The Board of Directors of Electrolux has authorized a number of
restructuring measures to improve productivity and adjust the cost structure within major appliances, mainly outside Europe, as well as within compressors. The actions proposed will involve a total cost of SEK 1,367 million (U.S. $154 million), which will be charged as items affecting comparability against operating income in the fourth quarter of 2002. Approximately half of the amount relates to cash items, mainly personnel cutbacks involving 5,091 employees. Savings are estimated at SEK 253 million ($28.5 million) in 2003, additional SEK 119 million ($13.4 million) in 2004 and a total of SEK 415 million ($46.7 million) annually from year-end 2005. All actions are subject to local laws and bargaining requirements.
The proposed actions would include closure of the Group's plant for room air-conditioners in Edison, NJ, U.S., as well as rationalization of refrigerator production and sales and marketing in China. In India, measures comprise further consolidation of Group operations, write-downs of assets, and personnel cutbacks. In addition, actions include divestment of the Australian component plant in Botany, NSW.
Within major appliances in Europe, rationalization would be implemented in relation to the previously announced consolidation of product platforms and change in production structure to a few master plants and a number of smaller, leaner manufacturing units. This includes transfer of part of cooker production in Motala, Sweden; Forli, Italy; and Rothenburg, Germany to the cooker plant in Romania. Actions also
include outsourcing of cooker hoods production in Motala to external suppliers, as well as transfer of part of refrigerator production in Fuenmayor, Spain to the refrigerator plant in Hungary.
Within compressors, actions would include restructuring of operations in Spain and India.
In addition to the proposed restructuring activities, and following impairment tests, write-downs of assets are expected in the full-year accounts for 2002 in the amount of approximately SEK 1,000 million ($112.6 million). These
relate to compressors, as well as assets in other underperforming
"Our operations in India and China, including the compressor
operations, have been generating losses in recent years," said Hans Stråberg, president and CEO of Electrolux. "The measures proposed will create a foundation for building financially sound operations in the respective markets and product categories. We must also examine changes in our cost structure within air-conditioners in North America, and leverage our strong market position in this product category which may involve sourcing from the Group's operation in Brazil as well as from external suppliers. The changes within appliances in Europe are focused mainly on improving productivity and achieving economies of scale in production.
We must make every effort to improve operations that are under-
performing or not creating sufficient value. This is fundamental for enabling increased activities in product development and marketing to achieve growth, and for strengthening our leading positions within our highly competitive industries."
Back to Breaking News