Report by the President and CEO « Previous page   Next page »




The decline in operating income and margin in 2001 was mainly due to:
  • Substantial costs for phase-in of a new generation of refrigerators in the US
  • Lower sales of outdoor products and air-conditioners as a result of cold weather and destocking at the retail level
  • Weak demand and unfavorable cost structure within components
Substantial costs for new-generation refrigerators in the US
The appliance operation in North America reported a marked drop in income as a result of lower volumes and substantial costs for the start-up and phase-in of a new generation of refrigerators at the plants in Anderson, North Carolina, and Greenville, Michigan.

Costs for factors such as additional staffing, overtime and factory rejects had a negative effect on operating income of about USD 100m (approximately SEK 1,050m). The situation gradually normalized during the fourth quarter.

Inventory cutbacks by retailers in North America for both indoor and outdoor products also had a negative impact on sales and income for Consumer Durables in North America.

Problems for Components
Income for Components declined from last year by almost SEK 400m and was negative. The decrease referred mainly to the compressor product area and was due to weak demand, downward pressure on prices, higher material costs, and costs related to adjustment of capacity and inventories.

Most of the Group’s compressor operations are in high-cost European countries and North America. We are also competing with companies in Asia and Latin America that have lower costs, and have benefited from changes in currency rates in recent years.

We are implementing an action plan to improve profitability in the compressor operation. Operating income is expected to improve gradually, but will still be negative in 2002.

Improved income for several operations
Higher operating income and margin were reported for major appliances in Europe and in other markets outside North America, as well as for food-service equipment and laundry equipment.

Continued good growth in both sales and income was also achieved by Professional Outdoor Products.


Sales and income 2001 Change 2000

Net sales, SEKm

 135,803 9% 124,493

Operating income, excluding items affecting comparability, SEKm

 6,422 –20% 8,050
Margin, % 4.7 6.5

Income after financial items, excluding items affecting comparability, SEKm

 5,356 –23% 6,978
Margin, % 3.9 5.6

Net income per share, excluding items affecting comparability, SEK

 11.10 –16% 13.25
Value creation, SEKm 262 –2,161 2,423



Negative factors in 2001
  • Lower demand in most product areas for full year
  • Poor season for outdoor products, due to cold weather
  • Destocking at retail level
  • Negative trends for price and mix, mainly within Consumer Durables
  • Marked drop in income for major appliances in North America, due to costs for phase-in of new-generation refrigerators
  • Sharp decline in income for the Components product line
Positive factors in 2001
  • Good growth in volume and higher income for major appliances in Europe
  • Higher sales and income for Professional Indoor Products, excluding Components
  • Continued positive trends for sales and income for Professional Outdoor Products
  • Lower costs for materials and semi-finished goods
  • Strong improvement in cash flow and net debt/equity ratio
  • Continued streamlining of Group structure

Strong improvement in cash flow and net debt/equity ratio
Despite difficult business conditions in 2001, both cash flow and the net debt/equity ratio improved substantially over last year. We covered our cost of capital, and we created value.




Cash flow and working capital in relation to sales have improved substantially since 1997.



Net debt in relation to equity has been reduced significantly over the last five years. 		      
Since 1998, the Group has covered its cost of capital, which is calculated at 14% before tax.



« Previous page   Next page »


Print