Global appliance giant Electrolux today reported fourth quarter 2005 net sales increased to SEK 33.651 billion (approx. U.S. $4.289 billion), compared to SEK 28.620 billion (approx. $3.649 billion) in 2004. For full-year 2005, Net sales were SEK 129.469 billion (approx. $16.506 billion), compared to SEK 120.651 billion (approx. $15.382 billion) in 2004.
Fourth quarter income before one-off items affecting comparability was SEK 1.861 billion (approx. $237 million), compared to SEK 1.364 billion (approx. $174 million) in 2004. Full-year 2005 income before one-off items was SEK 6.235 billion (approx. $795 million), compared to SEK 6.412 (approx. $818 million) in 2004.
"The fourth quarter ended the year with positive momentum and exceeded our last outlook," commented Electrolux President and CEO Hans Stråberg today. "We started the year with a strong headwind. There were material costs on historically high levels rolling forward from the prior year and pricing was weak for our products. At the same time, we were taking a big risk in leading on price increases and we continued implementing a necessary but complex restructuring and relocation program.
"With that background I am pleased to present this report on our performance for 2005," he added. "In total, we had SEK 4 billion in material cost increases against us during the year. By hard work and using our global opportunities in purchasing and R&D operations, we managed to save nearly half of that cost.
"We delivered a steady improvement from one quarter to the next during the year. Our fourth quarter sales were up almost 18 percent over last year, including changes in exchange rates. Operating margin for the fourth quarter increased to over 6 percent. This is a full percentage point over last year’s fourth quarter as well as the first nine months in 2005. As we predicted, we had a weak start of the year, but the gap versus the previous year was closed step by step."
Stråberg said he was especially pleased that improving profitability was spread across the regions in the company's indoor-products operations. North America, in particular, showed strong improvement in results, resulting from price increases and strong volumes, supported by a number of new product launches. Latin American operations reported strong improvements in the fourth quarter. The Appliances business in Europe reported a strengthening trend for operating income during the year, again bolstered by new product releases.
A key strategic development unfolding now is Electrolux's Outdoor Products group spin-off.
"We are enthusiastic about going forward as two very focused companies." Stråberg said. "Each will have a strong financial position, powerful brands and leading market positions."
The spin-off proposal will be presented to shareholders at Electrolux's Annual General Meeting in April, and the new Husqvarna company is expected to be listed on the Stockholm Stock Exchange in June.
"The strategy we have been implementing over the past few years is paying off, efficiently executed by our employees throughout the organization," Stråberg said. "In 2006 we will continue our successful work to strengthen our brand, launch new products and reduce cost in production and purchasing."
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