Electrolux Group Presentation The Electrolux Keith McLoughlin Group President and CEO Tomas Eliasson CFO Capital Markets Day Charlotte, November 20, 2014
Overview Value Business Strategic Financial Creation Update Review Review Potential
Business Update 3
Summary of what we said about 2014 Comments after Q4 2013 FY 2014 Comments Status • Growth in NA and emerging markets Market volumes Slightly positive • Europe developing sideways • Brazil slowing • Latin America and North America: positive • Europe: negative price Price/mix Slightly positive • Asia/Pacific: negative country mix • Range SEK -100m/+100m Raw material costs Flat • Higher marketing spend in NA and Asia R&D and Marketing Higher • Higher global R&D • Include global operations, overhead reduction Cost savings ~ SEK 1 bn and manufacturing footprint 4
YTD performance EBIT, 2014 vs. 2013 Cash flow after investments, 2014 vs. 2013 SEKm SEKm +27% +30% 1,600 4,000 +13% +55% 1,200 2,000 +4% +95% 800 0 Q1 Q2 Q3 400 -2,000 0 Q1 Q2 Q3 -4,000 2013 2014 2013 2014 5
Key drivers to performance • Higher profitability in Europe with contribution from productivity initiatives • Mix improvements through active product portfolio management • Sales and earnings in North America contribute strongly to the Group • Latin America and Asia/Pacific, solid performance in weak markets • Professional Products continues to show improved results • Earnings has continued to improve with a solid cash flow 6
Improved profitability EBIT, SEKbn 3.3 2.8 4.1% 3.9% Improved EBIT 17% YTD 2013 Volume Price/mix Currency Inflation Raw Investments Savings YTD 2014 materials efficiency 7
Operational recovery in Europe 8
European market stabilized, but not recovering from the downturn The European market is stabilizing Though there is M&A-activity, The European market is stabilizing Though there is M&A-activity, from the 2008-2009 downturn the market is still relatively fragmented from the 2008-2009 downturn the market is still relatively fragmented Europe YoY market growth % Some consolidation is taking place… 5% 0 -5% -10% -15% …but there are still 5 top players with less than 60% 2009 2010 2011 2012 2013 2014 of combined value share Source: Total Europe sell-in Major goods ex. Turkey, % change vs. same period last year Source: GfK MDA Sales value %, 25 CTR EU, 2014 H1
EMEA has restored profitability in a weak market EBIT Margin EBIT • Strong mix EBIT (SEK m) MARGIN (%) • Market improvement 500 5.5 demand • Product cost • Market prices 5.0 450 efficiency • Currency 4.5 • Cost savings 400 4.0 350 3.5 300 3.0 250 2.5 200 2.0 150 1.5 100 1.0 50 0.5 0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014
Focused Commercial Strategy Key focus areas • Strong brands Strongest Categories • Building on advantage in cooking Brands and built-in • Re-gaining premium position • Stronger sales channels FOCUS • Right-sized cost structure Strongest Value Categories Creating Built-in Kitchen Sales and Laundry Channels 11
Where we are heading 12
Our Desired Position Our Vision We will be the best appliance company in the world As measured by... ...our customers ...our employees ...our shareholders 13
Total Shareholder Return Electrolux B SIX Index Retun Total return (Annual return) (Annual return) 1 year 40% 15% 5 year 9% 14% 10 year 17% 11% 15 year 11% 7% 20 year 14% 12% 25 year 13% 11% Note: calculated TSR price as of 11/4/2014 14
Total Shareholder Return 12.0 % Cash flow productivity TSR 1.0 % Top line 14 % 0.5 % Margin CAGR 0.5 % Multiple *Data based on 1994-2014
Value creation model EBIT Margin >6% RoNA Growth >20% 4% Capital Turnover 4x 16
Our strategy Operational Innovation excellence Profitable growth People & Leadership 17
Profitable Growth 18
Electrolux has a leading position in most markets Electrolux Major Appliance (Value market share ranking) 19
Focus on organic growth 115,000 CAGR 2011-2014 ~5% 7% 110,000 5% Sales SEKm 3% 105,000 Growth % 1% 100,000 2011 2012 2013 2014 -1% 95,000 -3% -5% 90,000 Organic growth % Sales in local currencies, SEKm 20
Acquired growth 1919 1950 1984 1986 1994 2011 2014-15 21
Growth in Adjacent Products Coffe machines Electrolux Expressionist Collection: Filtration Kettles, toasters, mixers, blenders Consumables & Air Care Accessories Electrolux Masterpiece Collection: Stick mixer, food processor, blender Water Care Fabric Care 22
Innovation 23
A history of innovations and strong brands 1901 1919 1957 1984 1986 1994 1997 2004 2008 2012 2014 Electrolux Refribar US Launch China C5 AB Lux AB Electrolux Elektrolux to Zanussi White AEG 2nd gen Inspiration (Brazil) of Electrolux Launch Electrolux Consolidated Trilobite Range (Frigidaire) Ultraflex Launch of Electrolux Ergorapido Grand Termaline Cuisine 5000
Global innovation territories Benefit-driven innovation territories Culinary Health and Sustainable Effortless enjoyment well-being homes living 25
”Innovation Triangle” 1 Develop best-in-class products 2 “70% Preference Rule” 3 Marketing Design Reduce Time to Market 30% 4 R&D Continue investing in premium brands 26
Eight strategic brands 27
Accelerating innovation with relevant and differentiated offerings 28
Leading Innovation in Cooking Electrolux CombiSteam Oven AEG Maxi Sense Stove
Let the hob run the hood…you focus on cooking ! Hob²Hood Connected Range • A wireless functionality that automatically controls the hood according to the cooking activities on the hob • 1,400 connected possibilities
New product ranges launched in Small Domestic Appliances Electrolux Expressionist Collection Electrolux Masterpiece Collection
Ergorapido Range 2014 32
Ultraflex video 33
360 Consumer Experience Pre-Purchase Gathering inspiration and exploring possibilities Post-Purchase At-Purchase Setting up the appliance, Understanding the range using and maintaining it of potential options and making a final choice 34
Commercial Triangle MARKETING SIMPLE COLLABORATIVE Commercial Triangle PRODUCT SALES LINE FOCUSED 35
EMEA Electrolux CombiSteam Oven and Sousvide Launch TASTE FESTIVAL – ACROSS EUROPE BRAND WEBSITE STEAM OVEN COOKBOOK AND STEAM APP LA FAYETTE FOOD HALL COOKING ONLINE PRINT ADVERTISING SESSIONS BANNER STEAM OVEN STARTER KIT COOKING CLUB! VIP SECRET INGREDIENT ONLINE VIDEO CONTENT AND STEAM PR EVENT TASTE THEATRE IN STORE INTERACTIVE CATALOGUE SPECIAL RETAIL PLACEMENT POINT OF SALE TASTE BANNERS 36
Operational Excellence 37
Cost savings programs Savings from Savings from Savings from Overhead Global Manufacturing costs Operations footprint Savings from programs have full effect in 2016 38
Manufacturing footprint LCC transition in its final phase Percentage of Capacity in Low Cost Countries ~70% 51% 28% 2004 2008 2014est 39
Global Operations Previously communicated Manufacturing 20% 50% Modularization 1.0 30% Purchasing 40
People & Leadership 41
Passionate, Business-minded People Leaders at Business People Leader Leader Electrolux 42
Acquisition of GE Appliances 43
Our Desired Position Our Vision We will be the best appliance company in the world As measured by... ...our customers ...our employees ...our shareholders 44
Competitors with Aggressive Growth Plans KOREANS REGIONAL CHINESE #1 Household Appliances worldwide Aggressive growth plans from our competitors may impact the market picture in future
Global Market Leadership Product innovation Strong brands Local market strength Cost position Global scale
Overview of GE Appliances • 2013 revenue of USD 5.7bn Bloomington, Indiana - Refrigeration • Manufacturing footprint across 5 states – 12,000 employees Louisville, Kentucky - Laundry • State of the art distribution and logistics network - Dishwashers - Refrigerators • USD 1bn of investments in R&D, products - Water heaters and manufacturing Selmer, Tennessee LaFayette, Georgia • Innovative product portfolio - Built-in Refrigeration - Cooking Decatur, Alabama • Joint venture with 48.4% stake in Mabe - TM Refrigeration 47
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