Capital Markets Day - Electrolux Group

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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