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Electrolux Presentation SEB Enskilda Capital Goods Seminar 2011, Stockholm, Sweden
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How will Electrolux
create sustainable
economic value?
Keith McLoughlinPresident and CEO
2
What should Electrolux priority areas to
create further share holder values?
1. Return on Invested Capital
2. Growth
3. Current Reality
Today's agenda
3
EBIT
3
EBIT margin(excluding items affecting comparability)
0%
6%
2006 2007 2008 2009 2010
4
Capital Turnover
4
Capital Turnover
0,0
4,0
2006 2007 2008 2009 2010
5
Return on net assets
5
Return on net assets
0%
10%
20%
30%
2006 2007 2008 2009 2010
6
Growth
Net sales growth(in comparable currencies)
-5%
0%
5%
2006 2007 2008 2009 2010
6
Growth Target % 4
8
Sell-side Consensus 1-2%
9
Phases in Electrolux
development
Acquisitions &
Growth
Up until 1990’s
Consolidation
Up until early 2000’s
Globalization
Transformation
2000’s
Growth
Onwards
Today
10
First margin expansion
then profitable growth
Op
era
tin
g m
arg
in %
Growth %
0 1 2 3 4
8
7
6
5
4
3
2
1
Maximize
shareholder
value
11
How we accelerate growth
Selective acquisitions in strategically important categories and markets
Develop adjacent product opportunities
Growth in emerging markets
Value share growth in mature markets
Coming from heavy exposure to
mature markets…
12
13
…with tremendous growth
opportunity in emerging markets
14
Overview of CTI
Founded in 1905, CTI is the
leading manufacturer of large
household appliances in Chile
Listed on the Santiago Stock
Exchange, with controlling
shareholder Sigdo Koppers
Key subsidiaries: Frimetal and
Somela (listed)
Three production sites in Chile
and Argentina
Approx. 1,200 employees
Key Financials (SEK) (1)
2010, Y/e Dec
Sales 2.9 bn
EBIT 453 m
EBIT Margin 15.8 %
Net Profit (2) 331 m
CST
78.5%
Notes
1) Converted at average 2010 rate CLP/SEK 70.8
2) Pre minority interest
15
CTI Historical Financial
Development
Sales (USD M) (1)
EBITDA
Margin
Notes
1) Converted at average 2010 rate CLP/USD 509
14,8%
17,1%
16,0%15,5%
17,5% 17,2%
10,0%
12,5%
15,0%
17,5%
20,0%
0
125
250
375
500
2005 2006 2007 2008 2009 2010
Sales EBITDA Margin
CAGR (Sales) ~15%
16
Leading Market Positions
Market Position No. 1 in Chile with an
approximate 20% market
share
No. 1 in Chile
Market leader across all key
categories with a volume
market share of 36% in Chile
Strong position in cookers
No. 1 in refrigeration &
freezers in Argentina
Key Products Small domestic appliances Refrigerators, stoves, washing
machines and heaters
Refrigerators, freezers and
washing machines
% Total 2010 Revenue 48% 38% 14%
Brands
Company CTI Frimetal Somela
17
Strong synergies through
combined footprint
Maipú
Cerrillos Rosario
Curitiba
São Carlos
Juárez
Manaus
Snapshot of Combined Business
Combined sales in Latin America
of >SEK 20 billion on a pro forma
basis
Leading player in Brazil and
Southern Cone region
Market-leading brands and
complementary product portfolios
Seven manufacturing facilities
>12,000 employees
Strategic fit
Financial fit
Olympic Group a platform for
growth in Africa and Middle East
18
Commercial partnership with
Electrolux established in the
early 1980’s
19
Strong GDP per capita growth
12791504
1778
2173
2459
2779
0
500
1000
1500
2000
2500
3000
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Egypt GDP per capita (US$)
CAGR ~17%
Commercial partnership with Electrolux established in the early 1980’s
20
A solid result and growth
CAGR (Sales) ~6%
16,5%14,2% 16,8%
13,6%
0,0%
5,0%
10,0%
15,0%
20,0%
0
500
1000
1500
2000
2500
3000
2007 2008 2009 2010
Sales EBITDA Margin
Sales Olympic Group, MEGP
21
Strong position in Egypt and
surrounding countries
Market Position Distinct No 1 player in
Egypt and the largest
player in the MENA region
Distinct No 1 player in
Egypt and the largest
player in the MENA region
Leading player in
Egypt and in the MENA region
% Total Revenue 16% 31% 36%
Product segment Cookers Refrigerators Washing machines
Market share Egypt 32% 29% 46%
Delivering on our Growth
Strategy in Emerging Markets
22
Sales 2010:
~SEK 2.9 bn
Sales 2010:
~SEK 2.5 bn
23
Develop adjacent product
opportunities
24
Value share growth
“Best-in-Class” ProductsConsumer Insight
R&D
Phase-out
Product Creation Process
Intent Commercial Launch Process
Strategic
market plan
Consumer
opportunities
Primary
development
Concept
development
Product
development
Commercial
launch preparation
Launch
execution
Range
management
2011, First half
(SEKm) 2010 2011 %
Sales 52,444 47,579 -9.3%
in comparable currencies -0.4%
EBIT*) 2,803 1,441 -49%
Europe 952 467 -51%
North America 738 67 -91%
*) EBIT excluding items affecting comparability
What have we seen?
(SEKm) 2011 H1
Volumes +2%
Europe -4%
North America +1%
Raw materials - SEK 1.2 billion
Prices - SEK 650 million
-15%
-10%
-5%
0%
5%
10%
Quarterly comparison, year over year
2727
Growth in Eastern Europe but weak
demand in Southern Europe
E. Europe
W. Europe
2006 2007 2008 2009
6%
-4%
Q1
10%
-5%
Q4
5%
-1%
Q3
5%
1%
Q2
14%
1%
Q1
7%
5%
Q4
6%
1%
Q3
9%
1%
Q2
1%
4%
Q1
5%
-4%
Q2 Q3
-5%
4%
Q4
-8%
-15%
Q1
-9%
-31%
Q2
-9%
-30%
Q3
-4%
-26%
Q4
-2%
-17%
Q1
1%
-7%
2010
Q2
0%
1%
Q3
0%
5%
Q4
0%
13%
Q1
-2%
13%
2011
Q2
-2%
12%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Quarterly comparison, year-over-year
282828
North America continued to
decline in July
2006 2007 2008
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2009
Q2 Q3 Q4 Q1
2010
Q2 Q3 Q4 Q1
2011
Q2 July
YTD: -6%
Raw material exposure
Steel 45%
Plastics 27%
Other 28%
29
In 2010, Electrolux purchased raw materials for approximately SEK 20 billion
Steel
600
700
800
900
1 000
1 100
Dec 09 June 10 Dec 10 June 11
CRU US Midwest USD/t
30
Plastics
1500
2000
2500
3000
dec-09 jun-10 dec-10 jun-11
US Market USD/MT
31
Key External Drivers
Tough price environment
Price increases in North America, Europe and Latin America
Prices
Negotiations will start end of this year/beginning of next year
Headwind or tailwind?
Raw-material prices
Recovery in Southern Europe (Italy, France and Spain)?
Improved demand in North America; Discretionary and New Housing?
Volumes
Actions been taken
Global R&D
Marketing, Design, Engineering
Best-in-class products
Consumer insight process
Innovation/Mix
Global Operations
LCC production and sourcing
Leverage scale
Modularization
Productivity
Organically: Geographically, Segments, Channels
Acquisitions: Olympic Group, CTI
Growth
Exposure to
emerging markets % 35
35
36
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.
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