Business overview Jonas Samuelson, President and CEO New reporting - - PowerPoint PPT Presentation

Q4Results

presentation

2019

Business overview

Jonas Samuelson, President and CEO

New reporting structure

• Electrolux Board has decided to propose that an EGM is held to resolve on the distribution of Electrolux

Professional

• Intention is to list Electrolux Professional on Nasdaq Stockholm on March 23, 2020
• The comments in this presentation refers to the consumer business, ‘continuing operations’, exclusive of Electrolux

Professional, unless otherwise stated

Conti ntinu nuing ng o

• pera

rati tions ns Disco sconti ntinu nued opera rati tions ns Business Area Europe Business Area Professional Products Business Area North America Business Area Latin America Business Area Asia-Pacific, Middle East and Africa

Full year 2019 (continuing operations)

Intense year of transformation and innovation

• Product-mix improvements

— Well-received new ranges under a sharpened Electrolux brand

• Lower volumes, mainly in North America

— Lower private label sales and consolidation of refrigerators/freezer production

• Price increases

Lower earnings – mainly North America

• Lower volumes and manufacturing transition costs in North America
• Higher marketing investments, mainly in Europe and APAC MEA
• Price fully offset significant headwinds from raw material/tariffs/currency

Dividend proposal of SEK 2.4 bn, corresponding to DPS of SEK 8.50

Q4 Highlights (continuing operations)

Organic decline

• Lower North America volumes, mainly

manufacturing transition and weak market

• Positive price/mix
• Market growth across most regions

3 out of 4 BAs improved earnings

• Positive impact from price/mix

improvements

• Negative impact from consolidation of

manufacturing in North America, higher marketing cost and cost related to separation of Professional Products

EBIT IT a and m d margin gin

• 2.8

• 5.4

• 0.

• 0.

• 0.

• 42

• 2.2pts

• excl. N

• 40.

• excl. N

• 2.0p

Innovation targeting outstanding consumer experience

Reducing harmful allergens and pollutants in the home

— Electrolux is growing profitably in the air purification category — 3.5% CAGR estimated for global market for 2018-2024 — An installed base of air purifiers creates demand for filters throughout the product’s lifetime

Leveraging global presence to drive profitable growth

— Electrolux has transformed its laundry offering by leveraging global modularized product architectures — A profitable growth path in Asia- Pacific and North America is established and Europe has increased it’s contribution to

• perating margin by over 400%

Europe

Solid organic growth

• Volume/mix improvements
• Slight price increase
• Overall market demand increased

Improved operating income

• Increased value market shares in key

areas and positive aftermarket sales

• Favorable currency effect
• Increased marketing investments related

to launches

EBIT IT a and m d margin gin

• 0.

• 0.

• 1.

• excl. N

• excl. N

European Core Appliances Market

Total European shipments, quarterly unit comparison y-o-y

• 2
• 20%

0%

• 15

15%

• 1
• 10%

0%

• 5%

5% 0% 0% 5% 5% 10% 0% 2 200 009 2 201 010 2 201 011 2 201 012 2 201 013 2 201 014 2 201 015 2 201 016 2 201 017 2 201 018 2 201 019

North America

Significant sales decline

• Reduced volumes

— Manufacturing transition in Anderson — Weak market and destocking at a key U.S. customer — Lower sales of private label products

• Slight price increases

Manufacturing transition

• Lower volumes
• Manufacturing transition costs relating to

the consolidation

• Accounting adjustments from prior years

• 6%
• 4%
• 2%

• 600
• 400
• 200

EBIT IT a and m d margin gin

• 14

• 18

• 4.0%

• 14

• 2.4%

• 3.

• 519

• 5.9

• 8.

• excl. N

• 519

• excl. N

• 5.9

• 8.

U.S. Core Appliances Market

U.S. shipments, quarterly unit comparison y-o-y

• 2
• 20%

0%

• 15

15%

• 1
• 10%

0%

• 5%

5% 0% 0% 5% 5% 10% 0% 15% 5% 2 200 009 2 201 010 2 201 011 2 201 012 2 201 013 2 201 014 2 201 015 2 201 016 2 201 017 2 201 018 2 201 019

Latin America

Continued strong organic growth

• Growth in Brazil, Argentina recovered

slightly from low levels, while Chile declined due to unstable political situation

• Higher volumes and improved mix in Brazil
• Sales decline in Chile and Northern Latin

America due to weak market

• Price increases

Solid execution in a volatile market

• Strong organic contribution
• Continued headwind from raw material

and accelerated currency headwind

• Positive impact related to operational

taxes in Brazil

• 2%

• 100

EBIT IT a and m d margin gin

• 3.

• 10.

• excl. N

• excl. N

Asia-Pacific, Middle East and Africa

Softer markets

• Australia continued to decline, Southeast

Asia showed growth and Middle East and Africa slightly up

• Australia - lower volumes, improved mix
• SEA - price pressure
• Weakness in Middle East

Improved cost efficiency

• High traction on cost efficiency
• Favorable currency impact
• Investments in major product launches

continued

• Lower organic contribution

EBIT IT a and m d margin gin

• 4.

• 9.5

• 0.

• excl. N

• excl. N

Update Electrolux Professional

• Electrolux Board has proposed distribution of Electrolux Professional AB
• Information brochure published today

31 31 Janu nuary Information brochure 21 21 Fe Febru ruary ry Extraordinary General Meeting 10 M 0 Mar arch* * Prospectus 11 M Mar arch* Electrolux Professional Investor Day 23 M 3 Mar arch* Intended listing Nasdaq Stockholm

Discontinued operations (Electrolux Professional)

Softer market and separation impact

• Market growth, but at a slower pace
• Lower volumes due to

— Less chain roll-outs in the U.S. and lower sales in APAC

• Postponement of investment decision
• Heavy workload relating to separation
• Price increases contributed positively

Lower volumes and higher initial costs

• Lower volumes
• High initial costs for new product launches

and for start up as a standalone company

• Efficiency plan announced in Q319 is

expected to have full impact in H2 2020

EBIT IT a and m d margin gin

• 2.9

• 7.

• 12.6p

• 4.1p

• 1.8p

• 44.

• 5.2p

• excl. N

• 44.

• excl. N

• 5.2%

Financial overview

Therese Friberg, CFO

Financial overview (continuing operations)

Q4 Q4 2 2019 19 Q4 Q4 2 2018 18 Cha Change FY 2 2019 FY 2 2018 Cha Change 32,0 ,011 11 32, 2,021 21 0. 0.0% 0% 118 118,9 ,981 115,4 115,463 3. 3.0% 0%

• 2.8%

8% 2.6% 6%

• 5.4

5.4pts

• 1.0

1.0% 1.2 1.2%

• 2.

2.2p 2pts 0. 0.0% 0%

• 0.7%

7% 0.7pt pts

• 0.

0.3% 3% 0.4% 4%

• 0.7pt

pts 2.8% 8% 3.1% .1%

• 0.

0.3p 3pts 4. 4.3% 0.9 .9% 3.4p 4pts 5,7 5,756 56 5,7 5,718 18 0.7% 7% 19 19,7 ,799 20, 0,001 001

• 1.0

1.0% 18 18.0 .0% 17 17.9 .9% 0.1p .1pts 16. 6.6% 6% 17 17.3 .3%

• 0.7pt

pts 960 60 1,6 1,670

• 42.5%

.5% 3,18 ,189 4,17 ,176

• 23.6%

6% 3. 3.0% 0% 5.2 5.2%

• 2.

2.2p 2pts 2.7% 7% 3.6% 6%

• 0.9p

9pts

• 71

71 N/ N/A

• 1,3

1,344

• 1,3

1,343 0.1% .1% 960 60 1,59 1,599

• 40.

0.0% 0% 4,53 ,533 5,519 5,519

• 17

17.9 .9% 3. 3.0% 0% 5.0 5.0%

• 2.0pts

3.8% 8% 4. 4.8%

• 1.0

1.0pts

• Op. ca

cash sh f flow a w afte ter i r inv nvestm stments nts 2, 2,822 22 2,6 ,656 56 6. 6.3% 2, 2,28 280 2,646 646

• 13

13.8 .8% Net sa t sales Org rgani nic g c gro rowth wth EBIT m IT margin in e excl.

• l. N

NRI Non- n-re recu curri rring ng i ite tems EBIT IT EBIT m IT margin in Gro Gross o ss opera rati ting ng i inco ncome SEKm EKm Gro Gross o ss opera rati ting ng m marg rgin Acq cquisi siti tions/ ns/divestm stments nts Curre rrency ncy EBIT e IT excl.

• l. N

NRI

Sales and EBIT Bridge (continuing operations)

SEKm EKm Q4 20 2018

• excl. NRI

NRI* Vol Volume me/ Pri rice ce/Mi Mix Raw aw mat aterial al & & Ta Tarif iffs Curre rrency ncy** Net C t Cost st Effici ciency ncy Ac Acq/ q/*** Div Divest. Q4 20 2019

• excl. NRI

NRI* NR NRI* Q4 20 2019 Net et S Sales es 32, 2,021 21

• 96
• 969

955 55 5 32,0 ,011 11 32,0 ,011 11 Gro Growth wth % %

• 2.8%

8% 2.8% 8% 0. 0.0% 0% 0. 0.0% 0% 0. 0.0% 0% EBIT IT 1,59 1,599

• 189

89

• 14

14

• 3
• 33
• 40

403

• 960

60

• 960

60 EBIT % IT % 5.0 5.0% 3. 3.0% 0% 3. 3.0% 0% Accre ccreti tion/ n/ Dilu Dilutio ion

• 0.5%

.5% 0. 0.0% 0%

• 0.2%

2%

• 1.3

1.3% 0,0 ,0

Earnings contribution from price/mix

Lati tin A n Ameri rica ca Posit itiv ive Posit itiv ive p pric ice/mix ix Asi sia-Paci cific, c, Mi Middle E East a st and nd A Afri rica ca Neg egative Pri rice ce d decl cline ne Eu Europ

• pe

Posit itiv ive Posi siti tive m mix d dri riven b n by p pre remium p pro roducts a cts and nd b bra rand nds s Posi siti tive p pri rice ces s North rth A Ameri rica ca Posit itiv ive Posit itiv ive p pric ice, m mix ix d declin lined Busi usiness A ss Are rea Price/ ce/Mi Mix Comme

• mments f

for

• r Q

Q4 4 Gr Group EB EBIT % IT % a accretion +0. 0.7%

Sales and EBIT Bridge full year (continuing operations)

SEKm EKm FY 20 Y 2018 e excl. NRI NRI* Vol Volume me/ Pri rice ce/Mi Mix Raw aw mat aterial al & & Ta Tarif iffs Curre rrency ncy** Net C t Cost st Effici ciency ncy Ac Acq/ q/*** Div Divest. FY 20 Y 2019

• excl. NRI

NRI* NR NRI* FY 20 Y 2019 Net et S Sales es 115,4 115,463

• 1,2

1,204 5,0 5,062

• 340

40 118 118,9 ,981 118 118,9 ,981 Gro Growth wth % %

• 1,0

,0% 4, 4,3% 3%

• 0,

0,3% 3% 3. 3.0% 0% 3. 3.0% 0% EBIT IT 5,519 5,519 1,56 1,562

• 1,0

1,035

• 47

476

• 1,0

1,043 6 4,53 ,533

• 1,3

1,343 3,19 ,190 EBIT % IT % 4. 4.8% 3.8% 8% 2.7% 7% SEKm EKm FY 20 Y 2018 e excl. NRI NRI* Vol Volume me/ Pri rice ce/Mi Mix Raw aw mat aterial al & & Ta Tarif iffs Curre rrency ncy** Net C t Cost st Effici ciency ncy Ac Acq/ q/*** Div Divest. FY 20 Y 2019

• excl. NRI

NRI* NR NRI* FY 20 Y 2019 Net et S Sales es 115,4 115,463

• 1,2

1,204 5,0 5,062

• 340

40 118 118,9 ,981 118 118,9 ,981 Gro Growth wth % %

• 1,0

,0% 4, 4,3% 3%

• 0,

0,3% 3% 3. 3.0% 0% 3. 3.0% 0% EBIT IT 5,519 5,519 1,56 1,562

• 1,0

1,035

• 47

476

• 1,0

1,043 6 4,53 ,533

• 1,3

1,344 3,18 ,189 EBIT % IT % 4. 4.8% 3.8% 8% 2.7% 7% Accre ccreti tion/ n/ Dilu Dilutio ion 1.4 1.4%

• 0.9%

9%

• 0.

0.6% 6%

• 0.9%

9% 0. 0.0% 0%

Operating Cash Flow (Group)

Q4 Q4 2 2019 19 Q4 Q4 2 2018 18 FY 2 2019 FY 2 2018 960 60 1,6 1,670 3,18 ,189 4,17 ,176 1,16 1,161 941 41 6,557 ,557 5,0 5,069 3,150 ,150 2,40 400

• 4
• 499

99

• 780

80

• 2,649

649

• 2,373

73

• 6,

6,67 674

• 5,460

460 20 200 19 19

• 2
• 294

94

• 359

59 2, 2,822 22 2,65 656 2, 2,28 280 2, 2,646 403 403 508 08 1,15 153 1,004 004 3,226 226 3,163 63 3, 3,433 33 3,65 650 Cash sh f flow a w afte ter i r investm stments* ts* Inv nvestm stments i nts in i n inta ntang ngible a and nd ta tang ngible a asse ssets ts Chang nges i s in o n oth ther i r inv nvestm stments nts D/A a and nd o

• th

ther no r non- n-ca cash sh i ite tems Chang nge i in o n opera rati ting ng a asse ssets a ts and nd l liabiliti ties Cash sh f flow a w afte ter i r investm stments*, ts*, E Electro trolux ux P Pro rofessi ssional Cash sh f flow a w afte ter i r investm stments*, ts*, E Electro trolux ux SEKm EKm EBIT IT

Group key ratios full year

Ful ull year ar 2 2019 Gro Group Electro ctrolux* Electro ctrolux Pro rofessi ssiona nal Net income, SEKm 2,509 1,820 688 Earnings per share, SEK 8.73 6.33 2.40 Dividends per share, SEK 8.50

• Payout ratio, %

97%

• * Continuing operations

Illustrative capital structure (If separation of Electrolux Professional took place Dec 31, 2019)

31 1 Dec ecem ember er 2 2019 19 Electro ctrolux* Electro ctrolux P Pro rofessi ssiona nal Financial net debt

• 0.6

0.6 Lease liabilities 3.2 0.2 Net provisions for post-employee benefits 3.9 0.2 Net debt 6.5 1.0 Equity 19.9 2.7 Net debt/equity ratio 32.5% 37.8% Net debt/EBITDA 0.7 0.8

Outlook and summary

Jonas Samuelson, President and CEO Therese Friberg, CFO

Market outlook FY 2020 per region

Flat

North America Stable housing indicators, however, trade and political uncertainty

Slightly Positive

Europe Demand driven mainly from Eastern Europe

Positive

Latin America Market growth driven by Brazil

Slightly positive

Asia-Pacific, Middle East and Africa Growth mainly driven by Southeast Asia

Update on re-engineering and streamlining programs

Update cost savings

• Annual cost savings SEK ~3.5 bn with full

effect from 2024

• Savings from Anderson and Springfield

pushed one year to decrease capacity risk

• Other activities according to plan

Anderson update

• Loss Q1 2020 BA North America

— Lower volumes and higher costs

• Capacity constraints expected to be

gradually resolved during H1 2020

• Transition costs Q1 – Q3 2020

• 1

Electrolux business outlook

Net co t cost e st effici ciency ncy** Unfavorab able Unfavorab able Higher i r inno nnovati tion/ n/mark rketi ting ng inv nvestm stments a nts and nd m manu nufactu cturi ring ng tra transi nsiti tion co n costs, sts, p partl rtly o

• ffse

set b t by co cost- st- effi efficien encies es Curre rrency ncy e effect* ct*** SEK SEK -1

• 150m

SEK SEK -1

• 150m

Vol Volume me/price/mi mix Unfavorab able Favorabl able Mi Mix i impro rovements co nts combine ned wi with th ta targ rgete ted v volume g gro rowth wth Raw m w mate teri rial co costs & sts & tra trade ta tari riffs SEK SEK ~ ~0bn Dec ecrea ease o e of S f SEK 0 0- 0.5b .5bn Raw m w mate teri rial ta tailwi wind nd p partl rtly o

• ffse

set t by by t tar ariffs Cape pex Incre ncrease se SEK SEK ~ ~7bn Busi usiness o ss outl utlook*, *, y y-o-y Q1 2 202 020 FY 20 Y 2020 20 Comme

• mments f

for

• r t

the f full y year 2 202 020

Path to profitable growth continuing

Profitable Growth

1

Stability & Focus

2

Sustainable Profitability

3

Targeted Growth

2016 2017 2018/ 2019

Strategic drivers executed in Q4:

• 3 of 4 business areas improved earnings
• Consolidating U.S. fridge/freezer production
• Board propose that an EGM is held to resolve on

distribution of Electrolux Professional

• Value creation: solid cash flow and dividend proposal of

SEK 8.50 (8.50)

This presentation contains “forward-looking” statements that reflect the company’s current expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations prove to have been correct as they are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. These factors include, but are not limited to, changes in consumer demand, changes in economic, market and competitive conditions, currency fluctuations, developments in product liability litigation, changes in the regulatory environment and other government actions. Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, the company undertakes no obligation to update any of them in light of new information or future events.

Factors affecting forward-looking statements

Q&A

Path to profitable growth continuing

Profitable Growth

1

Stability & Focus

2

Sustainable Profitability

3

Targeted Growth

2016 2017 2018/ 2019

Strategic drivers executed in Q4:

• 3 of 4 business areas improved earnings
• Consolidating U.S. fridge/freezer production
• Board propose that an EGM is held to resolve on

distribution of Electrolux Professional

• Value creation: solid cash flow and dividend proposal of

SEK 8.50 (8.50)