presentations electrolux capital markets day 2014 - jack truong
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The Electrolux GroupGroup
Jack TruongHead of Major Appliances, North AmericajCapital Markets Day, Charlotte, NC November 20, 2014
Electrolux Major AppliancesWell Established in North America
People
12kManufacturing
8Footprint
11mAnnual Shipments
14m12kIn 3 Countries
8Facilities
11mSquare Feet
14mUnits
.2
Electrolux Major AppliancesNorth American Results for 2013
Net Sales
4 9bEBIT
327mCapital
6 1Return on
41%1 2 3 34.9bUSD
327mUSD
6.7% EBIT Margin
6.1Turnover
41%Net Assets
g
1. Represents 29% Share of Sales for the Group2. Represents 51% Share of EBIT for the Group3. 12 month rolling average
3
Our Path to Sustainable, Profitable Growth
NA Market and
New Products and
Consumersand
Strategic Fit andand
Businessand
Innovationand
Customersand
Summary
4
North American Core Appliance Market2013 Shipments
Laundry7.6b$Refrigeration
Refrigeration 10.5m
p
7.6b$Refrigeration 8.8b$Laundry
16.4m
44 8M
23%
37%25 2b$
35% 30%
Cooking
44.8M
19%
5%
25.2b$
22%2%
Cooking 5.5b$Dishwashers
2.7b$
Freezers0.6b$
8.7m
Dishwashers 7.1m
Freezers 2.2m
16%5% 22%11%
Total Units Total Value USD (Mfg. $)
Source: AHAM US, AHAM Canada, EMA BI AnalysisCooking excludes microwaves; Refrigeration is 6.5 cubic feet and over 5
US Core Appliance MarketManufacturers Dollars
3.6 4.120
25
Billio
ns $
3.9 2.615
B
15.0 17.0 18.7 19.7
5
10
02008 2012 2013 2014 Est.
Retail Builder
Source: EMA BI Analysis, AHAM Manufacturers Dollar Valuation, TraQline
Continued Market Growth
Retail Builder
6
TraQline US Market Share by RetailerValue Share
Sept. 2014 YTD2012 2013
Lowe's 19.0%Sears
27 5%Sears
Lowe's18.7% Sears
27 5%
Lowe's19.2%
Home Depot 13.4%
Other
27.5%30.5%Home Depot11.4%
Best Buy
27.5%Home Depot13.2%
B t BOther
Best Buy 10%Dealers
19.1%
Other 10.9%
Best Buy8.1%
Dealers20.3%
Other11.0%
Best Buy10%Dealers
19.1%
11.0%
Best Buy includes Pacific Sales Data for 2012-2014 7
US Housing Market
600
800Single FamilyMulti-Family
sof s
tarts
400
600
Thou
sand
s
200
02008 2009 2010 2011 2012 2013 2014(e) 2015(e)
Single Family Growth -21% 3% -7% 25% 21% 1% 11%Multi Family Growth -55% 15% 36% 29% 28% 7% 7%
Source: McGraw-Hill 20148
Annual US Total Core Shipments
50
nts (
m)
+2.0% -0.7%
45
nual
Ship
men -5.6%
-9.9%+4% to +5%
+9 6%
35
40Ann 9 9%
-8.6%+4.6%
-4.2% -2.1%
+9.6%
30
35
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E t2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Est.
Source: AHAM, EMA BI Analysis.
Expectation of 2014 Annual US Core Shipments is +4% to +5%9
North America: Profitable Sales Growth
+7.2%5$ +52%$
EBITNet Sales
4.64.9
3.8
+6.8%
+1.2%4Billio
ns $
327
+436%
+52%
-8.5%
300
Millio
ns $
2
3216
236+436%
200
0
1
0
100
02012 2013 SEPT 2014 YTD
0 2012 2013 SEPT 2014 YTD4.7% 6.7% 6.3%EBIT % vs 6.9% PY
10
North America: Profitable Sales GrowthSeptember YTD – Core White Goods
$
p
5$
Net Sales EBIT
44.3 12.3
300
Millio
ns $
0 50.5 0.3
4Billio
ns $
+8.4% +4.6%+45.6% +4.7%+3 5%
147
213 22321.8
44.32003.0 3.3 3.40.5
2
3+45.6%+3.5%
147
0
100
0
1
02012 YTD 2013 YTD 2014 YTD
02012 YTD 2013 YTD 2014 YTD
4.9%* 6.5% 6.5%EBIT %
11*September 2011 YTD EBIT = -5m$ (-0.2%)
Our Path to Sustainable, Profitable Growth
NA Market New Products Consumers Strategic Fit a etand
Business
e oductsand
Innovation
Consumersand
Customers
Strategic Fit and
Summary
12
Delivering Consumer-Driven Innovation
State of the Art Design TechnologyConsumer Research
Develop Innovative, New Products Based on Consumers’ Future Needs
Electrolux Innovation Center Consumer Testing
13
Memphis, TNNew Electrolux Brand Wall Ovens
• Oven cavity leverages global modularization efforts
• Perfect-Taste™ Temp Probe and Perfect Turkey® features utilize technology from Electrolux Professional Products group
• Keep your kitchen smelling great with Fresh Clean™ technology
+4% Gross Margin Dollar Improvement14
Anderson, SCNew Frigidaire Gallery SpaceWise® Refrigeratorsg y p g
• First significant innovation in the Top Freezer Refrigerator Category in many years
• Uses modularization and innovation developed in Electrolux operations in Thailand
• Satisfies the #1 pain point for consumers: • Satisfies the #1 pain point for consumers: Not enough storage flexibility
• Preferred by consumers 4 to 1 over l di titleading competitor
+20% Gross Margin Dollar Improvement15
Solaro, Italy New Electrolux Brand Dishwashers
• North American wash system, European modular design and manufacturingg
• Achieve a professional level clean with 4x more water coverage
Target Wash Zones
S t llit S ™ A
+15% Gross Margin Dollar Improvement
SatelliteSpray™ Arm
16
Porcia, ItalyNew Electrolux Brand Compact Laundry p y
• Existing European product for new market opportunities in North Americapp
• Deep cleaning results with Perfect Steam™
• Fits more spaces with vent-less design p g
• Global product fulfills US growth category
+310% Gross Margin Dollar Improvement17
The Electrolux GroupGroup
John WeinstockSVP Marketing, North America
18
Our Path to Sustainable, Profitable Growth
NA Market New Products Consumers Strategic Fit a etand
Business
e oductsand
Innovation
Consumersand
Customers
Strategic Fit and
Summary
19
Our Brands Attract a Broad Group of ConsumersBroad Group of Consumers
Home• Latest technology• Showcases latest interior design trends
Appliances
Home• Well-run• Organized
Appliances Appliances• Enable great entertaining• Have high-tech appeal
Appliances• Save time• Get it right the first time
20
New Frigidaire Gallery 360° Marketing Campaign
21
New Frigidaire Gallery 360° Marketing CampaignNational Television Advertisingg
Featuring:• French Door RefrigeratorFrench Door Refrigerator• Double Wall Oven• OrbitClean® Dishwasher
#1 Appliance Ad Q3 2014
22
New Frigidaire Gallery 360° Marketing CampaignDigital Presenceg
NEW WEBSITE NEW MOBILE TOOLS
23
New Frigidaire Gallery 360° Marketing CampaignRetailer IntegrationRetailer Integration
PRINT ADVERTISING DIGITAL INTEGRATION
®FRIGIDAIRE GALLERY®
Sell Through +27% YTD
24
The Electrolux GroupGroup
Mark ChambersSVP Sales, North America
25
Our Path to Sustainable, Profitable Growth
NA Market New Products Consumers Strategic Fit a etand
Business
e oductsand
Innovation
Consumersand
Customers
Strategic Fit and
Summary
26
TraQline US Market Share by RetailerValue Share
Sept. 2014 YTD2012 2013
Lowe's 19.0%Sears
27 5%Sears
Lowe's18.7% Sears
27 5%
Lowe's19.2%
Home Depot 13.4%
Other
27.5%30.5%Home Depot11.4%
Best Buy
27.5%Home Depot13.2%
B t BOther
Best Buy 10%Dealers
19.1%
Other 10.9%
Best Buy8.1%
Dealers20.3%
Other11.0%
Best Buy10%Dealers
19.1%
11.0%
Best Buy includes Pacific Sales Data for 2012-2014 27
Long Standing Strategic Partnership
• Started selling Electrolux products 30+ years ago
• Electrolux has 1/3 of showroom plan-o-gram
• Both Electrolux and Frigidaire Brands are represented on the showroom floorrepresented on the showroom floor
• +6% CAGR (2011-2014)
Growing Sales, Gaining Share, Increasing Mix, Expanding Floor PresenceSource: EMA BI AnalysisSeptember Year to Date Results 28
Strategic Growth Partnership
• Growth: +56% sales and +2% share
• Higher Mix: Frigidaire Gallery +5% and Electrolux +1%
• Showroom Expansion: 350 Jumbo and Showroom Expansion: 350 Jumbo and 1,000 Bigfoot Floors
• + 55% sales growth HomeDepot.com
Growing Sales, Gaining Share, Increasing Mix, Expanding Floor PresenceSource: EMA BI AnalysisSeptember Year to Date Results 29
Strategic Growth PartnershipYear Over Year Sales Growth
Upright Freezers+193%
Counter Depth SxS+39%
French Door BM+196%
Front Load Laundry+55%
Wall Ovens+58%
Sales Growth in Platforms That Drive Better MixSource: EMA BI AnalysisSeptember Year to Date Results 30
New Home Construction MarketsWell Positioned for Growth
• Product available to the market in 48 to 72 hours
• Systems and infrastructure to provide “one stop shop” for builder inquiry
• People dedicated within the market to sell, train, and People dedicated within the market to sell, train, and maintain builder accounts
• Job site delivery and installation capabilities to targeted marketstargeted markets
31
New Home Construction MarketsComplementary Packages for All Housing Segmentsp y g g g
Valu
eV
St t H M U S i C t C t
Kitchen Packages Across New Construction Segments
Starter Homes Move Up Semi-Custom Custom
32
The Electrolux GroupGroup
Jack TruongHead of Major Appliances, North Americaj
33
Our Path to Sustainable, Profitable Growth
NA Business New Products Consumers Strategic Fit us essand
Market
e oductsand
Innovation
Consumersand
Customers
Strategic Fit and
Summary
34
Electrolux + GE Appliances: Strategic FitCreating a Stronger North American BusinessCreating a Stronger North American Business
Brand Portfolio• Trusted, iconic brands that resonate with consumers
and customers
Operational Opportunities• Optimizes economies of scale in manufacturing footprint
and sourcingand customers
Product Offering• Enhances R&D capabilities for continuous innovation• Expands product portfolio in all major appliance
and sourcing
Consumer and Customer Focus• Provides best-in-class distribution, delivery and
service network
2013 North American Sales (Est)
Expands product portfolio in all major appliance categories, from opening price points to premium • Increases digital capabilities and retail merchandising
468
1012
Billio
ns $
024
Combined… Whirlpool GE Electrolux Others35
Electrolux + GE Appliances: Strategic FitExpanding Our Consumer Reachp g
PrE rice
VALU
E
Value
PRICE36
Electrolux + GE Appliances: Strategic FitIntegration Planning Status
Day One Planning• Integration Management Office created • 30 dedicated integration leaders; 200+ team members engaged in planning process
14 k t l i f th i t ti t ti “D O ”
g g
• 14 work streams planning for smooth integration starting “Day One”
• USD 300m expected annual synergies Synergy Focus
p y g• Largest part of synergies expected in sourcing, operations and logistics• One time implementation costs of USD 300m
Stronger Together• “Best of both” acquisition approach• Cultural integration is foundational• Increasing consumer benefits through economies of scale
37
g g
Integration Planning On Track; Expected to Close During 201537
Summary: Electrolux North America Sustainable, Profitable Sales Growth,
• 2014 US market demand is growing 4-5%, expected to continue growing
• Adoption of new energy requirements for refrigeration and freezers will continue to have negative EBIT impact into the first half of 2015
• Well-positioned to participate in growing market segments– Proven consumer-driven innovation pipeline utilizing local and global capabilities to improve mix– Full-line supplier with strong brand portfolio– Full-line supplier with strong brand portfolio– Distributed in all key retailers in North America and able to serve new home construction markets– Electrolux + GE Appliances = Stronger Together
BUILD STRENGTH ON STRENGTH38
Factors Affecting Forward-looking Statements
This presentation contains “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 Such statements include among others the financial goals and targets of 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 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 and acquisition candidates and the integration of these opportunities with existing businesses, progress in achieving structural and supply-chain reorganization goals. For further information concerning these and other risks, and how they are managed, see the AB Electrolux 2013 Annual Report generally, and specifically beginning at page 76 thereof.
39
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