Electrolux Capital Markets Day 2013 - Presentation Keith McLoughlin, CEO

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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.

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Electrolux Capital Markets Day 2013 - Presentation Keith McLoughlin, CEO

  1. 1. Capital Markets Day Stockholm, November 13, 2013 Keith McLoughlin, President and CEO Tomas Eliasson, CFO
  2. 2. 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
  3. 3. The transformation Business update is paying off 3
  4. 4. 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
  5. 5. Q3 Highlights Continued good growth Q3 2012 Q3 2013 Sales  +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) 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
  6. 6. The transformation the What’s behind is paying Electrolux strategy? off 6
  7. 7. 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
  8. 8. Historic Shareholder Return Cash-flow productivity 13% Top line TSR 15% Margin 0.5% CAGR Multiple Source: BCG, 1991-2011 1% 0.5% 8
  9. 9. Key Financial Targets EBIT margin >6% ROIC Capital turnover Growth >20% 4% 4x 9
  10. 10. The transformation Where we are is paying off 10
  11. 11. A Consumer Marketing Driven Company Growth Innovation Consumer marketing driven company Operational Excellence People Manufacturing engineering company 11
  12. 12. Our Competitive Advantages Glocal presence Scandinavian heritage Consumer insight Wide product range Design People & culture Professional legacy Sustainability leadership
  13. 13. Major Appliances Eastern Europe Western Europe Core Emerging Value market share US Brazil Australia
  14. 14. Floor Care Eastern Europe Core Emerging Western Europe Value market share South East Asia US Brazil Australia
  15. 15. Brands Eight strategic brands 15
  16. 16. 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
  17. 17. Sustainability Leadership
  18. 18. Values and Foundation Values Foundation Passion for Innovation Customer Obsession Respect & Diversity Ethics & Integrity Drive for Results Safety & Sustainability 18
  19. 19. The transformation Where we are going is paying off 19
  20. 20. Vision Our Vision To be the best appliance company in the world As measured by... ...our customers ...our employees ...our shareholders 20
  21. 21. Mission and Value Creation Potential EBIT margin >6% ROIC Capital turnover Growth >20% 4% 4x 21
  22. 22. Four Strategic Pillars Profitable Growth Innovation – Products and Services – Brands and Design Operational Excellence – Sustainability People & Leadership 22
  23. 23. The transformation Profitable Growth is paying off 23
  24. 24. 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
  25. 25. Exposure to Emerging Markets Emerging markets % of Group sales 50 40 36% 30 20 10 15% 0 2006 2013 YTD 25
  26. 26. Revenue Diversification Today Mature markets Growth 2017 Mature markets 1-2% 50% 7-10% Emerging markets 64% Emerging markets 36% ~50% 26
  27. 27. The transformation Innovation is paying off 27
  28. 28. 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
  29. 29. Electrolux Grand Cuisine 29
  30. 30. Electrolux Gourmet Range • Partnership with Poggenpohl • Super-premium segment • Available through kitchen retailers only 30
  31. 31. 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
  32. 32. The transformation UltraOne is paying off Commercial 32
  33. 33. China Launch
  34. 34. Latin America The Blossom Refrigerator Mini Silent Washer 34
  35. 35. The transformation Mini Silent Washer is paying off Commercial 35
  36. 36. Brand Architecture EU NA LA AP PREMIUM MASS MARKET Regional brands Regional brands 36
  37. 37. 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
  38. 38. The transformation Electrolux Commercial is paying off 38
  39. 39. The transformation Operational Excellence is paying off 39
  40. 40. Operational Excellence Three main areas Manufacturing footprint Global Operations Overhead costs 40
  41. 41. 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
  42. 42. New Production Centers Eastern Europe Asia North America South America Middle East Africa • Reducing global manufacturing costs • Supporting strategic growth areas 42
  43. 43. Four Strategic Pillars Profitable Growth Innovation – Products and Services – Brands and Design Operational Excellence – Sustainability People & Leadership 43
  44. 44. The transformation Outlook is paying off 44
  45. 45. 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
  46. 46. 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

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