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Electrolux: Organic Growth Tops Target in 2013
Jan 31, 2014
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Electrolux had full-year 2013 net sales of SEK 109,151 million (approx. USD $16,676 million), down 1% from SEK 109,994 million (approx. $16,804 million) in 2012. The Swedish-based company had organic growth of 4.5%, less than 2012's 5.5%, but both years were still above the company's annual target of 4%.

Operating income in 2013 was SEK 4,055 million, down from SEK 5,032 million.

Income for the period was SEK 672 million (approx. $103 million), compared to SEK 2,365 million.

Income for the period, including items affecting comparability, was SEK –987 million, compared to SEK 242 million in 2012.

"Over the past two years, growth in local currencies including acquisitions was 14%," commented President and CEO Keith McLoughlin. "Our ambition to increase our rate of new product launches and expand our market coverage combined with our consumer insight work is paying off in terms of both sales growth and market share.

He noted that increased sales volumes and mix improvements had a positive effect on earnings; the challenging European market and unfavorable currency development had an adverse effect.

McLoughlin noted that, in 2013, the company continued a manufacturing footprint program intended to enhance overall competitiveness and initiated a new overhead cost reduction program. "Both of these programs are mainly directed towards the restoration of profitability in Major Appliances EMEA (Europe, Middle East and Africa).

Fourth Quarter 2014
McLoughlin noted all six of the company's business areas showed fourth quarter 2013 growth, particularly in
• Major Appliances North America
• Asia/Pacific
• Small Appliances
• Professional Products

Europe was still a weak market, although sales grew slightly in 4Q 2013 and the company gained market share under some strategic brands—the result of product launches over the past two years. Electrolux expects demand for core appliances to be slightly positive in Europe in 2014.

North America had another quarter of strong organic sales with growth at almost 8%. Electrolux expects market demand for core appliances to grow in the United States to grow by 4%.

Latin America saw a slight increase in organic sales growth for Electrolux. The slowdown in the Brazilian economy had a negative impact on organic growth. Slower sales and continued currency headwinds hurt earnings.

"We foresee lower demand in Brazil over the next few quarters, although our fundamental view of the market is unchanged and we expect demand to pick up again," said McLoughlin.

In the Asia/Pacific business sector organic growth continued in all regions in Asia/Pacific. Electrolux's largest product launch of 2013 was in China—McLoughlin said the launch of 60 new kitchen and laundry appliances was successful and will continue in 2014.

The fourth quarter saw organic sales growth in Australia and in Southeast Asia .

Professional Products and Small Appliances both had stronger 4Q 2013 results, which McLoughlin credited to successful product launches, cost reductions, and strong sales momentum in emerging markets.

"Our strategy has paid off over the past two years with a growth trajectory that hasn’t been seen in the Group for many years," said McLoughlin. "Due to headwinds in the European market and significant currency fluctuations our earnings have declined. However, the actions that have been initiated will address the European situation to improve its profitability. We will also, over time, mitigate the currency headwinds through internal actions."

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