Business overview Jonas Samuelson, President and CEO Q3 Highlights - - PowerPoint PPT Presentation

Q3 Results

presentation

2019

Business overview

Jonas Samuelson, President and CEO

Q3 Highlights

Improved price/mix

• Organic growth driven by price/mix
• Reduced volumes in lower price points and

in U.S. private label sales

• Market growth across most regions

Focus on innovation and efficiency

• Price increases offset headwinds from raw

materials/trade tariffs/currency

• Manufacturing transition costs in U.S. and

higher marketing investments

• Mix improvements driven by innovation
• NRI across the Group

EBIT IT a and m d margin gin

• 0.

• 0.

• 0.

• 32

• 2.1p

• excl. N

• 8.

• excl. N

• 0.8p

• 36

Innovation targeting outstanding consumer experience

• Kee

eepin ing lea leadership ip in in a a fast gr growing, ng, attr ttracti tive ca catego gory i in n Latin in Am Amer eric ica

— Consumer-driven product innovation meeting consumer needs — Electrolux is the largest player in high-capacity top load washing machines

• Prof
• fitab

able g grow

• wth t

throu

• ugh

targe geted d inno nnovation i n in n steam c am cook

• oking

— Electrolux opened up significant market opportunities in Europe by creating an affordable steam range — Since 2015, Electrolux has strengthened its leading position in steam ovens by 6 percentage points — 140,000 units in 2015 to 530,000 in 2018 with a strong increase in profit

Europe

Growth in targeted categories

• Product/brand mix improvements
• Price continued to increase
• Market share gain in premium segments
• Reduced volumes in lower price points

Solid earnings

• Good price/mix contribution
• Cost efficiency improved
• Increased marketing investments for
• ngoing product launches
• Currency headwind

EBIT IT a and m d margin gin

• 1.

• 6.

• 0.

• 3.

• 87.

• 6.0p

• 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% 2 200 007 2 200 008 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 2 201 018 201 019

North America

Increasing sales under own brand

• Lower private label sales partly offset by
• wn branded sales
• Continued price/mix improvements

Higher manufacturing costs

• Ramp-up costs for Anderson related to

running three facilities in parallel

• Positive price offset raw materials/tariffs
• Lower private label sales

• 0.

• 4.

• 0.

• 1.

• 20

• 0.

• 3.

• excl. N

• 38

• excl. N

• 1.

• 2.0%

EBIT IT a and m d margin gin

Starting up in Anderson

Moving into execution in Q3

• Transferring production
• Running 3 factories in parallel
• Manufacturing transition costs

Major step in automation

• ~35% automation level vs <10%

Ramp-up continues in Q4 and H1 2020

• Expected approx. USD -25m in

EBIT impact in Q4

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 2 201 018 201 019

Latin America

Strong organic growth

• Market growth in Brazil, Argentina

recovered slightly while Chile declined further

• Strong sales growth in Brazil
• Positive pricing

Solid execution in a volatile market

• Strong volume/price/mix contribution
• Price offset higher raw material costs but

not fully the increased currency headwind

• Provision reversals positively impacting

Q3 2019 and Q3 2018

• 12

• excl. N

• excl. N

• 0.

• 4.0%
• 2.0%

• 100
• 50

EBIT IT a and m d margin gin

Asia-Pacific, Middle East and Africa

Good sales execution in Australia

• Market growth in Southeast Asia, while

Middle East and Africa was flat and Australia remained soft

• Higher sales volumes in Australia
• Product launches fueling mix

Building position through new launches

• Increased marketing investments in

major product launches

• Currency headwinds, mainly AUD
• Volume/mix contribution

• 3.

• 0.

• 15

• 4.0%

• 11.

• excl. N

• 8.1%

• excl. N

• 1.

EBIT IT a and m d margin gin

Professional Products

Volume decline partly offset by price

• Weaker markets across most regions
• Lower U.S. Beverage sales and volumes

down in MEA

• Price increases
• Higher aftermarket sales

Investing in innovation

• Higher initial product costs for new

launches

• Increased investments in marketing/R&D
• Q3 initiated efficiency activities will more

than offset ongoing separation costs

EBIT IT a and m d margin gin

• 7.1%

• 9.0p

• 1.

• 55.

• 7.

• excl. N

• 11.

• excl. N

• 1.8p

Financial overview

Therese Friberg, CFO

Financial overview

SEKm EKm Net sa t sales Org rgani nic g c gro rowth wth Acq cquisi siti tions/ ns/divestm stments nts Curre rrency ncy Gro Gross o ss opera rati ting ng i inco ncome Gro Gross o ss opera rati ting ng m marg rgin n EBIT IT Ma Marg rgin Non- n-re recu curri rring ng i ite tems EBIT e IT excl.

• l. N

NRI Ma Marg rgin e n excl cl N NRI EP EPS, S, SEK SEK

• Op. ca

cash sh f flow a w afte ter i r inv nvestm stments nts 2.57 .57 4. 4.04

• 36.5%

.5% 2,59 ,594 1,3 1,352 52 91.9 1.9% 5.8 5.8%

• 0.8pt

pts 3.7% 7% 5.8 5.8%

• 2.1p

.1pts

• 41

412

• 1,7

1,756 56

• 32

32.3% 3% 5,3 5,340 5,8 5,811 11

• 8.1%

.1% 1,6 1,601 1,7 1,756 56

• 8.

8.8% 8% Q3 Q3 2 2018 18 Cha Change 32, 2,520 20 30,444 444 6. 6.8% 16. 6.4% 4% 19 19.1% .1%

• 2.7pts

5.8 5.8% 4.1% .1% 1.7 1.7pts 0.8% 8% 0.8% 8% 0. 0.0p 0pts 0.2% 2%

• 0.1%

.1% 0. 0.3p 3pts Q3 Q3 2 2019 19 1,18 1,189 4. 4.9%

Sales and EBIT Bridge

SEKm EKm Q3 Q3 2 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. Q3 2 3 2019 9

• excl. NRI

NRI* NR NRI* Q3 Q3 2 2019 Net et S Sales es 30,444 444 25 250 1,7 1,752 52 74 74 32, 2,520 20 32, 2,520 20 Gro Growth wth % % 0.8% 8% 5.8 5.8% 0.2% 2% 6.8% 8% 6.8% 8% EBIT IT 1,7 1,756 56 327 27

• 240

40

• 46

46

• 176

76

• 20

20 1,6 1,601

• 41

412 1,18 1,189 EBIT % IT % 5.8 5.8% 4. 4.9% 3.7% 7% Accre ccreti tion/ n/ Dilu Dilutio ion 1.0 1.0%

• 0.8%

8%

• 0.

0.4% 4%

• 0.

0.6% 6%

• 0.1%

.1%

Earnings contribution from price/mix

Gr Group EB EBIT % IT % a accretion +1.6% 6% Pro rofessi ssiona nal P Pro roducts cts Posit itiv ive Posi siti tive p pri rice ce 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 Improved ved m mix, p , price d e dec ecline e 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/mix ix Busi usiness A ss Are rea Price/ ce/Mi Mix Comme

• mments f

for

• r Q

Q3

Non-recurring items in Q3 2019

SEKm Efficiency & outsourcing Sales tax claim & Legal settlement Total Europe

• 752
• 752

North America

• 45
• 197*
• 242

Latin America

• 77

1,403** 1,326 Asia-Pacific, Middle East and Africa

• 398
• 398

Professional Products

• 122
• 122

Other, Group common costs, etc.

• 224
• 224

Total Group

• 1,618

1,206

• 412

Operating Cash Flow

SEKm EKm EBIT IT 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 Inv nvestm stments i nts in i n inta ntang ngible a and nd ta tang ngible a asse ssets ts C Chang nges i s in o n oth ther i r inv nvestm stments nts Cash sh f flow a w afte ter i r investm stments* ts* Q3 Q3 2 2019 19 1,18 1,189 2,0 ,057 57 1,2 1,280

• 1,7

1,717 17

• 21

214 2, 2,594 1,35 352

• 21

216

• 1,3

1,384 331 331 865 65 1,7 1,756 56 Q3 Q3 2 2018 18

Outlook and summary

Jonas Samuelson, President and CEO Therese Friberg, CFO

Market outlook FY 2019 per region

Slightly negative

North America Demand impacted by higher industry prices and tariff uncertainty

Slightly positive

Europe Demand driven mainly from Eastern Europe

Slightly positive

Latin America Brazilian market showing recovery

Slightly positive Slightly negative

Southeast Asia In general favorable markets, a bit softer

Australia Slower property market

Electrolux business outlook

Bus usiness o

• ut

utlook*, y-o-y Q3 Q3 2 2019 19 FY 20 Y 2019 Commen ents for t the e full y ll yea ear 2 2019 19 Volum lume/p /pric ice/m /mix ix Fav avorabl rable Fav avorabl rable Posit itiv ive contrib ibut utio ion from p pric ice and nd mi mix comb mbine ned w with t h targeted vol volume g grow

• wth

Raw aw mat ateri rial al costs & & t trad rade tari ariffs In Incre reas ase of SEK ~ EK ~0.3bn bn In Incre reas ase of SEK 1 EK 1.2-1.4 1.4bn Hi Higher co cost sts f s for st steel, ch chemica cals, s, an and t tari ariffs Net t cost e t eff fficiency** Un Unfav avorabl rable Un Unfav avorabl rable Highe her i inno nnovation/ n/ma marketing inv nvestme ments, ma manu nufacturing ng transit itio ion costs and in infla flatio ion, part artly o y offset by c by cost-ef efficien encies es Curre rrency e y effect*** *** SEK 1 EK 100m SEK EK -200m 00m Cap apex In Incre reas ase SEK ~ EK ~7bn bn

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, nts, m manu nufactu cturi ring ng tra transi nsiti tion co n costs a sts and nd i inf nflati tion, n, p partl rtly

• ffse

set b t by co cost- st-effici cienci ncies s Curre rrency ncy e effect* ct*** SEK SEK -1

• 100m

SEK SEK -5

• 500m

Vol Volume me/price/mi mix Favorabl able Favorabl able Posi siti tive co contri ntributi tion f n fro rom p pri rice ce a and nd mix co combine ned wi with th ta targ rgete ted v volume gro rowth wth Raw m w mate teri rial co costs & sts & tra trade ta tari riffs Increa ease o e of S f SEK ~ ~0.1b .1bn Increa ease o e of S f SEK ~ ~1.1b 1.1bn Higher co r costs f sts for ste r steel, ch chemica cals, s, and nd ta tari riffs s Cape pex Incre ncrease se SEK SEK ~ ~7bn Busi usiness o ss outl utlook*, *, y y-o-y Q4 20 2019 FY 20 Y 2019 Comments f ts for th r the f ful ull y year 2 r 2019

Path to profitable growth continuing

Profitable Growth

1

Stability & Focus

2

Sustainable Profitability

3

Targeted Growth

2016 2017 2018/ 2019

Strategic drivers executed in Q3:

• Price execution fully offsetting headwinds
• Mix improvements across business areas
• Starting production in Anderson, U.S.

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 Q3:

• Price execution fully offsetting headwinds
• Mix improvements across business areas
• Starting production in Anderson, U.S.