Q3 Results, Q3 Results, October 27, 2010 October 27, 2010 Hans Stråberg, Hans Stråberg, President and CEO President and CEO Jonas Samuelson, CFO Jonas Samuelson, CFO Peter Nyquist, SVP IR Peter Nyquist, SVP IR
Approaching a record year Target of 6% within reach � EBIT margin (YTD) at 6.1% Building foundation for growth � Potential acquisition of Olympic Group, Egyptian appliances company, will accelerate growth in emerging markets � Increased presence in Eastern Europe by acquisition of washing- machine factory in Ukraine � Increased exposure to emerging markets by strong organic growth in Asia/Pacific Continued strong mix � Frigidaire launch in North America � Launch phase initiated in Europe � Strong product launches in Latin America 2
Q3 Highlights EBIT (SEKm) Margin (%) � Net sales decreased by 2500 10 8,1 2.3% in comparable 7,5 8 2000 currencies 6 � EBIT amounted to 1500 4 SEK 1,977m 2 1000 – Raw-material headwinds 0 – Increased marketing 500 -2 spend 0 -4 2009 2010 – Mix improvement (SEKm) Q3 2010 Q3 2009 – Cost savings Sales 26,326 27,617 – Price promotions EBIT* 1,977 2,234 Margin 7.5% 8.1% *) EBIT excluding items affecting comparability 3
Q3 Operating cash flow 4 000 � Q3 cash flow reflects normal 3 500 seasonal pattern 3 000 � Stronger second half 2 500 – Increased production 2 000 – Build-up of inventories 1 500 1 000 – Higher sales 500 � Q309 reflected low production 0 and low inventory levels -500 � Higher level of investments -1 000 compared to last year -1 500 Operations (excl. Change in Investments Operating cash assets and liab.) assets and flow liabilities Q3, 2009 Q3, 2010 4
Olympic Group – accelerating growth in emerging markets � Increase our presence in emerging markets � Improve ability to grow in North Africa and the Middle East � OG is currently licensing our brands � Cost-competitive sourcing base Olympic Group Sales ~SEK 2.5bn EBITDA (adj.) >13% Market share, Egypt ~30% Market growth, Egypt >10% 5
Consumer Durables Europe EBIT (SEKm) Margin (%) � Lower sales 1500 12 – Decline in private label sales 9,9 10 9,0 – Price pressure � Strong EBIT improvement 1000 8 – Strong mix – increased sales 6 within built-in segment 500 4 – Cost savings – previous cost measures 2 – Positive one-off effect 0 0 � Increased marketing spend 2009 2010 – Launch of AEG-branded (SEKm) Q3 2010 Q3 2009 products in Europe Sales 10,210 11,322 � Strong results for floor-care EBIT 1,014 1,014 Margin 9.9% 9.0% products – mix improvement 6
Flat market in Europe; but Eastern Europe has started growing Quarterly comparison, year over year 10% 5% 0% -5% -10% -15% 2010 2006 2007 2008 2009 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 4% 1% 1% 5% 1% 1% -1% -5% -4% -4% -5% -8% -9% -9% -4% -2% 1% 0% 0% West. Europe 4% -15% -31% -30% -26% -17% -7% 5% 1% 5% East. Europe 1% 9% 6% 7% 14% 5% 5% 10% 6% 7
Consumer Durables North America EBIT (SEKm) Margin (%) � Market-demand decline 7,9 800 8 – Incentive program ended in Q2 � Net sales decreased by 4% 600 6 5,3 – Exited unprofitable volumes 400 4 � EBIT amounted to SEK 439m 200 2 – Higher raw-material costs – Price promotions 0 0 � Lower sales and operating -200 -2 income for floor-care 2010 2009 products (SEKm) Q3 2010 Q3 2009 Sales 8,353 8,869 EBIT 439 705 Margin 5.3% 7.9% 10
After three quarters of growth, the market in North America declined in the third quarter Quarterly comparison, year-over-year 15% 10% 5% 0% -5% -10% -15% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q2 2006 2007 2009 2010 2008 11
Consumer Durables Latin America EBIT (mSEK) Margin (%) � Stable market demand in 400 10,0 Brazil 8,3 – Rest of Latin America showed 300 7,5 strong growth 5,7 � Operating income amounted 200 5,0 to SEK 231m – Negative customer mix 100 2,5 – Increased raw-material costs – Increased marketing spend 0 0,0 2010 2009 (SEKm) Q3 2010 Q3 2009 Sales 4,069 3,813 EBIT 231 318 Margin 5.7% 8.3% 12
Consumer Durables Asia/Pacific EBIT (SEKm) Margin (%) � Australia: Market stabilization 300 14,0 and improved EBIT 12,1 12,0 250 – Improved product mix 10,0 – Positive currency impact 200 8,3 8,0 – Improved efficiency 150 – Increased raw-material costs 6,0 100 � Southeast Asia and China 4,0 – Market-share gain in strong 50 2,0 markets 0 0,0 – Positive impact of cost-cutting 2009 2010 measures (SEKm) Q3 2010 Q3 2009 Sales 2,192 1,982 EBIT 265 164 Margin 12.1% 8.3% 14
Professional Products EBIT (SEKm) Margin (%) � Food-service 250 15,0 13,5 – Increased market demand 200 12,0 – Higher capacity utilization 10,6 – Improved customer mix 150 9,0 – Cost savings 100 6,0 � Laundry products – Stabilization of market demand 50 3,0 – Improved cost efficiency 0 0,0 – Price increases 2009 2010 (SEKm) Q3 2010 Q3 2009 Sales 1,501 1,629 EBIT 202 173 Margin 13.5% 10.6% 15
Fourth quarter Top line development � Product mix; continues to have a positive impact � Market volumes; flat year-over-year � Electrolux volumes; still impacted from exiting low-profit business in NA � Price pressure; temporary price cuts driven by promotion in NA Cost development � Cost savings; positive impact from the restructuring program � Raw-material prices; still a negative year-over-year effect � Increased marketing and brand spend Take into account � Similar seasonal pattern as last year; slightly weaker Q4 16
Full year 2010 …one quarter remains, and I am confident that 2010 will be the year we reach our target of an operating margin of 6%. 17
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Factors affecting forward- looking statements Factors affecting forward-looking statements This presentation contains “forward-looking” statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Such statements include, among others, the financial goals and targets of Electrolux for future periods and future business and financial plans. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. These factors include, but may not be limited to the following: consumer demand and market conditions in the geographical areas and industries in which Electrolux operates, effects of currency fluctuations, competitive pressures to reduce prices, significant loss of business from major retailers, the success in developing new products and marketing initiatives, developments in product liability litigation, progress in achieving operational and capital efficiency goals, the success in identifying growth opportunities and acquisition candidates and the integration of these opportunities with existing businesses, progress in achieving structural and supply-chain reorganization goals. 19
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