electrolux capital markets day 2013 - presentation tomas eliasson, cfo
DESCRIPTION
Electrolux today at its capital markets day presents a status update on the Group’s strategy, focusing on actions to drive profitable growth and further improve operational excellence. President and CEO Keith McLoughlin and members of senior management will hold presentations, including an in-depth view of the operations in North America.TRANSCRIPT
Capital Markets Day
November 13, 2013
Q3 and YTD 2013 Financials Tomas Eliasson, CFO
2
The transformation
is paying off Financial Highlights
Sales and EBIT bridge Q3
3
SEKm
Q3 2012
Organic
Currency
translation
Currency
Transaction
Acquisitions
Q3 2013
Net sales 27,171 1,301 -1,214 - - 27,258
Growth % - 4.9% -4.6% - - 0.3%
EBIT 1,423 171 -71 -448 - 1,075
EBIT % 5.2% 13.1% 5.8% - - 3.9%
Accretion % 0.3% 0.0% -1.6% 0.0%
Sales and EBIT bridge Jan-Sep
4
SEKm
Jan-Sep 2012
Organic
Currency
Translation
Currency
Transaction
Acquisitions
Jan-Sep 2013
Net sales 80,809 3,768 -4,317 - - 80,260
Growth % - 4.9% -5.5% - - -0.7%
EBIT 3,442 408 -179 -840 - 2,832
EBIT % 4.3% 11.0% 4.2% - - 3.5%
Accretion % 0.3% 0.0% -1.0% 0.0%
5
The transformation
is paying off Currency Effects
Transactional Currency Effects
In general, earnings for Electrolux benefits from a:
Weak USD, EUR, HUF, THB, MXN and CNY (export countries)
Strong BRL, RUB, ARS, CAD, CHF, AUD and GBP (import countries)
In countries with large manufacturing and logistic centers
effects over time will to a large extent balance out due to
natural hedging.
6
Gross Currency Flows
Largest currency flows over 12 months
In total 80 significant currency pairs
Total flows around SEK 37bn
7
-6 000
-4 000
-2 000
0
2 000
4 000
6 000
8 000
10 000
BRL AUD CHF GBP RUB THB HUF CNY EUR USD
SE
Km
8
The transformation
is paying off Restructuring Update
Announced in Q3
Manufacturing footprint SEK 2.2bn
Overhead cost reduction SEK 1.2bn
Total savings end of 2016 SEK 1.8bn
Operational Excellence 2012-2016 Presented November 2011
10
Total annual savings: SEK 5.3bn
One-time costs: SEK 5.1bn
Full effect 2016
Global Operations
Saving 3.0bn
Cost 1.2bn
Overhead cost
Saving 0.7bn
Cost 0.7bn
Mfg
footprint
Saving 1.6bn
Cost 3.5bn
Operational Excellence 2012-2016 Savings and Cost Update Q3 2013
11
Total annual savings: SEK 5.9bn (5.3)
One-time costs: SEK 6.0bn (5.1)
Full effect 2016
Mfg
footprint
Saving 1.1bn
Cost 3.2bn
Global Operations
Saving 3.0bn
Cost 1.2bn
Overhead cost
Saving 0.7bn
Cost 0.7bn
Overhead cost
Saving 1.1bn
Cost 1.2bn
On-going, savings during
latter part of the period
45% done Majority done Starting now Status:
12
The transformation
is paying off Cash Flow
Cash Flow
13
-4 000
-3 000
-2 000
-1 000
0
1 000
2 000
3 000
4 000
2011 2012 2013
SE
Kb
n
Free Cash Flow Strong recovery in Q2
& Q3 after weak Q1
Net Operating Working Capital
14
8%
10%
12%
14%
16%
10 000 000
11 000 000
12 000 000
13 000 000
14 000 000
15 000 000
2010 2011 2012 2013
NO
WC
/Rev
en
ues %
NO
WC
SE
Kk
Total NOWC NOWC % NS 12 Months NOWC % NS 3 Months
15
The transformation
is paying off Understanding the
Income Statement
Understanding Electrolux (2012)
16
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Understanding Electrolux (2012)
17
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Understanding Electrolux (2012)
Revenues
110bn
Price
0% or 100%
Drop-through
Mix
20-50%
Volume
~20%
!
Understanding Electrolux (2012)
19
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Understanding Electrolux (2012)
20
Direct Material
45bn
50%
Raw Material
50%
Added Value
40%
Steel
30%
Plastics
30%
Other
Understanding Electrolux (2012)
21
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Understanding Electrolux (2012)
22
Sourced Products
18bn
Four major groups
Air conditioners
Microwave owens
Small Appliances
Cooker hoods
Understanding Electrolux (2012)
23
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Understanding Electrolux (2012)
24
Salaries and Other
Expenses
42bn
17bn
Personnel
22bn
Expenses
3bn
Depreciation
3-4% inflation
Understanding Electrolux (2012)
25
110bn
45bn
18bn
42bn
= 5bn
Revenues
Direct Material
Sourced Products
Salaries and Other
Expenses
Variable cost to sales 80%
Fixed cost to sales 15%
Summary of Major P&L Components
26
Price 0% or 100% drop-through(!)
Mix 20-50% drop-through
Volume ~20% drop-through
Total Sales SEK 110bn
Salaries & expenses SEK 42bn, 3-4% inflation (1.2bn-1.5bn)
Raw material SEK 45bn total material, raw material 50%
Sourced products SEK 18bn
Savings projects Cost programs/efficiency
Fixed cost changes Planned changes
Net organic Net before currency and acq
Currency ~SEK 37bn in gross currency flows
Total
27
The transformation
is paying off Summary
Key Points Financial Development
Earnings
North America more than compensates for EMEA deterioration
The rest is basically currency impacts
Over time currency impacts are mitigated
Cost reduction program/investigation, mainly for EMEA, initiated
Cash Flow performance strong in Q2 and Q3 after weak Q1
Going forward:
Growth according to strategy
Low fixed cost to sales (~15%) and high asset velocity (~4 times) provides flexibility
Cash Flow and Return on Net Assets
Restoring profitability in EMEA