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Electrolux — Interim / Quarterly Report 2015
Jan 28, 2016
2907_10-k_2016-01-28_f75f9f1b-0b1b-4ee2-9014-f25f9aac7ef4.pdf
Interim / Quarterly Report
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Consolidated Results 2015
Stockholm, January 28, 2016
| Highlights of the fourth quarter of 2015 | Read more |
|---|---|
| • Net sales increased to SEK 31,794m (31,400). |
3 |
| • Sales increased by 1.3%, of which 0.2% was organic sales growth, 0.1% acquisitions and 1.0% currency translation. |
3 |
| • Strong results for Major Appliances EMEA and Professional Products. |
4,6 |
| • Operating income amounted to SEK -202m (1,395), corresponding to a margin of -0.6% (4.4). |
3 |
| • Operating income includes costs of SEK 1,659m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 4.6% (4.4). |
3 |
| • Strong operating cash flow of SEK 1.6bn (1.8). |
7 |
| • Income for the period was SEK -393m (970), and earnings per share was SEK -1.38 (3.39). |
12 |
| • The Board proposes a dividend for 2015 of SEK 6.50 (6.50) per share. |
9 |
Financial overview1)
| SEKm | 2014 | 2015 | Change, % | Q4 2014 | Q4 2015 | Change, % |
|---|---|---|---|---|---|---|
| Net sales | 112,143 | 123,511 | 10 | 31,400 | 31,794 | 1 |
| Organic growth, % | 1.1 | 2.2 | 2.0 | 0.2 | ||
| Acquired growth, % | — | 0.1 | 0.2 | 0.1 | ||
| Changes in exchange rates, % | 1.6 | 7.8 | 6.5 | 1.0 | ||
| Operating income | 3,581 | 2,741 | -23 | 1,395 | -202 | n.m. |
| Margin, % | 3.2 | 2.2 | 4.4 | -0.6 | ||
| Income after financial items | 2,997 | 2,101 | -30 | 1,292 | -525 | n.m. |
| Income for the period | 2,242 | 1,568 | -30 | 970 | -393 | n.m. |
| Earnings per share, SEK2) | 7.83 | 5.45 | 3.39 | -1.38 | n.m. | |
| Operating cash flow after investments3) |
6,631 | 7,492 | 13 | 1,844 | 1,575 | -15 |
| Items affecting comparability included above4) |
-1,199 | — | -77 | — |
1) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been presented separately in the income statement and excluded in operating income by business area and selective key ratios. For comparability purposes, the figures for 2014 have been restated to include restructuring costs. For a specification, see page 19 and the press release; Restated figures for Electrolux for 2014, March 30, 2015, on www.electroluxgroup.com
2) Basic based on an average of 287.4 (286.3) million shares for the fourth quarter, excluding shares held by Electrolux.
3) See page 7.
4) Restructuring costs in 2014, previously reported as items affecting comparability and not included in this financial overview.
About Electrolux
Electrolux is a global leader in household appliances and appliances for professional use, selling more than 50 million products to customers in more than 150 markets every year. The company makes thoughtfully designed, innovative solutions based on extensive consumer research, meeting the desires of today's consumers and professionals. Electrolux products include refrigerators, dishwashers, washing machines, cookers, air-conditioners and small appliances such as vacuum cleaners, all sold under esteemed brands like Electrolux, AEG, Zanussi and Frigidaire. In 2015, Electrolux had sales of SEK 124 billion and about 58,000 employees. For more information, go to www.electroluxgroup.com
AB Electrolux (publ) 556009-4178
Market overview
Market overview for the fourth quarter
Market demand for core appliances in Western Europe increased by 3% in the fourth quarter. Most markets in Eastern Europe increased but the overall demand was impacted by continued decline in Russia. Demand in Eastern Europe declined by 24%. In total, the European market increased by 3% excluding Russia.
Market demand for core appliances in North America increased by 8%.
Industry shipments of core appliances in Europe* Industry shipments of core appliances in the US*
Market demand for core appliances in Australia and China increased, while demand in Southeast Asia declined. Demand for appliances in Brazil continued to deteriorate and most other Latin American markets also declined.
*Units, year-over-year, %.
Sources: Europe: Electrolux estimates, North America: AHAM. For other markets, there are no comprehensive market statistics.
The fourth quarter in summary
- Organic sales growth for Major Appliances EMEA, Major Appliances North America and Professional Products.
- Strong quarters for Major Appliances EMEA and Professional Products.
- Earnings for Major Appliances North America improved year-over-year.
- Continued sharp down-turn in demand in Brazil impacted sales in Latin America.
- Results for Small Appliances declined. Measures were initiated to restore profitability and SEK 190m was charged to operating income.
- Severe currency headwinds impacted earnings.
- Operating income includes costs of SEK 1,659m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 4.6% (4.4).
| SEKm | 2014 | 2015 | Change, % | Q4 2014 | Q4 2015 | Change, % |
|---|---|---|---|---|---|---|
| Net sales | 112,143 | 123,511 | 10.1 | 31,400 | 31,794 | 1.3 |
| Change in net sales, %, whereof | ||||||
| Organic growth | 1.1 | 2.2 | 2.0 | 0.2 | ||
| Acquisitions | — | 0.1 | 0.2 | 0.1 | ||
| Changes in exchange rates | 1.6 | 7.8 | 6.5 | 1.0 | ||
| Operating income | ||||||
| Major Appliances Europe, Middle East and Africa | 232 | 2,167 | n.m. | 507 | 765 | 51 |
| Major Appliances North America | 1,714 | 1,580 | -8 | 134 | 493 | 268 |
| Major Appliances Latin America | 1,069 | 463 | -57 | 478 | 69 | -86 |
| Major Appliances Asia/Pacific | 438 | 364 | -17 | 200 | 123 | -39 |
| Small Appliances | 200 | -63 | n.m. | 173 | -92 | n.m. |
| Professional Products | 671 | 862 | 28 | 189 | 260 | 38 |
| Other, Common Group costs, etc.1) | -743 | -2,632 | n.m. | -286 | -1,820 | n.m. |
| Operating income | 3,581 | 2,741 | -23 | 1,395 | -202 | -114 |
| Margin, % | 3.2 | 2.2 | 4.4 | -0.6 | ||
| Items affecting comparability included above2) | -1,199 | — | -77 | — |
1) Common Group costs for 2015 includes the termination fee of USD 175m (SEK 1,493m) paid to General Electric in the fourth quarter of 2015, see page 3.
2) Restructuring costs in 2014 previously not included in operating income by business area and reported as items affecting comparability, see page 16.
Net sales for the Electrolux Group increased by 1.3% in the fourth quarter of 2015. Organic sales growth was 0.2%. Acquisitions and currency translation had a positive impact on sales of 0.1% and 1.0%, respectively. Major Appliances EMEA, Major Appliances North America and Professional Products reported organic sales growth. Sales for Major Appliances Latin America, Major Appliances Asia/Pacific and Small Appliances were impacted by weak market trends.
Operating income amounted to SEK -202m (1,395), corresponding to a margin of -0.6% (4.4).
As announced on December 7, 2015, the planned acquisition of GE Appliances will not be completed as General Electric terminated the agreement. Operating income for the fourth quarter includes costs of SEK 1,659m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 4.6% (4.4). For more information on costs related to GE Appliances, see page 10.
Operating income for Major Appliances EMEA continued to improve. Product mix improvements, increased sales volumes and higher efficiency contributed to the positive earnings trend.
Operating income for Major Appliances North America improved year-over-year. Price/mix improvements, increased sales volumes and restored profitability for food preservation were the main factors for the positive development.
Operating income for Major Appliances Latin America declined in soft markets.
Major Appliances Asia/Pacific was impacted by an inventory write-down in China.
Operating income for Small Appliances declined. Restructuring measures to restore profitability have been initiated and SEK 190m was charged to operating income, see page 6.
Professional Products reported a record strong result for the quarter.
Common Group costs included transaction costs of SEK 142m for the quarter relating to GE Appliances.
Effects of changes in exchange rates
Changes in exchange rates had a negative impact of SEK -769m on operating income year-over-year. The impact of transaction effects was SEK -732m. The negative impact refers to the strengthening of the US dollar against several currencies primarily in Latin America. This was mitigated by price/mix increases. Translation effects in the quarter amounted to SEK -37m.
Financial net
Net financial items for the fourth quarter of 2015 amounted to SEK -323m (–103). The financial net for the fourth quarter has been impacted by costs of SEK 187m arising from the bridge facility related to the not completed acquisition of GE Appliances.
Income for the period
Income for the period amounted to SEK -393m (970), corresponding to SEK -1.38 (3.39) in earnings per share.
Share of sales by business area in 2015 Operating income and margin
Full year of 2015
Net sales for Electrolux in the full year of 2015 amounted to SEK 123,511m (112,143). Organic sales increased by 2.2%, acquisitions and currency translation had a positive impact on sales of 0.1% and 7.8%, respectively.
Operating income amounted to SEK 2,741m (3,581), corresponding to a margin of 2.2% (3.2). Operating income for the full year includes costs of SEK 2,059m related to the not completed acquisition of GE Appliances, excluding these costs the margin was 3.9% (3.2). For more information, see page 10.
Income for the period amounted to SEK 1,568m (2,242), corresponding to SEK 5.45 (7.83) in earnings per share.
Events during the fourth quarter of 2015 and 2016
November 30. Electrolux expectations for 2016
The favorable market development for Electrolux largest business areas Major Appliances EMEA and Major Appliances North America is expected to continue in 2016. Overall global demand for appliances is forecast to be slightly positive. For more information, visit www.electroluxgroup.com
December 7. Acquisition of GE Appliances not to be completed
General Electric notified Electrolux that it has terminated the agreement pursuant to which Electrolux had agreed to acquire the appliance business of GE. The termination was effective as of December 7, 2015. Therefore, the transaction will not be completed.
December 9. Cost reduction program within Small Appliances Electrolux has announced measures to structurally reduce costs within the business area Small Appliances. Operations continue to be negatively impacted by reduced volumes in several key markets, as well as unfavorable currency movements. For more information, see page 6.
December 16. Electrolux Capital Markets Day 2016
Save the date for Electrolux Capital Markets Day on February 24, 2016. The event will be hosted at Electrolux headquarters in Stockholm, Sweden. For more information, visit www.electroluxgroup.com
January 5. Electrolux remains in the forefront of connected appliances
Electrolux has joined Google's Early Access Program for its Brillo operating system and Weave communications protocol for the Internet of things aimed at developing connected appliances for smart homes. For more information, visit www.electroluxgroup. com
January 11. Keith McLoughlin to retire from Electrolux and will be succeeded by Jonas Samuelson as President and CEO Keith McLoughlin has notified the Board of Directors of Electrolux that he wishes to retire from Electrolux. The Board has appointed Jonas Samuelson as new President and CEO of Electrolux as of February 1, 2016. For more information, visit www.electroluxgroup.com
January 20. Management change in AB Electrolux
Tomas Eliasson, Chief Financial Officer of AB Electrolux, has decided to resign from the company in order to pursue an external opportunity. For more information, visit www.electroluxgroup.com
Business areas
Major Appliances Europe, Middle East and Africa
Demand in Western Europe increased by 3% and demand improved in all markets. Growth was particularly strong in the Nordic countries, Spain and the UK. Although demand in Eastern Europe improved in most markets, overall demand declined by 24% impacted by a continued negative trend in Russia and the Ukraine. Overall market demand in Europe increased by 3%, excluding Russia.
Electrolux operations in EMEA reported organic sales growth of 6% in the fourth quarter. This growth was mainly a result of increased sales volumes and improved product mix, which more than offset continued price pressure. Sales increased in Western Europe in particular, but also in most regions in Eastern Europe. Product sales under premium brands, built-in kitchen products and laundry products were the main contributors to this positive sales trend and the Group continued to gain market shares in these categories. A strong focus on the most profitable product categories continued to improve the product mix.
Operating income and margin increased significantly as a result of product mix improvements, higher sales volumes and increased cost efficiency.
Industry shipments of core appliances in Europe, units,
Operating income and margin
| year-over-year, % | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Western Europe | 2 | 5 | 3 | 3 |
| Eastern Europe (excluding Turkey) | 0 | -17 | 1 | -24 |
| Total Europe | 2 | -1 | 2 | -5 |
| SEKm | ||||
| Net sales | 34,438 | 37,179 | 9,725 | 10,332 |
| Organic growth, % | –0.2 | 4.4 | 1.3 | 6.1 |
| Operating income | 232 | 2,167 | 507 | 765 |
| Operating margin, % | 0.7 | 5.8 | 5.2 | 7.4 |
| Items affecting comparability included above1) | –1,212 | — | -112 | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability.
Major Appliances North America
In the fourth quarter, market demand for core appliances in North America increased by 8% year-over-year. Market demand for major appliances, including microwave ovens and home-comfort products, such as room air-conditioners, rose by 10%.
Electrolux operations in North America reported organic sales growth of 4% in the quarter. Sales volumes of most product categories within core appliances increased as well as pre-season sales of room air-conditioners.
Operating income for the fourth quarter improved yearover-year. Price/mix improvements and higher sales volumes contributed to this positive trend in earnings as well as the restored profitability in food preservation. Activities to rampup and improve efficiency at the new cooking plant in Memphis, Tennessee, continued.
Operating income and margin
Industry shipments of appliances in the US, units,
| year-over-year, % | Full year 20142) | Full year 2015 | Q4 20142) | Q4 2015 |
|---|---|---|---|---|
| Core appliances | 5 | 6 | 7 | 8 |
| Microwave ovens and home-comfort products | 3 | 14 | 0 | 23 |
| Total Major Appliances US | 5 | 8 | 6 | 10 |
| SEKm | ||||
| Net sales | 34,141 | 43,053 | 8,924 | 10,413 |
| Organic growth, % | 2.2 | 4.9 | 3.0 | 4.2 |
| Operating income | 1,714 | 1,580 | 134 | 493 |
| Operating margin, % | 5.0 | 3.7 | 1.5 | 4.7 |
| Items affecting comparability included above1) | — | — | — | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability. 2) Figures for Industry shipments 2014 have been restated.
Major Appliances Latin America
In the fourth quarter of 2015, the macro-economic environment in Brazil weakened further and impacted market demand for core appliances, which declined significantly year-over-year. Demand in several other Latin American markets, such as Chile, also declined. However, market demand in Argentina increased during the period.
Electrolux operations in Latin America continued to be impacted by weakening market conditions and organic sales declined by 11% during the quarter year-over-year.
Operating income deteriorated, mainly as a result of the continued sharp downturn in the Brazilian market. This was to somewhat mitigated by improved financial performance in Argentina, Central America and the Caribbean. Actions continued to be taken to adjust the cost base to the lower demand. Price increases mitigated continued severe currency headwinds.
Operating income and margin
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 20,041 | 18,546 | 6,134 | 4,619 |
| Organic growth, % | 2.8 | -1.5 | 8.2 | -10.7 |
| Operating income | 1,069 | 463 | 478 | 69 |
| Operating margin, % | 5.3 | 2.5 | 7.8 | 1.5 |
| Items affecting comparability included above1) | –10 | — | — | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability.
Major Appliances Asia/Pacific
Overall market demand for core appliances in Australia In the fourth quarter of 2015 is estimated to have increased yearover-year. Market demand in China increased somewhat, while demand in Southeast Asia declined.
Electrolux sales declined during the fourth quarter. Reduced activity in operations in China continued to impact overall sales. Sales in Australia, New Zealand and Southeast Asia increased mainly as a result of new product launches and higher sales volumes of core appliances. Market shares increased in several product categories. Previously implemented price increases also contributed to the positive sales trend in these regions.
Operating income declined year-over-year. Lower sales volumes in China and an inventory write-down of approximately SEK 45m impacted earnings in the quarter. Other regions within the business area reported solid results, although increased brand spend to promote new product launches impacted earnings.
Operating income and margin
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 8,803 | 9,229 | 2,312 | 2,220 |
| Organic growth, % | 0.4 | -5.1 | -4.0 | -5.2 |
| Acquisitions, % | 0.6 | 0.8 | 2.0 | — |
| Operating income | 438 | 364 | 200 | 123 |
| Operating margin, % | 5.0 | 3.9 | 8.7 | 5.5 |
| Items affecting comparability included above1) | –10 | — | — | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability.
Small Appliances
Market demand for vacuum cleaners in Europe and North America in the fourth quarter of 2015 is estimated to have declined year-over-year.
Electrolux organic sales declined by 10% in the quarter, mainly due to significantly lower sales volumes of vacuum cleaners in the US, Brazil and Asia/Pacific. This was somewhat mitigated by higher sales in Europe.
Operating income for the fourth quarter declined yearover-year. Restructuring costs, lower sales volumes and a continued negative currency trend adversely impacted earnings. Measures to restore profitability were taken during the quarter and a cost-reduction program was initiated, including staff reductions and downsizing of activities, mainly in the U.S., Sweden and China. These actions are expected to achieve full effect from the end of 2016, with estimated annual cost savings of SEK 120m. Charges related to the program of SEK 190m impacted operating income in the quarter. The Group's active product-portfolio management and focus on the most profitable product categories continued and the product mix improved in the quarter.
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 8,678 | 8,958 | 2,664 | 2,452 |
| Organic growth, % | –4.2 | -3.8 | -6.0 | -10.1 |
| Operating income | 200 | -63 | 173 | -92 |
| Operating margin, % | 2.3 | -0.7 | 6.5 | -3.8 |
| Items affecting comparability included above1) | — | — | — | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability.
Professional Products
Overall market demand for professional food service and professional laundry equipment improved year-over-year in the fourth quarter. Demand in the core markets for Electrolux in Western Europe was stable. The US and emerging markets posted year-over-year growth.
Electrolux reported organic sales growth of 3.4% in the fourth quarter. Sales increased in several markets, and were particularly strong for laundry products. The Group's strategic initiatives to grow in new markets and segments as well as new product launches contributed to the sales trend. An example is the successful launch in Europe during the year of MyPro washing machines and tumble dryers for small businesses, a new segment for Electrolux. The acquisition of a professional dishwasher manufacturer in China, Veetsan Commercial Machinery Co. Ltd, had a positive impact of 2.7% on sales.
Operating income and margin reached record levels and improved year-over-year as a result of higher sales volumes, increased operational efficiency and higher prices.
Operating income and margin
Operating income and margin
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 6,041 | 6,546 | 1,641 | 1,758 |
| Organic growth, % | 5.6 | 2.8 | 1.9 | 3.4 |
| Acquisitions, % | — | 1.2 | — | 2.7 |
| Operating income | 671 | 862 | 189 | 260 |
| Operating margin, % | 11.1 | 13.2 | 11.5 | 14.8 |
| Items affecting comparability included above1) | — | — | — | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as items affecting comparability.
Cash flow
For the fourth quarter of 2015, operating cash flow after investments was strong and amounted to SEK 1,575m (1,844).
As announced on December 7, 2015, the planned acquisition of GE Appliances will not be completed as a result of the termination of the agreement by General Electric. On December 9, 2015 in accordance with the terms of the transaction agreement, Electrolux paid the termination fee of USD 175m, corresponding to SEK 1,493m to General Electric, and cash flow for the fourth quarter was negatively impacted.
Cash flow for 2015 exceeded the level in the preceding year despite the negative impact of the termination fee, described above. This is a result of the Group's on-going activities to operationally and structurally reduce working capital.
Operating cash flow after investments
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| EBITDA after reversal of restructuring provisions1) | 8,544 | 7,241 | 2,358 | 1,007 |
| Change in operating assets and liabilities | 1,777 | 3,563 | 858 | 1,297 |
| Operating cash flow | 10,321 | 10,804 | 3,216 | 2,304 |
| Investments in fixed assets2) | -3,690 | -3,312 | -1,372 | -729 |
| Operating cash flow after investments | 6,631 | 7,492 | 1,844 | 1,575 |
| Restructuring payments | -1,026 | -747 | -315 | -201 |
| Acquisitions and divestments of operations | -69 | -91 | -1 | — |
| Operating cash flow after structural changes | 5,536 | 6,654 | 1,528 | 1,374 |
| Financial items paid, net3) | -488 | -513 | -68 | -289 |
| Taxes paid | -985 | -1,277 | -384 | -419 |
| Free cash flow4) | 4,063 | 4,864 | 1,076 | 666 |
| Dividend | -1,861 | -1,870 | — | -2 |
| Total cash flow, excluding changes in loans and short–term investments |
2,202 | 2,994 | 1,076 | 664 |
1) Operating income plus depreciation and amortization, restructuring provisions and other non-cash items.
2) Investments excluding acquisitions and divestments of operations.
3) For the full year. Interests and similar items received SEK 134m (140), interests and similar items paid SEK -364m (-553) and other financial items paid SEK -283m (-75).
4) Cash flow from operations and investments.
Financial position
The financial net debt as of December 31, 2015, of SEK 1,898m, declined by SEK 228m compared to SEK 2,126m as of September 30, 2015, as a result of strong cash-flow generation. Net provisions for post-employment benefits declined by SEK 312m. In total, net debt declined by SEK 540m in the fourth quarter.
Long-term borrowings as of December 31, 2015, including long-term borrowings with maturities within 12 months, amounted to SEK 11,000m with average maturity of 2.8 years, compared to SEK 12,123m and 2.8 years at the end of 2014. In 2016, long-term borrowings in the amount of SEK 2,677m will mature.
Liquid funds as of December 31, 2015, amounted to SEK 11,199m (9,835), excluding short-term back-up facilities.
Net assets and working capital
Average net assets for 2015 amounted to SEK 24,848m (25,166), corresponding to 20.1% (22.4) of annualized net sales. Net assets as of December 31, 2015, amounted to SEK 21,412m (26,099).
Working capital as of December 31, 2015, amounted to SEK -12,234m (–8,377), corresponding to –9.9% (–6.6) of annualized net sales.
The return on net assets was 11.0% (14.2), and the return on equity was 9.9% (15.7).
Net debt
| SEKm | Dec. 31, 2014 | Dec. 31, 2015 |
|---|---|---|
| Borrowings | 14,703 | 13,097 |
| Liquid funds1) | 9,835 | 11,199 |
| Financial net debt | 4,868 | 1,898 |
| Net provisions for post–employment benefits | 4,763 | 4,509 |
| Net debt | 9,631 | 6,407 |
| Net debt/equity ratio | 0.58 | 0.43 |
| Equity | 16,468 | 15,005 |
| Equity per share, SEK | 57.52 | 52.21 |
| Return on equity, % | 15.7 | 9.9 |
| Equity/assets ratio, % | 21.7 | 20.8 |
1) Electrolux has two unused committed back-up revolving credit facilities. One multicurrency facility of SEK 3,400m maturing in 2017 and one multicurrency facility of EUR 500m, approximately SEK 4,600m, maturing in 2018. Electrolux has also a committed revolving credit facility of USD 300m, approximately SEK 2,500m, maturing in 2018.
Annual General Meeting 2016
Electrolux Annual General Meeting will be held on April 6, 2016 at Stockholm Waterfront Congress Centre, Nils Ericsons Plan 4, Stockholm, Sweden.
Proposed dividend
The Board of Directors proposes a dividend for 2015 of SEK 6.50 (6.50) per share, for a total dividend payment of approximately SEK 1,868m (1,868). The proposed dividend corresponds to approximately 119% (83) of income for the period. Friday, April 8, 2016, is proposed as record date for the dividend. The estimated date for payment of dividends is Wednesday, April 13, 2016.
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 2016 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 December 31, 2015, Electrolux held 21,522,858 B shares in Electrolux, corresponding to approximately 7.0% of the total number of shares in the company.
Nomination Committee for Electrolux Annual General Meeting 2016
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 were appointed based on the ownership structure as of August 31, 2015. Johan Forssell, Investor AB, is the Chairman of the committee. The other owner representatives are Mathias Leijon, Nordea Investment Funds, Kaj Thorén, Alecta, and Marianne Nilsson, Swedbank Robur funds. The committee also includes Ronnie Leten and Torben Ballegaard Sørensen, Chairman and Director, respectively, of Electrolux.
The Nomination Committee will prepare proposals for the Annual General Meeting 2016 regarding Chairman of the Annual General Meeting, Board members, Chairman of the Board, 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 email to [email protected]
Other items
Acquisition of GE Appliances not to be completed
On December 7, 2015 General Electric (GE) notified Electrolux that it had terminated the agreement pursuant to which Electrolux had agreed to acquire the appliance business of GE. Therefore, the planned transaction will not be completed. Electrolux has made extensive efforts to obtain regulatory approvals, and regrets that GE has terminated the agreement while the court procedure was still pending.
In accordance with the terms of the transaction agreement, Electrolux paid on December 9, 2015, a termination fee of USD 175m, corresponding to SEK 1,493m, to GE. Transaction costs related to the acquisition of SEK 408m and costs for preparatory integration work of SEK 158m have been charged to operating income in 2015. whereof SEK 142m and SEK 24m in the fourth quarter. The financial net has been impacted by costs arising from the bridge facility of SEK 187m.
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 substantially identical allegations against other defendants who are not part of the Electrolux Group.
As of December 31, 2015, the Group had a total of 3,259 (3,070) cases pending, representing approximately 3,326 (approximately 3,129) plaintiffs. During the fourth quarter of 2015, 281 new cases with 289 plaintiffs were filed and 333 pending cases with approximately 333 plaintiffs were resolved.
It is expected that additional lawsuits will be filed against Electrolux. It is not possible to predict the number of future lawsuits. In addition, the outcome of asbestos lawsuits is difficult to predict and Electrolux cannot provide any assurances that the resolution of these types of lawsuits will not have a material adverse effect on its business or on results of operations in the future.
Risks and uncertainty factors
As an international group with a wide geographic spread, Electrolux is exposed to a number of business and financial risks. The business risks can be divided into strategic, operational and legal risks. The financial risks are related to such factors as exchange rates, interest rates, liquidity, the giving of credit and financial instruments.
Risk management in Electrolux aims to identify, control and reduce risks. This work begins with the description of risks and risk management, see the 2014 Annual Report on page 66. No significant risks other than the risks described there are judged to have occurred.
Risks, risk management and risk exposure are described in more detail in the Annual Report 2014, www.electrolux.com/ annualreport2014
Press releases 2015 and 2016
| January 14 | Electrolux boosts brand with new visual identity |
|---|---|
| January 20 | Electrolux named Industry Leader in RobecoSAM sustainability rating |
| January 28 | Consolidated results 2014 and CEO Keith McLoughlin's comments |
| February 5 | Electrolux acquires leading professional dishwasher manufacturer in China |
| February 25 | Electrolux Annual Report 2014 is published |
| March 2 | Management change in AB Electrolux |
| March 16 | Electrolux Sustainability Report highlights new focus on strategic themes |
| March 27 | Bulletin from AB Electrolux Annual General Meeting 2015 |
| March 30 | Restated figures for 2014 following the elimination of items affecting comparability |
| April 8 | Update on Electrolux operations in North America |
| April 8 | Management change in AB Electrolux |
| April 24 | Electrolux interim report January-March 2015 and CEO Keith McLoughlin's comments |
| June 25 | Comment to articles in Swedish media about Electrolux President & CEO |
| July 1 | Electrolux contests the U.S. Department of Justice's opposition to the acquisition of GE Appliances |
| July 17 | Electrolux interim report January-September 2015 and CEO Keith McLoughlin's comments |
|---|---|
| September 10 | Electrolux retains global industry leadership in Dow Jones Sustainability Index 2015 |
| September 24 | Nomination Committee appointed for Electrolux Annual General Meeting 2016 |
| October 23 | Electrolux interim report January-September 2015 and CEO Keith McLoughlin's comments |
| November 30 | Electrolux expectations for 2016 |
| December 7 | Acquisition of GE Appliances not to be completed |
| December 9 | Cost-reduction program within Small Appliances and information on costs related to GE Appliances |
| December 16 | Electrolux Capital Markets Day on February 24, 2016 |
| January 5 | Electrolux remains in the forefront of connected appliances |
| January 11 | Keith McLoughlin to retire from Electrolux and will be succeeded by Jonas Samuelson as President and CEO |
| January 20 | Electrolux tops industry for the 5th year in global sustainability ranking |
| January 22 | Tomas Eliasson, Chief Financial Officer of AB Electrolux, has decided to resign |
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 in the full year of 2015 amounted to SEK 33,179m (29,508) of which SEK 26,775m (23,757) referred to sales to Group companies and SEK 6,404m (5,751) to external customers. Income after financial items was SEK 2,139m (1,398), including dividends from subsidiaries in the amount of SEK 3,346m (2,616). Income for the period amounted to SEK 2,398m (1,830).
Capital expenditure in tangible and intangible assets was SEK 471m (255). Liquid funds at the end of the period amounted to SEK 7,346m, as against SEK 4,601m at the start of the year.
Undistributed earnings in the Parent Company at the end of the period amounted to SEK 13,176m, as against SEK 12,617m at the start of the year. Dividend payment to shareholders for 2014 amounted to SEK 1,868m.
The income statement and balance sheet for the Parent Company are presented on page 21.
Stockholm, January 28, 2016
AB Electrolux (publ) 556009-4178 Board of Directors
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 2014.
The report has not been audited.
Consolidated income statement
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 112,143 | 123,511 | 31,400 | 31,794 |
| Cost of goods sold1) | –91,564 | -99,913 | -25,470 | -25,363 |
| Gross operating income1) | 20,579 | 23,598 | 5,930 | 6,431 |
| Selling expenses1) | –11,647 | -12,719 | -3,140 | -3,349 |
| Administrative expenses1) | –5,454 | -6,019 | -1,452 | -1,565 |
| Other operating income/expenses | 103 | -2,119 | 57 | -1,719 |
| Operating income | 3,581 | 2,741 | 1,395 | -202 |
| Margin, % | 3.2 | 2.2 | 4.4 | -0.6 |
| Financial items, net | –584 | -640 | -103 | -323 |
| Income after financial items | 2,997 | 2,101 | 1,292 | -525 |
| Margin, % | 2.7 | 1.7 | 4.1 | -1.7 |
| Taxes | –755 | -533 | -322 | 132 |
| Income for the period | 2,242 | 1,568 | 970 | -393 |
| Items that will not be reclassified to income for the period: | ||||
| Remeasurement of provisions for post-employment benefits | –1,534 | 343 | -990 | 283 |
| Income tax relating to items that will not be reclassified | 808 | -114 | 343 | -118 |
| –726 | 229 | -647 | 165 | |
| Items that may be reclassified subsequently to income for the period: |
||||
| Available for sale instruments | 19 | -39 | — | -20 |
| Cash flow hedges | –30 | -28 | -34 | -62 |
| Exchange-rate differences on translation of foreign operations | 2,428 | -1,454 | 867 | -604 |
| Income tax relating to items that may be reclassified | –10 | 29 | -10 | 16 |
| 2,407 | -1,492 | 823 | -670 | |
| Other comprehensive income, net of tax | 1,681 | -1,263 | 176 | -505 |
| Total comprehensive income for the period | 3,923 | 305 | 1,146 | -898 |
| Income for the period attributable to: | ||||
| Equity holders of the Parent Company | 2,241 | 1,566 | 969 | -394 |
| Non-controlling interests | 1 | 2 | 1 | 1 |
| Total | 2,242 | 1,568 | 970 | -393 |
| Total comprehensive income for the period attributable to: |
||||
| Equity holders of the Parent Company | 3,922 | 307 | 1,144 | -895 |
| Non-controlling interests | 1 | -2 | 2 | -3 |
| Total | 3,923 | 305 | 1,146 | -898 |
| Earnings per share, SEK | 7.83 | 5.45 | 3.39 | -1.38 |
| Diluted, SEK | 7.78 | 5.42 | 3.36 | -1.37 |
| Number of shares after buy-backs, million | 286.3 | 287.4 | 286.3 | 287.4 |
| Average number of shares after buy-backs, million | 286.3 | 287.1 | 286.3 | 287.4 |
| Diluted, million | 288.2 | 288.9 | 288.7 | 289.1 |
1) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been presented on a separate line in the income statement. For comparability purposes, the figures for 2014 have been restated. While this change in accounting practice has no impact on the Group's operating income, the restated gross operating income for 2014 has been reduced. Costs previously recognized as items affecting comparability as a separate item in the amount of SEK 1,199m have been allocated to costs of goods sold in the amount of SEK 1,076m to selling expenses in the amount of SEK 47m and administrative expenses in the amount of SEK 76m. For a specification of restructuring cost included in operating income for 2014, see page 16 and the press release; Restated figures for Electrolux for 2014, March 30, 2015.
Consolidated balance sheet
| SEKm | Dec. 31, 2014 | Dec. 31, 2015 |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 18,934 | 18,450 |
| Goodwill | 5,350 | 5,200 |
| Other intangible assets | 3,878 | 3,401 |
| Investments in associates | 228 | 209 |
| Deferred tax assets | 5,351 | 5,889 |
| Financial assets | 312 | 284 |
| Pension plan assets | 399 | 397 |
| Other non-current assets | 1,110 | 858 |
| Total non-current assets | 35,562 | 34,688 |
| Inventories | 14,324 | 14,179 |
| Trade receivables | 20,663 | 17,745 |
| Tax assets | 784 | 730 |
| Derivatives | 375 | 149 |
| Other current assets | 4,774 | 5,176 |
| Short-term investments | 99 | 108 |
| Cash and cash equivalents | 9,107 | 10,696 |
| Total current assets | 50,126 | 48,783 |
| Total assets | 85,688 | 83,471 |
| 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 | –251 | -1,739 |
| Retained earnings | 12,235 | 12,264 |
| 16,434 | 14,975 | |
| Non-controlling interests | 34 | 30 |
| Total equity | 16,468 | 15,005 |
| Long-term borrowings | 9,529 | 8,323 |
| Deferred tax liabilities | 687 | 645 |
| Provisions for post-employment benefits | 5,162 | 4,906 |
| Other provisions | 5,665 | 5,649 |
| Total non-current liabilities | 21,043 | 19,523 |
| Accounts payable | 25,705 | 26,467 |
| Tax liabilities | 1,042 | 813 |
| Short-term liabilities | 13,531 | 14,529 |
| Short-term borrowings | 4,960 | 4,504 |
| Derivatives | 156 | 222 |
| Other provisions | 2,783 | 2,408 |
| Total current liabilities | 48,177 | 48,943 |
| Total equity and liabilities | 85,688 | 83,471 |
| Contingent liabilities | 3,739 | 1,312 |
Change in consolidated equity
| SEKm | Dec. 31, 2014 | Dec. 31, 2015 |
|---|---|---|
| Opening balance | 14,308 | 16,468 |
| Total comprehensive income for the period | 3,923 | 305 |
| Share-based payment | 99 | 102 |
| Dividend | –1,862 | -1,868 |
| Dividend to non-controlling interests | — | -2 |
| Total transactions with equity holders | –1,763 | -1,768 |
| Closing balance | 16,468 | 15,005 |
Consolidated cash flow statement
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Operations | ||||
| Operating income | 3,581 | 2,741 | 1,395 | -202 |
| Depreciation and amortization | 3,671 | 3,936 | 943 | 980 |
| Restructuring provisions | 173 | -557 | -238 | -11 |
| Other non-cash items | 93 | 374 | -57 | 39 |
| Financial items paid, net1) | –488 | -513 | -68 | -289 |
| Taxes paid | –985 | -1,277 | -384 | -419 |
| Cash flow from operations, excluding change in operating assets and liabilities |
6,045 | 4,704 | 1,591 | 98 |
| Change in operating assets and liabilities | ||||
| Change in inventories | –929 | -306 | 1,520 | 1,382 |
| Change in trade receivables | 195 | 1,672 | -1,721 | 128 |
| Change in accounts payable | 3,160 | 1,798 | 857 | -242 |
| Change in other operating assets, liabilities and provisions |
–649 | 399 | 202 | 29 |
| Cash flow from change in operating assets and lia bilities |
1,777 | 3,563 | 858 | 1,297 |
| Cash flow from operations | 7,822 | 8,267 | 2,449 | 1,395 |
| Investments | ||||
| Acquisition of operations | –69 | -91 | -1 | — |
| Capital expenditure in property, plant and equipment | –3,006 | -3,027 | -1,152 | -1,082 |
| Capital expenditure in product development | –355 | -359 | -88 | -112 |
| Capital expenditure in software | –290 | -254 | -91 | -57 |
| Other | –39 | 328 | -41 | 522 |
| Cash flow from investments | –3,759 | -3,403 | -1,373 | -729 |
| Cash flow from operations and investments | 4,063 | 4,864 | 1,076 | 666 |
| Financing | ||||
| Change in short-term investments | 49 | -9 | — | — |
| Change in short-term borrowings | 367 | 84 | 449 | -270 |
| New long-term borrowings | 1,952 | 1,447 | 930 | — |
| Amortization of long-term borrowings | –2,254 | -2,632 | -1,005 | -4 |
| Dividend | –1,861 | -1,870 | — | -2 |
| Cash flow from financing | –1,747 | -2,980 | 374 | -276 |
| Total cash flow | 2,316 | 1,884 | 1,450 | 390 |
| Cash and cash equivalents at beginning of period | 6,607 | 9,107 | 7,616 | 10,414 |
| Exchange-rate differences referring to cash and cash equivalents |
184 | -295 | 41 | -108 |
| Cash and cash equivalents at end of period | 9,107 | 10,696 | 9,107 | 10,696 |
1) For the full year. Interest and similar items received SEK 134m (140), interest and similar items paid SEK -364m (-553) and other financial items paid SEK -283m (-75).
Key ratios
| SEKm unless otherwise stated | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 112,143 | 123,511 | 31,400 | 31,794 |
| Organic growth, % | 1.1 | 2.2 | 2.0 | 0.2 |
| Operating income | 3,581 | 2,741 | 1,395 | -202 |
| Margin, % | 3.2 | 2.2 | 4.4 | -0.6 |
| Income after financial items | 2,997 | 2,101 | 1,292 | -525 |
| Income for the period | 2,242 | 1,568 | 970 | -393 |
| Items affecting comparability included above1) | –1,199 | — | -77 | — |
| Capital expenditure, property, plant and equipment | –3,006 | -3,027 | -1,152 | -1,082 |
| Operating cash flow after investments | 6,631 | 7,492 | 1,844 | 1,575 |
| Earnings per share, SEK2) | 7.83 | 5.45 | 3.39 | -1.38 |
| Equity per share, SEK | 57.52 | 52.21 | — | — |
| Capital-turnover rate, times/year | 4.5 | 5.0 | — | — |
| Return on net assets, % | 14.2 | 11.0 | — | — |
| Return on equity, % | 15.7 | 9.9 | — | — |
| Net debt | 9,631 | 6,407 | 9,631 | 6,407 |
| Net debt/equity ratio | 0.58 | 0.43 | — | — |
| Average number of shares excluding shares owned by Electrolux, million |
286.3 | 287.1 | 286.3 | 287.4 |
| Average number of employees | 60,038 | 58,265 | 60,695 | 58,440 |
1) Restructuring costs in 2014, previously reported as items affecting comparability and not included in this financial overview.
2) Basic, based on average number of shares, excluding shares owned by Electrolux.
For definitions, see page 24.
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, 2015 | 8,192,539 | 300,727,769 | 308,920,308 | 22,599,884 | 286,320,424 |
| Shares allotted to senior managers under the Performance Share Program |
— | — | — | –1,077,026 | 1,077,026 |
| Number of shares as of December 31, 2015 | 8,192,539 | 300,727,769 | 308,920,308 | 21,522,858 | 287,397,450 |
| As % of total number of shares | 7.0% |
Exchange rates
| Dec. 31, 2015 |
|---|
| 6.31 |
| 6.13 |
| 2.57 |
| 2.15 |
| 6.57 |
| 6.06 |
| 9.35 |
| 9.19 |
| 12.84 |
| 12.45 |
| 0.0302 |
| 0.0293 |
| 8.40 |
| 8.41 |
Net sales by business area
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 34,438 | 37,179 | 9,725 | 10,332 |
| Major Appliances North America | 34,141 | 43,053 | 8,924 | 10,413 |
| Major Appliances Latin America | 20,041 | 18,546 | 6,134 | 4,619 |
| Major Appliances Asia/Pacific | 8,803 | 9,229 | 2,312 | 2,220 |
| Small Appliances | 8,678 | 8,958 | 2,664 | 2,452 |
| Professional Products | 6,041 | 6,546 | 1,641 | 1,758 |
| Other | 1 | — | — | — |
| Total | 112,143 | 123,511 | 31,400 | 31,794 |
Operating income by business area
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa1) | 232 | 2,167 | 507 | 765 |
| Margin, % | 0.7 | 5.8 | 5.2 | 7.4 |
| Major Appliances North America | 1,714 | 1,580 | 134 | 493 |
| Margin, % | 5.0 | 3.7 | 1.5 | 4.7 |
| Major Appliances Latin America1) | 1,069 | 463 | 478 | 69 |
| Margin, % | 5.3 | 2.5 | 7.8 | 1.5 |
| Major Appliances Asia/Pacific1) | 438 | 364 | 200 | 123 |
| Margin, % | 5.0 | 3.9 | 8.7 | 5.5 |
| Small Appliances | 200 | -63 | 173 | -92 |
| Margin, % | 2.3 | -0.7 | 6.5 | -3.8 |
| Professional Products | 671 | 862 | 189 | 260 |
| Margin, % | 11.1 | 13.2 | 11.5 | 14.8 |
| Common Group costs, etc.1) | –743 | -2,632 | -286 | -1,820 |
| Operating income | 3,581 | 2,741 | 1,395 | -202 |
| Margin, % | 3.2 | 2.2 | 4.4 | -0.6 |
1) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been excluded in operating income by business area. For comparability purposes, the figures for 2014 have been restated to include restructuring costs. For a specification, see below and the press release; Restated figures for Electrolux for 2014, March 30, 2015.
Items affecting comparability included in operating income
| SEKm | Full year 20141) | Full year 2015 | Q4 20141) | Q4 2015 |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | –1,212 | — | -112 | — |
| Major Appliances North America | — | — | — | — |
| Major Appliances Latin America | –10 | — | — | — |
| Major Appliances Asia/Pacific | –10 | — | — | — |
| Small Appliances | — | — | — | — |
| Professional Products | — | — | — | — |
| Other | 33 | — | 35 | — |
| Total | –1,199 | — | -77 | — |
1) Restructuring costs in 2014, previously reported as items affecting comparability and not included in operating income by business area and reported as "Items affecting comparability" in the income statement.
Change in net sales by business area
| Year–over–year, % | Full year 2015 | Full year 2015 in local currencies |
Q4 2015 | Q4 2015 in local currencies |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | 8.0 | 4.4 | 6.2 | 6.1 |
| Major Appliances North America | 26.1 | 4.9 | 16.7 | 4.2 |
| Major Appliances Latin America | -7.5 | -1.5 | -24.7 | -10.7 |
| Major Appliances Asia/Pacific | 4.8 | -4.3 | -4.0 | -5.2 |
| Small Appliances | 3.2 | -3.8 | -8.0 | -10.1 |
| Professional Products | 8.4 | 4.0 | 7.1 | 6.1 |
| Total change | 10.1 | 2.3 | 1.3 | 0.3 |
Change in operating income by business area
| Year–over–year, % | Full year 2015 | Full year 2015 in local currencies |
Q4 2015 | Q4 2015 in local currencies |
|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | n.m. | n.m. | 50.9 | 53.9 |
| Major Appliances North America | -7.8 | -21.4 | 267.9 | 412.0 |
| Major Appliances Latin America | -56.7 | -59.4 | -85.6 | -83.6 |
| Major Appliances Asia/Pacific | -16.9 | -18.7 | -38.5 | -47.0 |
| Small Appliances | n.m. | n.m. | n.m. | n.m. |
| Professional Products | 28.5 | 23.2 | 37.6 | 38.2 |
| Total change | -23.5 | -28.6 | -114.5 | -114.1 |
Working capital and net assets
| SEKm | Dec. 31, 2014 |
% of annualized net sales |
Dec. 31, 2015 |
% of annualized net sales |
|---|---|---|---|---|
| Inventories | 14,324 | 11.2 | 14,179 | 11.5 |
| Trade receivables | 20,663 | 16.2 | 17,745 | 14.3 |
| Accounts payable | –25,705 | –20.1 | -26,467 | -21.4 |
| Provisions | –8,448 | -8,057 | ||
| Prepaid and accrued income and expenses |
–8,495 | -9,406 | ||
| Taxes and other assets and liabilities | –716 | -228 | ||
| Working capital | –8,377 | –6.6 | -12,234 | -9.9 |
| Property, plant and equipment | 18,934 | 18,450 | ||
| Goodwill | 5,350 | 5,200 | ||
| Other non-current assets | 5,528 | 4,752 | ||
| Deferred tax assets and liabilities | 4,664 | 5,244 | ||
| Net assets | 26,099 | 20.4 | 21,412 | 17.3 |
| Average net assets | 25,166 | 22.4 | 24,848 | 20.1 |
Net assets by business area
| Assets | Equity and liabilities | Net assets | |||||
|---|---|---|---|---|---|---|---|
| SEKm | Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
|
| Major Appliances Europe, Middle East and Africa |
22,197 | 21,746 | 17,857 | 19,326 | 4,340 | 2,420 | |
| Major Appliances North America | 16,450 | 16,601 | 10,234 | 11,747 | 6,216 | 4,854 | |
| Major Appliances Latin America | 14,574 | 11,692 | 7,661 | 5,893 | 6,913 | 5,799 | |
| Major Appliances Asia/Pacific | 5,614 | 5,422 | 3,519 | 3,822 | 2,095 | 1,600 | |
| Small Appliances | 5,144 | 4,551 | 3,680 | 3,251 | 1,464 | 1,300 | |
| Professional Products | 2,931 | 3,070 | 2,012 | 2,188 | 919 | 882 | |
| Other1) | 8,544 | 8,793 | 4,392 | 4,236 | 4,152 | 4,557 | |
| Total operating assets and liabilities | 75,454 | 71,875 | 49,355 | 50,463 | 26,099 | 21,412 | |
| Liquid funds | 9,835 | 11,199 | — | — | — | — | |
| Interest-bearing liabilities | — | — | 14,703 | 13,097 | — | — | |
| Pension assets and liabilities | 399 | 397 | 5,162 | 4,906 | — | — | |
| Equity | — | — | 16,468 | 15,005 | — | — | |
| Total | 85,688 | 83,471 | 85,688 | 83,471 | — | — |
1) Includes common functions and tax items. As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been excluded in net assets by business area and reported under Other. Going forward, any potential restructuring charges will be reported in net assets by business area. For comparability purposes, the figures for 2014 have been restated.
Net sales and income per quarter
| Full year | Full year | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEKm | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | 2015 |
| Net sales | 25,629 | 26,330 | 28,784 | 31,400 | 112,143 | 29,087 | 31,355 | 31,275 | 31,794 | 123,511 |
| Operating income | 731 | 63 | 1,392 | 1,395 | 3,581 | 516 | 921 | 1,506 | -202 | 2,741 |
| Margin, % | 2.9 | 0.2 | 4.8 | 4.4 | 3.2 | 1.8 | 2.9 | 4.8 | -0.6 | 2.2 |
| Income after financial items | 575 | –120 | 1,250 | 1,292 | 2,997 | 450 | 815 | 1,361 | -525 | 2,101 |
| Income for the period | 431 | –92 | 933 | 970 | 2,242 | 339 | 608 | 1,014 | -393 | 1,568 |
| Earnings per share, SEK1) | 1.50 | –0.32 | 3.26 | 3.39 | 7.83 | 1.18 | 2.12 | 3.53 | -1.38 | 5.45 |
| Items affecting comparability | –18 | –1,104 | — | –77 | –1,199 | — | — | — | — | — |
| Number of shares after buy-backs, million |
286.2 | 286.3 | 286.3 | 286.3 | 286.3 | 287.4 | 287.4 | 287.4 | 287.4 | 287.4 |
| Average number of shares after buy-backs, million |
286.2 | 286.3 | 286.3 | 286.3 | 286.3 | 286.6 | 287.4 | 287.4 | 287.4 | 287.1 |
1) Basic, based on average number of shares, excluding shares owned by Electrolux.
Net sales and operating income by business area per quarter
| SEKm | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | Full year 2014 |
Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | Full year 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa |
||||||||||
| Net sales | 7,865 | 8,107 | 8,741 | 9,725 | 34,438 | 8,608 | 8,699 | 9,540 | 10,332 | 37,179 |
| Operating income1) | 142 | –901 | 484 | 507 | 232 | 371 | 426 | 605 | 765 | 2,167 |
| Margin, % | 1.8 | –11.1 | 5.5 | 5.2 | 0.7 | 4.3 | 4.9 | 6.3 | 7.4 | 5.8 |
| Major Appliances North America |
||||||||||
| Net sales | 7,664 | 8,464 | 9,089 | 8,924 | 34,141 | 9,313 | 11,717 | 11,610 | 10,413 | 43,053 |
| Operating income | 382 | 680 | 518 | 134 | 1,714 | –57 | 401 | 743 | 493 | 1,580 |
| Margin, % | 5.0 | 8.0 | 5.7 | 1.5 | 5.0 | –0.6 | 3.4 | 6.4 | 4.7 | 3.7 |
| Major Appliances Latin America |
||||||||||
| Net sales | 4,790 | 4,064 | 5,053 | 6,134 | 20,041 | 5,261 | 4,476 | 4,190 | 4,619 | 18,546 |
| Operating income1) | 211 | 138 | 242 | 478 | 1,069 | 177 | 107 | 110 | 69 | 463 |
| Margin, % | 4.4 | 3.4 | 4.8 | 7.8 | 5.3 | 3.4 | 2.4 | 2.6 | 1.5 | 2.5 |
| Major Appliances Asia/Pacific | ||||||||||
| Net sales | 1,928 | 2,221 | 2,342 | 2,312 | 8,803 | 2,241 | 2,576 | 2,192 | 2,220 | 9,229 |
| Operating income1) | 11 | 102 | 125 | 200 | 438 | 52 | 135 | 54 | 123 | 364 |
| Margin, % | 0.6 | 4.6 | 5.3 | 8.7 | 5.0 | 2.3 | 5.2 | 2.5 | 5.5 | 3.9 |
| Small Appliances | ||||||||||
| Net sales | 2,001 | 1,938 | 2,075 | 2,664 | 8,678 | 2,139 | 2,198 | 2,169 | 2,452 | 8,958 |
| Operating income | 33 | –41 | 35 | 173 | 200 | –8 | -4 | 41 | -92 | -63 |
| Margin, % | 1.6 | –2.1 | 1.7 | 6.5 | 2.3 | –0.4 | -0.2 | 1.9 | -3.8 | -0.7 |
| Professional Products | ||||||||||
| Net sales | 1,380 | 1,536 | 1,484 | 1,641 | 6,041 | 1,525 | 1,689 | 1,574 | 1,758 | 6,546 |
| Operating income | 126 | 172 | 184 | 189 | 671 | 170 | 220 | 212 | 260 | 862 |
| Margin, % | 9.1 | 11.2 | 12.4 | 11.5 | 11.1 | 11.1 | 13.0 | 13.5 | 14.8 | 13.2 |
| Other | ||||||||||
| Net sales | 1 | — | — | — | 1 | — | — | — | — | — |
| Operating income, common group costs, etc.1) |
–174 | –87 | –196 | –286 | –743 | –189 | -364 | -259 | -1,820 | -2,632 |
| Total Group | ||||||||||
| Net sales | 25,629 | 26,330 | 28,784 | 31,400 | 112,143 | 29,087 | 31,355 | 31,275 | 31,794 | 123,511 |
| Operating income | 731 | 63 | 1,392 | 1,395 | 3,581 | 516 | 921 | 1,506 | -202 | 2,741 |
| Margin, % | 2.9 | 0.2 | 4.8 | 4.4 | 3.2 | 1.8 | 2.9 | 4.8 | -0.6 | 2.2 |
1) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been excluded in operating income by business area. For comparability purposes, the figures for 2014 have been restated to include restructuring costs. For a specification, see below and the press release; Restated figures for Electrolux for 2014, March 30, 2015.
| Total Group | –18 | –1,104 | — | –77 | –1,199 | — | — | — | — | — |
|---|---|---|---|---|---|---|---|---|---|---|
| Common Group cost | –2 | — | — | 35 | 33 | — | — | — | — | — |
| Professional Products | — | — | — | — | — | — | — | — | — | — |
| Small Appliances | — | — | — | — | — | — | — | — | — | — |
| Major Appliances Asia/Pacific | –10 | — | — | — | –10 | — | — | — | — | — |
| Major Appliances Latin America | –6 | –4 | — | — | –10 | — | — | — | — | — |
| Major Appliances North America | — | — | — | — | — | — | — | — | — | — |
| Major Appliances Europe, Middle East and Africa |
— | –1,100 | — | –112 | –1,212 | — | — | — | — | — |
| Items affecting comparability included in operating income by business area above 1) | ||||||||||
1) Previously not included in operating income by business area and reported as Items affecting comparability in the income statement.
Fair value and carrying amount on financial assets and liabilities
| Dec. 31, 2014 | Dec. 31, 2015 | |||
|---|---|---|---|---|
| SEKm | Fair value | Carrying amount |
Fair value | Carrying amount |
| Per category | ||||
| Financial assets at fair value through profit and loss | 2,971 | 2,971 | 3,637 | 3,637 |
| Available for sale | 177 | 177 | 137 | 137 |
| Loans and receivables | 22,124 | 22,124 | 18,759 | 18,759 |
| Cash | 5,289 | 5,289 | 6,448 | 6,448 |
| Total financial assets | 30,561 | 30,561 | 28,981 | 28,981 |
| Financial liabilities at fair value through profit and loss | 157 | 157 | 220 | 220 |
| Financial liabilities measured at amortized cost | 39,415 | 39,247 | 39,150 | 38,965 |
| Total financial liabilities | 39,572 | 39,404 | 39,370 | 39,185 |
Fair value estimation
Valuation of financial instruments at fair value is done at the most accurate market prices available. Instruments which are quoted on the market, e.g., the major bond and interest-rate future markets, are all marked-to-market with the current price. The foreign-exchange spot rate is used to convert the value into SEK. For instruments where no reliable price is available on the market, cash-flows are discounted using the deposit/swap curve of the cash flow currency. If no proper cash-flow schedule is available, e.g., as in the case with forward-rate agreements, the underlying schedule is used for valuation purposes.
To the extent option instruments are used, the valuation is based on the Black & Scholes' formula. The carrying value less impairment provision of trade receivables and payables
are assumed to approximate their fair values. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market-interest rate that is available to the Group for similar financial instruments. The Group's financial assets and liabilities are measured according to the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for assets or liabilities either directly or indirectly.
Level 3: Inputs for the assets or liabilities that are not entirely based on observable market data.
Fair value measurement hierarchy
| Dec. 31, 2014 | Dec. 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|
| SEKm | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |
| Financial assets | 312 | — | 312 | 284 | — | 284 | |
| Financial assets at fair value through profit and loss |
135 | — | 135 | 147 | — | 147 | |
| Available for sale | 177 | — | 177 | 137 | — | 137 | |
| Derivatives | — | 375 | 375 | — | 148 | 148 | |
| Derivatives for which hedge accounting is not applied, i.e., held for trading |
— | 194 | 194 | — | 42 | 42 | |
| Derivatives for which hedge accounting is applied |
— | 181 | 181 | — | 106 | 106 | |
| Short-term investments and cash equivalents |
2,456 | — | 2,456 | 3,342 | — | 3,342 | |
| Financial assets at fair value through profit and loss |
2,456 | — | 2,456 | 3,342 | — | 3,342 | |
| Total financial assets | 2,768 | 375 | 3,143 | 3,626 | 148 | 3,774 | |
| Financial liabilities | |||||||
| Derivatives | — | 157 | 157 | — | 220 | 220 | |
| Derivatives for which hedge accounting is not applied, i.e., held for trading |
— | 89 | 89 | — | 135 | 135 | |
| Derivatives for which hedge accounting is applied |
— | 68 | 68 | — | 85 | 85 | |
| Total financial liabilities | — | 157 | 157 | — | 220 | 220 |
The Group strives for arranging master-netting agreements (ISDA) with the counterparts for derivative transactions and has established such agreements with the majority of the counterparts, i.e., if a counterparty will default, assets and liabilities will be netted. Derivatives are presented gross in the balance sheet.
Parent Company income statement
| SEKm | Full year 2014 | Full year 2015 | Q4 2014 | Q4 2015 |
|---|---|---|---|---|
| Net sales | 29,508 | 33,179 | 8,455 | 9,324 |
| Cost of goods sold | –25,477 | -28,005 | -7,254 | -7,873 |
| Gross operating income | 4,031 | 5,174 | 1,201 | 1,451 |
| Selling expenses | –3,430 | -3,855 | -1,003 | -1,059 |
| Administrative expenses | –1,208 | -1,789 | -247 | -761 |
| Other operating income | — | — | — | — |
| Other operating expenses | –645 | -519 | -473 | -237 |
| Operating income | –1,252 | -989 | -522 | -606 |
| Financial income | 3,105 | 3,830 | 2,011 | 348 |
| Financial expenses | –455 | -702 | -233 | -258 |
| Financial items, net | 2,650 | 3,128 | 1,778 | 90 |
| Income after financial items | 1,398 | 2,139 | 1,256 | -516 |
| Appropriations | 355 | 156 | 196 | -20 |
| Income before taxes | 1,753 | 2,295 | 1,452 | -536 |
| Taxes | 77 | 103 | 2 | 144 |
| Income for the period | 1,830 | 2,398 | 1,454 | -392 |
Parent Company balance sheet
| SEKm | Dec. 31, 2014 |
Dec. 31, 2015 |
|---|---|---|
| Assets | ||
| Non–current assets | 35,074 | 35,214 |
| Current assets | 21,021 | 24,559 |
| Total assets | 56,095 | 59,773 |
| Equity and liabilities | ||
| Restricted equity | 4,562 | 4,562 |
| Non–restricted equity | 12,617 | 13,176 |
| Total equity | 17,179 | 17,738 |
| Untaxed reserves | 396 | 450 |
| Provisions | 1,624 | 1,446 |
| Non–current liabilities | 9,071 | 7,843 |
| Current liabilities | 27,825 | 32,296 |
| Total equity and liabilities | 56,095 | 59,773 |
| Pledged assets | — | — |
| Contingent liabilities | 3,743 | 1,615 |
Operations by business area yearly
| SEKm1) 2) | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | |||||
| Net sales | 34,029 | 34,278 | 33,436 | 34,438 | 37,179 |
| Operating income | 675 | 178 | –481 | 232 | 2,167 |
| Margin, % | 2.0 | 0.5 | –1.4 | 0.7 | 5.8 |
| Major Appliances North America | |||||
| Net sales | 27,665 | 30,684 | 31,864 | 34,141 | 43,053 |
| Operating income | 146 | 1,347 | 2,136 | 1,714 | 1,580 |
| Margin, % | 0.5 | 4.4 | 6.7 | 5.0 | 3.7 |
| Major Appliances Latin America | |||||
| Net sales | 17,810 | 22,044 | 20,695 | 20,041 | 18,546 |
| Operating income | 820 | 1,590 | 979 | 1,069 | 463 |
| Margin, % | 4.6 | 7.2 | 4.7 | 5.3 | 2.5 |
| Major Appliances Asia/Pacific | |||||
| Net sales | 7,852 | 8,405 | 8,653 | 8,803 | 9,229 |
| Operating income | 736 | 746 | 116 | 438 | 364 |
| Margin, % | 9.4 | 8.9 | 1.3 | 5.0 | 3.9 |
| Small Appliances | |||||
| Net sales | 8,359 | 9,011 | 8,952 | 8,678 | 8,958 |
| Operating income | 543 | 461 | 309 | 200 | -63 |
| Margin, % | 6.5 | 5.1 | 3.5 | 2.3 | -0.7 |
| Professional Products | |||||
| Net sales | 5,882 | 5,571 | 5,550 | 6,041 | 6,546 |
| Operating income | 841 | 588 | 510 | 671 | 862 |
| Margin, % | 14.3 | 10.6 | 9.2 | 11.1 | 13.2 |
| Other | |||||
| Net sales | 1 | 1 | 1 | 1 | — |
| Operating income, common Group costs, etc. | –744 | –910 | –1,989 | –743 | -2,632 |
| Total Group | |||||
| Net sales | 101,598 | 109,994 | 109,151 | 112,143 | 123,511 |
| Operating income | 3,017 | 4,000 | 1,580 | 3,581 | 2,741 |
| Margin, % | 3.0 | 3.6 | 1.4 | 3.2 | 2.2 |
1) As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used. Restructuring charges have previously been excluded in operating income by business area. For comparability purposes, the figures for 2014 have been restated to include restructuring costs. See the press release; Restated figures for Electrolux for 2014, March 30, 2015. For information purposes, yearly operating income by business area 2011-2013 are presented including restructuring costs in the table above. For a specification see below. 2) Electrolux applies the amended standard for pension accounting, IAS 19 Employee Benefits, as of January 1, 2013. Reported figures for 2012 have been restated to enable comparison.
Reported figures for previous years have not been restated.
| Items affecting comparability1) | |||||
|---|---|---|---|---|---|
| Major Appliances Europe, Middle East and Africa | –34 | –927 | –828 | –1,212 | — |
| Major Appliances North America | –104 | –105 | — | — | — |
| Major Appliances Latin America | — | — | — | –10 | — |
| Major Appliances Asia/Pacific | — | — | –351 | –10 | — |
| Small Appliances | — | — | –82 | — | — |
| Professional Products | — | — | — | — | — |
| Common Group cost | — | — | –1,214 | 33 | — |
| Total Group | –138 | –1,032 | –2,475 | –1,199 | — |
1) Restructuring costs in 2014, previously not included in operating income by business area and reported as Items affecting comparability in the income statement.
Five-year review
| SEKm unless otherwise stated | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|
| Net sales | 101,598 | 109,994 | 109,151 | 112,143 | 123,511 |
| Organic growth, % | 0.2 | 5.5 | 4.5 | 1.1 | 2.2 |
| Operating income | 3,017 | 4,000 | 1.580 | 3,581 | 2,741 |
| Margin, % | 3.0 | 3.6 | 1.4 | 3.2 | 2.2 |
| Income after financial items | 2,780 | 3,154 | 904 | 2,997 | 2,101 |
| Income for the period | 2,064 | 2,365 | 672 | 2,242 | 1,568 |
| Restructuring cost included in operating income | –138 | –1,032 | –2,475 | –1,199 | — |
| Capital expenditure, property, plant and equipment | 3,163 | 4,090 | –3,535 | –3,006 | -3,027 |
| Operating cash flow after investments | 3,407 | 5,273 | 2,412 | 6,631 | 7,492 |
| Earnings per share, SEK | 7.25 | 8.26 | 2.35 | 7.83 | 5.45 |
| Equity per share, SEK | 72.51 | 54.96 | 49.99 | 57.52 | 52.21 |
| Dividend per share, SEK | 6.50 | 6.50 | 6.50 | 6.50 | 6.501) |
| Capital-turnover rate, times/year | 4.6 | 4.1 | 4.0 | 4.5 | 5.0 |
| Return on net assets, % | 13.7 | 14.8 | 5.8 | 14.2 | 11.0 |
| Return on equity, % | 10.4 | 14.4 | 4.4 | 15.7 | 9.9 |
| Net debt | 6,367 | 10,164 | 10,653 | 9,631 | 6,407 |
| Net debt/equity ratio | 0.31 | 0.65 | 0.74 | 0.58 | 0.43 |
| Average number of shares excluding shares owned by Electrolux, million |
284.7 | 285.9 | 286.2 | 286.3 | 287.1 |
| Average number of employees | 52,916 | 59,478 | 60,754 | 60,038 | 58,265 |
1) Proposed by the Board.
Financial goals over a business cycle
The financial goals set by Electrolux aim to strengthen the Group's leading, global position in the industry and assist in generating a healthy total yield for Electrolux shareholders. The objective is growth with consistent profitability.
Financial goals
- Operating margin of >6%
- Capital-turnover rate >4 times
- Return on net assets >20%
- Average annual growth >4%
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-endexchange rates and adjusted for acquired and divested operations.
Net assets
Total assets exclusive of liquid funds, pension plan assets 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-interestbearing provisions.
Total borrowings
Total borrowings consist of interest-bearing liabilities, fairvalue derivatives, accrued interest expenses and prepaid interest income, and trade receivables with recourse.
Net debt 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.
Other key ratios
Organic growth Sales growth, adjusted for acquisitions, divestments and changes in exchange rates.
Operating cash flow after investments Cash flow from operations and investments excluding financial items paid, taxes paid, restructuring payments and acquisitions and divestment of operations.
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.
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.
Capital-turnover rate Net sales in relation to average net assets.
Shareholders' information
President and CEO Keith McLoughlin's comments
on the fourth-quarter results 2015 Today's press release is available on the Electrolux website www.electroluxgroup.com/ir
Telephone conference 09.00 CET
A telephone conference is held at 09.00 CET today, January 28. The conference will be chaired by Keith McLoughlin, President and CEO of Electrolux. Mr. McLoughlin will be accompanied by Tomas Eliasson, CFO. Jonas Samuelson, the new President and CEO as of February 1, will also participate.
Details for participation by telephone are as follows: Participants in Sweden should call +46 8 505 564 74 Participants in UK/Europe should call +44 203 364 5374 Participants in US should call +1 855 753 2230
Slide presentation for download: www.electroluxgroup.com/ir
Link to webcast: www.electroluxgroup.com/q4-2015
For further information, please contact:
Catarina Ihre, Vice President Investor Relations at +46 (0)8 738 60 87 Merton Kaplan, Analyst Investor Relations at +46 (0)8 738 70 06
Calendar 2016
Capital Markets Day in Stockholm February 24 Annual Report 2015 Week 10 Annual General Meeting April 6 Interim report January - March April 28 Interim report January - June July 20 Interim report January - September October 28
Website: www.electroluxgroup.com