Electrolux Reports Increased Comparable Sales for 2011
Feb 2, 2012
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Electrolux reported full-year 2011 net sales were up 1.9% in comparable currencies - although 2011 net sales after currency impacts were SEK 101,598 million (approx. U.S. $15,080 million), down 4% from SEK 106,326 million in 2010. Income in 2011 was SEK 2,064 million (approx. $306 million), down 48% from SEK 3,997 million in 2010. Operating income was SEK 3,017 million (approx. $448 million), down 44% from SEK 5,430 million in 2010.
Electrolux reported fourth quarter net sales of SEK 28,369 million, up from SEK 27,556 million in the fourth quarter of 2010. Income in the fourth quarter was SEK 221 million, down from SEK 677 million in 4Q 2010. Operating income was SEK 1,441 million, down from SEK 1,714 million in 4Q 2010.
Electrolux President and CEO Keith McLoughlin said the appliance market saw the negative impacts of price pressures, higher raw-material costs, and weak demand grow stronger during 2011 - and noted that Electrolux was still able to end the year with an underlying operating income of SEK 4 billion. "Furthermore," he said, "we have taken actions to increase prices, take out costs, acquire companies in emerging markets and change the organization to strengthen the company's position as we entered 2012."
McLoughlin noted that, in addition to cost-cutting measures initiated in 2011, which will eventually include plant closures in North America, Electrolux put more focus on product development. The strategy to develop products based on end-user insight was given higher profile in 2011 with Electrolux's establishment of an "Innovation Triangle" structure in Group Management. R&D, Marketing, and Design functions now have new and strengthened roles, intended to create product development process synergies. McLoughlin said this will enable the company to focus more clearly on customers so it can bring "more relevant" products to market more quickly.
McLoughlin said he sees room for gradual improvements in the appliance markets in 2012, but, "We do not anticipate that demand in mature markets will recover in the first half of 2012." He added, "There could be a certain degree of improvement in the US market by the end of 2012, supported by a modest growth in the housing market."
McLoughlin noted that the commodity market has improved and 2012 raw materials costs will probably be no more than SEK 500 million (approx. $74 million) higher than raw materials in 2011. Most of the impact should come in the first half of the year.
However, 2012 will likely see higher costs for sourced components and for transportation, "which makes it even more important to be successful with our price increases," he said.
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