In its communication with the capital markets, Electrolux aims to supply relevant, reliable, accurate and updated information about the Group’s development and financial position.
Financial information is supplied continuously in annual and interim reports. Telephone conferences are arranged in connection with the publication of interim reports, at which Group Management presents results followed by a question and answer (Q&A) session, which is simultaneously audio- webcasted on the Group’s website.
Electrolux Investor Relations department arranges approximately 300 meetings annually for investors and analysts.
Meetings with investors are held at the Group’s head office in Stockholm, Sweden, as well as in the form of roadshows, primarily in major financial markets in Europe and the US. Electrolux also interacts daily with the capital markets. Furthermore, Electrolux arranges Capital Markets Days and the Annual General Meeting, providing shareholders and investors with the opportunity to attend presentations and interact with the company. For additional information, please visit the Group’s website www.electroluxgroup.com/ir.
On November 20, Electrolux hosted its Capital Markets Day in the US. More than 100 investors, analysts and media representatives from Europe and the US gathered at the Electrolux North American Headquarters in Charlotte, North Carolina.
At the event, Electrolux management presented a strategic review and an update of its business and its financial performance. The presentations outlined how Electrolux creates sustainable economic value through a continuous flow of consumer-focused product innovations, modularization and managing the Group’s cost structure. Investors, analysts and media were also invited to participate in a site visit at the retail centers of two large US customers. The main highlights from the event were:
Chief Executive Officer Keith McLoughlin presented the company’s vision to be the best appliance company in the world, along with milestones on the path toward achieving this goal. Supported by this vision, Electrolux continues to execute its strategy and support the creation of long-term and sustainable economic value and increased return for its stakeholders.
The operational recovery in Major Appliances EMEA is progressing well through a combination of active product portfolio management and cost savings.
Although productivity initiatives have made a major contribution to earnings improvement, a better mix has also had a positive impact. The broader European markets have remained flat since the beginning of the year.
Jan Brockmann, Chief Technology Officer, provided an overview of Electrolux R&D and the innovation pipeline, which he characterized as featuring “increased firepower” thanks, in part, to modularization. He also gave a demonstration of connected oven technology, which provides real consumer benefits.
The Electrolux North America team presented an overview of the appliance market and reported that the regulatory approvals and integration planning for the proposed GE Appliances acquisition remain on track.
Alberto Zanata, Head of Professional Products, gave an overview of the strengths and opportunities of the business area with emphasis on how the unit is driving sustainability to get closer to customers and to outstrip the competition.
Analysts engage in questions related to the development of the appliance market and the demand in Electrolux core markets. Price, mix and future outlook are important topics on which analysts focus in order to gain a better understanding of the operation for which they can base their longer term projections of Electrolux future performance. The telephone conferences from previous quarters are available at www.electroluxgroup.com/ir.
During 2014, Electrolux core markets demonstrated a very mixed pattern. Demand for appliances in North America continued to be solid throughout the year, following a very strong recovery in 2013. In Western Europe, market demand was mixed, while markets in Eastern Europe weakened due to the geopolitical uncertainty. The markets in Latin America declined sharply earlier in the year, but demand in Brazil has recently begun to stabilize somewhat. The development in Asia/Pacific remained mixed, with a slowdown in growth in China and South East Asia.
At the end of 2013, Electrolux launched a new product range specifically developed for the Chinese consumers. This marked the start of the Group’s ambition to drive growth in the premium segment in China. The launch has required investments in marketing and brand to support the growth strategy and to establish the Electrolux brand in key urban markets. Although the Chinese economy slowed in the second half of 2014, Electrolux remains convinced of the long-term potential of the world’s largest appliance market and will continue to support its Chinese launch program.
The European appliance market is a highly fragmented market where the top five players have a share of less than 60%. It is difficult to predict the short-term implications of the consolidation that is taking place, but generally, a market consolidation is a good thing and could be positive for the appliance industry and Electrolux.
In response to the prolonged weak market environment and increased competition in Europe, Electrolux has taken initiatives to restore profitability in its European operations. The team has executed its plan by pursuing two things; significant product portfolio management which has led to increased focus on premium and built-in products with enhanced value contribution to the market place; and continuation of the effort to generate savings from the ongoing cost-reduction program. As a result, both actions have helped mitigate what has been a weak market in terms of price and volume.
The acquisition of GE Appliances is a synergetic deal and the coordination of the Electrolux Group’s and GE Appliances’ operations is expected to create a stable growth platform for the North American market. GE Appliances has an offering that complements our brand portfolio in North America. The deal is expected to be EPS accretive in year one. This means there are substantial cost synergies to be realized over the next few years. The largest part of the synergies is expected to occur in purchasing and sourcing, operations and brands.
The year started very soft due to negative weather conditions in North America which affected demand for appliances, but market growth picked up quickly thereafter, supported by improving consumer confidence and a gradually stronger housing market. The North American appliance market increased by 6% in 2014. During the year, Electrolux was impacted by the transition of new products due to the new energy requirements for refrigerators and freezers by the Department of Energy.
Electrolux has been implementing an extensive restructuring program since 2004, resulting in the closure of several plants in high-cost areas. In 2013, additional measures were presented to further adapt capacity to a lower demand situation and increase efficiency in manufacturing. Since then, the Group has taken SEK 2.8bn in charges for a total expected savings of SEK 1.8bn to be fully realized from 2016. The charges for this program were completed in the last quarter of 2014.
Electrolux has approximately SEK 45 bn of annual currency in- and outflows. This leads to high exposure to currency risks since the Group operates in over 150 countries. In 2014, the total negative impact from both currency transaction and translation effects to earnings was SEK 1,300m. About one-third of the negative impact was from Latin American currencies, which depreciated against the USD. During the year, Electrolux was able to offset the negative currency effects by price and mix improvements.