, the Group's operations for floor-care products and small domestic appliances are reported as an own global business area. These operations have previously been reported within each regional business area within consumer durables. The new business area name is Small Appliances. Other business areas within consumer durables have changed their names to Major Appliances.
Net assets by business area
| Assets | Equity and liabilities | Net assets | |||||
|---|---|---|---|---|---|---|---|
| SEKm | Dec. 31, 2011 |
Dec. 31, 2010 |
Dec. 31, 2011 |
Dec. 31, 2010 |
Dec. 31, 2011 |
Dec. 31, 2010 |
|
| Major Appliances Europe, | |||||||
| Middle East and Africa | 29,877 | 27,481 | 20,427 | 20,668 | 9,450 | 6,813 | |
| Major Appliances North America | 8,138 | 9,072 | 2,822 | 2,060 | 5,316 | 7,012 | |
| Major Appliances Latin America | 11,634 | 7,228 | 4,166 | 4,082 | 7,468 | 3,146 | |
| Major Appliances Asia/Pacific | 4,293 | 3,920 | 2,253 | 1,900 | 2,040 | 2,020 | |
| Small Appliances | 4,951 | 4,057 | 2,741 | 2,334 | 2,210 | 1,723 | |
| Professional Products | 2,643 | 2,492 | 1,711 | 1,618 | 932 | 874 | |
| Other1) | 6,892 | 6,462 | 6,294 | 6,507 | 598 | –45 | |
| Items affecting comparability | 117 | 4 | 1,120 | 1,643 | –1,003 | –1,639 | |
| Total operating assets and | |||||||
| liabilities | 68,545 | 60,716 | 41,534 | 40,812 | 27,011 | 19,904 | |
| Liquid funds | 7,839 | 12,805 | – | – | – | – | |
| Interest—bearing receivables | – | – | – | – | – | – | |
| Interest—bearing liabilities | – | – | 14,206 | 12,096 | – | – | |
| Equity | – | – | 20,644 | 20,613 | – | – | |
| Total | 76,384 | 73,521 | 76,384 | 73,521 | – | – |
1) Includes common Group functions and tax items.
Acquisitions1)
| Consideration | |||
|---|---|---|---|
| Olympic | Total | ||
| SEKm | Group | CTI | |
| Cash paid | 2,556 | 3,804 | 6,360 |
| Total | 2,556 | 3,804 | 6,360 |
Recognized amounts of identifiable assets acquired and liabilities assumed at fair value
SEKm
| Property, plant and equipment | 555 | 382 | 937 |
|---|---|---|---|
| Intangible assets | 516 | 1,012 | 1,528 |
| Inventories | 577 | 734 | 1,311 |
| Trade receivables | 195 | 763 | 958 |
| Other current and non-current assets | 236 | 310 | 546 |
| Accounts payable | –223 | –189 | –412 |
| Other operating liabilities | –574 | –886 | –1,460 |
| Current assets classified as held for sale | 537 | – | 537 |
| Total identifiable net assets acquired | 1,819 | 2,126 | 3,945 |
| Cash and cash equivalents | 34 | 114 | 148 |
| Borrowings | –723 | –499 | –1,222 |
| Assumed net debt | –689 | –385 | –1,074 |
| Non-controlling interests | –69 | –41 | –110 |
| Goodwill | 1,495 | 2,104 | 3,599 |
| Total | 2,556 | 3,804 | 6,360 |
1) Olympic Group and CTI are included in Electrolux consolidated accounts as of September and October, respectively.
Operations, by business area*
| SEKm | 2011 | 2010 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | |||||
| Net sales | 34,029 | 36,596 | 40,500 | 42,952 | 44,015 |
| Operating income | 709 | 2,297 | 1,912 | –303 | 1,861 |
| Margin, % | 2.1 | 6.3 | 4.7 | –0.7 | 4.2 |
| Major Appliances North America | |||||
| Net sales | 27,665 | 30,969 | 32,694 | 29,836 | 30,412 |
| Operating income | 250 | 1,442 | 1,299 | 85 | 1,489 |
| Margin, % | 0.9 | 4.7 | 4.0 | 0.3 | 4.9 |
| Major Appliances Latin America | |||||
| Net sales | 17,810 | 16,260 | 13,302 | 10,485 | 8,794 |
| Operating income | 820 | 951 | 809 | 645 | 462 |
| Margin, % | 4.6 | 5.8 | 6.1 | 6.2 | 5.3 |
| Major Appliances Asia/Pacific | |||||
| Net sales | 7,852 | 7,679 | 7,037 | 6,049 | 6,080 |
| Operating income | 736 | 793 | 378 | 93 | 63 |
| Margin, % | 9.4 | 10.3 | 5.4 | 1.5 | 1.0 |
| Small Appliances | |||||
| Net sales | 8,359 | 8,422 | 8,464 | 7,987 | 8,309 |
| Operating income | 543 | 802 | 763 | 764 | 747 |
| Margin, % | 6.5 | 9.5 | 9.0 | 9.6 | 9.0 |
| Professional Products | |||||
| Net sales | 5,882 | 6,389 | 7,129 | 7,427 | 7,102 |
| Operating income | 841 | 743 | 668 | 774 | 584 |
| Margin, % | 14.3 | 11.6 | 9.4 | 10.4 | 8.2 |
| Other | |||||
| Net sales | 1 | 11 | 6 | 56 | 20 |
| Operating income, common Group costs, etc. | –744 | –534 | –507 | –515 | –369 |
| Total Group, excluding items affecting comparability | |||||
| Net sales | 101,598 | 106,326 | 109,132 | 104,792 | 104,732 |
| Operating income | 3,155 | 6,494 | 5,322 | 1,543 | 4,837 |
| Margin, % | 3.1 | 6.1 | 4.9 | 1.5 | 4.6 |
| Items affecting comparability | –138 | –1,064 | –1,561 | –355 | –362 |
| Total Group, including items affecting comparability | |||||
| Net sales | 101,598 | 106,326 | 109,132 | 104,792 | 104,732 |
| Operating income | 3,017 | 5,430 | 3,761 | 1,188 | 4,475 |
| Margin, % | 3.0 | 5.1 | 3.4 | 1.1 | 4.3 |
* As of the first quarter of 2011, the Group's operations for floor-care products and small domestic appliances are reported as an own global business area. These operations have previously been reported within each regional business area within consumer durables. The new business area name is Small Appliances. Other business areas within consumer durables have changed their names to Major Appliances.
Parent Company, income statement1)
| SEKm | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 1,754 | 1,807 | 6,660 | 5,989 |
| Cost of goods sold | –1,311 | –1,469 | –5,023 | –4,506 |
| Gross operating income | 443 | 338 | 1,637 | 1,483 |
| Selling expenses | –333 | –226 | –1,109 | –923 |
| Administrative expenses | 113 | –20 | –295 | –620 |
| Other operating income | 107 | 124 | 298 | 379 |
| Other operating expenses | – | –10 | –10 | –106 |
| Operating income | 330 | 206 | 521 | 213 |
| Financial income | 1,577 | 631 | 2,727 | 3,478 |
| Financial expenses | –222 | –271 | –344 | –58 |
| Financial items, net | 1,355 | 360 | 2,383 | 3,420 |
| Income after financial items | 1,685 | 566 | 2,904 | 3,633 |
| Appropriations | 9 | 35 | 32 | 55 |
| Income before taxes | 1,694 | 601 | 2,936 | 3,688 |
| Taxes | –99 | –210 | –191 | –335 |
| Income for the period | 1,595 | 391 | 2,745 | 3,353 |
Parent Company, balance sheet
| SEKm | Dec. 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Assets | ||
| Non-current assets | 33,247 | 28,517 |
| Current assets | 14,833 | 19,944 |
| Total assets | 48,080 | 48,461 |
| Equity and liabilities | ||
| Restricted equity | 4,562 | 4,562 |
| Non-restricted equity | 15,938 | 15,089 |
| Total equity | 20,500 | 19,651 |
| Untaxed reserves | 597 | 629 |
| Provisions | 732 | 616 |
| Non-current liabilities | 9,220 | 7,836 |
| Current liabilities | 17,031 | 19,729 |
| Total equity and liabilities | 48,080 | 48,461 |
| Pledged assets | 5 | 5 |
| Contingent liabilities | 1,428 | 1,608 |
1) The parent company reports Group contributions in the income statement as of the fourth quarter of 2011. The income statement for 2010 has been restated.
Five-year review
| 2011 | 2010 | 2009 | 2008 | 2007 | |
|---|---|---|---|---|---|
| Net sales, SEKm | 101,598 | 106,326 | 109,132 | 104,792 | 104,732 |
| Operating income, SEKm | 3,017 | 5,430 | 3,761 | 1,188 | 4,475 |
| Margin, % | 3.0 | 5.1 | 3.4 | 1.1 | 4.3 |
| Margin, excluding items affecting | |||||
| comparability, % | 3.1 | 6.1 | 4.9 | 1.5 | 4.6 |
| Income after financial items, SEKm | 2,780 | 5,306 | 3,484 | 653 | 4,035 |
| Margin, % | 2.7 | 5.0 | 3.2 | 0.6 | 3.9 |
| Margin, excluding items | |||||
| affecting comparability, % | 2.9 | 6.0 | 4.6 | 1.0 | 4.2 |
| Income for the period, SEKm | 2,064 | 3,997 | 2,607 | 366 | 2,925 |
| Earnings per share, SEK | 7.25 | 14.04 | 9.18 | 1.29 | 10.41 |
| Average number of shares after | |||||
| buy-backs, million | 284.7 | 284.6 | 284.0 | 283.1 | 281.0 |
| Dividend, SEK | 6.501) | 6.50 | 4.00 | – | 4.25 |
| Return on equity, % | 10.4 | 20.6 | 14.9 | 2.4 | 20.3 |
| Return on net assets, % | 13.7 | 27.8 | 19.4 | 5.8 | 21.7 |
| Net debt/equity ratio | 0.31 | –0.03 | 0.04 | 0.28 | 0.29 |
| Capital expenditure, SEKm | 3,163 | 3,221 | 2,223 | 3,158 | 3,430 |
| Average number of employees | 52,916 | 51,544 | 50,633 | 55,177 | 56,898 |
1) Proposed by the Board of Directors.
Definitions
Capital indicators
Annualized 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 and interest-bearing financial receivables less operating liabilities, non-interest-bearing provisions and deferred tax liabilities.
Working capital
Current assets exclusive of liquid funds and interest-bearing financial receivables less operating liabilities and non-interest-bearing provisions.
Total borrowings
Total borrowings consist of interest-bearing liabilities, fair-value derivatives, accrued interest expenses and prepaid interest income, and trade receivables with recourse.
Net borrowings
Total borrowings less liquid funds.
Net debt/equity ratio Net borrowings in relation to equity.
Equity/assets ratio
Equity as a percentage of total assets less liquid funds.
Capital turnover rate
Net sales in relation to average net assets
Other key ratios
Earnings per share
Income for the period divided by the average number of shares after buy-backs.
Operating margin
Operating income expressed as a percentage of net sales.
EBITDA
Operating income before depreciation and amortization.
Return on equity
Income for the period expressed as a percentage of average equity.
Return on net assets
Operating income expressed as a percentage of average net assets.
President and CEO Keith McLoughlin's comments on the fourth-quarter and full-year results 2011
Today's press release is available on the Electrolux website www.electrolux.com/ir
Telephone conference
A telephone conference is held at 15.00 CET on February 2, 2012. The conference is chaired by Keith McLoughlin, President and CEO of Electrolux. Mr. McLoughlin is accompanied by Peter Nyquist, SVP Investor Relations and Financial Information.
A slide presentation on the fourth-quarter and full-year results of 2011 will be available on the Electrolux website www.electrolux.com/ir
Details for participation by telephone are as follows: Participants in Sweden should call +46 (0)8 505 598 53 Participants in UK/Europe should call +44 (0)20 3043 2436 Participants in US should call +1 866 458 4087
You can also listen to the presentation at www.electrolux.com/webcast1
For further information
Peter Nyquist, Senior Vice President, Head of Investor Relations and Financial Information: +46 (0) 8 738 60 03.
Financial information from Electrolux is also available at www.electrolux.com/ir
Factors affecting forward-looking statements
This report contains "forward-looking" statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Such statements include, among others, the financial goals and targets of Electrolux for future periods and future business and financial plans. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. These factors include, but may not be limited to the following; consumer demand and market conditions in the geographical areas and industries in which Electrolux operates, effects of currency fluctuations, competitive pressures to reduce prices, significant loss of business from major retailers, the success in developing new products and marketing initiatives, developments in product liability litigation, progress in achieving operational and capital efficiency goals, the success in identifying growth opportunities and acquisition candidates and the integration of these opportunities with existing businesses, progress in achieving structural and supply-chain reorganization goals.
Calendar 2012
Financial reports 2012
| Consolidated results | February 2 | Annual General Meeting 2012 |
|---|---|---|
| Interim report January – March | April 25 | The Annual General Meeting of AB Electrolux will be held on |
| Interim report January – June | July 19 | Tuesday, March, 27, 2012, at Stockholm Waterfront Con |
| Interim report January – September | October 22 | gress Centre, Nils Ericsons Plan 4, Stockholm, Sweden |
| Annual Report 2011 Available at the Group's website |
Week 10 | Electrolux discloses the information provided herein pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication at |
08.00 CET on February 2, 2012.