Keith McLoughlin, President and CEO. Tomas Eliasson, CFO. Capital Markets
Day. Stockholm, November 13, 2013 ...
Capital Markets Day Stockholm, November 13, 2013
Keith McLoughlin, President and CEO Tomas Eliasson, CFO
Capital Markets Day, November 13, 2013 SESSION 1 09:00 – 10:00
Business update and strategy Getting behind the numbers
Keith McLoughlin, President and CEO Tomas Eliasson, CFO
10:00 – 10:30
Innovation & Modularization
Jan Brockmann, Chief Technology Officer
10:30 – 10:45
Break
SESSION 2 10:45 – 11:30
European Business
Jonas Samuelson, Head of Major Appliances Europe, Middle East and Africa
11:30 – 12:00
Operational Excellence
Frank Wagner, SVP Global Manufacturing Operations
SESSION 3 12:00 – 12:20
Q&A
12:20 – 13:00
Buffet lunch
SESSION 4 13:00 – 14:30
North American Business
SESSION 5
Q&A and Wrap-up
14:30 – 15:00
Summary and Conclusion
Jack Truong, Head of Major Appliances, North America - John Weinstock, VP, Marketing Major Appliances, North America - Mark Chambers, SVP, Sales Major Appliances, North America - Daren Couture, SVP, Operations Major Appliances, North America
Keith McLoughlin, President and CEO and Tomas Eliasson, CFO
The transformation Business update is paying off
3
What did we say about 2013? Comments after Q4 2012
FY 2013
Market volumes
Slightly positive
Growth in emerging markets and North America. Europe continues to be weak.
Price/Mix
Slightly positive
Prices maintained in NA. Europe continuous to be weak. LA positive.
Raw-material costs
Positive
Steel: Positive Plastics: Negative
R&D and marketing
Higher
Intensive launch period in 2013. Increased marketing spend in North America and China.
Comments
Status
Cost savings
~ SEK 1 bn
Global operations, overhead reduction and manufacturing footprint.
Consolidation of NA cooking
~SEK 300m
Costs for running two facilities when moving production from L’Assomption in Canada to Memphis in US
Higher
Overall increase and extra cost from entering new distribution channels in NA.
Logistics and warehousing
4
Q3 Highlights Continued good growth +4.9% organic growth North America, Asia Pacific, Small Appliances and Professional show strong growth Latin America slowing down EMEA flat – moving sideways Restructuring program launched, mainly EMEA Solid free cash flow
(SEKm)
Q3 2012
Q3 2013
Sales
27,171
27,258
EBIT*
1,423
1,075
5.2
3.9
Margin*
EBIT% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0%
2011
2012
2013
* Excluding items affecting comparability. Non-recurring items are excluded in all figures.
5
The transformation What’s behind the is paying Electrolux off strategy?
6
Total Shareholder Return
Total return
Electrolux B (Annual return)
SIX index retun (Annual return)
1 year
42%
33%
5 year
19%
8%
10 year
15%
14%
15 year
10%
7%
20 year
16%
13%
25 year
13%
12%
Note: Calculated from year-end 2012
7
Historic Shareholder Return
Cash-flow productivity
Source: BCG, 1991-2011
13%
Top line
1%
TSR 15%
Margin
0.5%
CAGR
Multiple
0.5% 8
Key Financial Targets
EBIT margin
>6% Capital turnover
ROIC
Growth
>20%
4%
4x
9
The transformation Where we are is paying off
10
A Consumer Marketing Driven Company
Growth Innovation
Consumer marketing driven company
Operational Excellence People Manufacturing engineering company
11
Our Competitive Advantages
Glocal presence
Scandinavian heritage
Consumer insight
Wide product range
Design
People & culture
Professional legacy
Sustainability leadership
Major Appliances Eastern Europe Western Europe
Core Emerging Value market share
US
Brazil
Australia
Floor Care Eastern Europe
Core Emerging
Western Europe
Value market share
South East Asia
US
Brazil
Australia
Brands
Eight strategic brands
15
Dual Business Model
Shared global strength
Benefits of scale in: • Manufacturing • R&D • Purchasing • Modularization • Common processes and shared services
Sharp customer focus
Premium
Focus on differentiated branded product offer Low cost, lean go-to-market Market set price
Mass 16
Sustainability Leadership
Values and Foundation
Values Foundation
Passion for Innovation
Customer Obsession
Respect & Diversity
Ethics & Integrity
Drive for Results Safety & Sustainability 18
The transformation Where we are going is paying off
19
Vision
Our Vision
To be the best appliance company in the world
As measured by...
...our customers
...our employees
...our shareholders
20
Mission and Value Creation Potential
EBIT margin
>6% Capital turnover
ROIC
Growth
>20%
4%
4x
21
Four Strategic Pillars
Profitable Growth
Innovation – Products and Services – Brands and Design
Operational Excellence
– Sustainability
People & Leadership
22
The transformation Profitable Growth is paying off
23
Sales Growth, Currency Adjusted 8,0%
110 000
7,0% 6,0% Growth %
5,0% 4,0% 3,0%
100 000
2,0%
1,0%
95 000
0,0% -1,0%
Sales SEKm
105 000
2011
2012
2013
-2,0%
90 000 Organic growth %
Note: Currency adjusted growth, rolling 12 months
Acquired growth %
Sales in fixed currencies, SEKm
24
Exposure to Emerging Markets Emerging markets % of Group sales 50
40
36%
30
20
10
15%
0 2006
2013 YTD 25
Revenue Diversification
Today
Mature markets
Growth
2017
Mature markets
1-2%
50%
7-10%
Emerging markets
64%
Emerging markets
36%
~50%
26
The transformation Innovation is paying off
27
Innovation Triangle
1 2 3 4
Develop best-in-class products
70% Preference Rule
Marketing
Design
Reduce Time to Market 30%
Continue investing in premium brands
R&D 28
Electrolux Grand Cuisine
29
Electrolux Gourmet Range
• Partnership with Poggenpohl • Super-premium segment • Available through kitchen retailers only
30
New Floor Care Products 2013
UltraOne
UltraSilencer
UltraPower
UltraCaptic
40%
Rapido
Ergorapido
Over 40% of vacuum cleaner sales expected from newly launched products in 2014 31
The transformation UltraOne is paying off Commercial
32
China Launch
Latin America The Blossom Refrigerator
Mini Silent Washer
34
The transformation Mini Silent Washer is paying off Commercial
35
Brand Architecture
EU
NA
LA
AP
PREMIUM
MASS MARKET
Regional brands
Regional brands
36
360 Consumer Experience
Pre-purchase Gathering inspiration and exploring possibilities
SHOP LIVE
At-purchase Post-purchase Setting up the appliance, using and maintaining it
Understanding the range of potential options and making a final choice
The transformation Electrolux Commercial is paying off
38
The transformation Operational Excellence is paying off
39
Operational Excellence
Three main areas
Manufacturing footprint
Global Operations
Overhead costs
40
Timeline LCC Production
Percentage of Capacity in LCC
65%
66%
2012
2013
62% 51%
53%
55%
2009
2010
43% 39% 28%
2004
31%
2005
2006
2007
2008
2011
41
New Production Centers
Eastern Europe
Asia
North America
South America
Middle East Africa
• Reducing global manufacturing costs • Supporting strategic growth areas 42
Four Strategic Pillars
Profitable Growth
Innovation – Products and Services – Brands and Design
Operational Excellence
– Sustainability
People & Leadership
43
The transformation Outlook is paying off
44
2014 Expectations Q4
FY 2014
Market volumes
Slightly Positive
Slightly Positive
Growth in North America and Asia Pacific, Europe flat, slowdown expected in Brazil.
Price/Mix
Slightly Positive
Slightly Positive
Positive Price/Mix: North America, Latin America and Australia. Negative Price: Europe. Negative Country Mix: Asia/Pacific.
Raw-material costs
Slightly positive
Flat
R&D and Marketing
Slightly higher
Slightly higher
Higher marketing spend in Asia and higher costs for Global R&D.
~SEK 250m
~ SEK 1bn
Includes global operations, overhead reduction and manufacturing footprint.
Higher
Flattening
Some carry-over effect in 2014.
Cost savings Logistics, warehousing etc.
Comments
In the range of -100 to +100.
45
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. 47