Electrolux: President and CEO Keith McLoughlin’s Comments on the Results for the First Quarter of 2013

  Electrolux: President and CEO Keith McLoughlin’s Comments on the Results for
  the First Quarter of 2013

Business Wire

STOCKHOLM -- April 25, 2013

Regulatory News:

Strong North America, Weak Europe

Supported by a gradual recovery in the market, the Electrolux North American
appliance business generated strong sales and earnings growth. Results in
Latin America, Europe and Small Appliances were all impacted by negative
currency movements. Operations in Latin America and Asia presented yet another
quarter of solid sales growth. In Europe, however, all of our operations
continued to suffer from weak consumer confidence, resulting in falling
volumes and negative price and mix development.

At the end of the first quarter, Electrolux experienced very strong currency
movements, which had a total negative impact of more than SEK 300m on
operating income. Excluding the currency impact, operating income for the
first quarter exceeded last year’s results by 15%. One third of the negative
currency impact was related to the Latin American operations. We expect that
the negative currency effect in Latin America, mainly in Brazil, will diminish
over the course of the year, enabling us to benefit from the continued strong
organic growth in Latin America, which amounted to more than 7% during the
quarter.

Operations in North America reported yet another quarter of strong volume
growth supported by a gradually improving appliance market. We are seeing
evidence that the recovery in the housing market is finally generating
increased consumption of appliances. As such, our view is that demand for
appliances could increase with 3-5% in 2013. Furthermore, after an extended
period of consumers trading down to less expensive products, they are now
purchasing more high-end products yielding a positive product mix. Electrolux
is leveraging from this positive momentum by increasing investments in
brand-building. Combined with a strong product offering in all price segments
and access to all of the important distribution channels, we remain confident
that we can improve our market position in North America in 2013.

Electrolux sales in Asia grew organically by more than 20%. In the second half
of 2013, we will begin our extensive re-launch of Electrolux into the Chinese
appliance market. Through our new innovative products supported by an
integrated marketing campaign, we expect to develop a solid and growing
position in the premium segment of the market.

As we have discussed in the past, Electrolux has globally diversified its
revenue base, whereas 70% of sales are generated from regions outside Europe.
Nevertheless, we are unquestionably impacted by the challenging market trend
we are seeing in all of our product categories in Europe (Major Appliances,
Professional Products and Small Appliances). Results in Europe were impacted
by a negative country mix as demand in Southern Europe, France, Germany and
the Benelux countries weakened during the quarter.

In the first quarter, operating income for Electrolux Major Appliances in
Europe was just above breakeven and was another part of the Group materially
impacted by negative currency. Even though this result is weak, our analysis
shows that we managed to maintain a healthy gross margin. This is mainly the
result of all of our previously announced activities to remain cost
competitive by improving our manufacturing footprint, capitalizing on our
shared global strength and reducing overhead costs, in addition to ensuring a
positive product mix driven by the launch of high-end appliances under the
Electrolux brand. In spite of all improvements made, we believe that 2013 will
continue to be a challenging year for all our operations in Europe, due to the
negative macro environment resulting in falling demand of domestic and
professional appliances.

Despite the difficult situation in Europe, it is encouraging to note that the
organic growth for the Group in the first quarter is still close to our target
of 4%. At some point, demand in Europe will rebound and, combined with a
recovery and a stronger market in North America and continued strong growth in
our emerging markets, Electrolux will exceed all key financial objectives.

Keith McLoughlin President and Chief Executive Officer

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