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issue: August 2003 APPLIANCE Magazine

European Report
A Look At The End Of The Business Year

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What trends are to be found between the figures for 2002?

Several European appliance makers end their business year in March, so their annual reports are published during the spring and summer. What trends are to be found between the figures for 2002?

First, small appliance does not mean small profits: Philips Domestic Appliances and Personal Care (DAP), a division of the electronics giant, had its best results ever. Despite a weak economy, a 17.6-percent profit margin was achieved by a profit of 401 million Euro (U.S. $461.8 million) on total revenues of 2.2 billion Euro, with 8,766 staff. There are two reasons for this: the Philishave/Norelco shavers can be sold at premium prices because they are perceived as personal care, and the company's new Senseo coffee maker attained the number one position in all countries where it is available. The Senseo product is a big success; it's a low-pressure espresso machine with special coffee pads; it's easy to use; and it was developed with coffee giant Sara Lee.

For the first time, figures from Groupe SEB (the French giant in small appliances, with the Tefal and Rowenta brands) included Moulinex-Krups. The integration apparently was successful; the company reported total sales of 2.5 billion Euro (U.S. $2.9 billion), of which 587 million came from the Moulinex/Krups takeover, which is a real change in size for the company. Operating margin was 8.7 percent and net income was 4.7 percent, despite initial losses at Moulinex/Krups.

In line with Scandinavian culture, the annual report of Swedish white goods giant Electrolux states quite frankly what is right and wrong with the company: the performance of the Group has improved substantially over the past few years, mainly through cost cutting and restructuring. For the future, the report says, "There is still room for reducing costs and improving the performance of our operations. But at the same time, we must intensify our efforts in product development and brand building." Net sales for Electrolux were U.S. $13.7 billion and operating income was $795 million, which makes for a 5.8-percent margin.

Whirlpool faced many challenges last year. Due to a number of one-time charges, the company reported a net loss, but core operating earnings were up 13.2 percent to $420 million. Total revenues were $11 billion, with 68,000 employees. Whirlpool is the market leader in Central Europe; it occupies the number three spot in Western and Eastern Europe, and is the largest pan-European brand. The big news for the company was the acquisition of Polar S.A., a leading Polish manufacturer and brand. Much of the global Whirlpool restructuring took place in the other European operations.

BSH, the appliance division of German giants Bosch and Siemens, had a good year. Its yearly report has an optimistic outlook and beautiful illustrations. The decline on the home German market was more than compensated by better sales in France, the UK, Spain, and Italy. Total sales for the company were 6.3 billion Euro ($7.3 billion), with 434 million Euro profit, or 6.9 percent. As German labor is expensive, and as the occupancy rate in German factories was too low, BSH took several measures. This shows that even the prestigious German brands suffer from low-cost competition.

This report is filed by Paul Roggema, European correspondent, APPLIANCE magazine.


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