Company Management of Electrolux

Electrolux – a global leader with a customer focus

Electrolux vision is to be the best appliance company in the world as measured by its customers, employees and shareholders. 

Through profitable growth, innovative products under strong brands, operational excellence, and dedicated employees Electrolux creates the conditions to reach its vision.

Electrolux focus is on strengthening the position in its core markets and increasing the share of sales in growth markets. The strategy is to achieve this through an increased speed of innovative products to the market and growth in new segments, distribution channels and product categories. In addition to organic growth, Electrolux sees a potential to grow through acquisitions. Electrolux objective is to grow with consistent profitability, see the financial goals below.

Dedicated employees with diverse backgrounds and a position of leadership in sustainability are necessary for Electrolux to implement its strategy and achieve its goals. The objective is to develop smarter, more accessible, resource-efficient solutions that meet peoples’ needs and improve their everyday lives.

Mission – financial goals

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.

• Growth of at least 4% annually. 
• Operating margin of at least 6%. 
• Capital turnover-rate of at least 4.
• Return on net assets of at least 20%.

A sustainable business

The company takes a consistent approach to sustainability in the more than 150 countries where Electrolux operates. Understanding and engaging in challenges such as climate change, creating ethical and safe workplaces, and adopting a responsible approach to sourcing and restructuring are important for realizing the business strategy. Values such as respect, diversity, integrity, ethics, safety and sustainability are at the core of all employee actions when they interact with customers and colleagues around the globe. Key policies in this context include the Electrolux Code of Ethics, the Electrolux Workplace Code of Conduct and the Electrolux Policy on Corruption and Bribery. 

In the Dow Jones Sustainability World Index (DJSI World) for 2015, Electrolux maintained the position as industry leader in the Household Durables category. The Dow Jones Sustainability Indexes evaluate the performance of the world’s leading companies in sustainability – from each industry on a global and regional level, respectively. The evaluation is based on criteria such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices.

Electrolux has a global Ethics Program, encompassing both ethics training and a whistleblowing system – the Electrolux Ethics Helpline. Through the Ethics Helpline, employees can report suspected misconduct. in local languages. Reports may be submitted anonymously if legally permitted. The majority of the reported cases during 2015 relates to discrimination and harassment. 

In 2014, Electrolux Workplace Code of Conduct was updated to align with the UN Guiding Principles on Business and Human Rights. Educational activities throughout the organization have taken place in 2015.

Read more about Electrolux sustainability work on
www.electroluxgroup.com/sustainability.

Electrolux as a tax payer 

One important aspect for Electrolux of being the best appliance company in the world is to act as a good corporate citizen and taxpayer wherever Electrolux operates. 

Electrolux plays an important role in contributing to public finances in all jurisdictions where the Group operates. The Group has 58,000 employees in about 60 countries and about 50 manufacturing facilities across five continents. 

Of Electrolux total tax contribution, as defined in the below chart, corporate tax represented approximately 9% in 2015. Corporate income taxes are only a minor portion of the Group’s total contribution to public finances in Electrolux markets. In addition to corporate income taxes Electrolux pays indirect taxes, customs duties, property taxes, employee related taxes, environmental charges and a number of other direct or indirect contributions to governments. The total contribution to public finances for 2015 exceeded SEK 5.8bn whereof more than half related to emerging markets. 

Electrolux most transparent contribution to public finances around the world is corporate income taxes, see note 10. Corporate income taxes amounted to SEK 533m in 2015, representing a global effective tax rate of the Group of 25.4%. More than two thirds of the total corporate income taxes in 2015 related to the Group’s activities in emerging markets.

For more information on Electrolux tax policy visit www.electroluxgroup.com.

Risk assessment 

Risks in connection with the Group’s operations can, in general, be divided into operational risks related to business operations and those related to financial operations. Business risks are normally managed by the operative units within the Group, and financial risks by the Group’s treasury department.

Electrolux operates in competitive markets, most of which are relatively mature. Demand for appliances varies with general business conditions, and price competition is strong in a number of product categories. The Group’s ability to improve profitability and increase shareholder return is based on three elements: Profitable growth, Innovation and Operational Excellence. Realizing this potential requires effective and controlled risk management. 

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, price competition, exposure to customers and suppliers, changes in prices for raw materials and components as well as adapting production capacity. In addition, the Group is exposed to risks related to financial operations, e.g., interest risks, financing risks, currency risks and credit risks. 

The Group has established internal bodies to manage these risk exposures, see page 148. 

The purpose of the internal audit function, Management Assurance & Special Assignments, is to provide reasonable assurance that the Group’s goals are met in terms of efficient operations, compliance with relevant laws and regulations and reliable financial reporting, see page 154.

Management and company structure

Electrolux aims at implementing strict norms and efficient processes to ensure that all operations create long-term value for shareholders and other stakeholders. This involves the maintenance of an efficient organizational structure, systems for internal control and risk management and transparent internal and external reporting.

The Group has a decentralized corporate structure in which the overall management of operational activities is largely performed by the business area boards.

Electrolux operations are organized into six business areas. Within Major Appliances, the business areas are geographically defined, while the business areas Small Appliances and Professional Products are global. There are six group staff units that support all business areas: Finance, Legal Affairs, Human Resources and Organizational Development, Marketing and Branding, Global Operations and Communications. 

There are a number of internal bodies which are forums that are preparatory and decision-making in their respective areas. Each body includes representatives from concerned functions and in most cases the President and CEO, see chart below.

In order to fully take advantage of the Group’s global presence and economies of scale, the Group has established Global Operations with the responsibility for product development, purchasing, manufacturing, design and quality. 

The Group also has a global Major Appliances Leadership Team (MALT) which includes the President, the CFO, the four Major Appliances business area heads, the Chief Marketing Officer, the Chief Operations Officer and the heads of the Product Boards, Purchasing and Manufacturing, the General Counsel and the Head of Human Resources and Organizational Development. The MALT makes decisions and provides clarity on issues and opportunities relevant to the four major appliances businesses. Some decisions regarding cross-sector products and investments are prepared by Global Product Boards. The MALT has the authority to decide when matters amount up to SEK 100m.