First quarter report, 2001

FIRST QUARTER REPORT, 2001 -Operating income down 10% from strong first quarter last year, net income per share declines 5%- Amounts in SEKm, First First Change unless otherwise stated quarter quarter 2001 2000 Net sales 33,670 31,229 8% Operating income1) 1,852 2,050 -10% Margin, % 5.5 6.6 Income after financial 1,499 1,786 -16% items Margin, % 4.5 5.7 Net income per share, 3.10 3.25 -5% SEK2) Value creation3) 290 691 -401 Return on equity, % 16.2 18.4 1) Operating income for 2000 includes a capital gain of SEK 241m and a provision in the same amount for restructuring within Professional Indoor Products. 2) Based on an average of 341.1 million shares after buy-backs. 3) See definition on page 3. · Lower demand in US, continued market growth in Europe, Latin America and Asia · Lower operating income for Consumer Durables and Professional Indoor Products · Higher income for Professional Outdoor Products · Previously announced structural changes and cost adjustments proceeding according to plan · Acquisition of Email, Australia's largest appliance company, finalized in February Net sales and income Net sales for Electrolux in the first quarter of 2001 rose to SEK 33,670m, as against SEK 31,229m for the same period last year. This corresponds to an increase of 8%, of which 3% refers to changes in Group's structure, 8% to changes in exchange rates, and -3% to price/mix/volume. Operating income declined by 10% to SEK 1,852m (2,050), corresponding to 5.5% (6.6) of sales, and income after financial items decreased by 16% to 1,499m (1,786), corresponding to 4.5% (5.7) of sales. Net income declined by 10% to SEK 1,066m (1,188), which corresponds to SEK 3.10 (3.25) per share. The above income figures for 2000 include a capital gain of SEK 241m on the divestment of the operation in professional refrigeration, and a provision in the same amount for restructuring within Professional Indoor Products. Changes in exchange rates during the period, i.e. in terms of both transactions and translations, had a slight positive effect on income after financial items. Net financial items were unfavorably impacted by increased net borrowings referring to share buy-backs and the acquisition of Email, as well as by negative translation effects for interest costs on dollar loans, which account for a large proportion of Group debt. Cash flow The cash flow generated by operations amounted to SEK -899m (-2,543), after adjustment for exchange-rate effects. The improvement is traceable mainly to a change in working capital. Cash flow inclusive of investments declined as a result of the acquisition of Email, while the comparative figure for last year include the proceeds on divestment of the operation in professional refrigeration equipment. Cash flow is normally weak during the first half of the year as a result of a build-up of inventories and accounts receivable referring to a seasonal increase in sales of outdoor products, room air-conditioners, refrigerators and freezers. Equity and net debt/equity ratio Equity as of March 31, 2001 amounted to SEK 28,417m (26,390), which corresponds to SEK 83.30 (72.10) per share. The return on equity was 16.2% (18.4). Average net assets for the period increased to SEK 42,760m (37,510), mainly as a result of the consolidation of Email and exchange rate effects referring to translation of the financial statements into Swedish kronor. The return on net assets was 17.3% (21.9). Net borrowings increased to SEK 22,797m (15,539), principally due to the acquisition of Email, and the share buy-back program that was started in June 2000. The net debt/equity ratio increased to 0.78 (0.57). Liquid funds at the end of the period amounted to SEK 10,956m (8,552). Value creation The total value created during the first quarter of 2001 amounted to SEK 290m (691), which was SEK 401m less than in the same period last year. The decline refers mainly to a decrease in operating margin to 5.5% (6.6) due to lower sales in the US, downward pressure on prices, and higher costs for materials. A substantial downturn in income for the components product line also had a negative impact. The capital turnover rate decreased to 3.02 from 3.22 in the previous year. The table below shows value creation by business area. SEKm First quarter First quarter Change 2001 2000 Consumer Durables Europe 133 273 -140 North America 266 466 -200 Rest of the world -256 -327 71 Total Consumer Durables 143 412 -269 Professional Products Indoor 108 205 -97 Outdoor 230 212 18 Total Professional Products 338 417 -79 Common group costs, etc. -191 -138 -53 Total 290 691 -401 Value created is defined as operating income excluding items affecting comparability, less a weighted average cost of capital (WACC) on average net assets. The Group's WACC is calculated at 14% before tax. [REMOVED GRAPHICS] Operations by business area Consumer Durables The market for core appliances1 in Western Europe increased in volume during the first quarter by about 1% compared with the same period last year. The Group's European operation within Electrolux Home Products reported good growth in volume, particularly with large key accounts. Operating income was lower than last year, however, mainly as a result of higher costs for materials. The devaluation of the Turkish lira also had an adverse effect on income as compared with last year. The US market declined in volume by about 7% for core appliances1, and about 8% for major appliances2. Sales of appliances for Electrolux Home Products, North America were lower than last year and operating income declined considerably. Demand for core appliances in Brazil showed an upturn, and the Group achieved strong growth in sales volume. Operating income improved substantially over last year and was positive. The Group also achieved good sales growth for core appliances in China and ASEAN countries, while sales in India were lower than last year. Overall, operating income for appliance operations outside Europe and North America improved substantially but was still negative excluding the newly acquired Email operation which was consolidated as of February 1. The market for floor-care products declined somewhat in volume in both Europe and US. The Group achieved higher sales volume in Europe, while sales for the US operation were lower than last year. Overall, operating income for the floor-care product line was unchanged with a somewhat lower margin due to an unfavorable product mix. In outdoor products for the consumer market, the season started late due to cold weather in both Europe and the US. Sales for the Group's European operation declined and operating income showed a marked downturn. In the US, Group sales of outdoor products increased over the previous year and operating income improved. Total sales for the Consumer Durables business area were higher than in the first quarter of last year. Operating income and margin declined, however. Professional Indoor Products Demand for food-service equipment in Europe was more or less unchanged. Group sales increased in several product areas, but declined for baking equipment. Operating income was somewhat lower than last year. Laundry equipment reported somewhat higher sales for comparable units. Operating income improved, mainly as a result of the divestment of a loss making operation in the second half of 2000. Demand for absorption refrigerators and other equipment for the recreational vehicle industry increased in Europe but declined in North America. Total sales for the Group's leisure-appliances product line increased over last year, and operating income improved. Demand for compressors was lower than last year, particularly in the US. Overall, the Group achieved somewhat higher sales volume. Operating income showed a marked decline as production volumes were adjusted in order to reduce inventories. Total sales for Professional Indoor Products increased over 2000. Operating income and margin decreased, however. Professional Outdoor Products Demand for professional chainsaws showed an upturn in the US, but declined considerably in Europe. In 2000 the European market showed strong growth following storms at the beginning of the year. Total sales of chainsaws for the Group were lower than last year. In lawn and garden equipment pre-seasonal deliveries for the Group were higher than in 2000. Sales of power cutters and diamond tools declined in the US, but rose in other markets. Overall, sales for Professional Outdoor Products showed good growth over last year. Operating income improved, but with a lower margin due to a change in the sales mix with lower volumes of chainsaws. Major changes in the Group The acquisition of the household appliance division of Email Ltd. in Australia was finalized as of February 19, 2001. Email is Australia's largest producer of major appliances, with annual sales of approximately SEK 4,700m and about 4,500 employees. The company has a market share of almost 60% in Australia and close to 30% in New Zealand. The final purchase price was approximately AUD 440m (approx. SEK 2,270m). Email was consolidated as of February 1 and is included in sales for the first quarter 2001 in the amount of SEK 780m, SEK 51m in operating income and SEK 2,166m in net assets. At the end of March 2001, the Group signed an agreement to sell 90% of the shares in its Italian finance company Veneta Factoring S.p.A., which will reduce net borrowings by approximately SEK 2,700m. Ongoing structural changes and cost adjustments The structural changes and cost adjustments announced previously this year are proceeding according to plan. They refer mainly to an alignment of the organization for major appliances in both Europe and North America, consolidation of the production system for floor-care products in Europe, and rationalization of the Group's IT structure. Of the provision of SEK 883m that was made during the fourth quarter of 2000, approximately SEK 230m had been utilized as of March 31, 2001. The implemented changes refer primarily to major appliances in Europe and North America, and have involved employee cutbacks of approximately 800. These changes have generated savings of approximately SEK 60m. Parent company Net sales for the parent company, AB Electrolux, for the first quarter of 2001 amounted to SEK 1,808m (1,768). Income after financial items was SEK -81m (2,324), including dividends from subsidiaries in the amount of SEK 400m (2,592). Capital expenditure was SEK 32m (41). Liquid funds at the end of the period amounted to SEK 4,500m (2,111) as against SEK 2,701m at the start of the year. Dividend On April 24, 2001 the Annual General Meeting of AB Electrolux authorized an increase in the dividend for 2000 to SEK 4.00 (3.50) per share, for a total dividend payment of SEK 1,365m (1,282). Repurchase of own shares The Annual General Meeting in 2000 authorized a program for repurchase of up to 10% of the total number of shares during the period prior to the next AGM in 2001. As of December 31, 2000 the Group had repurchased 25,035,000 B-shares for a total of SEK 3,190m, corresponding to an average price per share of SEK 127.40. No shares were repurchased in the first quarter of 2001. The Group thus still owns 6.84% of the total number of shares, with a total par value of SEK 125m. The Group has no voting rights for these shares. The total number of shares in the Company amounts to 366,169,580. On April 24, 2001 the AGM renewed authorization for the Board to buy and sell own A- and/or B-shares up to 10% of the total number of shares, i.e. 3.16% of the total may be repurchased. The authorization covers the period up to the next AGM. The buy-backs will be implemented with due consideration for the Group's target of a net debt/equity ratio not exceeding 0.80. Outlook for the rest of the year The outlook for the year remains unchanged, which means that the Group should achieve an improvement in operating income, exclusive of items affecting comparability, and in value created for the full year 2001. Stockholm, April 25, 2001 Michael Treschow President and CEO Factors affecting forward-looking statements This report 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 or targets of Electrolux for future periods and future business and financial plans. Actual results may differ materially from these goals and targets due to a variety of factors. These factors include, but may not be limited to the following; the success in developing new products and marketing initiatives, 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, competitive pressures to reduce prices, significant loss of business from major retailers, consumer demand, effects of current fluctuations and the effect of local economies on product demand. Consolidated income statement, SEKm First First Full quarter quarter year 2001 2000 2000 Net sales 33,670 31,229 124,493 Cost of goods sold -25,895 -23,400 -93,549 Selling expense -4,333 -4,247 -17,092 Administrative expense -1,536 -1,537 -5,585 Other operating income/expense -54 5 -217 Items affecting comparability - - -448 Operating income* 1,852 2,050 7,602 Margin, % 5.5 6.6 6.1 Financial items, net -353 -264 -1,072 Income after financial items 1,499 1,786 6,530 Margin, % 4.5 5.7 5.2 Taxes -487 -620 -2,121 Minority interests in net income 54 22 48 Net income 1,066 1,188 4,457 * Including depreciation in the -985 -923 -3,810 amount of: Net income per share, SEK 3.10 3.25 12.40 Number of shares after buy backs, million 341.1 366.2 341.1 Average number of shares after buy backs, 341.1 366.2 359.1 million Consolidated balance sheet, SEKm March 31 March 31 Full 2001 2000 year 2000 Assets Fixed assets 33,228 27,095 29,680 Inventories, etc 20,697 16,940 16,880 Accounts receivable 28,486 26,083 23,214 Other receivables 9,104 5,903 9,093 Liquid funds 10,956 8,552 8,422 Total assets 102,471 84,573 87,289 Equity and liabilities Shareholders' equity 28,417 26,390 26,324 Minority interests 747 813 810 Interest-bearing liabilities and provisions 33,753 24,091 25,398 Non-interest-bearing liabilities and 39,554 33,279 34,757 provisions Total equity and liabilities 102,471 84,573 87,289 Contingent liabilities 1,305 - 1,325 Change in equity, SEKm First First Full quarter quarter year 2001 2000 2000 Opening balance 26,324 25,781 25,781 Dividend payment - - -1,282 Repurchase of shares - - -3,193 Translation differences 1,027 -579 561 Net income 1,066 1,188 4,457 Closing balance 28,417 26,390 26,324 Consolidated cash-flow statement, SEKm First First Full quarter quarter year 2001 2000 2000 Operations Income after financial items 1,499 1,786 6,530 Depreciation according to plan charged 985 923 3,810 against above income Provisions and capital gains/losses -232 -21 628 Taxes paid -405 -151 -2,329 Changes in operating assets and -2,746 -5,080 -2,540 liabilities Cash flow from operations -899 -2,543 6,099 Investments Investments in/divestments of operations and -2,274 1,170 180 trade mark Capital expenditure -1,053 -924 -4,423 Other 143 327 876 Cash flow from investments -3,184 573 -3,367 Dividend - - -1,282 Repurchase of shares - - -3,193 Cash flow after dividends -4,083 -1,970 -1,743 Change in interest-bearing 6,728 351 -422 liabilities Total cash flow 2,645 -1,619 -2,165 Liquid funds at beginning of year 8,422 10,312 10,312 Exchange-rate differences referring to liquid funds -111 -141 275 Liquid funds at end of period 10,956 8,552 8,422 Change in net borrowings Total cash flow excl. change in loans -4,083 -1,970 -1,743 Net borrowings at beginning of year -16,976 -13,423 -13,423 Exchange-rate differences referring to -1,738 -146 -1,810 net borrowings Net borrowings at end of period -22,797 -15,539 -16,976 Net sales by business area, SEKm First First Full quarter quarter 2000 year 2001 2000 Consumer Durables Europe 10,901 10,308 42,704 North America 12,308 12,351 46,581 Rest of the world 3,233 1,951 9,203 Total Consumer Durables 26,442 24,610 98,488 Professional Products Indoor 4,584 4,398 17,561 Outdoor 2,525 2,140 8,039 Total Professional Products 7,109 6,538 25,600 Other 119 81 405 Total 33,670 31,229 124,493 Operating income by business area, SEKm First First Full quarter quarter 2000 year 2001 2000 Consumer Durables Europe 447 566 2,179 Margin, % 4.1 5.5 5.1 North America 807 928 3,577 Margin, % 6.6 7.5 7.7 Rest of the world 45 -71 23 Margin, % 1.4 -3.6 0.2 Total Consumer Durables 1,299 1,423 5,779 Margin, % 4.9 5.8 5.9 Professional Products Indoor 328 423 1,577 Margin, % 7.2 9.6 9.0 Outdoor 331 309 1,153 Margin, % 13.1 14.4 14.3 Total Professional Products 659 732 2,730 Margin, % 9.3 11.2 10.7 Common Group costs, etc. -106 -105 -459 Items affecting comparability - - -448 Total 1,852 2,050 7,602 Value creation, SEKm First First Full quarter quarter year 2001 2000 2000 Consumer Durables Europe 133 273 986 North America 266 466 1,669 Rest of the world -256 -327 -1,056 Total Consumer Durables 143 412 1,599 Professional Products Indoor 108 205 713 Outdoor 230 212 756 Total Professional Products 338 417 1,469 Common Group costs, etc. -191 -138 -645 Total 290 691 2,423 Key ratios First First Full quarter quarter year 2001 2000 2000 Net income per share, SEK1) 3.10 3.25 12.40 Return on equity, %2) 16.2 18.4 17.3 Return on net assets, %3) 17.3 21.9 19.6 Net debt/equity ratio4) 0.78 0.57 0.63 Capital expenditure, SEKm 1,053 924 4,423 Average number of employees 87,800 88,700 87,128 1) Average number of shares for the period after buy-backs is 341.1 million. 2) Annualized net income, expressed as a percentage of opening equity. 3) Annualized operating income, expressed as a percentage of average net assets. 4) Net borrowings, i.e. interest-bearing liabilities less liquid funds, in relation to adjusted equity. The latter is defined as equity including minority interests. Quarterly figures Net sales and income, per quarter 1st qtr 2nd qtr 3rd qtr 4th qtr Full year Net sales, SEKm 2001 33,670 2000 31,229 34,199 29,644 29,421 124,493 Operating 2001 1,852 income, SEKm Margin,% 5.5 2000 2,050 2,453 1,830 1,269 7,602 Margin,% 6.6 7.2 6.2 4.3 6.1 20001) 2,050 2,453 1,830 1,717 8,050 Margin, % 6.6 7.2 6.2 5.8 6.5 Income after 2001 1,499 financial items, SEKm Margin,% 4.5 2000 1,786 2,285 1,504 955 6,530 Margin,% 5.7 6.7 5.1 3.2 5.2 20001) 1,786 2,285 1,504 1,403 6,978 Margin, % 5.7 6.7 5.1 4.8 5.6 Net income, SEKm 2001 1,066 2000 1,188 1,510 1,018 741 4,457 20001) 1,188 1,510 1,018 1,046 4,762 Net income per 2001 3.10 share, SEK 2000 3.25 4.10 2.85 2.20 12.40 20001) 3.25 4.10 2.85 3.05 13.25 Value 2001 290 creation, SEKm 2000 691 1,040 406 286 2,423 1) Exclusive of items affecting comparability, which in 2000 amounted to SEK -448m. Net sales by business area, per quarter, SEKm Consumer Durables 1st qtr 2nd qtr 3rd qtr 4th qtr Full year Europe 2001 10,901 2000 10,308 10,126 10,832 11,438 42,704 North America 2001 12,308 2000 12,351 14,640 10,484 9,106 46,581 Rest of the world 2001 3,233 2000 1,951 2,259 2,276 2,717 9,203 Total 2001 26,442 Consumer Durables 2000 24,610 27,025 23,592 23,261 98,488 Professional 2001 4,584 Products, Indoor 2000 4,398 4,890 4,092 4,181 17,561 Professional 2001 2,525 Products, Outdoor 2000 2,140 2,191 1,846 1,862 8,039 Total 2001 7,109 Professional Products 2000 6,538 7,081 5,938 6,043 25,600 Operating income by business area, per quarter, SEKm Consumer Durables 1st 2nd 3rd 4th Full year qtr qtr qtr qtr Europe 2001 447 Margin,% 4.1 2000 566 418 504 691 2,179 Margin,% 5.5 4.1 4.7 6.0 5.1 North America 2001 807 Margin,% 6.6 2000 928 1,197 812 640 3,577 Margin,% 7.5 8.2 7.7 7.0 7.7 Rest of the world 2001 45 Margin,% 1.4 2000 -71 -11 -31 136 23 Margin,% -3.6 -0.5 -1.4 5.0 0.2 Professional 2001 328 Products, Indoor Margin,% 7.2 2000 423 673 313 168 1,577 Margin,% 9.6 13.8 7.6 4.0 9.0 Professional 2001 331 Products, Outdoor Margin,% 13.1 2000 309 295 289 260 1,153 Margin,% 14.4 13.5 15.7 14.0 14.3 Common 2001 -106 Group costs, etc. 2000 -105 -119 -57 -178 -459 Items affecting 2001 - comparability 2000 - - - -448 -448 This report has not been audited. A number of new accounting standards went into effect in Sweden as of January 1, 2001. The implementation of the new standards has not had any material effect on the Group's accounts. Financial reports in 2001 Quarterly report, 2nd quarter July 20 Quarterly report, 3rd quarter October 26 Financial information from Electrolux is also available on www.electrolux.com _______________________________ 1 Core appliances include refrigerators, freezers, cookers, dishwashers, washers and dryers 2 Major appliances include core appliances plus room air-conditioners, dehumidifiers and microwave ovens ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/25/20010425BIT00050/bit0001.doc Full Report http://www.bit.se/bitonline/2001/04/25/20010425BIT00050/bit0001.pdf Full Report