Electrolux: President and CEO Keith McLoughlin’s Comments on the Results for
the Fourth Quarter of 2012
2012 – a year of record-strong organic growth
STOCKHOLM -- February 1, 2013
In the fourth quarter, Electrolux (STO:ELUXA)(STO:ELUXB) posted a record-high
organic growth of 7.5%. The growth rate for the full-year 2012 was 5.5%.
Operations in North America and Latin America, which currently account for 50%
of total sales, showed strong sales and earnings growth, primarily
attributable to a continued positive volume trend and improvements in
price/mix. Operations in Europe suffered from weak consumer confidence with
falling volumes and negative country mix. In 2013, we believe that the weak
market in Europe will be offset by growth in North America and the emerging
In the fourth quarter, Electrolux delivered its strongest organic growth rate
for 2012 of 7.5%. A significant portion of the growth came from the Latin
American operations, which noted another record quarter with an organic growth
of nearly 20%. The strong development was partly generated by government-tax
incentives in Brazil, but also by an improved product mix, higher prices and
market share gain.
Price/mix improvements in North America were a strong contributor to the sales
growth and the improved results. Operations in North America reported yet
another quarter of volume growth, thereby yielding an improved market share
for the full-year 2012. Although the market development in 2012 did not meet
our expectations of a year ago, we anticipate growth in the North American
market in 2013, supported by a gradual recovery in the housing market. We will
utilize the positive momentum to increase investments in brand-building and
R&D activities with the aim of further strengthening the Group’s position
At present, the Americas account for more than 50% of Group sales. The
corresponding figure five-years ago was around 35%. At the same time, we have
increased our exposure to emerging markets, which now represent more than 35%
of sales, and we expect this figure to reach 50% within five years.
Although the Group is currently less dependent on developments in Europe, the
region still represents the single-largest market for our core appliances,
professional products and small appliances. The weak performance in Europe is
primarily attributable to low consumer confidence, which is spreading
throughout the region and resulting in falling volumes and negative price/mix.
We stand by our view that the market situation in Europe is likely to get
worse before it gets better and we are minimizing the negative effect by
launching new products and eliminating costs.
We will see some reduction in our costs during 2013, which is partly related
to our own cost-saving initiatives but also to a slight tailwind from some
raw-material costs. There will also be some temporary cost increases as a
result of entering new distribution channels and the consolidation of
production of cooking products in North America. In line with our strategy,
2013 will be another intensive year of product launches, requiring increased
investments in marketing and product development.
The global macroeconomic development will be decisive for the Group’s sales
growth in 2013. We expect that the weak market in Europe will probably be
offset by growth in North America and the emerging markets.
The substantial improvement in the results for 2012 confirmed our longstanding
ability to generate strong free cash flow, even in a weak macro environment
through good work in operational and asset productivity. Importantly, our
performance in 2012 also confirms our ability to grow profitably and expand
our gross margin by diversifying our revenue base and bringing more consumer
relevant innovation to the market at a faster pace. Moving forward, we believe
there is good potential for us to continue to deliver a high return to our
shareholders through a consistent and steady profitable expansion of our
global operations – both organically and through acquisitions – while
continuing to generate a strong cash return.
Stockholm, February 1, 2013
Keith McLoughlin President and Chief Executive Officer
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Peter Nyquist, Senior Vice President
Head of Investor Relations and Financial Information
+46 (0)8 738 60 03
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