Electrolux
Annual Report 2019
Well positioned to
create value
A strong focus on innovation to improve the consumer
experience and a track record of successfully driving cost
efficiency are important competitive assets. A solid balance
sheet facilitates profitable growth. This makes Electrolux
well positioned to continue to deliver shareholder value.
global leader
Electrolux is a global leader in household
appliances. We reinvent taste, care and
wellbeing experiences for more enjoyable
and sustainable living around the world. We
offer thoughtfully designed, innovative and
sustainable solutions, under well-established
brands including Electrolux, AEG and Frigidaire.
FoCUSed ProFITable groWTH STraTegY
We focus on consumer-relevant product
innovations to drive profitable growth. Our
global presence offers economies of scale,
and we invest in modularized product
architectures as well as automation and
flexibility in production. Sustainability is a
key business driver, and a solid balance
sheet facilitates profitable growth.
119
sales
billion sek
60
million products
sold annually
120
markets
49
thousand
employees
Figures above are for the consumer business, continuing operations,
exclusive of the discontinued operations Electrolux Professional.
Table of contents
CEO STATEMENT
Strengthening our innovation
and efficiency platform
Business overview
Key areas to create value and drive
profitable growth
Well-positioned in a changing world
Celebrating a century of better living
REPORTING
Report by the Board of Directors
Notes
Proposed distribution of earnings
Auditors’ report
Eleven-year review
Operations by business area, yearly
Quarterly information
Sustainability reporting
Corporate governance report
Events and reports
Annual General Meeting
100 years of better living
5
6
10
12
14
17
44
81
82
86
88
89
90
101
119
120
121
CONTINUING OPERATIONS
The CEO statement on pages 4–15 in this report includes the
consumer business, continuing operations, following the deci-
sion made by the Board in 2019 to propose to distribute and list
the business area Professional Products (Electrolux Professional)
as a separate company. Electrolux Professional is accounted for
as discontinued operations, for more information see Note 26.
The Annual Report for AB Electrolux (publ), 556009-4178,
consists of the Report by the Board of Directors and Notes to the
financial statements, pages 17—81. The Annual Report is publis-
hed in Swedish and English.
ANNUAL REVIEW ON THE WEB
Please find more information about business development,
strategy and business areas in the Electrolux Annual Review
2019, accessible on all your digital platforms.
Please visit the Electrolux Annual Review 2019 at:
www.electroluxgroup.com/annualreports/2019
SUSTAINABILITY
The Electrolux sustainability framework and execution
are described in the Sustainability reporting section on
pages 90—98. The full Electrolux Sustainability Report is
published online in March 2020 at:
www.electroluxgroup.com/sustainabilityreport2019
341
298
Printed matter
Larsson Offsettryck
Electrolux, AEG and Zanussi are the registered trademarks of
AB Electrolux. For further information about trademarks, please
contact Electrolux Group Intellectual Property, Trademark.
Concept, text and production by
Electrolux Investor Relations and Hallvarsson & Halvarsson.
Jonas Samuelson, Electrolux President and CEO.
CEO statement 5
Strengthening
our innovation
and efficiency
platform
In 2019, we intensified our work to make
our business even more consumer
focused and streamlined, as well as
executed on our re-engineering program.
Such measures – along with the proposed
separation of our professional products
business – are key to create even more
shareholder value going forward.
Building for the future
We are in an intense period of transformation and innovation. In 2019,
we strengthened our platform for future growth by launching important
new product ranges, initiating additional efficiency measures and
investing in modularized products in automated manufacturing. During
the year, we also announced our intention to split the Group into two
listed companies – ‘Electrolux’ for household appliances and ‘Electrolux
Professional’ for professional appliances.
business areas
sales by region
share of
sales
Europe, 38%
North America, 33%
Latin America, 16%
Asia-Pacific, Middle East
and Africa, 13%
Key data
Sales growth,%1)
Operating margin, %1)
Operating cash flow, SEKm2)
Dividend, SEK per share3)
2019
–1.3
3.8
2,280
8.50
2018
1.2
4.8
2,646
8.50
1) Continuing operations. Operating margin is excluding non-recurring items.
2) Continuing operations, after investments.
3) 2019 proposed by the Board.
33%
38%
5%
3%
16%
5%
Core markets
Growth markets
6 CEO statement
“Our targeted innovation approach has
strengthened our position in key categories
and contributed positively to margin.”
Business overview
In 2019, we continued to have a favorable
sales and earnings impact from product-mix
improvements, which means that we are
selling more of our innovative and premium
products that have higher margins. The
new products we launched during the year
were very well received by consumers. For
example, our new built-in kitchen range in
Europe was at launch rated 4.9 stars out of
5 in consumer online reviews. We were also
the first to bring built-in Air Fry technology to
the North American cooker market, which
has been a great success with strong growth
and a 4.6 star rating. Our targeted innovation
approach has strengthened our position in
key categories and contributed positively to
margins.
Our re-engineering investments in man-
ufacturing are building for the future by
enabling us to be more efficient and to speed
up innovation and enhance the consumer
experience of our products.
We experienced significant headwinds
from raw material costs, trade tariffs and
currency – an increase of approximately
SEK 1.5bn in 2019 compared to 2018. I am
very pleased that we have been able to
fully offset these headwinds during the year
through pricing.
However the complex and resource
intensive process to consolidate the U.S.
production of refrigerators/freezers to our
new Anderson facility in North America
impacted sales and earnings negatively
in 2019. Importantly, this consolidation will
increase our competitiveness going forward.
We also had higher marketing investments to
support our product launches. Hence, oper-
ating margin excluding non-recurring items
declined to 3.8%.
In Europe, we saw a positive contribution
to sales and earnings from product-mix
improvements and price increases. High-
lights included a strong performance in our
focus area built-in kitchen where we gained
value market share. Continued market
growth was mainly driven by Eastern Europe,
although Western Europe also developed
positively.
North America experienced organic sales
decline and lower earnings. The consolida-
tion of production to the new plant in Ander-
son resulted in manufacturing transition costs
related to running three facilities in parallel. In
addition, capacity constraints in the ramp-up
phase of the plant impacted sales volumes
negatively. Cost-based price increases fully
offset higher costs from raw materials and
trade tariffs. Mix improved, partly driven by
our new multidoor refrigerators.
In Latin America, we saw good prog-
ress despite a volatile environment. Price
increases combined with mix improvements
– particularly for high-capacity washers and
multidoor refrigerators – offset significant
headwinds from raw material costs as well as
currency due to the macroeconomic turbu-
lence. Importantly, we saw market growth in
our main market Brazil.
In Asia-Pacific, Middle East and Africa
sales volumes declined. Mix improvements,
predominantly driven by new product
launches under the Electrolux brand in
Australia contributed to earnings. Significant
currency headwinds and lower volumes had
a negative impact on operating income.
Creating value through a more
efficient and streamlined business
I believe that the separation of the profes-
sional products business into a stand-alone
company will create substantial shareholder
value over time, given that the two businesses
have different markets, customers and suc-
cess drivers. The spin-off will ensure that our
earnings development1)
operating income bridge1)
SEKbn
8
6
4
2
0
15
16
17
18
19
Operating income
Operating margin
%
8
6
4
2
0
SEKbn
10
8
6
4
2
0
1.6
5.5
-1.0
-1.1
-0.5
0.0
4.5
EBIT
2018
Organic
contribution
Raw
material
& tariffs
Cost
efficiency
Currency
Acq/
Divest
EBIT
2019
Operating income for continuing opera-
tions excl. non-recurring items in 2019 was
SEK 4,533m (5,519), corresponding to a
margin of 3.8% (4.8).
Our continued focus on consumer driven innovation and several important product launches
contributed to earnings in 2019. We strengthened our platform for future profitable growth
through additional efficiency measures and extensive re-engineering investments in auto-
mated and modularized manufacturing. However, manufacturing transition costs for consol-
idating production to our new Anderson facility as well as increased marketing investments
impacted operating income (EBIT). Price increases compensated for the strong headwind we
faced, from raw material costs, trade tariffs and currency.
1) Operating income is for the consumer business, exclusive of the business area Professional Products, excluding non-recurring items.
ELECTROLUX ANNUAL REPORT 2019
CEO statement 7
Taste
Making it possible to prepare
great-tasting food.
We sell cookers, hobs, ovens, hoods, micro wave
ovens, refrigerators, freezers and dishwashers
for consumers around the world. Electrolux is a
leader in kitchen appliances and new function-
alities are continuously being developed.
In 2019, Electrolux launched the multidoor
refrigerator global platform in the Americas
to tap into an attractive segment, as well as
several steam ovens with the Steamify® function,
which enables best-in-class baking, roasting
and steaming results.
share of
sales
Taste, 61%
Care, 29%
Wellbeing, 10%
Wellbeing
Making it possible to achieve healthy
wellbeing in your home.
Electrolux vacuum cleaners, air-conditioning equipment, water
heaters, heat pumps, small domestic appliances, and accesso-
ries are sold to consumers worldwide. We have a strong, global
distribution network and an attractive product offering that
includes service.
Product launches in the Wellbeing segment in 2019 included
the PureSense system, which continuously measures indoor and
outdoor air quality levels and automatically adjusts the air purifi-
cation rate to ensure a healthy indoor environment.
Three clear areas
for innovation
We shape living for the better by
reinventing taste, care and wellbeing
experiences, for more enjoyable and
sustainable living.
Care
Making it possible to care for your clothes
so they stay new for longer.
Washing machines and tumble dryers are the core of
our product offering for washing and garment care.
Demand is driven by innovations that promote user -
friendliness and resource efficiency.
Care innovations in 2019 included the connected AEG
9000 Premium Edition Washer Dryer with SensiDry®
Technology, which can provide a three-hour wash to dry
cycle, and optimizes the program to help clothing retain
its shape and condition while saving energy and water.
8 CEO statement
professional business has improved capital
market access and more opportunities for
further market consolidation. Following
shareholder approval to distribute Electrolux
Professional the plan is to list the company on
Nasdaq Stockholm on March 23, 2020.
Our financial targets for the consumer
business as a stand-alone company remain,
which requires a further sharpening of our
performance to reach the targets, given the
higher margin of the professional business.
We define profitable growth as sales growth
of at least 4% and an operating margin of
at least 6% over a business cycle. Offering
outstanding consumer experiences, driven
by innovation and operational excellence,
is at the heart of our strategy to achieve
these goals.
By creating four regionally focused
business areas and reorganizing key global
functions during the year, we have improved
our consumer focus with the objective of
accelerating profitable growth. This was rein-
forced by the creation of a global function for
Consumer Experience that pulled together
central functions into a new organizational
structure.
As these activities progressed, we iden-
tified additional opportunities to improve
efficiency and create an even more stream-
lined setup for our consumer business.
Our SEK 8 bn re-engineering investment
program in automation, digitalization and
innovation continued during 2019. We con-
solidated our U.S. refrigeration and freezer
production and started up production in our
new Anderson facility in the U.S., which is the
biggest step we have ever taken in terms of
automation. We also continued our invest-
ments in production facilities in Latin America.
All initiatives under the investment program
have now been announced.
Targets1)
operating margin
capital turnover-rate
return on net assets
SEKbn
8
6
4
2
0
15
16
17
18
Operating income
Operating margin
Target, ≥6%
%
8
6
4
2
0
3.2
2.7
19
Times
10
8
6
4
2
0
4.5
15
16
17
18
19
Capital turnover-rate, times
Target, ≥4 times
SEKbn
30
25
20
15
10
5
0
26.5
12.0
15
16
17
18
19
Average net assets
Return on net assets
Target, >20%
%
30
25
20
15
10
5
0
In 2019, operating income included
non-recurring items of SEK –1,344m.
Reducing the amount of capital tied up in opera-
tions creates opportunities for profitable growth.
Sustained profitability and a small, efficient
capital base enable us to achieve a high
long-term return on capital.
1) Financial targets are for the consumer business, the figures in the graphs above exclude the business area Professional Products. Targets are over a business cycle.
ELECTROLUX ANNUAL REPORT 2019
CaSe STorY
Keeping leadership in a fast growing,
attractive category
The market for high-capacity Top Load Washing
Machines (TLWMs) has grown rapidly in Latin America in
recent years, driven by consumer need to save time and
resources by washing more clothes in a single batch.
Electrolux is the largest player in this attractive TLWM category
with nearly one-third of the market and has increased sales by
35% between 2015 and 2019. The company has developed a
17 kg capacity washing machine for the premium segment that
uses ‘perfect dilution’ technology to ensure the perfect mix of
detergent and softener to care for clothes and avoid stains.
The consumer response has not only resulted in a strengthened
market position, but also high consumer ratings in 2019
– for example 4.6 in Brazil.
Read more in the Electrolux Annual Review 2019:
www.electroluxgroup.com/annualreports/2019
CaSe STorY
Meeting consumer needs
through consumer-centric
innovation
In 2019, Electrolux launched a new kitchen
range based on deep consumer insight to
drive premium market growth in Europe under
the sharpened Electrolux brand.
A deep kitchen consumer analysis in Europe provided
valuable consumer insight that highlighted the need
for more intuitive products. During the second half
of 2019, Electrolux launched a kitchen range of
products that meet the consumer demand for more
intuitive usability to enable them to get the most out
of their products.
The new range has been very well received by
consumers, which is significant as positive consumer
reviews drive sales. The consumer rating for the new
Electrolux kitchen range was 4.9 at launch compared
with an average of 4.6 for the range that it replaced.
Read more in the Electrolux Annual Review 2019:
www.electroluxgroup.com/annualreports/2019
sales growth
employee engagement
sustainability
SEKbn
125
100
75
50
25
0
-25
%1)
10
119
8
6
4
2
0
15
16
17
18
–1.3
19
-2
Net sales
Sales growth
Target, ≥4%
1) Total sales growth excluding currency
translation effects.
73
15
16
–
18
19
Engagement index
Target, 80
80
75
70
65
60
-32%
Target1)
-50%
05
-
16
17
18
19
Product use
Greenhouse gas
Manufacturing
Transport
In 2017, a mini survey was carried out to monitor the
teams with low scores in previous surveys. The survey
showed progress.
1) Reduce CO₂ impact by 50% by 2020 through focusing on
product efficiency in the main product categories. Sales
volumes and emission factors are normalized to 2005.
To reach the growth target, we are continuing
to strengthen our positions in core markets, new
markets and segments.
The employee engagement survey (EES) is an
important tool to assess engagement, leader-
ship and commitment to strategy.
Sustainability leadership is a key business driver
and important to realizing the Electrolux strategy
for profitable growth.
1) Financial targets are for the consumer business, the figures in the graphs above exclude the business area Professional Products. Targets are over a business cycle.
ELECTROLUX ANNUAL REPORT 2019
10 CEO statement
Key areas to drive profitable growth
Create Value
Following the intended separation of
Professional Products, the consumer
business will retain its financial targets for
profitable growth. As I previously mentioned,
this will require a sharpening of our targets
given the higher margin of the professional
business.
Our two key areas to drive profitable
growth are:
• Driving sustainable consumer experience
innovation
• Increasing efficiency through digitaliza-
tion, automation and modularization
Driving sustainable consumer
experience innovation
A streamlined and innovative product
portfolio, with proven consumer benefits,
enables great tasting food, care for clothes
and healthy wellbeing in the home. Our new
global consumer experience organization
established during the year intensifies our
focus on deep consumer insight.
Our well-established brands with a strong
innovation heritage, together with sustain-
ability leadership differentiate Electrolux and
are key to drive profitable growth. We have
a clear roadmap to strengthen our position
in emerging markets, which represents huge
business opportunities.
We also aim to strengthen our position
in the high-margin aftermarket business by
doubling aftermarket sales by 2025.
We are increasing direct consumer con-
tact by digital consumer service interfaces
and by expanding our range of connected
products based on a global IoT platform. In
addition, we are strengthening our service
product offering through extended warran-
ties and fixed price repair models.
Increasing efficiency through digitalization,
automation and modularization
Delivering continuous cost improvements is
an important part of our strategy. We have a
strong track record of delivering cost reduc-
tions and since 2015 we have reduced costs
by approximately SEK 5bn.
We are implementing our SEK 8bn global
product architecture and automation pro-
gram to further strengthen competitiveness.
These re-engineering investments together
with additional streamlining measures
are expected to generate approximately
SEK 3.5bn in annual cost savings with full
effect by 2024, while also reducing our envi-
ronmental footprint.
We are increasingly leveraging our global
scale while at the same time benefiting from
deep local understanding to capture
regional opportunities. Our digitally inte-
grated supply chain and manufacturing
helps drive improved productivity and flexi-
bility in our operations.
ELECTROLUX ANNUAL REPORT 2019
Financial targets for profitable growth*OPERATING MARGINSALESGROWTHRONA**≥6%≥4%>20%Driving sustainable consumer experience innovationIncreasing efficiency through digitalization, automation and modularizationSolid balance sheet facilitates profitable growth* Financial targets are over a business cycle** Return on net assets CaSe STorY
Fixed price repair service
targets high-margin
aftermarket growth
Electrolux is launching services, such as
fixed price repair in Europe, that aim to
access the largely untapped aftermarket
business, with the overall objective of
doubling Group aftermarket sales to
10% by 2025.
Electrolux has launched a fixed price repair
service to tap into the significant aftermarket
potential. The service allows consumers to
make an informed decision on whether to
repair or replace an appliance based on their
quote from Electrolux.
Such services increase the lifetime value for
consumers, which also drives loyalty and repur-
chasing rates. The new service has been well
received since its launch in 2017, with its Net
Promoter Score* more than doubling.
Read more in the Electrolux Annual Review 2019:
www.electroluxgroup.com/annualreports/2019
* Measures the willingness of consumers to recommend a company’s
products or services to others.
ELECTROLUX ANNUAL REPORT 2019
CEO statement 11
CaSe STorY
Re-engineering
further strengthens
competitiveness
The Anderson refrigeration plant
in South Carolina in the U.S. will
become one of the Group’s most
automated facilities following
a USD 250m re-engineering
investment.
Best-in-class automation solutions,
modularization and more energy-
efficient production at Anderson will
result in significant cost savings. Auto-
mation level will increase to about 35%
compared to previously less than 10%.
The food preservation category is the
largest in North America for Electrolux
– accounting for nearly half of business
area sales.
A new range of innovative Frigidaire
refrigerator and freezer products has
been enabled by the re-engineering
investment in Anderson. The new refrig-
erator and freezer range is based on
completely new product architectures to
speed up innovation and enhance the
consumer experience.
Read more in the Electrolux Annual
Review 2019: www.electroluxgroup.com/
annualreports/2019
12 CEO statement
Global trends
Growing
global
middle class
Consumer
power
Trends
in our
industry
Digitalization
Consolidation
Sustainability
trends
The increasing pace of change in the global
market stems from a number of trends that
influence volumes and the types of products
that are in demand, but also how these products
are produced, marketed and sold.
Well-positioned
in a changing world
The world in which we operate is con-
stantly changing due to the influence of
global megatrends. These create chal-
lenges for our business – but also bring
about enormous opportunities.
Increasing consumer power is a key
trend. I am convinced our consumer-fo-
cused business model gives us a com-
petitive advantage in a market where
consumers are very well informed. This
trend is closely related to digitalization as
many consumers have access to a huge
amount of consumer-related information
via the internet and social media. I con-
sider this trend to be very favorable for
Electrolux as positive consumer reviews of
our products drive further sales. Digitali-
zation also presents us with opportunities
to connect appliances. This is a key tool to
create new consumer experiences and
cultivate consumer relationships during
the product use phase, as well as increase
efficiency in our operations.
Sustainability is increasingly important
to consumers, and therefore a key driver
of demand. This is a competitive advan-
tage for us as we have a leading position
when it comes to sustainability in our
industry. Resource efficient products as
well as greater resource efficiency in our
operations continue to be a priority for us.
I believe the growing global middle class
presents many exciting opportunities
for Electrolux. This is why we recognize
emerging markets as a driver of our future
business. We are increasingly drawing on
our global scale, deep local insight and
modularized product platforms to quickly
bring products to emerging markets,
meeting the needs of local consumers.
Many of these global trends require
significant investment, which favors larger
players and therefore drives industry
consolidation. Electrolux is a leading
global player that is well positioned to
continue to drive profitable growth by
drawing on the opportunities from global
megatrends.
ELECTROLUX ANNUAL REPORT 2019
Our focused strategy for profitable growth
CEO statement 13
path to profitable growth
Electrolux applies a three-step model for
all business areas. It starts with ensuring
stability and predictability in all key
processes in combination with clear focus.
In the second step, the business model
has resilience to external factors and clear
competitive advantages that enable
profitability over time. The third step is to
accelerate growth in a targeted way.
1
Stability &
Focus
2
Sustainable
Profitability
3
Targeted
Growth
Profitable
Growth
Taste, Care
& Wellbeing
Innovation
A clear consumer
focus sets us apart
Branded Star
Products with
Preferred
Partners
Outstanding
Consumer
Experiences
Engaging
Ownership
& Quality
Experience
Operational Excellence
Talent, Teamship & Continuous Improvement
Execution to increase
competitiveness
Emerging Markets
Acceleration
Digital
Transformation
Sustainable
Development
With drivers that
prepare us for the future
the electrolux
business model
By focusing on creating
Outstanding Consumer
Experiences, the Electrolux
business model is designed
to achieve the Group’s
purpose – Shape living
for the better – and drive
profitable growth.
ELECTROLUX ANNUAL REPORT 2019
14 CEO statement
Celebrating a century of better living
Electrolux 100 years
Electrolux turned 100 years in 2019 and
we can be proud of our achievements
over the past century. I believe our
well-established brands, strong innova-
tion heritage, winning sales orientation,
contribution to societal development
and sustainability leadership are all key
strengths that ensure Electrolux is well
positioned to deliver profitable growth
going forward.
A century of better living
By creating great taste, care and well-
being experiences, and better living for
hundreds of millions of people around the
world over the past century, Electrolux
has not only enhanced the quality of life
of its consumers, but also the societies in
which they live. Our company is part of an
industry that has revolutionized domestic
duties, as well as general hygiene and eat-
ing habits within less than half a century.
Sustainability leadership
– a key differentiator
In the 1990s, we were the first appliance
company to focus on sustainability, which
has been at the heart of our strategy ever
since. Today, the Electrolux brand is asso-
ciated with sustainability, which I believe
is a differentiator that results in additional
growth opportunities.
Sustainable products are more prof-
itable. Our most resource-efficient prod-
ucts accounted for 23% of total products
sold and 32% of gross profit in 2019.
We celebrated our anniversary year
by launching the Better Living Program,
which is a bold initiative to enable us
to continue to be at the forefront of
sustainability. The program includes a
broad range of actions and targets until
2030 and is our first step to contributing
to more sustainable lifestyles for the next
100 years.
Creating shareholder value
Offering outstanding consumer experi-
ences, driven by innovation and opera-
tional excellence, is at the heart of our
strategy and essential to deliver on our
financial targets.
ELECTROLUX ANNUAL REPORT 2019
CEO statement 15
Better Living Program
Better eating
Make sustainable eating
the preferred choice.
Better garment care
Make clothes last twice
as long with half the
environmental impact.
Better home
environment
Make homes healthier and
more sustainable through
smart solutions for air,
water and floors.
Better company
Make our business circular
and climate neutral.
Our journey toward profitable growth
continues in 2020. As we now have
an even more consumer-focused
organization with key global capabilities
to accelerate product innovation and
efficiency, I am confident that we are
better positioned than ever to deliver
long-term shareholder value.
I would finally like to thank all
our employees for their individual
contributions during the year. I am proud
of the dedication, professionalism and
expertise our employees have shown
throughout the Group.
Stockholm, February 2020
Jonas Samuelson President and CEO
Electrolux
Annual Review 2019
–
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includes comprehensive information
about business development,
strategy for profitable growth,
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VISIT OUR ONLINE REPORT
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ELECTROLUX ANNUAL REPORT 2019
Report by the
Board of Directors
In 2019, the Electrolux Board of Directors decided to propose to shareholders to distribute the business area Professional Products as a separate company under the name of
Electrolux Professional. The intention is to list the company on Nasdaq Stockholm. Distribution of, and first day of trading in, the shares in Electrolux Professional is planned to take place
on March 23, 2020. Electrolux Professional is in this report accounted for as discontinued operations. The comments in this report refers to the consumer business, continuing operations,
exclusive of Electrolux Professional, unless otherwise stated. For information on accounting principles, see Note 1 and Note 26.
Board of Directors’ report and financial statements 17
Report by the
Board of Directors
• Net sales for continuing operations amounted to SEK 118,981m (115,463). The sales growth
excluding currency translation effects was –1.3%.
• Operating income for continuing operations amounted to SEK 3,189m (4,176),
corresponding to a margin of 2.7% (3.6).
• Excluding non-recurring items of SEK –1,344m (–1,343), operating income for continuing
operations amounted to SEK 4,533m (5,519), corresponding to a margin of 3.8% (4.8).
• Income for the period for the Group, including discontinued operations, amounted to
SEK 2,509m (3,805), corresponding to SEK 8.73 (13.24) per share.
• Operating cash flow after investments for the Group, including discontinued operations,
amounted to SEK 3,433m (3,649).
• Extraordinary General Meeting is held on February 21, 2020, to resolve on the distribution
of Electrolux Professional.
• The Board proposes a dividend for 2019 of SEK 8.50 (8.50) per share, to be paid
in two installments.
Key data
sekm
Continuing operations
Net sales
Sales growth, %1)
Organic growth, %
Acquisitions, %
Divestments, %
Changes in exchange rates, %
Operating income2)
Operating margin, %
Income after financial items
Income for the period
Earnings per share, SEK3)
Operating cash flow after investments5)
Return on net assets, %
Capital turnover-rate, times/year
Average number of employees
Net debt/equity ratio
Total Group, including discontinued operations
Income for the period
Earnings per share
Operating cash flow after investments
Dividend per share, SEK
Net debt/equity ratio
Return on equity, %
2019
2018
Change, %
118,981
115,463
3
–1.3
–1.0
—
–0.3
4.3
3,189
2.7
2,456
1,820
6.33
2,280
12.0
4.5
1.2
1.2
0.4
–0.4
0.9
4,176
3.6
3,754
2,854
9.93
2,646
20.2
5.6
48,652
0.34
51,253
—
2,509
8.73
3,433
8.504)
—
11.4
3,805
13.24
3,649
8.50
0.08
18.2
–24
–35
–36
–34
1) Change in net sales adjusted for currency translation effects.
2) Operating income for 2019 includes non-recurring items of SEK –1,344m (–1,343). Excluding these items, operating income amounted to SEK 4,533m, (5,519)
corresponding to a margin of 3.8% (4.8), see Note 7.
3) Basic, based on an average of 287.4 (287.4) million shares for the full year, excluding shares held by Electrolux.
4) Proposed by the Board of Directors.
5) See page 30.
AB Electrolux (publ), 556009–4178
Annual Report 2019, page 17–81
Sustainability Reporting 2019, page 90–98
Corporate Governance Report 2019, page 101–118
ELECTROLUX ANNUAL REPORT 2019
18 Board of Directors’ report and financial statements
2019 in summary
• The organic sales decline of 1.0% was related to lower volumes, primarily in North America.
• Operating income declined to SEK 3,189m (4,176) and includes non-recurring items
of SEK –1,344m (–1,343).
• Lower volumes and manufacturing transition costs in North America impacted earnings negatively,
while price increases offset higher costs for raw materials, trade tariffs and currency headwinds.
• Major product launches, e.g. under a sharpened Electrolux brand, contributed to mix improvements.
• Proposal to shareholders to distribute Electrolux Professional as a standalone company.
• Comprehensive manufacturing consolidation projects and global streamlining measures initiated.
Net sales and operating income
Net sales for continuing operations increased by 3.0% in 2019.
Organic sales declined by 1.0%, the net contribution of acquisi-
tions and divestments was –0.3% and currency translation had a
positive impact of 4.3%. The organic sales decline was primarily
due to lower volumes in North America, where sales under
private label declined and temporary capacity constraints in
the new facility in Anderson impacted volumes negatively. Price
increases and mix improvements contributed to sales. The busi-
ness areas Europe and Latin America reported organic sales
growth. Product-mix improvements and price increases explain
the growth in Europe. The sales growth in Latin America was
mainly driven by Brazil and increased volumes, mix improve-
ments and price increases also contributed positively. Asia-
Pacific, Middle East and Africa reported a sales decline.
Operating income amounted to SEK 3,189m (4,176),
corresponding to a margin of 2.7% (3.6). Operating income was
negatively impacted by SEK –1,344m (–1,343) related to non-
recurring items. These items comprised of restructuring charges
for consolidation of manufacturing in North America and Latin
America, efficiency measures and outsourcing projects across
the Group, recovery of overpaid sales tax in Brazil and a legal
settlement in the U.S. For more information see Note 7. Exclud-
ing these non-recurring items, operating income amounted to
SEK 4,533m (5,519), corresponding to a margin of 3.8% (4.8).
Mix improvements across business areas contributed posi-
tively to operating income, as a result of major product launches
and focus on core brands to improve the product mix. However,
lower volumes and manufacturing transition costs in North
America, higher marketing investments as well as costs related
to the preparation of the separation of Professional Products
had a negative impact on earnings. Headwinds from higher
raw material costs, trade tariffs and currency were fully offset by
price increases.
Distribution of Professional Products
In December 2019, Electrolux Board decided to propose
to shareholders to split the Group in two listed companies
Electrolux for household appliances and Electrolux Professional
for professional appliances. A split will enable both companies
to focus on their respective opportunities to drive profitable
growth, with distinct strategies for innovation and customer
focus, as well as a high level of capital efficiency. The intention
is to list Electrolux Professional on March 23, 2020. Electrolux
Professional is reported as discontinued operations in this
report and the results are included as a single net in the income
statement under the item; Income for the period, discontinued
operations. For more information on Electrolux Professional
and accounting principles, see page 25 and Note 26.
Strategic initiatives to improve profitability
Electrolux has a clear strategy to deliver profitable growth and
create shareholder value. At the heart of the strategy is a strong
consumer focus. In 2019, Electrolux continued executing on the
path to profitable growth. Product mix improved through contin-
ued focus on product portfolios with strong consumer benefits.
To accelerate profitable growth, the business was reor-
ganized in four regional consumer-focused business areas
ensuring a unified approach to each market. This meant that
the Home Care & SDA business area was combined with the
four major appliances business areas. A new global consumer
experience organization responsible for functions such as mar-
Financial overview by business area, continuing operations
sekm
Net sales
Operating income:
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Other, Group common costs, etc.
Total
Operating margin, %
Operating margin excl. non-recurring items, %1)
1) For more information on non-recurring items, see Note 7.
2019
118,981
2018
Change, %
115,463
3
2,493
–516
1,821
446
–1,055
3,189
2.7
3.8
2,128
1,104
492
979
–527
4,176
3.6
4.8
17
n.m.
270
–54
–100
–24
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 19
Financial targets over a business cycle1)
SALES GROWTH
OPERATING MARGIN
SEKM
125,000
100,000
75,000
50,000
25,000
0
-25,000
%
10
8
6
4
2
0
-2
Net sales
Sales growth
Target: at least 4%
Total sales growth excluding
currency translation effects.
SEKM
8,000
6,000
4,000
2,000
0
15
16
17
18
19
15
16
17
18
19
CAPITAL TURNOVER-RATE
RETURN ON NET ASSETS
TIMES
8
6
4
2
0
Capital turnover-rate
Target: at least 4 times
SEKM
30,000
22,500
15,000
7,500
0
15
16
17
18
19
15
16
17
18
19
1) For comparable reasons the figures in the graphs above are exclusive of the business area Professional Products.
Operating income
Operating margin
Operating margin
excl. non-recurring items
Target: at least 6%
For non-recurring items included in
operating income, see Note 7 and page 88.
Average net assets
Return on net assets
Target: >20%
%
8
6
4
2
0
%
40
30
20
10
0
keting, design and digital consumer solutions was established
to support the business areas. The investments in modularized
products in automated production continued. These are impor-
tant to further increase the competitiveness in order to drive
growth through more innovative products as well as lowering
costs. The re-engineering program, totaling SEK 8bn, contin-
ued in 2019. The freezer and refrigerator production in U.S. was
consolidated to a new factory in Anderson. The cost savings
from this program and the streamlining measures above are
expected to be approximately SEK 3.5bn annually, with full effect
from 2024.
Launches of new products
Electrolux aims to drive profitable growth by creating out-
standing consumer experiences. Product development focuses
on three main areas: great tasting food, care for clothes and
healthy well-being in the home.
Taste innovations in 2019 included launches under a sharp-
ened Electrolux brand in several global markets, including
Europe and Australia. New kitchen products included steam
ovens with the steamify function for best baking and cooking
results. The new kitchen range received high recognition in
consumer reviews. Other examples in 2019 included the Air-
Fry cooker in North America, the first on the market built into a
cooker. Multidoor refrigerators adapted to local preferences
using a common manufacturing platform were launched in
North America and Latin America. Multidoor is the largest and
fastest growing refrigeration category. Care innovations in
2019 included the development of Top Load Washing Machines
(TLWMs) in Latin America. The market for high-capacity TLWMs
has experienced fast growth in recent years and Electrolux is
the largest player in this category. Resource-efficient washing
machines with Electrolux UltraCare technology were launched
in Europe.
In the Wellbeing area, the stylish Electrolux Pure A9 air purifier
was launched in South Korea and the Nordics.
Changes in Group Management during 2019
In February, as described on page 18, the business was reor-
ganized into four regional consumer-focused business areas
where the four major appliances business areas were combined
with the previous business area Home Care & SDA. At the same
time a new global consumer experience function was estab-
lished to accelerate product and ownership experience innova-
tion. This new function is headed by Ola Nilsson, previously head
of Home Care & SDA, as Group Chief Experience Officer (CXO)
as of February 1, 2019. As a consequence of the new organiza-
tional structure, the Chief Marketing Officer Lars Hygrell is no
longer member of Group Management. Jan Brockman, Chief
Operations Officer, was also appointed as Executive Vice Presi-
dent of AB Electrolux.
In December, Alan Shaw, head of the business area North
America, decided to retire from his position. Nolan Pike, previ-
ously Senior Vice President within Electrolux global Consumer
Experience organization, was appointed new head of the busi-
ness area as of January 1, 2020.
For more information, visit www.electroluxgroup.com
ELECTROLUX ANNUAL REPORT 2019
20 Board of Directors’ report and financial statements
Net sales and income
• Sales for continuing operations increased by 3.0%. This was a result of positive currency translation
effects of 4.3%, while organic sales declined by 1.0% and divestment had a negative impact of 0.3%.
• Operating income for continuing operations amounted to SEK 3,189m (4,176), corresponding to a
margin of 2.7% (3.6).
• Excluding non-recurring items of SEK –1,344m (–1,343), operating income amounted to SEK 4,533m
(5,519), corresponding to a margin of 3.8% (4.8).
• Lower volumes and manufacturing transition costs in North America impacted earnings negatively,
while mix improvements across business areas contributed positively.
• Price increases fully offset headwinds from higher raw material costs, trade tariffs and currency.
• Income for the period for the Group, including discontinued operations, amounted to SEK 2,509m (3,805),
corresponding to SEK 8.73 (13.24) per share.
Net sales
Net sales for continuing operations in 2019 amounted to
SEK 118,981m (115,463), which is an increase of 3.0%. Organic
sales decreased by 1.0%, while divestments had a negative
impact of 0.3% and currency translation had a positive impact
of 4.3%.
The organic sales decline was primarily related to North
America, where sales under private label declined and capac-
ity constraints related to the manufacturing consolidation
impacted sales volumes of refrigerators and freezers negatively.
The business areas Europe and Latin America reported organic
sales growth, while sales in Asia-Pacific, Middle East and Africa
declined.
Operating income
Operating income for continuing operations for 2019 amounted
to SEK 3,189m (4,176), corresponding to a margin of 2.7% (3.6).
Operating income included non-recurring items of SEK –1,344m
(–1,343). These items refer to restructuring charges for the con-
solidation of the U.S. cooking production of SEK –829m, closure
of a refrigerator production line in Latin America of SEK –225m,
efficiency measures and outsourcing projects across business
areas and Group common costs of SEK –1,496m as well as over-
paid sales tax in Brazil of SEK 1,403m and a legal settlement in
the U.S. of SEK –197m, see Note 7. Excluding these non-recurring
items, operating income amounted to SEK 4,533m (5,519), cor-
responding to a margin of 3.8% (4.8).
Lower volumes and manufacturing transition costs in North
America impacted earnings negatively while mix improvements
across business areas contributed positively. Price increases
fully offset higher costs for raw material, trade tariffs and
currency.
Operating income excluding non-recurring items declined
significantly for the business area North America. The busi-
ness area Asia-Pacific, Middle East and Africa also reported
a decline. Earnings for the business areas Europe and Latin
America increased. For more information on the performance
of each business area, see page 22–24.
Effects of changes in exchange rates
Changes in exchange rates had a negative impact of
SEK –476m on operating income year-over-year. The impact
of transaction effects was SEK –696m. Translation effects
amounted to SEK 220m.
Financial net
Net financial items amounted to SEK –733m (–422). The change
was mainly due to interest expense on lease liabilities following
the implementation of IFRS 16 as well as a general increase in
interest net.
Income after financial items
Income after financial items amounted to SEK 2,456m (3,754),
corresponding to 2.1% (3.2) of net sales.
Taxes
Total taxes for 2019 amounted to SEK –636m (–900),
corresponding to a tax rate of 25.9% (24.0).
Income for the period and earnings per share
Income for the period for continuing operations, amounted to
SEK 1,820m (2,854), corresponding to SEK 6.33 (9.93) in earnings
per share before dilution.
Income for the period for the Group, including discontinued
operations, amounted to SEK 2,509m (3,805), corresponding to
SEK 8.73 (13.24) in earnings per share before dilution.
NET SALES AND OPERATING MARGIN1)
EARNINGS PER SHARE2)
SEKM
125,000
100,000
75,000
50,000
25,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
7,5
6,0
4,5
3,0
1,5
0,0
SEK
20
15
10
5
0
15
16
17
18
19
15
16
17
18
19
1) For comparable reasons the figures in the graph above excludes the business area
2) The figures for 2018 and 2019 are for continuing operations, exclusive of
Professional Products.
Electrolux Professional.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 21
Consolidated statement of comprehensive income
note
2019
2018
3, 4
5, 7
5, 7
5, 7
6, 7, 29
3, 8
9
10
26
22
11, 18
11
11
20
20
118,981
–99,182
19,799
–12,186
–5,481
115,463
–95,462
20,001
–11,344
–4,667
1,057
3,189
–733
2,456
–636
1,820
688
2,509
–103
3
–100
–10
1,030
24
1,044
944
3,452
2,509
–1
2,509
3,453
–1
3,452
6.33
2.40
8.73
6.30
2.38
8.69
287.4
288.8
185
4,176
–422
3,754
–900
2,854
951
3,805
–448
128
–319
–2
203
23
224
–95
3,710
3,805
–0
3,805
3,710
– 0
3,710
9.93
3.31
13.24
9.86
3.29
13.14
287.4
289.5
sekm
Continuing operations
Net sales
Cost of goods sold
Gross operating income
Selling expenses
Administrative expenses
Other operating income and expenses
Operating income
Financial items, net
Income after financial items
Taxes
Income for the period, continuing operations
Income for the period, discontinued operations
Income for the period
Items that will not be reclassified to income for the period:
Remeasurement of provisions for post–employment benefits
Income tax relating to items that will not be reclassified
Items that may be reclassified subsequently to income for the period:
Cash flow hedges
Exchange–rate differences on translation of foreign operations
Income tax relating to items that may be reclassified
Other comprehensive income, net of tax
Total comprehensive income for the period
Income for the period attributable to:
Equity holders of the Parent Company
Non–controlling interests
Total
Total comprehensive income for the period attributable to:
Equity holders of the Parent Company
Non–controlling interests
Total
Earnings per share
For income attributable to the equity holders of the Parent Company:
Basic, continuing operations, SEK
Basic, discontinued operations, SEK
Basic, total Group, SEK
Diluted, continuing operations, SEK
Diluted, discontinued operations, SEK
Diluted, total Group, SEK
Average number of shares
Basic, million
Diluted, million
ELECTROLUX ANNUAL REPORT 2019
22 Board of Directors’ report and financial statements
Operations by business area
• Solid earnings and value market share gains in Europe.
• North America negatively impacted by lower volumes and manufacturing transition cost.
• Strong organic sales growth in Latin America with improved operating margin.
• Asia-Pacific, Middle East and Africa impacted by lower sales and strong currency headwind.
SHARE OF SALES BY BUSINESS AREA
Europe, 38%
North America, 33%
Latin America, 16%
Asia-Pacific, Middle East and Africa, 13%
During the year, Electrolux revised its business area structure
to create four consumer-focused regional business areas
to ensure a unified approach in each market with common
branded platforms and interaction with consumers. The previ-
ous business area Home Care & SDA, was combined with the
four major appliances business areas. The business areas are
Europe, North America, Latin America and Asia-Pacific, Middle
East and Africa. The Group’s operations include products for
consumers comprising of major appliances, e.g. refrigerators,
freezers, cookers, dryers, washing machines, dishwashers, room
air-conditioners and microwave ovens. Floor-care products,
water heaters, heat pumps, small domestic appliances as well
as consumables, accessories and service are other important
areas for Electrolux.
Market overview
Market demand for core appliances in Europe increased by 2%
in 2019. This was driven by growth of 3% in Eastern Europe and of
1% in Western Europe. In the U.S., market demand for core appli-
ances declined by 2%. Market demand in Brazil is estimated to
have increased in 2019, while demand in Argentina and Chile
is estimated to have declined, due to an unstable political and
economic environment. Overall market demand for appliances
in Australia declined due to a weaker economy, slowing prop-
erty market and a weak Australian dollar. The markets in South-
east Asia as well as in Middle East and Africa are estimated to
have shown growth.
INDUSTRY SHIPMENTS FOR CORE APPLIANCES IN THE U.S.
INDUSTRY SHIPMENTS FOR CORE APPLIANCES IN EUROPE
MILLION UNITS
MILLION UNITS
50
46
42
38
34
30
A total of approximately
48 million core
appliances were sold
in the U.S. in 2019, which
is on par with peak lev-
els in 2005 and 2006.
100
95
90
85
80
75
A total of approximately
98 million core
appliances were sold
in Europe in 2019.
01
03
05
07
09
11
13
15
17
19
01
03
05
07
09
11
13
15
17
19
Source: AHAM.
Source: Electrolux estimates, as from 2018, market volumes
in Eastern Europe have been revised, considering additional
sources.
For other markets there are no comprehensive market statistics.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 23
Europe
Market demand in Europe increased by 2% in 2019. This was
driven by growth in Eastern Europe of 3% and in Western Europe
of 1%.
Electrolux operations reported an organic sales growth
of 1.7% in 2019 driven by improvement in brand and product
mix as well as price increases. The business area gained value
market share in its focus area built-in kitchen, supported by the
new Electrolux branded built-in kitchen range, launched in the
second half of the year.
Operating income and margin improved year-over-year. Strong
organic contribution from price and mix more than compen-
sated for higher raw material costs, increased marketing invest-
ments to support important product launches as well as higher
costs related to product architecture projects. Currency contrib-
uted positively. Non-recurring items of SEK –752m (–747)were
included in the operating income and related to restructuring
charges for efficiency measures and outsourcing projects, see
Note 7.
KEY FIGURES
sekm
Net sales
Organic growth, %
Acquisitions, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
NET SALES AND OPERATING MARGIN
2019
2018
45,420
43,321
1.7
0.1
4.7
0.7
2,493
2,128
5.5
7.1
1,429
108.4
2,399
4.9
6.6
510
177.1
1,741
SEKM
50,000
40,000
30,000
20,000
10,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
15
16
17
18
19
Average number of employees
17,943
18,325
1) For information on non-recurring items, see Note 7 and page 88.
North America
Market demand for core appliances in the U.S. declined by 2% in
2019. Market demand for all major appliances, including micro-
wave ovens and home-comfort products, declined by 5%.
Electrolux operations in North America reported an organic
sales decline of 8.7% due to lower volumes. Those were primar-
ily impacted by lower sales under private label and capacity
constraints related to the manufacturing consolidation for
refrigerators and freezers. Cost-based price increases and mix
improvements contributed positively to sales. The divestment
of the commercial and central vacuum cleaner business had a
negative impact of 1.0% on sales.
Operating income and margin declined year-over-year,
mainly as a result of the lower volumes but also increased costs
related to the manufacturing consolidation. Price increases
more than compensated for higher costs from raw material
and trade tariffs. Mix improvements and currency had a favora-
ble impact. Non-recurring items of SEK –1,071m (–596) were
included in operating income, mainly related to the consolida-
tion of the U.S. cooking production, see Note 7.
KEY FIGURES
sekm
Net sales
Organic growth, %
Divestments, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
NET SALES AND OPERATING MARGIN
2019
2018
38,954
39,804
–8.7
–1.0
–516
–1.3
1.4
6,496
–8.3
2,573
–6.3
–1.0
1,104
2.8
4.3
3,802
29.3
2,099
SEKM
50,000
40,000
30,000
20,000
10,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
8
6
4
2
0
-2
15
16
17
18
19
Average number of employees
11,287
13,325
1) For information on non-recurring items, see Note 7 and page 88.
ELECTROLUX ANNUAL REPORT 2019
24 Board of Directors’ report and financial statements
Latin America
Consumer demand for core appliances in Brazil is estimated to
have shown growth in 2019. In Argentina and Chile the demand
is estimated to have declined, due to the unstable political and
economic environment.
Electrolux operations in Latin America reported an organic
sales growth of 10.9% in 2019, mainly driven by Brazil but also by
Argentina. Both price increases and mix improvement contrib-
uted, as well as higher sales volumes in Brazil.
Operating income and margin increased year-over-year.
This was a result of the positive mix development, higher
volumes and good execution on cost-efficiency measures.
Increased prices offset higher raw material costs but could not
fully compensate for significant currency headwinds.
Operating income included a positive impact related to
operational taxes and a reversal of provision in Brazil. Last year,
operating income included a positive impact of approximately
SEK 170m from a reversal of a provision related to an adminis-
trative case.
Non-recurring items of SEK 1,101m (0) were included in oper-
ating income, mainly related to the recovery of overpaid sales
tax in Brazil, see Note 7.
KEY FIGURES
sekm
Net sales
Organic growth, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
Average number of employees
1) For information on non-recurring items, see Note 7 and page 88.
NET SALES AND OPERATING MARGIN
2019
2018
19,653
17,963
10.9
1,821
9.3
3.7
9.3
492
2.7
2.7
7,044
6,186
27.1
956
7.7
722
10,230
10,360
SEKM
25,000
20,000
15,000
10,000
5,000
0
-5,000
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
-2
15
16
17
18
19
Asia-Pacific , Middle East and Africa
Overall market demand for appliances in Australia declined in
2019, mainly related to a slowing property market and a weak
Australian dollar. The markets in Southeast Asia as well as in
Middle East and Africa are estimated to have shown growth.
Electrolux reported an organic sales decline of 1.3%, mainly
related to lower volumes and, in Southeast Asia, price pressure.
Mix contributed positively across product categories and in
most regions, notably in Australia.
Operating income and margin declined year-over-year, mainly
as a result of significant currency headwinds as well as the
decline in organic sales. Investments in major product launches
increased, while production efficiency contributed positively.
Non-recurring items of SEK –398m (0) were included in operat-
ing income and related to restructuring charges for efficiency
measures and outsourcing projects, see Note 7.
KEY FIGURES
sekm
Net sales
Organic growth, %
Acquisitions, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %1)
Net assets
Return on net assets, %
Capital expenditure
Average number of employees
1) For information on non-recurring items, see Note 7 and page 88.
NET SALES AND OPERATING MARGIN
SEKM
15,000
12,000
9,000
6,000
3,000
0
2019
2018
14,954
14,375
–1.3
0.1
446
3.0
5.6
4.2
0.9
979
6.8
6.8
6,062
5,223
7.4
456
19.2
505
7,919
7,829
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
10
8
6
4
2
0
15
16
17
18
19
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 25
Discontinued operations
Electrolux Professional
Overall market demand for professional food and beverage
and professional laundry equipment is estimated to have shown
growth in 2019, although at a slower pace than the previous year.
Electrolux Professional reported a slight organic decline of
0.3%. Volumes decreased in the food and beverage segment,
while price development contributed positively. Acquisitions
had a positive impact of 4.0% on sales and refer to the acquisi-
tions of SPM Drink Systems and UNIC.
Operating income and margin declined year-over-year.
The decrease was mainly due to lower volumes, partly
relating to preparations pertaining to the separation of
Electrolux Professional, but also increased investments in
marketing and innovation. Operating income included initial
costs for setting up a new IT infrastructure, higher ongoing costs
for operating as a stand-alone company as well as a posi-
tive effect from a pension plan settlement in Sweden. In 2019,
an efficiency program was launched to offset the additional
higher cost as a stand-alone company. Non-recurring items of
SEK –122 m (0) were included in operating income related to
the efficiency program. For more information on discontinued
operations, see note 26.
KEY FIGURES
sekm
Net sales
Organic growth, %
Acquisitions, %
Operating income
Operating margin, %
Operating margin excl. non-recurring items, %
NET SALES AND OPERATING MARGIN
2019
9,281
–0.3
4.0
991
10.7
12.0
2018
8,666
3.5
4.7
1,134
13.1
13.1
SEKM
10,000
8,000
6,000
4,000
2,000
0
Net sales
Operating margin
Operating margin
excl. non-recurring items
%
25
20
15
10
5
0
15
16
17
18
19
ELECTROLUX ANNUAL REPORT 2019
26 Board of Directors’ report and financial statements
In the balance sheet as per December 31, 2019, assets and liabilities of Electrolux Professional have been reclassified as ‘Discontinued operations, assets held for distribution’ and ‘Discontinued
operations, liabilities held for distribution’ respectively. The balance sheet items for 2018 are the historical financial statements as no restatement is allowed under IFRS.
To facilitate comparison, working capital and net assets items below excludes assets and liabilities of Electrolux Professional for both 2018 and 2019.
Financial position
• Equity/assets ratio was 23.6% (25.6).
• Return on equity was 11.4% (18.2).
• Return on net assets was 12.0% (20.2).
• Financial net debt position amounted to SEK 667m (1,989 net cash position).
Working capital and net assets
Working capital as of December 31, 2019 amounted to
SEK –17,390m (–17,077), corresponding to –14.8% (–14.8) of
annualized net sales. Operating working capital amounted to
SEK 3,149m (2,279), corresponding to 2.7% (2.0) of annualized
net sales.
Average net assets were SEK 26,532m (20,722),
corresponding to 22.3% (17.9) of annualized net sales.
Return on net assets was 12.0% (20.2).
Working capital and net assets
sekm
Inventories
Trade receivables
Accounts payable
Operating working capital
Provisions
Prepaid and accrued income and expenses
Taxes and other assets and liabilities
Working capital
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other non-current assets
Deferred tax assets and deferred tax liabilities
Net assets
Annualized net sales4)
Average net assets
Annualized net sales5)
Return on net assets, %
1) Annualized, see Note 30.
2) Excluding discontinued operations.
3) Including discontinued operations.
4) Calculated at end of period exchange rates.
5) Calculated at average exchange rates.
Dec. 31, 2019 % of net sales1)
restated2) % of net sales1) Dec. 31, 20183) % of net sales1)
Dec. 31, 2018
16,194
20,847
–33,892
3,149
–8,183
–11,748
–608
–17,390
21,803
2,811
7,071
5,820
6,057
26,172
117,519
26,532
118,981
12.0
13.8
17.7
–28.8
2.7
–14.8
22.3
22.3
15,451
19,824
–32,996
2,279
–7,083
–11,205
–1,067
–17,077
20,003
—
6,800
5,102
5,478
20,306
115,733
20,722
115,463
20.2
13.4
17.1
–28.5
2.0
–14.8
17.5
17.9
16,750
21,482
–34,443
3,789
–7,565
–11,745
–1,327
–16,848
21,088
—
8,239
5,516
5,580
23,574
124,399
23,381
124,129
22.7
13.5
17.3
–27.7
3.0
–13.5
19.0
18.8
Liquid funds
Liquid funds as of December 31, 2019, amounted to
SEK 11,189m (12,249), excluding back-up credit facilities.
Electrolux has an unused committed back-up multi- currency
revolving credit facility of EUR 1,000m, approximately
SEK 10,440m, expiring 2023.
Liquidity profile
sekm
Liquid funds
% of annualized net sales1)
Net liquidity
Fixed interest term, days
Effective annual yield, %
Dec. 31, 2019 Dec. 31, 2018
11,189
18.4
7,569
12
0.8
12,249
18.1
8,187
12
1.1
1) Liquid funds in relation to net sales, see note 31 for definition.
For additional information on the liquidity profile, see Note 18.
RETURN ON NET ASSETS
CAPITAL TURNOVER-RATE, TIMES/YEAR
SEKM
30,000
22,500
15,000
7,500
0
%
40
30
20
10
0
Average net assets
Return on net assets
Average net assets for 2019 increased
to SEK 26,532m (20,722). Return on net
assets was 12.0% (20.2).
TIMES
8
6
4
2
0
15
16
17
18
19
15
16
17
18
19
For comparable reasons the figures in the graphs above are exclusive of the business area Professional Products.
Capital turnover-rate
The capital turnover-rate decreased
to 4.5 (5.6) times in 2019.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 27
note
December 31, 2019
December 31, 2018
12
8
13
13
29
10
18
22
14
15
17, 18
18
16
18
18
26
20
20
20
20
18
8
10
22
23
18
24
18
8
18
23
26
21,803
21,088
2,811
7,071
3,817
424
6,618
93
1,043
1,486
—
8,239
3,919
397
6,448
246
532
952
45,166
41,822
16,194
20,847
913
192
4,465
190
10,807
8,034
61,642
106,808
1,545
2,905
–1,351
19,468
22,566
8
22,574
8,236
2,333
561
4,909
5,577
21,616
33,892
883
16,821
3,354
817
293
2,606
3,951
62,617
84,233
106,808
16,750
21,482
738
139
4,507
176
11,697
—
55,490
97,312
1,545
2,905
–2,394
19,683
21,738
11
21,749
6,198
—
868
4,346
5,281
16,693
34,443
984
17,105
3,952
—
102
2,284
—
58,870
75,563
97,312
Consolidated balance sheet
sekm
ASSETS
Non-current assets
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other intangible assets
Investments in associates
Deferred tax assets
Financial assets
Pension plan assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade receivables
Tax assets
Derivatives
Other current assets
Short-term investments
Cash and cash equivalents
Discontinued operations, assets held for distribution
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Parent Company
Share capital
Other paid-in capital
Other reserves
Retained earnings
Non-controlling interests
Total equity
Non-current liabilities
Long-term borrowings
Long-term lease liabilities
Deferred tax liabilities
Provisions for post-employment benefits
Other provisions
Total non-current liabilities
Current liabilities
Accounts payable
Tax liabilities
Other liabilities
Short-term borrowings
Short-term lease liabilities
Derivatives
Other provisions
Discontinued operations, liabilities held for distribution
Total current liabilities
Total liabilities
Total equity and liabilities
ELECTROLUX ANNUAL REPORT 2019
28 Board of Directors’ report and financial statements
Net debt items as per December 31, 2019, excludes assets and liabilities of Electrolux Professional. Net debt items as per December 31, 2018, includes assets and liabilities of
Electrolux Professional. Equity as per December 31, 2019, and December 31, 2018, includes Electrolux Professional.
Cont. Financial position
Long-term borrowings and long-term borrowings with maturi-
ties within 12 months amounted to a total of SEK 9,682m as of
December 31, 2019 with average maturity of 3.0 years, com-
pared to SEK 8,553m and 2.6 years at the end of 2018. During
2020, long-term borrowings amounting to approximately
SEK 1.4bn will mature.
The Group’s target for long-term borrowings includes an
average time to maturity of at least two years, an even spread
of maturities and an average interest-fixing period between
0 and 3 years. A maximum of SEK 5,000m of the long-term
borrowings is allowed to mature in a 12-month period. At year-
end, the average interest- fixing period for long-term borrowings
was 1.5 years (1.0).
At year-end, the average interest rate for the Group’s total
interest-bearing borrowings was 1.6% (2.5).
Rating
Electrolux has an investment-grade rating from Standard &
Poor’s, A- with a stable outlook.
Rating
Standard &
Poor’s
Long-term
debt
Outlook
Short-
term debt
Short-term
debt, Nordic
A-
Stable
A-2
K-1
Net debt/equity and equity/assets ratio
The net debt/equity ratio was 0.34 (0.08). The equity/assets
ratio was 23.6% (25.6).
Equity and return on equity
Total equity as of December 31, 2019, amounted to
SEK 22,574m (21,749), which corresponds to SEK 78.55
(75.67) per share. Return on equity was 11.4% (18.2).
Net debt
As of December 31, 2019, Electrolux had a financial net debt
position (excluding lease liabilities and post-employment
provisions) of SEK 667m, compared to the financial net cash
position of SEK 1,989m as of December 31, 2018. Net provisions
for post-employment benefits was SEK 3,866m (3,814). Lease
liabilities amounted to SEK 3,150m as of December 31, 2019
and is an effect of the application of IFRS 16 as from January 1,
2019. In total, net debt amounted to SEK 7,683m, an increase by
SEK 5,858m compared to SEK 1,825m per December 31, 2018.
Net debt
sekm
Short-term loans
Short-term part of long-term loans
Trade receivables with recourse
Short-term borrowings
Financial derivative liabilities
Accrued interest expenses and pre-
paid interest income
Total short-term borrowings
Long-term borrowings
Total borrowings2)
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and
accrued interest income
Dec. 31, 20191) Dec. 31, 2018
1,307
1,446
602
3,354
233
33
3,620
8,236
11,856
1,429
2,355
168
3,952
81
28
4,062
6,198
10,260
10,807
11,697
190
176
16
176
132
243
Liquid funds
11,189
12,249
Financial net debt
Lease liabilities
Net provisions for post-employment
benefits
Net debt
Net debt/equity ratio
Total equity
Equity per share, SEK
Return on equity, %
Equity/assets ratio, %
667
3,150
3,866
7,683
0.34
22,574
78.55
11.4
23.6
–1,989
-
3,814
1,825
0.08
21,749
75.67
18.2
25.6
1) Electrolux Professional is currently primarily financed through intra-group loans of
approximately SEK 1.2bn from Electrolux, included in net debt as per December 31,
2019 shown above. These loans will be repaid in connection with the planned listing of
Electrolux Professional and replaced by external financing leading to a reduction of
Electrolux financial net debt. Electrolux Professional’s liquid funds as per December 31, 2019
amounted to approximately SEK 0.6bn.
2) Whereof interest-bearing liabilities amounting to SEK 10,989m as of December 31, 2019
and SEK 9,982m as of December 31, 2018.
LONG-TERM BORROWINGS, BY MATURITY
NET DEBT/EQUITY RATIO1)
EQUITY/ASSETS RATIO1)
SEKM
3,000
2,500
2,000
1,500
1,000
500
0
In 2020, long-term borrowings
in the amount of approximately
SEK 1,400m will mature. For information
on borrowings, see Note 2 and 18.
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
-0.1
%
50
40
30
20
10
0
20
21
22
23
24
25-
10
11
12
13
14
15
16
17
18
19
10
11
12
13
14
15
16
17
18
19
1) Both ratios were significantly affected from 2012 and onwards by the changed
pension accounting from the updated IAS 19 Employee Benefits.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 29
Changes in consolidated equity
sekm
Attributable to equity holders of the parent company
Share
capital
Other
paid-in
capital
Other
reserves
Retained
earnings
Total
Non-
controlling
interests
Opening balance, January 1, 2018
1,545
2,905
–2,615
18,630
20,465
Effect from change in accounting principles
Adjusted opening balance
Income for the period
Cash flow hedges
Exchange differences on translation of foreign operations
Remeasurement of provisions for post-employment benefits
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payments
Dividend
Acquisition of non-controlling interest
Total transactions with equity holders
Closing balance, December 31, 2018
Effect from change in accounting principles
Adjusted opening balance
Income for the period
Cash flow hedges
Exchange differences on translation of foreign operations
Remeasurement of provisions for post-employment benefits
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payments
Dividend
Acquisition of non-controlling interest
Total transactions with equity holders
Closing balance, December 31, 2019
—
1,545
—
–1
2,905
–2,615
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
–2
200
—
23
221
221
—
—
—
—
1,545
2,905
–2,394
—
1,545
—
—
2,905
–2,394
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
–10
1,029
—
24
1,044
1,044
—
—
—
—
1,545
2,905
–1,351
–17
18,614
3,805
—
4
–448
128
–316
3,490
–35
–18
20,448
3,805
–2
204
–448
151
–95
3,710
–35
–2,385
–2,385
—
–2,421
19,683
–234
19,450
2,509
—
—
–103
3
–100
2,409
52
—
–2,421
21,738
–234
21,504
2,509
–10
1,029
–103
27
944
3,453
52
–2,443
–2,443
—
–2,391
19,468
—
–2,391
22,566
For more information about share capital, number of shares and earnings per share, see Note 20.
14
0
14
0
—
0
—
—
0
0
—
0
–3
–3
11
—
11
—
—
—
—
—
—
–1
—
–1
–1
–2
8
Total
equity
20,480
–18
20,463
3,805
–2
203
–448
151
–95
3,710
–35
–2,385
–3
–2,424
21,749
–234
21,515
2,509
–10
1,029
–103
27
944
3,452
52
–2,443
–1
–2,393
22,574
ELECTROLUX ANNUAL REPORT 2019
30 Board of Directors’ report and financial statements
The consolidated cash flow statement for 2019 and 2018 is for the total Group and includes a split of operating income into ‘Operating income, continuing operations’ and ‘Operating income,
discontinued operations’.
Cash flow
• Operating cash flow after investments for the Group amounted to SEK 3,433m (3,649).
• Capital expenditure amounted to SEK 6,931m (5,629).
• R&D expenditure amounted to 3.3% (3.1) of net sales.
Operating cash flow after investments
Operating cash flow after investments in 2019 for the Group
amounted to SEK 3,433m (3,649). The year-over-year compar-
ison reflects a higher contribution from operating cash flow,
partly related to timing effects, while higher investments had
a negative impact. Acquisitions of operations had a negative
impact of SEK 467m. For more information on acquisitions see
Note 26.
Operating cash flow after investments for continuing opera-
tions amounted to SEK 2,280m (2,646). For more information on
cash flow related to discontinued operations, see Note 26.
Capital expenditure
Capital expenditure in property, plant and equipment in 2019
for the Group amounted to SEK 5,562m (4,650). Including invest-
ments in product development and software, capital expendi-
ture amounted to SEK 6,931m (5,629).
Capital expenditures for continuing operations amounted to
SEK 6,674m (5,460), corresponding to 5.6% (4.7) of net sales. The
investments were mainly related to new products and architec-
tures, manufacturing efficiency, automation and re-engineering.
Cash flow
sekm
Capital expenditure by business area
sekm
Continuing operations
2019
2018
Europe
Operating income adjusted for non-cash items1)
11,006 10,547
Change in operating assets and liabilities
Operating cash flow
Investments in tangible and intangible assets
Changes in other investments
Operating cash flow after investments
Acquisitions and divestments of operations
Operating cash flow after structural changes
Financial items paid, net2)
–357 –1,000
10,649
9,547
–6,931 –5,629
–285
–269
3,433
3,649
–467
–609
2,966
3,041
–661
–361
% of net sales
North America
% of net sales
Latin America
% of net sales
Asia-Pacific, Middle East and Africa
% of net sales
Other
Total
Taxes paid
–1,554 –1,140
% of net sales
Cash flow from operations and investments
Payment of lease liabilities
Dividend
Share-based payments
Total cash flow, excluding changes in loans and
short-term investments
751
1,540
–942
—
–2,443 –2,385
9
–210
–2,624 –1,056
1) Operating income adjusted for depreciation and amortization and other non-cash items.
2) For the period January 1 — December 31, 2019. Interests and similar items received SEK 78m
(116), interests and similar items paid SEK –499m (–427) and other financial items paid
SEK –111m (–49). Interest paid related to lease liabilities SEK –129m (–).
Discontinued operations
Electrolux Professional
Total Group
% of net sales
2019
2018
2,399
1,741
5.3
4.0
2,573
2,099
6.6
956
4.9
456
3.0
290
5.3
722
4.0
505
3.5
393
6,674
5,460
5.6
4.7
257
169
6,931
5,629
5.2
4.5
R&D expenditure
The expenditure for research and development in 2019 for con-
tinuing operations, including capitalization of SEK 788m (412),
amounted to SEK 3,899m (3,566) corresponding to 3.3% (3.1) of
net sales.
OPERATING CASH FLOW AFTER INVESTMENTS1)
CAPITAL EXPENDITURE1)
SEKM
10,000
8,000
6,000
4,000
2,000
0
SEKM
8,000
6,000
4,000
2,000
0
Operating cash flow after invest-
ments in 2019 for continuing operations
amounted to SEK 2,280m (2,646).
15
16
17
18
19
15
16
17
18
19
1)The figures for 2018 and 2019 are for continuing operations, exclusive of Electrolux Professional.
Capital expenditure
Depreciation and amortization
Capital expenditure in 2019 for
continuing operations including product
development and software amounted to
SEK 6,674m (5,460).
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 31
Consolidated cash flow statement
sekm
Operations
Operating income from continuing operations
Operating income from discontinued operations
Depreciation and amortization
Other non-cash items
Financial items paid, net1)
Taxes paid
Cash flow from operations, excluding change in operating assets and liabilities
Change in operating assets and liabilities
Change in inventories
Change in trade receivables
Change in accounts payable
Change in other operating assets, liabilities and provisions
Cash flow from change in operating assets and liabilities
Cash flow from operations
Investments
Acquisition of operations
Divestment of operations
Capital expenditure in property, plant and equipment
Capital expenditure in product development
Capital expenditure in software and other intangibles
Other
Cash flow from investments
Cash flow from operations and investments
Financing
Change in short-term investments
Change in short-term borrowings2)
New long-term borrowings
Amortization of long-term borrowings
Payment of lease liabilities
Dividend
Share-based payments
Cash flow from financing
Total cash flow
Cash and cash equivalents at beginning of period
Exchange-rate differences referring to cash and cash equivalents
Cash and cash equivalents at end of period2)
note
2019
2018
26
26
26
12
13
13
18
18
3,189
991
5,104
1,722
–661
–1,554
8,791
–298
–561
44
459
–357
8,434
–467
—
–5,562
–797
–571
–285
–7,683
751
–13
828
3,810
–2,412
–942
–2,443
9
–1,162
–411
11,697
172
11,458
4,176
1,134
4,150
1,088
–361
–1,140
9,046
–1,619
–582
2,317
–1,116
–1,000
8,046
–902
293
–4,650
–416
–563
–269
–6,506
1,540
193
951
1,736
–1,531
—
–2,385
–210
–1,245
295
11,289
113
11,697
1) Interests and similar items received SEK 78m (116), interests and similar items paid SEK –499m (–427) and other financial items paid SEK –111m (–49). Interest paid related to lease liabilities
SEK –129 (-).
2) Whereof net cash change in short-term loans SEK 303m (397).
3) The difference between Cash and cash equivalents at the end of period for 2019 in the Consolidated cash flow statement and Consolidated balance sheet correspond to the cash and cash
equivalents of Electrolux Professional amounting to approximately SEK 0.6 bn.
ELECTROLUX ANNUAL REPORT 2019
32 Board of Directors’ report and financial statements
External and emerging risks
Active risk management is essential for Electrolux to drive
successful operations. The Group’s strategic framework in com-
bination with the external environment generates opportunities
but also risks which in turn impact how the company manages
those risks in the daily operations. Electrolux monitors and mini-
mizes key risks in a structured and proactive manner.
The Group has several processes to manage risks through
operational activities that are managed by the business area
boards. Electrolux organizational structure and system for inter-
nal control and risk management are included in the Corporate
Governance report.
The Group has also established internal bodies that manage
risk exposures. Examples of internal bodies are: Enterprise Risk
Management Board, Insider Committee, Ethics & Human Rights
Steering Group, Audit Board and the Tax Board.
Macroeconomic trends, political uncertainties and overall
changes in industry dynamics are factors that may impact the
appliance industry and the markets in which Electrolux oper-
ates. To manage external risks, Electrolux puts close attention
to understanding the economic and political developments
in its key markets and pro-actively manages and adapts its
operations. External risks include:
Variations in demand
In times of weak markets and decline in demand for the Group’s
products, decisive actions and cost saving initiatives throughout
the Group have proven that Electrolux can make timely adjust-
ments to its production and cost structure. In times of strong
market demand, it is essential that Electrolux can benefit from its
global scale by delivering new innovative products and out-
standing consumer experiences with a high speed to market.
Changing industry dynamics
The fast pace of change in the industry has led to new trends,
such as increased consumer power, digitalization, consolida-
tion and sustainability. These changes place increasing demand
on investments and the ability to adapt, but also open up major
opportunities. Electrolux has in recent years invested in R&D
and innovation and transformed its business into a consumer-
Sensitivity analysis year-end 2019, continuing operations
Change +/-
Pre-tax earnings
impact -/+, sekm
Risk
Raw materials1)
Carbon Steel
Stainless Steel
Plastics
Currency2) and interest rates
USD to EUR
USD to BRL
EUR to GBP
USD to CAD
CNY to USD
EUR to CHF
THB to AUD
EUR to RUB
EUR to CZK
USD to AUD
Translation exposure to SEK3)
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
600
200
650
380
290
260
260
210
200
130
120
110
100
370
40
Interest rate
1 percentage point
1) Changes in raw materials refer to Electrolux prices and contracts, which may differ
from market prices.
2) Transactional exposure. Translation effects not included.
3) Assuming the Swedish krona appreciates/depreciates against all other currencies.
oriented company with strong focus on consumer benefits.
Electrolux has also set ambitious targets to strengthen its sus-
tainability footprint. For more information, see Sustainability
reporting 2019.
Price competition
Electrolux markets are experiencing price competition. This is
particularly evident in the low-cost segments and in product
categories with significant overcapacity. In markets with high
inflation combined with currency-rate fluctuations, Electrolux
has a better possibility to carry out price increases to offset
potential negative effects.
Regulatory changes
Regulatory changes (industry, environmental, social, labor and
human rights) can impact reputation and the Group’s ability to
successfully conduct business. There are a number of processes
in place to control these risks such as internal and supplier audit-
ing, environmental management and certification, the Ethics
program and the safety management system. The regulatory
environment is monitored in order to be prepared for changes
that impact the business.
Purchasing and raw material impact
Materials account for a large share of Electrolux costs.
Electrolux purchases raw materials and components for
approximately SEK 50bn, of which approximately SEK 17bn
referred to raw materials in 2019. Electrolux also sources a
significant number of finished products from external sup-
pliers. Fluctuations in commodity prices impact the Group’s
input costs and, therefore, its profitability. In order to mitigate
increased input costs related to higher raw material prices,
Electrolux may have to take actions to increase cost efficiency,
negotiate purchasing contracts for finished products and/
or commodities such as steel and chemicals or increase the
prices of its products. The purchasing of materials and finished
products also involves risks for Electrolux if suppliers encoun-
ter constraints to deliver according to plan, which could be
caused by many reasons, such as extreme weather conditions,
pandemic situations or political disruptions.
Political and macro risk
Political uncertainties and weak macro-economic conditions
may indirectly impact demand for appliances. This has implica-
tions for Electrolux business and strategy in regions, which carry
a high political and macro risk. While such risks have historically
been mainly associated with certain markets in Latin America,
the Middle East and Africa the development around Brexit have
made it more difficult to predict the political risk also in Europe
RAW MATERIALS EXPOSURE 2019
Plastics, 39%
Carbon steel, 38%
Stainless steel, 12%
Copper and aluminum, 8%
Other, 3%
In 2019, Electrolux, continuing operations, purchased
raw materials for approximately SEK 17bn. Purchases
of steel accounted for the largest cost.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 33
and other regions. Consequently, Electrolux must take proactive
steps to assess the risks and manage them accordingly.
Business risks surrounding rising international trade tariffs
also include costlier imports, less competitive exports, fluctuat-
ing foreign exchange rates, shorter contracts, cancelled orders,
reduced consumer demand, and slower customs procedures.
Ultimately, such risks can affect Electrolux operating margins
negatively.
Electrolux also looks at emerging risks. They can either
develop from macro-level changes such as climate change,
consumer preferences or the introduction of AI – artificial
intelligence, or from risks that are closer to home (resulting
from industry/sector prospects and trends etc.). Emerging
risks include:
Cyber Security risk
The digital transformation of the global economy, and of
Electrolux more specifically, leads to great opportunities. As
Electrolux uses digital enablers to speed up the transfer of infor-
mation, it also creates potential greater risk. Electrolux continu-
ously prepares against attacks by assessing its cyber risk profile,
remediate where recommended and proactively manage its
defense.
Climate change risk
Financial stakes arising from climate change can be high, both
from a risk and opportunity perspective. Electrolux is closely
monitoring operational, market and financial risks emerging
from climate change, like the increase of natural catastrophes,
which might subsequently impact property values. Protection
of factories and distribution centers may have to be adapted to
face extreme weather conditions. In parallel, the need to transi-
tion to a low-carbon economy implies possible tax and legal
consequences which Electrolux proactively analyzes, as well as
the consequences of these risks for its large suppliers.
Risks, risk management and risk exposure are described in more detail in Note 1 Accounting
principles, Note 2 Financial risk management and in Note 18 Financial instruments.
Other facts
Asbestos litigation in the U.S.
Litigation and claims related to asbestos are pending against
the Group in the U.S. Almost all of the cases refer to externally
supplied components used in industrial products manufac-
tured by discontinued operations prior to the early 1970s. The
cases involve plaintiffs who have made substantially identical
allegations against other defendants who are not part of the
Electrolux Group.
As of December 31, 2019, the Group had a total of 3,897
(3,460) cases pending, representing approximately 3,933
(approximately 3,502) plaintiffs. During 2019, 1,617 new cases
with approximately 1,618 plaintiffs were filed and 1,180 pending
cases with approximately 1,187 plaintiffs were resolved.
The Group continues to operate under a 2007 agreement
with certain insurance carriers who have agreed to reimburse
the Group for a portion of its costs relating to certain asbestos
lawsuits. The agreement is subject to termination upon 60 days
notice and if terminated, the parties would be restored to their
rights and obligations under the affected insurance policies.
It is expected that additional lawsuits will be filed against
Electrolux. It is not possible to predict the number of future
lawsuits.
In addition, the outcome of asbestos lawsuits is difficult to
predict and Electrolux cannot provide any assurances that
the resolution of these types of lawsuits will not have a mate-
rial adverse effect on its business or on results of operations
in the future.
For information on certain additional legal proceedings, see Note 25 Contingent liabilities.
ELECTROLUX ANNUAL REPORT 2019
34 Board of Directors’ report and financial statements
Share information and ownership
According to Holdings and Euroclear Sweden, there were
50,544 shareholders in AB Electrolux as of December 31,
2019. Investor AB is the largest shareholder, owning 16.4%
of the share capital and 28.4% of the voting rights. Informa-
tion on the shareholder structure is updated quarterly at
www.electroluxgroup.com
Distribution of shareholdings
Shareholding
1–1,000
1,001–10,000
10,001–20,000
20,001–
Total
Ownership, %
Number of
shareholders
As % of
shareholders
3.1
3.4
0.7
92.8
100
45,963
4,311
151
297
50,544
90.9
8.2
0.3
0.6
100
Source: Holdings and Euroclear Sweden as of December 31, 2019.
Articles of Association
AB Electrolux Articles of Association stipulate that the Annual
General Meeting (AGM) shall always resolve on the appoint-
ment of the members of the Board of Directors. Apart from that,
the articles do not include any provisions for appointing or
dismissing members of the Board of Directors or for changing
the articles.
A shareholder participating in the AGM is entitled to vote for
the full number of shares which he or she owns or represents.
Outstanding shares in the company may be freely transferred,
without restrictions under law or the company’s Articles of
Association. Electrolux is not aware of any agreements between
shareholders, which limit the right to transfer shares.
The full Articles of Association can be downloaded at
www.electroluxgroup.com
Effect of significant changes in ownership structure
on long-term financing
The Group’s long-term financing is subject to conditions, which
stipulate that lenders may request advance repayment in
the event of significant changes in the ownership of the com-
pany. Such significant change could result from a public bid to
acquire Electrolux shares.
Share price performance
The Electrolux share is listed on the exchange Nasdaq
Stockholm. The Electrolux B share increased by 23% in 2019,
underperforming the broader Swedish market index, OMX
Stockholm, which increased by 30% during the same period. The
opening price for the Electrolux B share in 2019 was SEK 187.10.
The highest closing price was SEK 266.20 on October 25 while
the lowest closing price was SEK 182.70 on January 3. The clos-
ing price for the B share at year-end 2019 was SEK 229.90.
Total shareholder return during the year was 27%. Over the
past ten years, the average total return on an investment in
Electrolux B shares has been 7% annually. The corresponding
performance for the OMX Stockholm Return Index was 11%.
Share capital and ownership structure
As of December 31, 2019, the share capital of AB Electrolux
amounted to approximately SEK 1,545m, corresponding to
308,920,308 shares. The share capital of Electrolux consists of
Class A shares and Class B shares. An A share entitles the holder
to one vote and a B share to one-tenth of a vote. All shares enti-
tle the holder to the same proportion of assets and earnings and
carry equal rights in terms of dividends. In accordance with the
Swedish Companies Act, the Art icles of Association of Electrolux
also provide for specific rights of priority for holders of different
types of shares, in the event that the company issues new shares
or certain other instruments.
According to Electrolux Articles of Association, owners of
Class A shares have the right to have such shares converted to
Class B shares. The purpose of the conversion clause is to give
holders of Class A shares an opportunity to achieve improved
liquidity in their shareholdings. Conversion re duces the total
number of votes in the company. There were no conversion
of shares in 2019.
The total number of registered shares in the company
amounts to 308,920,308 shares, of which 8,192,539 are Class A
shares and 300,727,769 are Class B shares, and the total number
of votes amounts to 38,265,316.
Major shareholders
Investor AB
Alecta Pension Insurance
Swedbank Robur Funds
BlackRock, Inc.
Handelsbanken Funds
Nordea Funds
Vanguard
AMF Insurance & Funds
Fiduciary Management, Inc. of Milwaukee
Norges Bank Investment Management
Share
capital, %
Voting
rights, %
16.4
28.4
7.2
7.0
4.7
2.7
2.6
2.3
2.3
2.1
1.5
7.0
5.7
3.8
2.2
2.1
1.8
4.2
1.7
1.2
Total, ten largest shareholders
48.8
58.1
Source: Holdings and Euroclear Sweden as of December 31, 2019.
OWNERSHIP STRUCTURE
Swedish institutions and mutual funds, 61%
Foreign investors, 33%
Swedish private investors, 6%
At year-end, about 33% of the total share capital
was owned by foreign investors.
Source: Holdings and Euroclear Sweden as of
December 31, 2019.
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 35
Distribution of funds to shareholders
Proposed dividend
The Board of Directors proposes a dividend for 2019 of SEK 8.50
(8.50) per share, for a total dividend payment of approximately
SEK 2,443m (2,443). The proposed dividend corresponds to
approximately 97% (64) of income for the period.
The dividend is proposed to be paid in two equal install-
ments, the first with record date April 2, 2020, and the second
with record date October 2, 2020. The first installment is esti-
mated to be paid on April 7, 2020, and the second installment on
October 7, 2020.
The Group’s goal is for the dividend to correspond to at least
30% of income for the period. Historically, the Electrolux divi-
dend rate has been considerably higher than 30%. Electrolux
has a long tradition of a high total distribution to shareholders
that includes repurchases and redemptions of shares.
Proposal for a renewed mandate on acquisition
of own shares
Electrolux has, for several years, had a mandate from the Annual
General Meetings to acquire own shares.
The Board of Directors proposes the Annual General Meeting
2020 to authorize the Board of Directors, for the period until
the next Annual General Meeting, to resolve on acquisitions of
shares in the company and that the company may acquire as
a maximum so many B shares that, following each acquisition,
the company holds a maximum of 10% of all shares issued by the
company.
The purpose of the proposal is to be able to use repurchased
shares on account of potential company acquisitions and the
company’s share related incentive programs, and to be able to
adapt the company’s capital structure.
In December 2019, the Board of Directors proposed that an
As of December 31, 2019, Electrolux held 21,522,858 B shares
Extraordinary General Meeting resolves that all shares in the
wholly-owned subsidiary Electrolux Professional AB is distrib-
uted. An Extraordinary General Meeting will be held on February
21, 2020 at Electrolux Headquarters in Stockholm, Sweden. For
more information see, page 38 and www.electroluxgroup.com
Number of shares
in Electrolux, corresponding to approximately 7.0% of the total
number of shares in the company.
Number of shares as of January 1, 2019
8,192,539
300,727,769
308,920,308
21,522,858
287,397,450
Total number of shares as of December 31, 2019
8,192,539
300,727,769
308,920,308
21,522,858
287,397,450
As % of total number of shares
7.0%
A shares
B shares
Shares, total
Shares held
by Electrolux
Shares held
by other
shareholders
TOTAL DISTRIBUTION TO SHAREHOLDERS
SEKM
7,500
6,000
4,500
3,000
1,500
0
07
08
09
10
11
12
13
14
15
16
17
18
19
Dividend
Redemption of shares
ELECTROLUX ANNUAL REPORT 2019
Electrolux has a
long tradition of high
total distribution to
share holders that
includes dividends as
well as repurchases
and redemptions of
shares.
36 Board of Directors’ report and financial statements
Employees
Electrolux corporate culture
Teamship is the Electrolux way of working. It’s about setting
aligned goals that allow clear choices and continuous improve-
ment. It’s about knowing how to collaborate. It’s about transpar-
ency and a learning organization. Finally, it’s about engage-
ment and passion about outstanding consumer experiences.
Wherever Electrolux operates in the world, the company
applies the same high ethical standards and principles of
conduct.
Electrolux has a global ethics program, encompassing both
ethics training and a whistleblowing system – the Electrolux
Ethics Helpline. Through the Ethics Helpline, employees can
report suspected misconduct in local languages. Reports may
be submitted anonymously if legally permitted.
Code of Conduct
The Group has a Code of Conduct that defines high employ-
ment standards for all Electrolux employees in all countries and
business areas. It incorporates issues such as child and forced
labor, health and safety, workers’ rights and environmental
compliance. Key policies in this context include the Workplace
Policy, the Anti-Corruption Policy and the Environmental Policy.
Number of employees
The average number of employees for Electrolux continuing
operations decreased in 2019 to 48,652 (51,253), of whom 1,341
(1,504) were in Sweden.
Salaries and remuneration in 2019 amounted to SEK 16,318m
(15,829), of which SEK 1,339m (1,170) refers to Sweden.
Proposal for remuneration guidelines for
Group Management
The Board of Directors will to the Annual General Meeting 2020
propose the following guidelines for remuneration and other
terms of employment for the President and CEO, other members
of the Group Management of Electrolux (“Group Management”)
and, if applicable, remuneration to board members for work in
addition to the board assignment. The Group Management cur-
rently comprises of eleven executives.
The principles shall be applied to employment and con-
sultancy agreements entered into after the Annual General
Meeting in 2020 and to changes made to existing agreements
thereafter. The guidelines shall be in force until new guidelines
are adopted by the General Meeting. These guidelines do not
apply to any remuneration decided or approved by the General
Meeting.
Remuneration for the President and CEO and, if applicable,
members of the Board of Directors is resolved upon by AB
Electrolux Board of Directors, based on the recommendation of
the Remuneration Committee. Remuneration for other members
EMPLOYEES1)
EMPLOYEES
65,000
55,000
45,000
35,000
25,000
15,000
SEKM
2.5
2.0
1.5
1.0
0.5
0.0
Average number of employees
Net sales per employee
The average number of employees
decreased to 48,652 (51,253) in 2019.
15
16
17
18
19
1) The figures for 2018 and 2019 are for continuing operations, exclusive of
Electrolux Professional.
of Group Management is resolved upon by the Remuneration
Committee and reported to the Board of Directors. The Remu-
neration Committee shall also monitor and evaluate programs
for variable remuneration for the Group Management, the
application of the guidelines for executive remuneration as well
as the current remuneration structures and compensation levels
in the Company. The Board of Directors shall, based on the
recommendation from the Remuneration Committee, prepare a
proposal for new guidelines at least every fourth year and sub-
mit it to the Annual General Meeting. The President and CEO and
other members of the Group Management do not participate in
the Board of Directors’ processing of and resolutions regarding
remuneration-related matters in so far as they are affected by
such matters.
Note 27 of the Annual Report includes a detailed description of existing remuneration
arrangements for Group Management, including fixed and variable compensation, long-
term incentive programs and other benefits.
Electrolux has a clear strategy to deliver profitable growth and
create shareholder value. A prerequisite for the successful imple-
mentation of the Company’s business strategy and safeguard-
ing of its long-term interests, including its sustainability, is that the
Company is able to recruit and retain qualified personnel. To this
end, it is necessary that the Company offers competitive remu-
neration in relation to the country or region of employment of
each Group Management member. These guidelines enable the
Company to offer the Group Management a competitive total
remuneration. More information on the Company’s strategy
can be found on the Company’s website and in the most recent
annual report, www.electroluxgroup.com.
The remuneration terms shall emphasize ‘pay for perfor-
mance’, and vary with the performance of the individual and the
Group. The total remuneration for the Group Management shall
be in line with market practice and may comprise of the follow-
ing components: fixed compensation, variable compensation,
pension benefits and other benefits.
Employment contracts governed by rules other than Swed-
ish may be duly adjusted for compliance with mandatory rules
or established local practice, taking into account, to the extent
possible, the overall purpose of these guidelines.
Fixed compensation
The Annual Base Salary (“ABS”) shall be competitive relative
to the relevant country market and reflect the scope of the job
responsibilities. Salary levels shall be reviewed periodically
(usually annually) to ensure continued competitiveness and to
recognize individual performance.
Variable compensation
Variable compensation consists of both short-term and long-
term incentives. Long-term incentives consist of long-term
share-related incentive programs (“LTI programs”). Such
programs are resolved upon by the General Meeting and are
therefore excluded from these guidelines. Each year, the Board
of Directors will evaluate whether or not an LTI program shall
be proposed to the General Meeting. LTI programs shall be
distinctly linked to the business strategy and shall always be
designed with the aim to further enhance the common interest
of participating employees and Electrolux shareholders of a
good long-term development for Electrolux. For more informa-
tion regarding these LTI programs, including the criteria which
the outcome depend on, please see the corporate governance
section on the Group’s website www.electroluxgroup.com.
Following the ‘pay for performance’ principle, variable com-
pensation shall represent a significant portion of the total com-
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 37
pensation opportunity for Group Management. Variable com-
pensation shall always be measured against pre-defined targets
and have a maximum above which no payout shall be made.
Variable compensation shall mainly relate to financial perfor-
mance targets. Non-financial targets may also be used in order
to strengthen the focus on delivering on the Company’s business
strategy and long-term interests, including its sustainability. The
targets shall be specific, clear, measurable and time bound and
be determined by the Board of Directors.
Short Term Incentive (STI)
Members of the Group Management shall participate in an STI
plan under which they may receive variable compensation. The
objectives in the STI plan shall mainly be financial and the mea-
surement period shall be one year. The objectives shall mainly
be set based on financial performance of the Group and, for the
business area heads, of the business area for which the Group
Management member is responsible, such as profit, financial
efficiency and sales. Financial objectives will comprise at least
80% of the weighting. Non-financial objectives may be related to
sustainability, customer satisfaction, quality or company culture.
To which extent the criteria for awarding variable cash
remuneration has been satisfied shall be determined by the
Remuneration Committee when the measurement period has
ended. For financial objectives, the evaluation shall be based on
the annual financial performance in accordance with the most
recent interim report for the fourth quarter made public by the
Company.
The maximum STI entitlements shall be dependent on job
position and may amount to a maximum of 100% of ABS. Reflect-
ing current market conditions, the STI entitlement for Group
Management members employed in the U.S. may amount to a
maximum of 150% of ABS.
Extraordinary arrangements
Additional variable compensation may be approved in
extraordinary circumstances, under the conditions that such
extraordinary arrangement is made for recruitment or retention
purposes, is agreed on an individual basis, does not exceed
three (3) times the ABS and is earned and/or paid out in instal-
ments over a minimum period of two (2) years. Such additional
variable remuneration may also be paid on an individual level
for extraordinary performance beyond the individual’s ordinary
tasks and shall in these situations not exceed 30% of the ABS and
be paid in one instalment.
Right to reclaim variable remuneration
Terms and conditions for variable remuneration should be
designed to enable the Board, under exceptional financial cir-
cumstances, to limit or cancel payments of variable remunera-
tion provided that such actions are deemed reasonable (malus).
The Board shall also have the possibility, under applicable law
or contractual provisions and subject to the restrictions that may
apply under law or contract, to in whole or in part reclaim vari-
able remuneration paid on incorrect grounds (claw-back).
Pension and benefits
Old age and survivor’s pension, disability benefits and health-
care benefits shall be designed to reflect home country prac-
tices and requirements. When possible, pension plans shall be
based on defined contribution. In individual cases, depending
on provisions in collective agreements, tax and/or social secu-
rity legislation to which the individual is subject, other schemes
and mechanisms for pension benefits may be approved.
Defined pension contributions shall not exceed 40% of the ABS
unless the entitlement is higher under applicable collective
agreements.
Other benefits, such as company cars and housing, may be
provided on an individual level or to the entire Group Manage-
ment. Costs relating to such benefits may amount to not more
than 20% of the ABS. Members of the Group Management who
are expatriates, may receive additional remuneration and
other benefits to the extent reasonable in light of the special
circumstances associated with the expat arrangement. Such
benefits shall be determined in line with the Group’s Directive on
International Assignments and may for example include reloca-
tion costs, housing, tuition fees, home travel, tax support and tax
equalization.
Notice of termination and severance pay
The notice period shall be twelve months if Electrolux takes the
initiative to terminate the employment and six months if the
Group Management member takes the initiative to terminate
the employment.
In individual cases, contractual severance pay may be
approved in addition to the notice periods. Contractual sever-
ance pay may only be payable upon Electrolux termination of
the employment arrangement or where a Group Management
member gives notice as the result of an important change in the
working situation, because of which he or she can no longer
perform to standard. This may be the case in e.g. the event of a
substantial change in ownership of Electrolux in combination
with a change in reporting line and/or job scope.
Contractual severance pay may for the individual include the
continuation of the ABS for a period of up to twelve months fol-
lowing termination of the employment agreement; no other ben-
efits shall be included. These payments shall be reduced with the
equivalent value of any income that the individual earns during
that period of up to twelve months from other sources of income,
either from employment or from other business activities.
In addition to the above, compensation for any non-compete
undertaking may be awarded. Such compensation shall be
based on the ABS at the time of notice of termination of the
employment, unless otherwise stipulated by mandatory collec-
tive agreement provisions, and be awarded over the period for
which the non-compete clause applies, which should not exceed
twelve months after termination of the employment. The com-
pensation shall be reduced by an amount corresponding to any
income that the person receives from other sources of income,
either from employment or from other business activities.
Salary and employment conditions for employees
In the preparation of the Board of Directors’ proposal for these
remuneration guidelines, salary and employment conditions for
employees of the Company have been taken into account by
including information on the employees’ total income, the com-
ponents of the remuneration and increase and growth rate over
time, in the Remuneration Committee’s and the Board of Direc-
tors’ basis of decision when evaluating whether the guidelines
and the limitations set out herein are reasonable.
Consultancy fees
If a member of the Board of Directors (including through a
wholly-owned subsidiary) should carry out services to Electrolux
in addition to the board assignment, specific fees for this can
be paid out (consultancy fees), provided that such services
ELECTROLUX ANNUAL REPORT 2019
38 Board of Directors’ report and financial statements
Proposal for remuneration guidelines for Group Management cont.
contribute to the implementation of Electrolux business strategy
and the safeguarding of Electrolux long-term interests, includ-
ing its sustainability. Such consultancy fee may for each member
of the Board of Directors not exceed the annual remuneration
for the board assignment. The fee shall be in line with market
practice.
Deviations from the guidelines
The Board of Directors may temporarily resolve to deviate from
the guidelines, in whole or in part, if in a specific case there is
special cause for the deviation and a deviation is necessary
to serve the Company’s long-term interests, including its sus-
tainability, or to ensure the Company’s financial viability. The
Remuneration Committee’s tasks include preparing the Board
of Directors’ resolutions in remuneration-related matters. This
includes any resolutions to deviate from the guidelines.
Deviations from the guidelines adopted by the Annual General
Meeting 2019
Compensation related to extraordinary work efforts in
connection with the separation and distribution of Electrolux
Professional is planned to be paid out in April 2020. The com-
pensation deviates from the provision in the remuneration
guidelines for 2019 stating that such compensation shall be
earned and/or paid out in installments over a minimum period
of two (2) years.
Sustainability and environmental facts
Electrolux a leader in the Household Durables Industry
The Group’s sustainability performance strengthens relations
with investors and Electrolux is recognized as a leader in the
household durables industry. In 2019, Electrolux was included
in the Dow Jones Sustainability Index (DJSI) World and Europe
indexes and thereby ranks among the top 10% of the world’s
2,500 largest companies for social and environmental perfor-
mance. Additionally, Electrolux has received recognition from
other indexes and organizations, including including SAM,
OEKOM, CDP and UN Global Compact Top 100.
Sustainability reporting 2019
The Group’s sustainability framework – For the Better –
comprises of three areas: Better Solutions, Better Operations
and Better Society. For more information on the Group’s
sustainability work and progress during 2019, read Electrolux
sustainability reporting section on pages 90–98.
Mandatory permits and notification in Sweden and elsewhere
Electrolux operates one plant in Sweden, which accounts for
approximately 0.1% of the total value of the Group’s production.
Manufacturing units in other countries adjust their opera-
tions, apply for necessary permits and report to the authori-
ties in accordance with local legislation. The Group follows a
precautionary principle with reference to both acquisitions of
new plants and continuous operations. No significant non-
compliance with applicable environmental legislation was
reported in 2019.
Electrolux products are affected by legislation in various
markets, principally involving energy consumption, producer
responsibility for recycling, and the restriction and manage-
ment of hazardous substances. Electrolux continuously moni-
tors changes in legislation, and both product development
and manufacturing are adjusted to reflect these changes.
Events after year-end 2020
January 20. Notice convening the EGM of AB Electrolux
An Extraordinary General Meeting will be held on Friday, February 21,
2020 at AB Electrolux Headquarters, S:t Göransgatan 143, Stockholm,
Sweden.
The Board of Directors proposes that the Extraordinary General
Meeting resolves that all shares in the wholly-owned subsidiary
Electrolux Professional be distributed, whereby one (1) share of
series A in Electrolux entitles to one (1) share of series A in Electrolux
Professional and one (1) share of series B in Electrolux entitles to one
(1) share of series B in Electrolux Professional.
The Board of Directors further proposes that the Extraordinary
General Meeting authorizes the Board of Directors to determine the
record date for the right to receive shares in Electrolux Professional.
Listing of the shares in Electrolux Professional is planned to take
place on March 23, 2020, and the record date is expected to occur in
close relation to the listing.
February 7. New board members of AB Electrolux proposed
In preparation for the Electrolux Annual General Meeting on March
31, 2020, the Electrolux Nomination Committee proposed the elec-
tion of Henrik Henriksson and Karin Overbeck as new members of the
Board of Directors of AB Electrolux. Henrik Henriksson is President and
CEO of Scania AB and Board Member of Scania AB and Hexagon AB.
Karin Overbeck is CEO of Freudenberg Home and Cleaning Solutions
GmbH.
The committee also proposes re-election of Staffan Bohman
(chairman), Petra Hedengran, Ulla Litzén, Fredrik Persson, David
Porter, Jonas Samuelson and Kai Wärn as Board Members. Hasse
Johansson and Ulrika Saxon have declined re-election.
For more information, visit www.electroluxgroup.com
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 39
Parent Company income statement
Income statement
sekm
Net sales
Cost of goods sold
Gross operating income
Selling expenses
Administrative expenses
Other operating income
Other operating expenses
Operating income
Financial income
Financial expenses
Financial items, net
Income after financial items
Appropriations
Income before taxes
Taxes
Income for the period
Total comprehensive income for the period
sekm
Income for the period
Other comprehensive income
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
note
6
6
9
9
21
10
2019
40,594
–35,020
5,574
–3,314
–2,276
0
–487
–503
5,424
–888
4,536
4,033
–682
3,351
6
3,357
2019
3,357
11
0
0
11
2018
38,911
–33,560
5,351
–3,247
–1,410
0
–804
–110
7,967
–695
7,272
7,162
–1,743
5,419
69
5,488
2018
5,488
57
–5
0
52
3,368
5,540
The Parent Company comprises of the functions of the Group’s
head office, as well as five companies operating on a commis-
sion basis for AB Electrolux.
Net sales for the Parent Company, AB Electrolux, during
2019 amounted to SEK 40,594m (38,911) of which SEK 33,113m
(31,806) referred to sales to Group companies and SEK 7,481m
(7,105) to external customers. Income after financial items
was SEK 4,033m (7,162), including dividends from subsidiar-
ies amounting to SEK 4,396m (7,179). Income for the period
amounted to SEK 3,357m (5,488).
Income tax related to group contributions is reported in the
income statement. Income tax related to cash flow hedges is
reported in other comprehensive income.
Capital expenditures in tangible and intangible assets
amounted to SEK 658m (594). Liquid funds at the end of the
period amounted to SEK 6,084m, as against SEK 7,244m at
the start of the year.
Undistributed earnings in the Parent Company at the end
of the period amounted to SEK 22,894m, compared with
SEK 22,078m at the start of the year. Dividend payments to
shareholders for 2018 amounted to SEK 2,443m.
For information on the number of employees, salaries and
remuneration, see Note 27. For information on shareholdings
and participations, see Note 29.
ELECTROLUX ANNUAL REPORT 2019
40 Board of Directors’ report and financial statements
Parent Company balance sheet
sekm
ASSETS
Non–current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Financial assets
Total non–current assets
Current assets
Inventories
Receivables from subsidiaries
Trade receivables
Derivatives with subsidiaries
Derivatives
Other receivables
Prepaid expenses and accrued income
Short-term investments
Cash and bank
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital
Statutory reserve
Development reserve
Non–restricted equity
Retained earnings
Income for the period
Total equity
Untaxed reserves
Provisions
Provisions for pensions and similar commitments
Other provisions
Total provisions
Non–current liabilities
Payable to subsidiaries
Bond loans
Other non–current loans
Total non–current liabilities
Current liabilities
Payable to subsidiaries
Accounts payable
Other liabilities
Short–term borrowings
Derivatives with subsidiaries
Derivatives
Accrued expenses and prepaid income
Total current liabilities
Total liabilities and provisions
Total liabilities, provisions and equity
note
December 31, 2019
December 31, 2018
13
12
14
15
20
21
22
23
24
1,772
141
579
39,268
41,760
3,038
22,546
552
54
180
310
336
0
6,084
33,100
74,860
1,545
3,017
1,035
5,597
19,537
3,357
22,894
28,491
430
437
1,024
1,461
69
5,803
2,328
8,200
31,005
1,842
453
1,461
27
242
1,248
36,278
45,939
74,860
1,714
144
453
35,943
38,254
2,813
21,110
1,172
43
127
256
392
—
7,244
33,157
71,411
1,545
3,017
875
5,437
16,590
5,488
22,078
27,515
442
442
691
1,133
68
3,011
2,656
5,735
30,519
1,720
416
2,334
45
73
1,479
36,586
43,454
71,411
ELECTROLUX ANNUAL REPORT 2019
Board of Directors’ report and financial statements 41
Parent Company change in equity
Restricted equity
Non-restricted equity
Statutory
reserve
Development
reserve
Fair value
reserve
Retained
earnings
Total
equity
Share
capital
1,545
—
1,545
—
—
—
—
—
—
—
—
—
—
3,017
—
3,017
—
—
—
—
—
—
—
—
—
—
1,545
3,017
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
506
—
506
—
—
—
—
—
—
—
369
—
369
875
—
—
—
—
—
—
—
160
—
160
1,545
3,017
1,035
45
–37
8
—
57
–5
0
52
52
—
—
—
—
60
—
11
0
0
11
11
—
—
—
—
71
19,319
24,432
—
19,319
5,488
–37
24,395
5,488
—
—
—
—
5,488
–35
–369
–2,385
–2,789
22,018
3,357
—
—
—
—
3,357
51
–160
–2,443
–2,552
22,823
57
–5
0
52
5,540
–35
0
–2,385
–2,420
27,515
3,357
11
0
0
11
3,368
51
0
–2,443
–2,392
28,491
sekm
Opening balance, January 1, 2018
Effect of change in accounting principles
Adjusted opening balance
Income for the period
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payment
Development reserve
Dividend
Total transactions with equity holders
Closing balance, December 31, 2018
Income for the period
Exchange rate differences
Cash flow hedges
Income tax relating to other comprehensive income
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payment
Development reserve
Dividend
Total transactions with equity holders
Closing balance, December 31, 2019
ELECTROLUX ANNUAL REPORT 2019
42 Board of Directors’ report and financial statements
Parent Company cash flow statement
sekm
Operations
Income after financial items
Depreciation and amortization
Capital gain/loss included in operating income
Share-based compensation
Group contributions
Taxes paid
Cash flow from operations, excluding change in operating assets and liabilities
Change in operating assets and liabilities
Change in inventories
Change in trade receivables
Change in current intra-group balances
Change in other current assets
Change in other current liabilities and provisions
Cash flow from operating assets and liabilities
Cash flow from operations
Investments
Change in shares and participations
Capital expenditure in intangible assets
Capital expenditure in property, plant and equipment
Other
Cash flow from investments
Total cash flow from operations and investments
Financing
Change in short-term investments
Change in short-term borrowings
Change in intra-group borrowings
New long-term borrowings
Amortization of long-term borrowings
Dividend
Cash flow from financing
Total cash flow
Cash and cash equivalents at beginning of period
Exchange-rate differences referring to cash and cash equivalents
Cash and cash equivalents at end of period
2019
2018
4,033
302
739
51
–694
–121
4,310
–225
620
–1,261
–51
425
–492
3,818
–5,730
–618
–40
1,969
–4,419
–601
0
34
283
3,767
–2,211
–2,443
–570
–1,171
7,244
11
6,084
7,162
412
332
–35
–1,746
–92
6,033
–173
–93
–2,358
–109
–236
–2,969
3,064
–2,726
–549
–45
89
–3,231
–167
0
231
3,282
1,661
–1,501
–2,385
1,288
1,121
6,066
57
7,244
ELECTROLUX ANNUAL REPORT 2019
Notes
44 Notes
All amounts in SEKm unless otherwise stated
Notes
Contents
Note 1
Accounting principles
Note 2
Financial risk management
Note 3
Segment information
Note 4
Revenue recognition
Note 5
Operating expenses
Note 6
Other operating income and expenses
Note 7
Material profit or loss items in operating income
Note 8
Leasing
Note 9
Financial income and financial expenses
Note 10
Taxes
Note 11 Other comprehensive income
Note 12
Property, plant and equipment
Note 13 Goodwill and other intangible assets
Note 14 Other non-current assets
Note 15
Inventories
Note 16 Other current assets
Note 17
Trade receivables
45
48
50
51
53
53
53
54
55
55
56
57
58
60
60
60
60
Note 18
Financial instruments
Note 19 Assets pledged for liabilities to credit institutions
Note 20
Share capital, number of shares and
earnings per share
Note 21 Untaxed reserves, Parent Company
Note 22 Post-employment benefits
Note 23 Other provisions
Note 24 Other liabilities
Note 25 Contingent assets and liabilities
Note 26 Acquired, divested and discontinued operations
Note 27 Employees and remuneration
Note 28
Fees to auditors
Note 29 Shares and participations
Note 30
Transactions with related parties
Note 31 Definitions
Note 32
Proposed distribution of earnings
Auditor's report
61
65
66
66
67
71
71
72
73
75
78
78
79
80
81
82
AB Electrolux (publ), 556009-4178
ELECTROLUX ANNUAL REPORT 2019
Notes 45
All amounts in SEKm unless otherwise stated
Note 1 Accounting principles
This section describes the comprehensive basis of preparation which has
been applied in preparing the financial statements. Accounting principles
for specific accounting areas and individual line items are described in the
related notes. For additional information on accounting principles, please
contact Electrolux Investor Relations.
The following apply to acquisitions and divestments:
• Companies acquired are included in the consolidated income statement
as of the date when Electrolux gains control.
• Companies divested are included in the consolidated income statement
up to and including the date when Electrolux loses control.
Basis of preparation
The consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU). The consolidated financial statements have been
prepared under the historical cost convention, except for financial instru-
ments at fair value (including derivative financial instruments). Some addi-
tional information is disclosed based on the standard RFR 1 issued by the
Swedish Financial Reporting Board and the Swedish Annual Accounts Act.
As required by IAS 1, Electrolux companies apply uniform accounting rules,
irrespective of national legislation, as defined in the Electrolux Accounting
Manual which is fully compliant with IFRS. The policies set out below have
been consistently applied to all years presented with the exception of new
accounting standards where the application follows the rules in each par-
ticular standard. For information on new standards, see the section on new
or amended accounting standards below.
The effects from applying IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations for the accounting of the Electrolux Professional
operations are described in Note 26.
Enumerated amounts presented in tables and statements may not
always agree with the calculated sum of the related line items due to round-
ing differences. The aim is for each line item to agree with its source and
therefore there may be rounding differences affecting the total when add-
ing up the presented line items.
The Parent Company applies the same accounting principles as the
Group, except in the cases specified in the section entitled ‘Parent Company
accounting principles’.
The financial statements were authorized for issue by the Board of Direc-
tors on February 13, 2020. The balance sheets and income statements are
subject to approval by the Annual General Meeting of shareholders on
March 31, 2020.
Principles applied for consolidation
The consolidated financial statements have been prepared by use of the
acquisition method of accounting, whereby the assets and liabilities and
contingent liabilities assumed in a subsidiary on the date of acquisition are
recognized and measured to determine the acquisition value to the Group.
The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the
date of exchange. The consideration transferred includes the fair value of
any asset or liability resulting from a contingent consideration arrange-
ment. Costs directly attributable to the acquisition effort are expensed as
incurred. On an acquisition-by-acquisition basis, the Group recognizes any
non- controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the identifiable
net assets acquired is recorded as goodwill. If the fair value of the acquired
net assets exceeds the cost of the business combination, the identification
and measurement of the acquired assets must be reassessed. Any excess
remaining after that reassessment represents a ‘bargain purchase’ and is
recognized immediately in the statement of comprehensive income.
The consolidated financial statements for the Group include the financial
statements of the Parent Company and its directly and indirectly owned
subsidiaries after:
• elimination of intra-group transactions, balances and unrealized intra-
group profits, and
• carrying values, depreciation and amortization of acquired surplus values.
Definition of Group companies
The consolidated financial statements include AB Electrolux and all compa-
nies over which the Parent Company has control, i.e., the power to direct the
activities; exposure to variable return and the ability to use its power. When
the Group ceases to have control or significant influence, any retained inter-
est in the entity is remeasured at its fair value, with the change in carrying
amount recognized in profit or loss.
At year-end 2019, the Group consisted of 187 (164) companies with
264 (246) operating units.
ELECTROLUX ANNUAL REPORT 2019
Associated companies
Associates are all companies over which the Group has significant influ-
ence but not control, generally accompanying a shareholding of between
20 and 50% of the voting rights. Investments in associated companies are
accounted for in accordance with the equity method.
Foreign currency translation
Foreign currency transactions are translated into the functional currency
using the exchange rate prevailing at the date of each transaction.
Monetary assets and liabilities denominated in foreign currencies are
valued at year-end exchange rates and any exchange-rate differences are
included in income for the period, except when deferred in other compre-
hensive income for the effective part of qualifying net investment hedges.
The consolidated financial statements are presented in Swedish krona
(SEK), which is the Parent Company’s functional currency and the Group’s
presentation currency according to IAS 21.
The balance sheets of foreign subsidiaries are translated into SEK at
year-end closing rates. The income statements are translated at the aver-
age rates for the year. Translation differences thus arising are included in
other comprehensive income.
Exchange rates
SEK
Exchange rate
ARS
AUD
BRL
CAD
CHF
CLP
CNY
EUR
GBP
HUF
MXN
RUB
THB
USD
2019
2018
Average
0.2010
6.57
2.40
7.10
9.50
End of
period
0.1558
6.53
2.31
7.14
9.60
Average
0.3087
6.50
2.39
6.71
8.91
End of
period
0.2373
6.34
2.32
6.59
9.15
0.0133
0.0125
0.0136
0.0129
1.37
10.56
12.03
0.0324
0.4878
0.1455
0.3039
9.43
1.34
10.44
12.25
0.0315
0.4951
0.1507
0.3119
9.33
1.31
10.26
11.57
0.0321
0.4517
0.1392
0.2691
8.70
1.30
10.28
11.38
0.0320
0.4556
0.1292
0.2754
8.97
New or amended accounting standards applied in 2019
The following new, amended or improved accounting standards were
applicable from January 1, 2019: IFRS 9 Financial Instruments; IFRS 16
Leases; IAS 19 Employee Benefits; IAS 28 Investments in Associates and
Joint Ventures; and Annual Improvements 2015–2017. In addition, the Group
has early adopted the amendments to IFRS 9, IAS 39 and IFRS 7 under the
Interest Rate Benchmark Reform, endorsed by the EU on January 15, 2020.
The general effects from the application of IFRS 16 are described in sec-
tion ‘New or amended accounting standards to be applied after 2018’ on
pages 45–46 in the Annual Report 2018. A summary of the opening bal-
ance adjustment to the balance sheet is presented in the table below and
a reconciliation between IAS 17 operating lease commitments and IFRS 16
lease liabilities is presented on the next page. The other new, amended or
improved standards mentioned above did not have any material impact on
Electrolux financial statements.
Assets
Equity and Liabilities
Right-of-use assets
3,172
Lease liabilities
Deferred tax assets
Prepaid lease fees
90
–34
Retained earnings
Accrued lease fees
Total
3,228
Total
3,465
–234
–4
3,228
46 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 1
Reconciliation of IAS 17 operating lease commitments
and IFRS 16 lease liabilities
Operating lease commitments disclosed per 31 Dec. 2018
Short-term leases recognized on
a straight-line basis as expense
Low-value leases recognized on
a straight-line basis as expense
Effect from the application of the short-term practical expedi-
ent at transition to IFRS 16
Adjustments as a result of a different
treatment of extension and termination options
Commitments for standard lease agreements
Discounted using the group’s incremental
borrowing rate of 3.8%
Finance lease liabilities recognized per 31 Dec. 2018
Other
Lease liability recognized as at January 1, 2019
2019
4,995
–47
–181
–513
–417
3,837
–384
6
6
3,465
New interpretations of accounting standards
Interpretation 23 Uncertainty over Income Tax Treatments, issued by the
International Financial Reporting Interpretation Committee (IFRIC), was
applicable from January 1, 2019 and has had no material impact on the
financial statements of Electrolux.
New or amended accounting standards to be applied after 2019
The following new, amended or improved accounting standards have
been published but are not mandatory for 2019 and have not been early
adopted by Electrolux: IFRS 3 Business Combinations; IFRS 17 Insurance
Contracts; IAS 1 Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current ; amendments to IAS 1 and IAS 8: Defi-
nition of material (endorsed by the EU on November 29, 2019). These new,
amended or improved standards have not yet been endorsed by the EU
unless specifically stated above and they are not expected to have any
material impact on Electrolux financial statements.
New interpretations of accounting standards
No new interpretations, with effective date after 2019, have been issued by
The International Financial Reporting Interpretation Committee (IFRIC).
Critical accounting policies and key sources of estimation uncertainty
Use of estimates
Management has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent assets
and liabilities to prepare the financial statements in conformity with IFRS.
Actual results may differ from these estimates under different assumptions or
conditions. Below, Electrolux has summarized the accounting policies that
require more subjective judgement by management in making assumptions
or estimates regarding the effects of matters that are inherently uncertain.
Asset impairment and useful lives
Non-current assets, including goodwill, are evaluated for impairment yearly
or whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impaired asset is written
down to its recoverable amount based on the best information available.
Different methods have been used for this evaluation, depending on the
availability of information. When available, market value has been used and
impairment charges have been recorded when the information indicated
that the carrying amount of an asset was not recoverable. In the majority
of cases, however, market value has not been available, and the fair value
has been estimated by using the discounted cash flow method based on
expected future results. Differences in the estimation of expected future
results and the discount rates used could have resulted in different asset
valuations. The yearly impairment testing of goodwill and other intangible
assets with indefinite useful lives, including sensitivity analyses performed,
has not indicated any impairment. See Note 13 for more information.
Property, plant and equipment are depreciated on a straight-line basis
over their estimated useful lives. Useful lives for property, plant and equip-
ment are estimated between 10 and 40 years for buildings and between 0
and 15 years for land and land improvements and between 3 and 15 years
for machinery, technical installations and other equipment. Management
regularly reassesses the useful lives of all significant assets. The carrying
amount of property, plant and equipment at year-end 2019 amounted to
SEK 21,803m. The carrying amount for goodwill at year-end 2019 amounted
to SEK 7,071m.
Leases
Accounting for leases require the use of judgement from different aspects
of which determining the discount rate and determining the lease term
have been assessed as the most critical ones. Discount rates used are
centrally established as the Group’s calculated incremental borrowing
rate for each entity determined by country, currency and contract duration
(>12–36 months, >37–72 months and >72 months). The model for determining
incremental borrowing rate is revised at least annually or when objective
evidence indicates a need for revision in order to maintain the validity of
the model. The lease term is determined based on the information avail-
able in the lease agreement and other relevant facts and circumstances
as per management’s judgement. The lease term includes extension or
termination options should such options meet the threshold for reasonably
certain. There may not be specific clauses on e.g. termination, cancella-
tion or renewal of a lease. In such cases, assessments are made based
on the information available in the contract together with management’s
judgement of any relevant circumstances. As per December 31, 2019, the
carrying amount of right-of-use assets was SEK 2,811m and total lease
liabilities amounted to SEK 3,150m. Of the carrying amount of right-of-use
assets, SEK 2,289m is related to lease contracts for buildings, where many
of the contracts have different types of extension and termination options.
Changes in determination whether any such option is reasonably certain
to exercise or not may have significant effect on the reported amounts on
right-of-use assets and lease liabilities recognized under IFRS 16.
Deferred taxes
In the preparation of the financial statements, Electrolux estimates the
income taxes in each of the tax jurisdictions in which the Group operates
as well as any deferred taxes based on temporary differences. Deferred
tax assets relating mainly to tax loss carry-forwards, energy-tax credits and
temporary differences are recognized in those cases when future taxable
income is expected to permit the recovery of those tax assets. Changes in
assumptions in the projection of future taxable income as well as changes
in tax rates could result in significant differences in the valuation of deferred
taxes. As of December 31, 2019, Electrolux had a net amount of SEK 6,057m
recognized as deferred tax assets in excess of deferred tax liabilities. As
of December 31, 2019, the Group had tax loss carry-forwards and other
deductible temporary differences of SEK 4,971m, which have not been
included in the computation of deferred tax assets.
Current taxes
Electrolux provisions for uncertain outcome of tax audits and tax litigations
are based on management’s best estimates and recorded in the balance
sheet. These estimates might differ from the actual outcome and the timing
of the potential effect on Electrolux cash flow is normally not possible to
predict.
In recent years, tax authorities have been focusing on transfer pricing.
Transfer-pricing matters are normally very complex, include high amounts
and it might take several years to reach a conclusion.
Trade receivables and calculation of loss allowance
Receivables are reported net of provision for expected credit losses. The
net value reflects the amounts that are expected to be collected, based on
circumstances known at the balance sheet date. Changes in circumstances
such as higher than expected defaults or changes in the financial situation
of a significant customer could lead to significantly different valuations.
When measuring expected credit loss the Group uses reasonable and
supportable forward looking information, which is based on assumptions
regarding the future movement of different economic drivers and how these
drivers will affect each other.
If the expected credit loss rates on trade receivables between 16 and 60
days past due had been 10% higher/lower as of December 2019, the loss
allowance on trade receivables would have increased/decreased SEK 0.9m
(0.7). If the expected credit loss rates on trade receivables between 61 and
180 days past due had been 10% higher/lower as of December 2019, the
loss allowance on trade receivables would have increased/decreased
SEK 3.9m (4.6).
At year-end 2019, trade receivables, net of provisions for expected credit
losses, amounted to SEK 20,847m. The total provision for expected credit
losses at year-end 2019 was SEK –882m.
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 1
Post-employment benefits
Electrolux sponsors a number of defined contribution and defined ben-
efit pension plans for its employees. The pension calculations, referring to
defined benefit plans, are based on actuarial assumptions regarding, e.g.,
mortality rates, future salary and pension increases. The calculation of the
pension obligation also depends on the discount rate. Changes in assump-
tions directly affect the defined benefit obligation, service cost, interest
income and expense. The discount rate used for the calculation of expenses
during 2019 was 2.63% in average, which was the same rate used to esti-
mate liabilities at the end of 2018. Sensitivities for the main assumptions are
presented in Note 22.
Restructuring
Restructuring charges include required write-downs of assets and other
non-cash items, as well as estimated costs for personnel reductions and
other direct costs related to the termination of the activity. The charges
are calculated based on detailed plans for activities that are expected to
improve the Group’s cost structure and productivity. In general, the out-
come of similar historical events in previous plans are used as a guideline
to minimize these uncertainties. The total provision for restructuring at year-
end 2019 was SEK 1,729m.
Warranties
As is customary in the industry in which Electrolux operates, many of the
products sold are covered by an original warranty, which is included in the
price and which extends for a predetermined period of time. Provisions for
this original warranty are estimated based on historical data regarding
service rates, cost of repairs, etc. As of December 31, 2019, Electrolux had a
provision for warranty commitments amounting to SEK 2,086m.
Disputes
Electrolux is involved in disputes in the ordinary course of business. The
disputes concern, among other things, product liability, alleged defects in
delivery of goods and services, patent rights and other rights and other
issues on rights and obligations in connection with Electrolux operations.
Such disputes may prove costly and time consuming and may disrupt
normal operations. In addition, the outcome of complicated disputes is
difficult to foresee. It cannot be ruled out that a disadvantageous outcome
of a dispute may prove to have a material adverse effect on the Group’s
earnings and financial position.
Parent Company accounting principles
The Parent Company has prepared its Annual Report in compliance with
Swedish Annual Accounts Act (1995:1554) and recommendation RFR 2,
Accounting for Legal Entities of the Swedish Financial Reporting Board.
RFR 2 prescribes that the Parent Company in the Annual Report of a legal
entity shall apply all International Financial Reporting Standards and inter-
pretations approved by the EU as far as this is possible within the framework
of the Annual Accounts Act, taking into account the connection between
accounting and taxation. The recommendation states which exceptions
from IFRS and additions shall be made.
Shares in subsidiaries
Holdings in subsidiaries are recognized in the Parent Company financial
statements according to the cost method of accounting. The value of sub-
sidiaries are tested for impairment when there is an indication of a decline
in the value.
Notes 47
All amounts in SEKm unless otherwise stated
Accounts Act. One of the companies operating on a commission basis for
AB Electrolux changed its functional currency to euro as from January 1,
2015. Translating differences thus arise as from 2015. The balance sheet of
the commissioner company has been translated into SEK at year-end rate.
The income statement has been translated at the average rate for the year.
Translation differences thus arising have been included in Other compre-
hensive income.
Anticipated dividends
Dividends from subsidiaries are recognized in the income statement after
decision by the annual general meeting in the respective subsidiary. Anti-
cipated dividends from subsidiaries are recognized in cases where the
Parent Company has exclusive rights to decide on the size of the dividend
and the Parent Company has made a decision on the size of the dividend
before the Parent Company has published its financial reports.
Taxes
The Parent Company’s financial statements recognize untaxed reserves
including deferred tax. The consolidated financial statements, however,
reclassify untaxed reserves to deferred tax liability and equity. Tax on group
contribution is reported in the income statement.
Group contributions
Group contributions provided or received by the Parent Company are
recognized as appropriations in the income statement. Shareholder con-
tributions provided by the Parent Company are recognized in shares and
participations which are subject to impairment tests as indicated above.
Pensions
The Parent Company reports pensions in the financial statements in accor-
dance with RFR 2. According to RFR 2, IAS 19 shall be adopted regarding
supplementary disclosures when applicable.
Intangible assets
The Parent Company amortizes trademarks in accordance with RFR 2. The
Electrolux trademark in North America is amortized over 40 years using the
straight-line method. All other trademarks are amortized over their useful
lives, estimated to 10 years, using the straight-line method.
Development reserve
The Parent Company’s financial statement recognize a development
reserve in compliance with Swedish Annual Accounts Act. An amount equal
to the period’s total expenditure of own developed intangible assets has
been transferred from unrestricted equity to the development reserve within
restricted equity.
Appropriations and untaxed reserves
The Parent Company reports additional fiscal depreciation, required by
Swedish tax law, as appropriations in the income statement. In the balance
sheet, these are included in untaxed reserves.
Leases
All lease agreements where the Parent Company is a lessee are reported
as operating leases, regardless of whether the agreements are finance or
operating leases. The leasing fee is recognized as an expense on a straight-
line basis over the lease period.
Foreign currency translations
The Annual Report is presented in Swedish krona (SEK), which is the
Parent Company’s accounting currency according to the Swedish Annual
Financial statements presentation
The Parent Company presents the income statement and the balance
sheet in compliance with the Swedish Annual Accounts Act (1995:1554) and
recommendation RFR 2.
ELECTROLUX ANNUAL REPORT 2019
48 Notes
All amounts in SEKm unless otherwise stated
Note 2 Financial risk management
Financial risk management
The Group is exposed to a number of risks from liquid funds, trade receiv-
ables, customer-financing receivables, payables, borrowings, commodities
and foreign exchange. The risks include:
• Interest-rate risk on liquid funds and borrowings
• Financing risk in relation to the Group’s capital requirements
• Foreign-exchange risk on commercial flows and net investments in
foreign subsidiaries
• Commodity-price risk affecting the expenditure on raw materials and
components; and
• Credit risk relating to financial and commercial activities
Risks described and quantified in this note are for total Group, including
Electrolux Professional, unless otherwise stated.
The Board of Directors of Electrolux has established several policies for
the Group (hereinafter all policies are referred to as the Financial Policy)
to monitor and manage the financial risks relating to the operations of
the Group.
Group Treasury in Stockholm, supported by three regional treasury
centers located in Asia, North America, and Latin America, provide
services to the business, co-ordinate access to financial markets, monitor
and manage the financial risks through internal risk reports, which analyze
exposures by degree and magnitude of the risk.
The Group seeks to minimize the effects of these risks by using derivatives
to hedge these risks exposures. The Group’s Financial Policy governs the
use of financial derivatives, which provide principles on foreign exchange
risk, interest rate risk, credit risk, the use of financial derivatives and non-
derivative financial instruments, and the investment of excess liquidity. The
internal auditors review on a continuous basis compliance with policies and
exposure limits.
Interest-rate risk on liquid funds and borrowings
Interest-rate risk refers to the adverse effects of changes in interest rates
on the Group’s income. The main factors determining this risk include the
interest-fixing period.
Liquid funds
Liquid funds as defined by the Group consist of cash and cash equiva-
lents, short-term investments, financial derivative assets, prepaid interest
expenses and accrued interest income. Electrolux target is that the level of
liquid funds including unutilized committed credit facilities shall correspond
to at least 2.5% of annualized net sales. In addition, net liquid funds defined
as liquid funds less short-term borrowings shall exceed zero, taking into
account fluctuations arising from acquisitions, divestments, and seasonal
variations. The main criteria for the investments are that the instruments
are highly liquid and have creditworthy issuers. See Credit risk in financial
activities on page 49.
Interest-rate risk in liquid funds
All liquidity is invested in interest bearing instruments, normally with
maturities between 0 and 3 months. A downward shift in the yield curves
of one percentage point would reduce the Group’s interest income by
approximately SEK 113m (115). For more information, see Note 18.
Borrowings
The debt financing of the Group is managed by Group Treasury in order
to ensure efficiency and risk control. Debt is primarily raised at parent
company level and transferred to subsidiaries through internal loans or
capital injections. In this process, swap instruments are used to convert
the funds to the required currency. Short-term financing is also undertaken
locally in subsidiaries where there are capital restrictions. The Group’s
borrowings contain no financial covenants that can trigger premature
cancellation of the loans. For more information, see Note 18.
Interest-rate risk in borrowings
Group Treasury manages the long-term loan portfolio to keep the average
interest-fixing period between 0 and 3 years. Derivatives, such as interest-
rate swap agreements, are used to manage the interest-rate risk by chang-
ing the interest from fixed to floating or vice versa. For those derivatives
Electrolux practice hedge accounting, which have affected Other compre-
hensive income by SEK –0m (–5) during 2019. On the basis of 2019 long-term
interest-bearing borrowings with an average interest fixing period of 1.5
years (1.0), a one percentage point shift in interest rates would impact the
Group’s interest expenses by approximately SEK +/–69m (61). This calcula-
tion is based on a parallel shift of all yield curves simultaneously by one
percentage point, excluding immaterial revaluation effects. Electrolux
acknowledges that the calculation is an approximation and does not take
into consideration the fact that the interest rates on different maturities and
different currencies might change differently.
Capital structure and credit rating
The Group defines its capital as equity stated in the balance sheet includ-
ing non-controlling interests. On December 31, 2019, the Group’s capital
amounted to SEK 22,574m (21,749). The Group’s objective is to have a
capital structure resulting in an efficient weighted cost of capital and suf-
ficient credit worthiness where operating needs and the needs for potential
acquisitions are considered.
To achieve and keep an efficient capital structure, the Financial Policy
states that the Group’s long-term ambition is to maintain a long-term rat-
ing within a safe margin from a non-investment grade. In December 2019,
Standard & Poor’s confirmed Electrolux A- rating with stable outlook. The
A-2 short-term corporate credit rating and the short-term Nordic regional
scale rating of K-1 were also affirmed.
Rating
Long-term
debt
Outlook
Short-
term debt
Short-term
debt, Nordic
Standard & Poor’s
A-
Stable
A-2
K-1
When monitoring the capital structure, the Group uses different figures,
which are consistent with methodologies used by rating agencies and
banks. The Group manages the capital structure and makes adjustments
to it in light of changes in economic conditions. In order to maintain or
adjust the capital structure, the Electrolux Board of Directors may propose
to adjust the amount of dividends paid to shareholders, return capital to
shareholders, buy back own shares or issue new shares, or sell assets to
reduce debt.
Financing risk
Financing risk refers to the risk that financing of the Group’s capital require-
ments and refinancing of existing borrowings could become more difficult
or more costly. This risk can be decreased by ensuring that maturity dates
are evenly distributed over time, and that total short-term borrowings do
not exceed liquidity levels. The financial net debt, total borrowings less liquid
funds, excluding seasonal variances, shall be long-term according to the
Financial Policy. The Group’s goals for long-term borrowings include an
average time to maturity of at least 2 years, and an even spread of maturi-
ties. A maximum of SEK 5,000m of the long-term borrowings is allowed to
mature in a 12-month period. For more information, see Note 18.
Foreign exchange risk
Foreign exchange risk refers to the adverse effects of changes in foreign
exchange-rates on the Group’s income and equity. In order to manage such
effects, the Group covers these risks within the framework of the Financial
Policy. The Group’s overall currency exposure is managed centrally.
Transaction exposure from commercial flows
The Financial Policy stipulates to what extent commercial flows are to be
hedged. Hedging with currency derivatives in most cases only are applied
on invoiced flows. This means that currency exposures from forecasted
flows should normally be managed by natural hedges, price adjustments
and cost reductions. However, in cases when both price and volume is com-
mitted, Electrolux may hedge also forecasted flows. For those derivatives
Electrolux practice hedge accounting, which has affected Other compre-
hensive income by SEK –9m (–2) during 2019.
Group subsidiaries cover their risks in commercial currency flows mainly
through the Group’s treasury centers. Group Treasury thus assumes the currency
risks and covers such risks externally by the use of currency derivatives.
The Group’s geographically widespread production reduces the effects
of changes in exchange-rates. The remaining transaction exposure is
either related to internal sales from producing entities to sales companies
or external exposures from purchasing of components and input material
for the production paid in foreign currency. These external imports are often
priced in U.S. dollar (USD). The global presence of the Group, however, leads
to a significant netting of the transaction exposures. For additional informa-
tion on exposures and hedging, see Note 18.
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 2
Notes 49
All amounts in SEKm unless otherwise stated
Translation exposure from consolidation of entities outside Sweden
Changes in exchange-rates also affect the Group’s income in connection
with translation of income statements of foreign subsidiaries into SEK.
Electrolux does not hedge such exposure. The translation exposures arising
from income statements of foreign subsidiaries are included in the sensitivity
analysis mentioned below.
Foreign-exchange sensitivity from transaction and translation exposure
The major net export currencies that Electrolux is exposed to are the U.S.
dollar, the Chinese renminbi and the euro. The major import currencies
that Electrolux is exposed to are the British pound, the Australian dollar,
the Canadian dollar and the Brazilian real. These currencies represent
the majority of the exposures of the Group, but are largely offsetting each
other as different currencies represent net inflows and outflows. A change
up or down by 10% in the value of each currency against the Swedish krona
would affect the Group’s profit and loss for one year by approximately SEK
+/– 420m (530), as a static calculation. The model assumes the distribution
of earnings and costs effective at year-end 2019 and does not include any
dynamic effects, such as changes in competitiveness or consumer behavior
arising from such changes in exchange rates.
Sensitivity analysis of major currencies
Risk
Currency
BRL/SEK
AUD/SEK
GBP/SEK
CAD/SEK
CHF/SEK
RUB/SEK
THB/SEK
CNY/SEK
EUR/SEK
USD/SEK
Change
Profit or loss
impact 2019
Profit or loss
impact 2018
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–10%
–582
–309
–285
–272
–206
–164
178
261
410
1,248
–345
–295
–286
–261
–184
–116
128
129
383
984
Exposure from net investments (balance sheet exposure)
The net of assets and liabilities in foreign subsidiaries constitute a net
investment in foreign currency, which generates a translation difference
in the consolidation of the Group. This exposure can have an impact on
the Group’s total comprehensive income, and on the capital structure.
The exposure is normally handled by natural hedges including matching
assets with debts in the same currency. In exceptional cases the exposure
can be managed by currency derivatives implemented on Group level
and carried out by the Parent Company. For those derivatives Electrolux
practice hedge accounting, which has affected Other comprehensive
income by SEK –1m (–65) during 2019.
A change up or down by 10% in the value of each currency against the
Swedish krona would affect the net investment of the Group by approxi-
mately SEK +/– 3,719m (3,230), as a static calculation at year-end 2019.
A similar valuation of outstanding hedges, would have an effect on the
Group’s equity of approximately SEK +/–261m (154).
Commodity-price risks
Commodity-price risk is the risk that the cost of direct and indirect materials
could increase as underlying commodity prices rise in global markets. The
Group is exposed to fluctuations in commodity prices through agreements
with suppliers, whereby the price is linked to the raw-material price on the
world market. This exposure can be divided into direct commodity expo-
sure, which refers to pure commodity exposures, and indirect commodity
exposure, which is defined as exposure arising from only part of a com-
ponent. Commodity-price risk is mainly managed through contracts with
the suppliers. A change in price up or down by 10% in steel would affect the
Group’s profit or loss with approximately SEK +/– 850m (800) and in plastics
with approximately SEK +/– 650m (600), based on volumes in 2019.
Credit risk
Credit risk in financial activities
Exposure to credit risks arises from the investment of liquid funds, and
derivatives. In order to limit exposure to credit risk, the Group has adopted
a policy of only dealing with creditworthy counterparties. A counterpart list
has been established, which specifies the maximum permissible exposure in
relation to each counterpart. The Group only transacts investments of liquid
funds and derivatives with issuers and counterparts holding a long-term
rating of at least A- credit rating, as these are considered to have low credit
risk for the purpose of impairment assessment. Standard & Poor’s or similar
independent rating agencies supply the credit rating information. Group
Treasury can allow exceptions from this rule, e.g., to enable money deposits
within countries rated below A-, but this represents only a minor part of the
total liquidity in the Group.
The Group strives for master netting agreements (ISDA) with all coun-
terparts for derivative transactions. Assets and liabilities will only be netted
from a credit risk perspective for counterparts with valid ISDA-agreements.
As a result of these policies and limitations, the expected credit loss from
external financial activities is not material. However, since Group Treasury
manage a majority of the subsidiary financing through internal loans from
the parent, there is a material credit risk originating from internal loans.
The opening expected credit loss provision in the parent company for
2019 amounted to SEK 72m primarily originate from internal loans to Latin
America. The closing expected credit loss reservation in the parent com-
pany amounted to SEK 86m, mainly due to higher country risk for Argentina.
To reduce the settlement risk in foreign exchange transactions done with
banks, Group Treasury uses Continuous Linked Settlement. Continuous
Linked Settlement eliminates temporal settlement risk since both legs of a
transaction are settled simultaneously.
Credit risk in trade receivables
Electrolux sells to a substantial number of customers in the form of large
retailers, buying groups, independent stores, and professional users. Sales
are made on the basis of normal delivery and payment terms. The Electrolux
Group Credit Policy Directive defines how credit management is to be per-
formed in the Electrolux Group to achieve competitive and professionally
performed credit sales, limited bad debts, and improved cash flow and
optimized profit. On a more detailed level, it also provides a minimum level
for customer and credit- risk assessment, clarification of responsibilities and
the framework for credit decisions. The credit-decision process combines
the parameters risk/reward, payment terms and credit protection in order
to obtain as much paid sales as possible. In some markets, Electrolux uses
credit insurance as a mean of protection. For many years, Electrolux has
used the Electrolux Rating Model (ERM) to have a common and objective
approach to credit-risk assessment that enables more standardized and
systematic credit evaluations to minimize inconsistencies in decisions. The
ERM is based on a risk/reward approach and is the basis for the customer
assessment. The Electrolux Rating Model consists of three different parts:
Customer and Market Information; Warning Signals; and a Credit Risk
Rating (CR2). Through CR2 the customers are classified in risk categories.
Credit approvals and other monitoring procedures are also in place to
ensure that follow-up action is taken to recover overdue debts. Further-
more, the Group reviews the recoverable amount of each trade debt and
debt investment on an individual basis at the end of the reporting period to
ensure that adequate loss allowance is made for irrecoverable amounts.
In this regard, management considers that the Group’s credit risk is signifi-
cantly reduced.
Trade receivables relate to a large number of customers, spread across
diverse industries and geographical areas. However, there is a concen-
tration of large credit exposures on a number of customers in, primarily,
the U.S., Latin America and Europe. Concentration of credit risk related to
a single counterparty did not exceed 6.4 % (11.7) total trade receivables at
any time during the year. For more information, see Note 17.
The Group defines default as customers where significant financial dif-
ficulties have been identified. A receivable is written off when there are
indications of no realistic prospect of recovery or at a 360 days overdue
whichever is the earliest. There is a limited use of enforcement activities.
ELECTROLUX ANNUAL REPORT 2019
50 Notes
All amounts in SEKm unless otherwise stated
Note 3 Segment information
Reportable segments – Business areas
Electrolux has revised the business area structure to create four consumer-
focused regional business areas, this means the Home Care & SDA business
area has been combined with the four major appliances business areas.
The Professional Products business area has been classified as discontin-
ued operations as of December 5, 2019 and is presented in Note 26.
The Group’s operations are after the structure changes divided into four
reportable segments: Europe; North America; Latin America; Asia-Pacific,
Middle East and Africa.
All the segments are producing appliances for the consumer market, and
products comprise mainly of refrigerators, freezers, cookers, dryers, wash-
ing machines, dishwashers, microwave ovens, vacuum cleaner and other
small appliances.
The segments are regularly reviewed by the President and CEO, the
Group’s chief operating decision maker.
The segments are responsible for the operating results and the net assets
used in their businesses, whereas financial items and taxes, as well as net
debt and equity, are not reported per segment. The operating results and
net assets of the segments are consolidated using the same principles as
for the total Group. Operating costs not included in the segments are shown
under Group Common costs, which mainly are costs related to group man-
agement activities typically required to run the Electrolux Group.
Sales between segments are made on market conditions with arm’s-
length principles.
Net sales
Operating income
Europe
North America
Latin America
Asia-Pacific, Middle East and
Africa
2019
2018
45,420
43,321
38,954
39,804
19,653
17,963
14,954
14,375
118,981 115,463
2019
2,493
–516
1,821
446
4,244
Common Group costs
—
—
–1,055
Total
Financial items, net
Income after financial items
118,981 115,463
—
—
—
—
3,189
–733
2,456
2018
2,128
1,104
492
979
4,703
–527
4,176
–422
3,754
Inter-segment sales exist with the following split:
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Eliminations
2019
2018
1,270
1,105
627
640
1
1
818
318
2,716
2,064
The segments are responsible for the management of the operational assets and their performance is measured at the same level, while financing is
managed by Group Treasury at group or country level. Consequently, liquid funds, interest-bearing receivables, interest-bearing liabilities and equity are
not allocated to the business segments.
Assets
December 31
Equity and liabilities
December 31
Net assets
December 31
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Professional Products
Other1)
Continuing operations
Discontinued operations
Liquid funds
Total borrowings
Lease liabilities
Pension assets and liabilities
Equity
Total
1) Includes common functions, tax items.
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Other3)
Continuing operations
Discontinued operations
Acquisitions/Divestments
Financial items paid
Taxes paid
Total
1) Depreciation related to right-of-use assets: SEK 953m.
2) Cash flow from operations and investments.
3) Includes Group functions.
2019
28,032
22,917
14,064
12,351
—
9,175
86,540
8,034
11,189
—
—
1,043
—
2018
26,276
19,124
13,092
10,826
6,101
9,112
84,531
—
12,249
—
—
532
—
106,808
97,312
Depreciation and
amortization1)
2019
1,693
1,391
694
751
291
4,821
283
—
—
—
2018
1,402
1,165
651
515
249
3,981
168
—
—
—
2019
26,604
16,421
7,020
6,289
—
4,033
60,368
3,951
—
11,856
3,150
4,909
22,574
106,808
2018
25,766
15,322
6,906
5,603
3,144
4,217
60,958
—
—
10,260
—
4,346
21,749
97,312
2019
1,429
6,496
7,044
6,062
—
5,142
26,172
—
—
—
—
—
—
—
Capital expenditure
Cash flow2)
2019
2,399
2,573
956
456
290
6,674
257
—
—
—
2018
1,741
2,099
722
505
393
5,460
169
—
—
—
2019
2,716
–1,795
961
1,035
–638
2,279
1,153
–467
–661
–1,554
751
2018
510
3,802
6,186
5,223
2,957
4,895
23,574
—
—
—
—
—
—
—
2018
1,984
343
–25
586
–243
2,645
1,004
–609
–361
–1,140
1,540
5,104
4,150
6,931
5,629
ELECTROLUX ANNUAL REPORT 2019
Notes 51
All amounts in SEKm unless otherwise stated
Tangible and intangible fixed assets located in the Group’s country of domi-
cile, Sweden, amounted to SEK 2,277m (2,040). Tangible and non-tangible
fixed assets located in all other countries amounted to SEK 33,224m (28,289).
Individually, material countries in this aspect are Italy with SEK 4,104m
(3,427), USA with SEK 10,749m (9,016) and Poland with SEK 2,717m (2,462),
respectively.
No single customer of the Group represents 10% or more of the external
revenue.
Sale of services in a separate contract
Electrolux recognizes revenue from services related to installation of
products, repairs or maintenance service when control is transferred being
over the time the service is provided. For service contracts covering a longer
period revenue is recognized on a linear basis over the contract period.
Sale of licenses in a separate contract
Electrolux is licensing trade names to other companies. The license provides
the licensee a right to access intellectual property throughout the license
period and revenue is recognized over time. The most common license type
for Electrolux is sales based royalty where the revenue is recognized when
the sales occur.
Payments to customers
Agreements can be made with customers to compensate for various
services or actions the customer takes. This relates to e.g. agreements
under which Electrolux agrees to compensate the customer for e.g.
marketing activities undertaken by the customer. The main rule is that if the
payment is related to a distinct service or product it shall be accounted for
as a purchase of that service or product. If not it shall be deducted from
the related revenue stream. In practice, if the contract doesn’t include any
requirement of follow up from Electrolux side and/or reporting back from
the customer that the service is performed, the payment shall be accounted
for as a reduction of revenue.
Customer incentives
Customer incentives include promotional activities as e.g. coupons, gift
cards, free products and loyalty/cash points. Customer incentives are
additional performance obligations providing the customer with a mate-
rial right, i.e. the customer is purchasing a product or service in the original
purchase and the right to a free or discounted product or service in the
future. The customer is effectively paying in advance for future products or
services. Revenue is therefore allocated to two performance obligations,
the originally purchased product and the product bought in the future (pay-
ment in advance). A liability is recognized for the rebate until it’s used or
expires unused.
Within Electrolux a common promotional activity is to offer free products
in combination with other sales. When the free products are related to
the Electrolux product range, revenue is allocated to both the ordinary
products sold and the free products.
When the free products are unrelated to the Electrolux product range,
the free products are recognized as marketing/sales cost.
Warranties
The most common warranty for Electrolux is to replace a faulty product
under legal and common practice warranty terms. In those cases warranty
is recognized as a provision. Electrolux also sells extended warranty where
the revenue is recognized during the warranty period, which usually starts
Cont. Note 3
Geographical information
USA
Brazil
Germany
Australia
France
Sweden (country of domicile)
United Kingdom
Italy
Canada
Switzerland
Other
Total
Net sales1)
2019
2018
35,920
37,083
14,154
11,990
6,056
4,785
3,995
3,968
3,928
3,702
3,227
2,869
5,915
4,729
3,747
5,014
3,712
3,595
3,006
3,204
36,377
33,468
118,981 115,463
1) Revenues attributable to countries on the basis of customer location.
Note 4 Revenue recognition
Revenue recognition
Electrolux manufactures and sells appliances mainly in the wholesale market
to customers being retailers. Electrolux products include refrigerators, dish-
washers, washing machines, cookers, vacuum cleaners, air conditioners
and small domestic appliances. Electrolux offer complete solutions for both
consumers and professionals.
Sales are recorded net of value-added tax, specific sales taxes, returns,
and trade discounts. Revenues arise from sales of finished products and
services.
Sale of finished products including spare parts and accessories
Sales of products are revenue recognized at a point in time i.e when control
of the products has transferred, being when the products are delivered to
the customer. Delivery occurs when the products have been shipped to
the specific location, the risks of obsolescence and loss have been trans-
ferred to the customer, and either the customer has accepted the products
in accordance with the sales contract, the acceptance provisions have
lapsed, or there is objective evidence that all criteria for acceptance have
been satisfied. In practice, transfer of control and thus revenue recognition
normally depends on the contractual incoterm.
Transaction price — Volume discounts
The products are often sold with volume discounts based on aggregate
sales over a specific time period, normally 3–12 months. Revenue from these
sales is recognized based on the price specified in the contract, net of the
estimated volume discounts. Accumulated experience is used to estimate
and provide for the discounts using either the expected value method or
an assessment of the most likely amount. Revenue is only recognized to the
extent that it is highly probable that a significant reversal will not occur. A
contract liability is recognized for expected volume discounts payable to
customers in relation to sales made until the end of the reporting period. The
estimated volume discount is revised at each reporting date.
Receivables, contract assets and contract liabilities
A receivable is recognized when the goods are delivered as this is the point
in time that the consideration is unconditional because only the passage of
time is required before the payment is due. If the consideration is conditional
to additional performance, a contract asset is recorded.
If Electrolux receive prepayments from customer a contract liability is
recorded.
Sale of goods and services combined
When contracts include both goods and services the sales value is split
into the separate performance obligations as applicable and revenue is
recognized when each of the separate performance obligations is satis-
fied. In general, types of performance obligations that may occur are prod-
ucts, spare parts, installation, service and support and education.
ELECTROLUX ANNUAL REPORT 2019
52 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 4
after the legal warranty period. Sometimes warranty offered is including a
service part and if it is difficult to separate the warranty from the service the
two are bundled together and revenue is recognized over the warranty
period.
Sales with a right of return
A right of return is not a separate performance obligation, but it affects the
transaction price for the transferred goods. Returns rights are commonly
granted in the retail and consumer industry.
Regarding a right of return which follows from legislation, statutory
requirements, business practice or is stipulated in the contract with the
customer, revenue is not recognized for goods expected to be returned.
Instead, a liability is recognized for expected refunds to customers. An asset
is also recorded for the expected returned item. The estimated amount of
returned goods in each sale with a right of return, is based on a probability-
weighted approach or most likely outcome, whichever is most predictive.
The estimate is revised on each reporting date.
Principal versus agent
In some countries Electrolux acts as an agent, i.e. Electrolux arranges for
goods or services to be provided by an external supplier to the customer.
Electrolux records as revenue the commission fee earned for facilitating
the transfer of goods or service or the net amount of consideration that the
company retains after paying the other party the consideration received in
exchange for the goods or services to be provided by that party.
Freight charges
In most cases freight is included in the price of the product sold and revenue
is recognized at the same time as for the product.
Consignment stock or sell-through arrangement
For some customers Electrolux keeps the inventory of products in the ware-
house of the customer or in the customer’s outlet. Transfer of control of the
products are done when the customer lifts the product from the warehouse
or when the product is sold to the end consumer. Electrolux recognizes
revenue when the control has been transferred or when there is a legal right
of forcing a sales transaction.
Revenue types and flows
The vast majority of the Group’s revenues of SEK 118,981m (115,463) dur-
ing the year consisted of product sales. Revenue from service activities
amounted to SEK 1,954m (1,410). The Group’s net sales in Sweden amounted
to SEK 3,968m (5,014). Exports from Sweden during the year amounted to
SEK 35,419m (33,390), of which SEK 32,488m (30,695) were to Group subsid-
iaries. The major part of the Swedish export comes from one of the Swedish
entities acting as a buying/selling hub for the European business meaning
that most of the European product flows are routed via this entity.
Disaggregation of revenue
Electrolux manufactures and sells appliances mainly in the wholesale mar-
ket to customers being retailers. Electrolux products include refrigerators,
dishwashers, washing machines, cookers, vacuum cleaners, air condition-
ers and small domestic appliances. The four regional Consumer Products
business areas focus on the consumer market. The business area Profes-
sional Products , which focuses on professional users, has been classified as
discontinued operations in December, 2019.
Sales of services are not material in relation to Electrolux total net sales.
Product and geography are considered important attributes when disag-
gregating Electrolux revenue. Therefore, the table below presents net sales
related to Consumer Products and discontinued operations per geographi-
cal region based on the location of each selling company.
Disaggregation of revenue
Geographical region
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Total
2019
Consumer
Products
Discontinued
operations
45,420
38,954
19,653
14,954
7,474
949
—
858
Total
52,894
39,903
19,653
15,812
2018
Consumer
Products
Discontinued
operations
43,321
39,804
17,963
14,375
6,951
849
—
866
Total
50,272
40,654
17,963
15,241
118,981
9,281
128,262
115,463
8,666
124,129
The table below presents the opening and closing balances of contract liabilities as well as movements during the year.
Contract liabilities
Opening balance, January 1, 2018
Gross increase during the period
Paid to/settled with customer
Revenue recognized during the year
Contracts cancelled during the year
Other changes to contract balances
Exchange-rate differences
Closing balance, December 31, 2018
Advances from Cus-
tomers
Customer bonuses/
incentives
Short-term
Long-term
Contract
liabilities, total
Prepaid income – service & warranty
118
1,098
—
–1,105
—
—
3
114
4,222
13,305
–12,721
—
–301
–14
165
4,656
92
175
—
–193
–14
114
10
184
74
52
—
–11
–11
28
7
139
4,506
14,630
–12,721
–1,309
–326
128
185
5,093
The table below presents the opening and closing balances of contract liabilities as well as movements during the year.
Contract liabilities
Opening balance, January 1, 2019
Gross increase during the period
Paid to/settled with customer
Revenue recognized during the year
Contracts cancelled during the year
Acquisition/divestment of operations
Other changes to contract balances
Exchange-rate differences
DIscontinued operations
Closing balance, December 31, 2019
Advances from
Customers
Customer bonuses/
incentives
Short-term
Long-term
Contract
liabilities, total
Prepaid income – service & warranty
114
1,274
—
–1,213
–5
—
—
4
–109
65
4,656
23,907
–22,747
—
–463
—
–26
152
–54
5,425
184
289
—
–227
–4
3
—
7
–35
217
139
273
—
–7
–3
—
—
3
–107
298
5,093
25,743
–22,747
–1,447
–475
3
–26
166
–305
6,005
ELECTROLUX ANNUAL REPORT 2019
Notes 53
All amounts in SEKm unless otherwise stated
Other operating expenses
2019
2018
2019
2018
Group
Parent Company
Loss on sale of property, plant
and equipment
Asbestos litigation
Electrolux Professional separation
project & listing costs
Loss on sale of operations and
shares
Legal settlement U.S.
Fine to competition authority
Provision for reorganization
procedure
Other
Other operating expenses, total
–68
–142
–190
—
–197
—
—
—
–371
–968
–38
—
0
—
—
—
–493
–254
–78
–863
—
—
—
–37
—
–450
—
—
—
—
—
—
—
—
–310
–493
—
–1
–487
–804
Other operating income and
expenses, net
1,057
185
–487
–804
Note 7 Material profit or loss items in operating income
This note summarizes events and transactions with significant effects, which
are relevant for understanding the financial performance when comparing
income for the current period with previous periods, including items such as:
• Capital gains and losses from divestments of product groups or major
units
• Close-down or significant down-sizing of major units or activities
• Restructuring initiatives with a set of activities aimed at reshaping a major
structure or process
• Significant impairment
• Other major non-recurring costs or income
Material items in 2019 amount to SEK –1,344m and contain restructuring
measures related to the consolidation of the U.S. cooking production,
closure of a refrigeration production line in Latin America and efficiency
measures and outsourcing projects across business areas and Group com-
mon cost, a legal settlement in the U.S. and recovery of overpaid sales tax
in Brazil.
Material items in 2018 amount to SEK –1,343 and relate to a restructuring
charge in connection with the consolidation of freezer production in North
America, a fine paid to the competition authority in France and a provision
for reorganization procedure as a consequence of the unfavorable court
ruling in France, extending a reorganization procedure of a former subsid-
iary to include Electrolux Home Products France SAS.
Material profit or loss items
Restructuring charge
Recovery of overpaid sales tax
Legal settlement U.S.
Fine to competition authority
Provision for reorganization procedure
Total
Effect from material profit or loss items by function
Cost of goods sold
Selling expenses
Administration expenses
Other operating income and expenses
Total
2019
–2,550
1,403
–197
2018
–596
—
—
—
—
–493
–254
–1,344 –1,343
2019
–1,938
–69
–543
1,206
2018
–596
—
—
–747
–1,344 –1,343
Note 5 Operating expenses
Cost of goods sold and additional information on costs by nature
Cost of goods sold includes expenses for the following items:
• Finished goods i.e. cost for production and sourced products
• Warranty
• Environmental fees
• Warehousing and transportation
• Exchange-rate changes on payables and receivables and the effects
from currency hedging
Operating expenses
Direct material and components
Sourced products
Depreciation and amortization
Salaries, other renumeration and employer
contribution
Other operating expenses
Operating expenses, total
2019
2018
Impairment
50,092
14,615
4,821
47,417
13,831
3,981
20,500
25,764
19,998
26,060
115,792
111,287
Operating expenses for continuing operations
Cost of goods sold includes direct material and components amounting
to SEK 50,092m (47,417) and sourced products amounting to SEK 14,615m
(13,831). The depreciation and amortization charge for the year amounted
to SEK 4,821m (3,981). Costs for research and development amounted to
SEK 3,462m (3,459).
Government grants relating to expenses have been deducted in the
related expenses by SEK 82m (74). Government grants related to assets
have been recognized as deferred income in the balance sheet and will be
recognized as income over the useful life of the assets. The remaining value
of these grants, at the end of 2019, amounted to SEK 828m (882).
The Group’s operating income includes net exchange-rate differences in
the amount of SEK –12m (–162). The Group’s Swedish factories accounted
for 0.1% (0.1) of the total value of production.
Selling and administration expenses
Selling expenses include expenses for brand communication, sales driving
communication and costs for sales and marketing staff. Selling expenses
also include the cost for impairment of trade receivables.
Administration expenses include expenses for general management,
controlling, human resources, shared service and IT expenses related to
the named functions. Administration costs related to manufacturing are
included in cost of goods sold.
Note 6 Other operating income and expenses
Other operating income
2019
2018
2019
2018
Group
Parent Company
Gain on sale of property, plant
and equipment
Gain on sale of operations
and shares
Pension plan amendment
Recovery of overpaid sales tax
Reversal of restructuring provision
Bargain purchase (neg. goodwill)
Earn-out adjustment
Other
98
—
98
1,403
150
—
—
275
18
205
—
130
140
150
194
211
Other operating income, total
2,024
1,048
—
—
—
—
—
—
—
0
0
—
—
—
—
—
—
—
0
0
ELECTROLUX ANNUAL REPORT 2019
54 Notes
All amounts in SEKm unless otherwise stated
Note 8 Leases
The major part of the group’s lease arrangements are those under which
the group is a lessee. This applies to a large number of assets such as ware-
houses, office premises, vehicles, and certain office equipment. The group’s
activities as a lessor are limited.
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration. Such an assessment is performed at inception of a contract.
An identified lease agreement is further categorized by the group as either
a short-term lease, a lease of a low-value asset or a standard lease. Short-
term leases are defined as leases with a lease term of 12 months or less.
The group’s definition of low-value assets comprises all personal computers
and laptops, phones, office equipment and furniture and all other assets,
independent of asset class, of a value less than SEK 100k when new. Lease
payments related to short-term leases and leases of low value assets are
recognized as operating expenses on a straight-line basis over the term
of the lease. The group applies the term ‘standard lease’ to all identified
leases which are categorized as neither short-term leases nor leases of
a low-value asset. Thus, a standard lease is a lease agreement for which
a right-of-use asset and a corresponding lease liability are recognized at
commencement of the lease, i.e. when the asset is available for use. The
group’s right-of-use assets and its long-term and short-term lease liabili-
ties are presented as separate line items in the consolidated statement of
financial position.
Assets and liabilities arising from a lease are initially measured on a pres-
ent value basis. The lease liability is determined as the present value of all
future lease payments at the commencement date, discounted using the
Group’s calculated incremental borrowing rate determined by country and
contract duration (>12–36 months, >37–72 months and >72 months).
The following lease payments are included in the measurement of a lease
liability:
• fixed payments, less any lease incentives,
• variable lease payments that are based on an index or a rate, initially
measured using the index or rate as at the commencement date,
• amounts expected to be payable under residual value guarantees,
• the exercise price of a purchase option if reasonably certain to exercise
that option, and
• payments of penalties for terminating the lease, if the lease term reflects
the exercise of that option.
Variable lease fees that do not depend on an index or rate (including prop-
erty tax related to leased buildings) are not included in the measure ment of
the lease liability. The related variable payments are charged to the state-
ment of comprehensive income as incurred.
The lease liability is subsequently measured by reducing the carrying
amount to reflect the lease payments made and by increasing the carrying
amount to reflect interest on the lease liability, using the effective interest
method.
A right-of-use asset is measured at cost comprising the amount of the
initial measurement of the lease liability, any lease payments made at or
before the commencement day, less any lease incentives received, and any
initial direct costs, and restoration costs (unless incurred to produce inven-
tories) with the corresponding obligation recognized and measured as a
provision under IAS 37. The right-of-use asset is subsequently measured at
cost less accumulated depreciation, any impairment losses as well as any
remeasurement of the lease liability. Impairment of right-of-use assets is
determined and accounted for in accordance with IAS 36.
A remeasurement of the lease liability, and a corresponding applicable
adjustment to the related right-of-use asset, is performed when:
• the lease term has changed or there is a change in the assessment of
exercise of a purchase option, in which case the lease liability is remea-
sured by discounting the revised lease payments using a revised discount
rate,
• the lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in
which cases the lease liability is remeasured by discounting the revised
lease payments using the initial discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which case a
revised discount rate is used), or
• a lease contract is modified and the lease modification is not accounted
for as a separate lease, in which case the lease liability is remeasured
by discounting the revised lease payments using a revised discount rate.
A right-of-use asset is normally depreciated on a straight-line basis over the
shorter of the asset’s useful life and the lease term. However, if ownership of
the asset is reasonably certain to be transferred at the end of the lease, the
right-of-use asset is depreciated over its useful life. Depreciation of a right-
of-use asset starts at the commencement date of the lease.
A lease payment related to a standard lease is accounted for partly as
amortization of the lease liability and partly as interest expense in the state-
ment of comprehensive income.
Lease components are separated from non-lease components for
leases regarding buildings (offices, warehouses etc.). For leases regarding
other asset classes (machinery, vehicles etc.) the lease components and
any associated non-lease components are accounted for as a single
arrangement.
In determining the lease term, extension options are only included if it
is determined as reasonably certain to extend. Periods after termination
options are only included in the lease term if the lease is reasonably certain
not to be terminated. A lease term is reviewed if a significant event or a
significant change in circumstances occurs which affects the assessment.
Lease income and expenses
Income from subleasing
Lease expenses:
Short-term leases
Leases of low-value assets
Variable lease payments
Depreciation of right-of-use assets
Total lease expenses in operating income
Whereof continuing operations
Whereof discontinued operations
Lease liability interest expense
Group 2019
5
–60
–56
–196
–953
–1,265
–1,159
–106
–129
Total cash outflow for lease contracts amount to SEK 1,187m for the year.
The total lease expense related to short-term leases will be lower in 2020
than in 2019 and is expected at SEK 1m. This is due to standard lease con-
tracts being classified as short-term at the adoption of IFRS 16.
The calculated average lease interest rate for 2019 was 3.8%.
Lease commitments related to leases not yet commenced as per
December 31, 2019, amount to SEK 111m.
Maturity profile of lease liabilities is presented in Note 18.
Property, plant and equipment, right-of-use
Group
Carrying amount
Opening balance, January 1, 2019
Acquisition of operations
Additions
Cancellations
Depreciation
Exchange rate differences
Discontinued operations
Closing balance, December 31, 2019
Land
Buildings
Machinery
Other equipment
6
—
0
0
–1
0
–0
5
2,571
29
589
–126
–678
86
–182
2,289
41
—
42
–7
–22
1
–12
42
511
2
254
–11
–253
15
–43
476
Total
3,128
30
885
–144
–953
102
–238
2,811
ELECTROLUX ANNUAL REPORT 2019
Notes 55
All amounts in SEKm unless otherwise stated
Non-recognized deductible temporary differences
As of December 31, 2019, the Group had tax loss carry-forwards and other
deductible temporary differences of SEK 4,971m (6,008), which have not
been included in computation of deferred tax assets. The decision not to
recognize certain temporary differences is based on an assessment where
the likelihood of future utilization is evaluated for each of the temporary
items. The Group typically does not recognize temporary differences in
situations where it is considered the ability to utilize these to be limited.
The non-recognized deductible temporary differences will expire as follows:
2020
2021
2022
2023
2024
And thereafter
Without time limit
Total
December 31, 2019
56
61
31
12
120
254
4,438
4,971
The tables below show deferred tax assets and liabilities at the end of each
reporting period and the change in net deferred tax assets and liabilities.
Deferred tax assets and deferred tax liabilities
Deferred tax assets:
Property, plant and equipment
Provision for Pension obligations
Provision for restructuring
Other provisions
Inventories
Accrued expenses and prepaid income
Unused tax losses carried forward
Other deferred tax assets
Deferred tax assets before netting of deferred tax
assets and liabilities
Netting of deferred tax assets and liabilities
Deferred tax assets net
Deferred tax liabilities:
Property, plant and equipment
Other provisions
Inventories
Other taxable temporary differences
Deferred tax liabilities before netting of deferred tax
assets and liabilities
Netting of deferred tax assets and liabilities
Deferred tax liabilities net
2019
2018
340
861
308
734
94
587
1,148
4,068
322
945
170
998
145
467
674
3,768
8,140
7,489
–1,522 –1,041
6,448
6,618
890
78
327
676
738
159
315
697
1,971
1,909
–1,410 –1,041
868
561
Deferred tax assets and liabilities net
6,057
5,580
Deferred tax assets and liabilities, net opening balance
before restatement due to change in accounting principles
Restatement of opening balance due to change in
accounting principles
Deferred tax assets and liabilities, net opening balance
Recognized in income statement, continuing operations
Recognized in income statement, discontinued opera-
tions
Recognized in other comprehensive income
Acquisitions of operations
Exchange rate differences
Discontinued operations
2019
2018
5,580
4,981
90
5,670
382
1
4,982
61
100
3
–14
122
–206
67
142
110
218
—
Deferred tax assets and liabilities, net closing balance
6,057
5,580
Other deferred tax assets include tax credits related to the production of
energy-efficient appliances amounting to SEK 1,706m (1,665).
Cont. Note 10
Note 9 Financial income and financial expenses
Financial income
Interest income
from subsidiaries
from others
Dividends from subsidiaries
Other financial income
Total financial income
Financial expenses
Interest expenses
to subsidiaries
to others
Lease liability interest expenses
Pension interest expenses, net
Exchange-rate differences, net
Other financial expenses
Total financial expenses
Financial items, net
Group
Parent Company
2019
2018
2019
2018
—
69
—
—
69
—
103
—
—
1,013
0
782
0
4,396
7,179
15
6
103
5,424
7,967
—
–367
–124
–41
–72
–198
–802
–733
—
–234
—
–45
22
–268
–525
–422
–307
–251
—
—
–151
–179
–888
–229
–84
—
—
–122
–260
–695
4,536
7,272
Interest expenses to others, for the Group and Parent Company, include
gains and losses on derivatives used for managing the Group’s interest fix-
ing. For information on financial instruments, see Note 18.
Note 10 Taxes
Current taxes
Deferred taxes
Taxes in income for the period,
continuing operations
Taxes in income for the period,
discontinued operations
Taxes related to OCI
Taxes included in total
comprehensive income
Group
Parent Company
2019
–1,017
382
2018
–960
61
2019
–121
127
2018
–92
161
–636
–900
–314
27
–182
151
–923
–930
6
—
—
6
69
—
—
69
Deferred taxes 2019 include an effect of SEK –11m (–41) due to changes
in tax rates. The consolidated accounts include deferred tax liabilities of
SEK 89m (91) related to untaxed reserves in the Parent Company.
Theoretical and actual tax rates
%
Theoretical tax rate
Non-taxable/non-deductible income
statement items, net
Non-recognized tax losses carried forward
Utilized non-recognized tax losses
carried forward
Other changes in recognition of deferred tax
Withholding tax
Other
Actual tax rate
2019
31.1
2018
23.6
2.2
0.9
–0.9
–7.0
5.3
–5.7
25.9
0.2
8.5
0.0
–5.8
2.3
–4.8
24.0
The theoretical tax rate for the Group is calculated on the basis of the
weighted total income after financial items per country, multiplied by the
local statutory tax rates.
ELECTROLUX ANNUAL REPORT 2019
56 Notes
All amounts in SEKm unless otherwise stated
Note 11 Other comprehensive income
Items that will not be reclassified to income
for the period:
Remeasurement of provisions for post-employment
benefits
Opening balance, January 1
Gain/loss taken to other comprehensive income
Income tax relating to items that will not be reclassified
Closing balance, December 31
Items that may be reclassified subsequently to income
for the period:
Available-for-sale instruments
Opening balance, January 1
Change in accounting principle1)
Gain/loss taken to other comprehensive income
Transferred to profit and loss
Closing balance, December 31
Cash flow hedges
Opening balance, January 1
Gain/loss taken to other comprehensive income
Transferred to profit and loss on sale
Closing balance, December 31
Exchange differences on translation of
foreign operations
Opening balance, January 1
Net investment hedge
Translation differences
Closing balance, December 31
Income tax
Opening balance, January 1
Income tax relating to items that may be reclassified
Closing balance, December 31
Non-controlling interests, translation differences
Other comprehensive income, net of tax
Group
2019
2018
129
–103
3
29
449
–448
128
129
—
—
—
—
—
–8
–14
4
–18
1
–1
—
—
—
–6
–4
2
–8
–2,291 –2,495
–65
269
–1,261 –2,291
–1
1,030
–91
24
–68
0
944
–114
23
–91
0
–95
1) At transition to IFRS 9 a financial instrument classified as Available for sale was reclassified to
Financial asset at fair value through profit and loss.
Income taxes related to items of other comprehensive income were SEK 3m
(128) for remeasurement of provisions for post-employment benefits and
SEK 24m (23) for financial instruments for hedging.
–
ELECTROLUX ANNUAL REPORT 2019
Notes 57
All amounts in SEKm unless otherwise stated
Note 12 Property, plant and equipment, owned
Property, plant, and equipment are stated at historical cost less straight-line
accumulated depreciation, adjusted for any impairment charges. Land is
not depreciated as it is considered to have an unlimited useful life. All other
depreciation is calculated using the straight-line method and is based on
the following estimated useful lives:
• Land and land improvements
• Buildings
• Machinery and technical installations
• Other equipment
0–15 years
10–40 years
3–15 years
3–10 years
Group
Acquisition costs
Opening balance, January 1, 2018
Acquired during the year
Acquisition of operations
Transfer of work in progress and advances
Sales, scrapping, etc.
Exchange–rate differences
Closing balance, December 31, 2018
Acquired during the year
Acquisition of operations
Transfer of work in progress and advances
Sales, scrapping, etc.
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Accumulated depreciation
Opening balance, January 1, 2018
Depreciation for the year
Transfer of work in progress and advances
Sales, scrapping, etc.
Impairment
Exchange-rate differences
Closing balance, December 31, 2018
Depreciation for the year
Transfer of work in progress and advances
Sales, scrapping, etc.
Impairment
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Net carrying amount, December 31, 2018
Net carrying amount, December 31, 2019
Land and land
improvements
Buildings
Machinery
and technical
installations
Other
equipment
Plants under
construction
and advances
Total
1,368
13
2
91
–8
66
1,532
59
3
37
–40
58
–142
1,506
223
19
49
–4
2
14
303
29
11
–39
4
10
–11
307
1,229
1,200
10,353
201
10
167
–78
461
11,114
208
3
136
–318
385
–844
10,683
4,779
363
–31
–54
33
235
5,325
366
–11
–285
278
168
–337
5,504
5,789
5,179
39,703
1,178
20
807
–2,225
1,673
41,156
1,250
6
2,331
–2,143
1,076
–1,903
41,774
30,232
2,530
–92
–2,130
146
1,346
32,032
2,579
–24
–2,019
557
799
–1,516
32,409
9,124
9,365
2,789
221
20
180
–118
69
3,161
255
2
99
–432
78
–235
2,927
2,245
265
74
–110
0
62
2,536
297
18
–242
–152
58
–179
2,336
625
591
2,844
3,036
0
–1,245
–39
156
4,752
3,789
0
–2,605
–82
127
–134
5,847
386
0
0
1
14
30
431
0
4
0
–74
19
–1
379
4,321
5,468
57,057
4,649
52
0
–2,468
2,425
61,715
5,562
13
–3
–3,016
1,724
–3,258
62,737
37,865
3,177
0
–2,297
195
1,687
40,627
3,271
–2
–2,585
613
1,054
–2,044
40,935
21,088
21,803
Total net impairment in 2019 was SEK 282m (35) on buildings and land, and SEK 405m (146) on machinery and other equipment and SEK –74m (14) on plants
under construction. The majority of the impairment relates to the business areas North America and Latin America.
Parent Company
Acquisition costs
Opening balance, January 1, 2018
Acquired during the year
Transfer of work in progress and advances
Sales, scrapping, discontinued operations etc.
Exchange-rate differences
Closing balance, December 31, 2018
Acquired during the year
Transfer of work in progress and advances
Sales, scrapping, etc.
Exchange-rate differences
Closing balance, December 31, 2019
Accumulated depreciation
Opening balance, January 1, 2018
Depreciation for the year
Sales, scrapping, discontinued operations etc.
Exchange-rate differences
Closing balance, December 31, 2018
Depreciation for the year
Sales, scrapping, etc.
Exchange-rate differences
Closing balance, December 31, 2019
Net carrying amount, December 31, 2018
Net carrying amount, December 31, 2019
ELECTROLUX ANNUAL REPORT 2019
Land and land
improvements
Buildings
Machinery
and technical
installations
Other
equipment
Plants under
construction
and advances
Total
1
—
—
0
—
1
—
—
—
—
1
1
—
0
—
1
—
—
—
1
0
0
1
—
—
0
—
1
—
—
—
—
1
1
—
0
—
1
—
—
—
1
0
0
60
—
5
0
3
68
0
9
—
1
78
54
6
0
3
63
5
—
1
69
5
9
452
16
21
–30
3
462
5
14
–43
1
439
350
28
–26
2
354
27
–37
1
345
108
94
60
29
–26
–34
2
31
35
–23
–5
0
38
0
—
—
—
0
—
—
—
0
31
38
574
45
0
–64
8
563
40
0
–48
2
557
406
34
–26
5
419
32
–37
2
416
144
141
58 Notes
All amounts in SEKm unless otherwise stated
Note 13 Goodwill and other intangible assets
Goodwill
Goodwill is reported as an indefinite life intangible asset at cost less accu-
mulated impairment losses.
Product development
Electrolux capitalizes expenses for certain own development of new
products provided that the level of certainty of their future economic
benefits and useful life is high. The intangible asset is only recognized if the
product is sellable on existing markets and that resources exist to complete
the development. Only expenditures which are directly attributable to the
new product’s development are recognized. Capitalized development
costs are amortized over their useful lives, between 3 and 5 years, using the
straight-line method.
Software
Acquired software licenses and development expenses are capitalized on
the basis of the costs incurred to acquire and bring to use the specific soft-
ware. These costs are amortized over useful lives, between 3 and 5 years,
using the straight-line method.
Trademarks
Trademarks are reported at historical cost less amortization and impair-
ment. The Electrolux trademark in North America, acquired in 2000, is
regarded as an indefinite life intangible asset and is not amortized in the
group accounts. One of the Group’s key strategies is to develop Electrolux
into the leading global brand within the Group’s product categories. This
acquisition gave Electrolux the right to use the Electrolux brand worldwide,
whereas it previously could be used only outside of North America. The total
carrying amount for the Electrolux brand is SEK 410m, included in the item
Other in the table on the next page. All other trademarks are amortized over
their useful lives, estimated to 5 to 10 years, using the straight-line method.
Customer relationships
Customer relationships are recognized at fair value in connection with
acquisitions. The values of these relationships are amortized over their esti-
mated useful lives, between 5 and 15 years, using the straight-line method.
Intangible assets with indefinite useful lives
Goodwill as at December 31, 2019, had a total carrying value of SEK 7,071m.
The allocation, for impairment-testing purposes, on cash-generating units
is shown in the table below.
All intangible assets with indefinite useful lives are tested for impairment
at least once every year. Single assets are tested more often in case there
are indications of impairment. The recoverable amounts of the cash-
generating units have been determined based on value in use calcula-
tions. The cash-generating units equal the business areas. Costs related
Goodwill, value of trademark and discount rate
to group services and global leverage activities are carried by the cash-
generating units and therefore included in the impairment testing of each
cash-generating unit. Common group costs that cannot be allocated on a
reasonable and consistent basis to any the individual cash generating units
are included in impairment testing in the total carrying amount of all cash
generating units combined.
Value in use is calculated using the discounted cash flow model based
on by Group management approved forecasts for the coming four years.
The forecasts are built up from the estimate of the units within each business
area. The preparation of the forecast requires a number of key assumptions
such as volume, price, product mix, prices for raw material and compo-
nents, which will create a basis for future growth and gross margin. These
figures are set in relation to historic figures and external reports on market
growth. The cash flow for the last year of the four-year period is used as
the base for the perpetuity calculation. The discount rates are based on
the pre-tax Electrolux Group WACC (Weighted Average Cost of Capital)
with adjustments for country specific risk premiums and inflation rates for
each individual country. The individual country discount rates are used to
calculate a weighted average discount rate for each cash-generating unit.
The pre-tax discount rates used in 2019 were within a range of 8.9% (9.3) to
14.0% (12.0). For the calculation of the in-perpetuity value, Gordon’s growth
model is used. According to Gordon’s model, the terminal value of a growing
cash flow is calculated as the starting cash flow divided by cost of capital less
the growth rate. Cost of capital less growth of 2% (2%) is within the range of
6.9 to 12.0%.
Sensitivity analyses have been carried out based on a reduction of the
operating margin by 0.5 percentage points and by an increase in the cost of
capital by one percentage point respectively. None of the sensitivity analyses
led to a reduction of the recoverable amount below the carrying amount
for any of the cash-generating units, i.e. the hypothetical changes in key
assumptions would not lead to any impairment. The calculations are based
on management’s assessment of reasonably possible adverse changes in
operating margin and cost of capital, yet they are hypothetical and should
not be viewed as an indication that these factors are likely to change. The
sensitivity analyses should therefore be interpreted with caution.
As from 2019, right-of-use assets are included in the carrying amount of
each cash-generating unit. Accordingly, lease payments, representing lease
liability amortization and interest expense, are not considered in the fore-
casted cash flows. However, the forecasted cash flows have been charged
with a ‘replacement capital expenditure’ for right-of-use assets, calculated
based on an assumed normalized level of depreciation per cash-generating
unit and a calculated average remaining lease period of contracts existing
at December 31.
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Professional Products
Total
2019
2018
Goodwill
Electrolux
trademark
Discount
rate, %
Goodwill
Electrolux
trademark
Discount
rate, %
449
1,662
1,093
3,867
—
7,071
—
410
—
—
—
410
9.1
8.9
14.0
10.8
—
442
1,598
1,176
3,584
1,439
8,239
—
410
—
—
—
410
9.9
9.3
12.0
9.6
10.1
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 13
Goodwill and other intangible assets
Acquisition costs
Opening balance, January 1, 2018
Acquired during the year
Acquisition of operations
Internally developed
Reclassification
Fully amortized
Sales, scrapping etc.
Exchange-rate differences
Closing balance, December 31, 2018
Acquired during the year
Acquisition of operations
Internally developed
Reclassification
Fully amortized
Sales, scrapping etc.
Exchange-rate differences
DIscontinued operations
Closing balance, December 31, 2019
Accumulated amortization
Opening balance, January 1, 2018
Amortization for the year
Reclassification
Fully amortized
Impairment
Sales, scrapping etc.
Exchange-rate differences
Closing balance, December 31, 2018
Amortization for the year
Reclassification
Fully amortized
Impairment
Sales, scrapping etc.
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Carrying amount, December 31, 2018
Carrying amount, December 31, 2019
Notes 59
All amounts in SEKm unless otherwise stated
Group
Other intangible assets
Parent
Company
Product
develop-
ment
Goodwill
Software
Other
Total other
intangible
assets
Trademarks,
software, etc.
7,628
3,430
3,688
2,647
9,765
3,752
—
6171)
—
—
—
–4
–2
8,239
—
3841)
—
—
—
—
269
–1,821
7,071
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,239
7,071
—
1
415
–51
–268
–44
91
3,574
—
—
797
–2
–103
–138
75
–107
4,096
2,444
344
—
–268
–9
–25
62
2,548
392
—
–103
56
–61
46
–60
2,818
1,026
1,278
121
1
441
52
–870
–106
91
3,418
363
—
208
5
–308
–248
47
–10
3,475
2,608
377
—
–870
—
–60
63
2,118
248
2
–308
1
–69
25
–5
2,012
1,300
1,463
1
214
—
–1
–52
–45
–30
2,734
—
35
—
—
—
—
37
–454
2,352
972
251
—
–52
—
—
–30
1,141
240
—
—
13
—
—
–118
1,276
1,593
1,076
122
216
856
—
–1,190
–195
152
9,726
363
35
1,005
3
–411
–386
159
–571
9,923
6,024
972
—
–1,190
–9
–85
95
5,807
880
2
–411
70
–130
71
–183
6,106
3,919
3,817
102
—
447
—
–512
–13
34
3,810
140
—
538
—
–216
–545
19
—
3,746
2,222
378
—
–512
—
–5
13
2,096
270
—
–216
—
–182
6
—
1,974
1,714
1,772
1) Including adjustments of provisional values within the measurement period related to acquisitions with a value of SEK 10m for 2018 and with a value of SEK 8m for 2019.
Included in the item Other are trademarks of SEK 690m (813) and customer relationships etc. amounting to SEK 386m (780). For continuing operations
amortization of intangible assets is included within Cost of goods sold with SEK 454m (409), Administrative expenses with SEK 123m (320) and Selling
expenses with SEK 237m (243) in the income statement. For discontinued operations amortization of intangible assets is included within Cost of goods sold
with SEK 26m (18), Administrative expenses with SEK 6m (0) and Selling expenses with SEK 34m (27) in the income statement. Electrolux did not capitalize
any borrowing costs during 2019 or 2018.
ELECTROLUX ANNUAL REPORT 2019
60 Notes
All amounts in SEKm unless otherwise stated
Note 14 Other non-current assets
Note 17 Trade receivables
Shares in subsidiaries
Participations in other companies
Long-term receivables in
subsidiaries
Other receivables
Total
Group
December 31,
Parent Company
December 31,
2019
2018
2019
2018
—
—
—
1,486
1,486
—
—
—
952
952
37,515 32,245
241
219
1,480
3,459
32
20
39,268 35,943
For the Group ‘Other receivables’ include mainly recoverable import
duties and long-term operational tax credits.
Note 15 Inventories
Raw materials
Products in progress
Finished products
Advances to suppliers
Total
Group
December 31,
Parent Company
December 31,
2019
2018
2019
2018
3,032
3,590
289
346
—
—
—
—
12,854 12,790
3,038
2,813
19
24
—
—
16,194 16,750
3,038
2,813
Trade receivables
Provisions for impairment of receivables
Trade receivables, net
Provisions in relation to trade receivables, %
2019
2018
21,729 22,417
–882
–935
20,847 21,482
4.1
4.2
Trade receivables are recognized initially at fair value and subse-
quently measured at amortized cost using the effective interest method,
less provision for expected credit losses. The Group applies the simpli-
fied approach for trade receivables and uses a matrix to estimate the
expected credit losses. The change in amount of the provision is recog-
nized in the income statement within selling expenses. The expected loss
calculation is based on historical data and is adjusted with a forward
looking analysis, including macroeconomic factors impacting the differ-
ent customer segments and more specific factors such as signs of bank-
ruptcy, officially known insolvency etc. Electrolux uses credit insurance as
a mean of protection. The Group’s internal guidelines to the companies is
to at least reserve 0.01 % for current trade receivables and for receivables
maximum 15 days past due. For trade receivables past due between 16
to 60 days Electrolux reserves 1% and increase to 5% for receivables past
due between 61 to 180 days. Trade receivables that are 6 months past
due but less than 12 months is reserved at 45% and receivables that are
12 months past due and more are reserved at 100%. There is no signifi-
cant impact on provisions from changes in the forward looking factors.
Provisions for impairment of receivables
Inventories and work in progress are valued at the lower of cost, at normal
capacity utilization, and net realizable value. Net realizable value is defined
as the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make
the sale at market value. The cost of finished goods and work in progress
comprises development costs, raw materials, direct labor, tooling costs,
other direct costs and related production overheads. The cost of invento-
ries is assigned by using the weighted average cost formula. Provisions for
obsolescence are included in the value for inventory.
Provisions, January 1
Effect of change in accounting principles
Acquisition of operations
New provisions
Actual credit losses
Exchange-rate differences and other changes
Discontinued operations
2019
–935
—
–1
–50
65
–27
66
2018
–801
–18
–4
–212
135
–35
—
The cost of inventories recognized as expense and included in Cost of
Provisions, December 31
–882
–935
goods sold amounted to SEK 87,649m (83,035) for the Group.
Write-downs due to obsolescence amounted to SEK 303m (272) and
reversals of previous write-downs, due to inventories either scrapped or
sold, amounted to SEK 200m (364) for the Group. The amounts have been
included in the item Cost of goods sold in the income statement.
Note 16 Other current assets
VAT receivable
Other tax recoverable
Miscellaneous short-term receivables
Provisions for doubtful accounts
Prepaid expenses and accrued income
Prepaid interest expenses and accrued
interest income
Total
The fair value of trade receivables equals their carrying amount as the
impact of discounting is not significant. Electrolux has a significant credit
exposure on a number of major customers, primarily in the U.S., Latin
America and Europe. Receivables concentrated to customers with credit
limits amounting to SEK 300m or more represent 33.5% (33) of the total trade
receivables. The creation and usage of provisions for impaired receivables
have been included in selling expenses in the income statement.
Group
December 31,
Timing analysis of trade receivables past due
2019
2018
Trade receivables not overdue
1,012
1,031
Past due 1 - 15 days
946
319
Past due 16 - 60 days
1,530
1,585
2 – 6 months overdue
–97
–138
6 –12 months overdue
1,057
1,467
More than 1 year overdue
17
243
Total trade receivables past due
but not impaired
4,465
4,507
Impaired trade receivables
Total trade receivables
Past due, including impaired, in relation
to trade receivables, %
2019
2018
20,222 20,571
253
258
114
0
0
625
882
481
239
191
0
0
911
935
21,729 22,417
6.9
8.2
ELECTROLUX ANNUAL REPORT 2019
Notes 61
All amounts in SEKm unless otherwise stated
loss. To measure the expected credit losses, trade receivables are grouped
into six categories based on shared credit risk characteristics and days past
due. If the provision is considered insufficient due to individual consider-
ations, the provision is extended to cover the extra anticipated losses.
De-recognition
Financial assets, or a portion thereof, are derecognized when the contrac-
tual rights to receive the cash flows from the assets have expired, or when
they have been transferred and either (i) the Group transfers substantially
all the risks and rewards of ownership, or (ii) the Group neither transfers nor
retains substantially all the risks and rewards of ownership and the Group
has not retained control of the asset.
Financial liabilities
Classification and subsequent measurement
All of the Groups financial liabilities, excluding derivatives, are
classified as subsequently measured at amortized cost.
De-recognition
Financial liabilities are derecognized when they are extinguished, i.e. when
the obligation specified in the contract is discharged, cancelled or expires.
Derivatives and hedging activities
Derivatives are initially recognized at fair value on the date on which the
derivative contract is entered into and are subsequently re-measured at
fair value. All derivatives are carried as assets when fair value is positive
and as liabilities when fair value is negative. Fair value gain or loss related
to derivatives not designated or not qualifying as hedging instruments is
recognized in profit or loss.
The Group applies the hedge accounting requirements of IFRS 9. For
derivatives designated and qualifying as hedging instruments, the method
of recognizing the fair value gain or loss depends on the nature of the item
being hedged. Derivatives are designated as either:
• Hedges of the fair value of recognized assets or liabilities or firm
commitments (fair value hedges);
• Hedges of highly probable future cash flows attributable to a recognized
asset or liability (cash flow hedges); or
• Hedges of a net investment in a foreign operation (net investment hedges).
The Group documents, at the inception of the hedge, the relationship
between hedged items and hedging instruments, as well as its risk manage-
ment objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at the hedge inception and on
an ongoing basis, of whether the derivatives that are used in hedging trans-
actions are highly effective in offsetting changes in fair values or cash flows
of hedged items based on the following hedge effectiveness requirements:
• There is an economic relationship between the hedged item and the
hedging instrument;
• The effect of credit risk does not dominate the value changes that result
from that economic relationship; and
• The hedge ratio of the hedging relationship is the same as that result-
ing from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as
fair value hedges are recorded in the statement of comprehensive income,
together with changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognized in equity via
other comprehensive income. The gain or loss relating to the ineffective
portion is recognized immediately in the statement of comprehensive
income. Amounts accumulated in equity are recycled to the statement
of profit or loss in the periods when the hedged item affects profit or loss.
They are recorded in the income or expense lines in which the revenue or
expense associated with the related hedged item is reported.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly
to cash flow hedges. Any gain or loss on the hedging instrument relating to
Note 18 Financial instruments
Additional and complementary information is presented in the following
notes to the Annual Report: Note 2, Financial risk management, describes
the Group’s risk policies in general and regarding the principal financial
instruments of Electrolux in more detail. Note 17, Trade receivables,
describes the trade receivables and related credit risks.
The information in this note highlights and describes the principal finan-
cial instruments of the Group regarding specific major terms and conditions
when applicable, and the exposure to risk and the fair values at year end.
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the entity
becomes party to the contractual provisions of the instrument. Regular way
purchases and sales of financial assets are recognized on trade-date, the
date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures a financial asset or financial
liability at its fair value plus or minus, in the case of a financial asset or
financial liability not at fair value through profit or loss, transaction costs
that are incremental and directly attributable to the acquisition or issue of
the financial asset or financial liability, such as fees and commissions. Trans-
action costs of financial assets and financial liabilities carried at fair value
through profit or loss are expensed in profit or loss.
Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement
categories:
• Fair value through profit or loss (FVPL);
• Fair value through other comprehensive income (FVOCI); or
• Amortized cost.
The classification requirements for debt and equity instruments are
described below.
Debt instruments are those instruments that meet the definition of a financial
liability from the issuer’s perspective, such as trade receivables, loan
receivables as well as government bonds.
The Group classifies its debt instruments into one of the following two
measurement categories:
Amortized cost: Assets that are held for collection of contractual cash
flows where those cash flows represent solely payments of principal and
interest (SPPI), and are not designated as FVPL, are measured at amor-
tized cost. The carrying amount of these assets is adjusted by any expected
credit loss allowance recognized (see impairment below). Interest income
from these financial assets is included in the financial net using the effective
interest rate method.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria
for amortized cost are measured at fair value through profit and loss. A gain
or loss on a financial debt investment that is subsequently measured at fair
value through profit or loss and is not part of a hedging relationship is rec-
ognized in the financial net in the period in which it arises. Interest income
from these financial assets is included in the financial net using the effective
interest rate method. Trade receivables sold on non-recourse terms are
categorized as ‘Hold to Sell’ with gain or loss reported in operating income.
The Group reclassifies debt investments when and only when its business
model for managing those assets changes.
Equity instruments are instruments that meet the definition of equity from the
issuer’s perspective; that is, instruments that do not contain a contractual
obligation to pay and that evidence a residual interest in the issuer’s net
assets. Gains and losses on equity investments at FVPL are included in the
financial net in the statement of comprehensive income. The Group does
not have any material investments in equity instruments.
Impairment and expected credit loss
The Group assesses on a forward-looking basis the expected credit losses
(ECL) associated with its debt instrument assets not carried at fair value.
The Group recognizes a provision for such losses at each reporting date.
The measurement of ECL reflects an unbiased and probability-weighted
amount based on reasonable and supportable information available such
as past events, current condition and forecasts of future economic condi-
tions. For trade receivables, the group applies the ‘simplified approach’,
which means that the provision for bad debts will equal the lifetime expected
ELECTROLUX ANNUAL REPORT 2019
62 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 18
the effective portion of the hedge is recognized directly in equity via other
comprehensive income; the gain or loss relating to the ineffective portion is
recognized immediately in the statement of comprehensive income. Gains
and losses accumulated in equity are included in the statement of compre-
hensive income when the foreign operation is disposed of as part of the
gain or loss on the disposal.
Net debt
At year-end 2019, the Group’s financial net debt amounted to SEK 667m
(–1,989). The table below presents how the Group calculates net debt and
what it consists of.
Net debt
Short-term loans
Short-term part of long-term loans
Trade receivables with recourse
Short-term borrowings
Financial derivative liabilities
Accrued interest expenses and prepaid
interest income
Total short-term borrowings
Long-term borrowings
Total borrowings
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and accrued
interest income
Liquid funds
Financial net debt
Lease liabilities
Net provision for post-employment benefits
Net debt
Revolving credit facility (EUR 1,000m)1)
December 31
2019
1,307
1,446
602
2018
1,429
2,355
168
3,354
3,952
233
33
3,620
8,236
81
28
4,062
6,198
11,856
10,260
10,807
11,697
190
176
176
132
16
243
11,189
12,249
667
–1,989
3,150
3,866
7,683
—
3,814
1,825
10,440
10,277
1) The facilities are not included in net borrowings, but can be used for short-term and long-
term funding.
Liquid funds
Liquid funds as defined by the Group consist of cash and cash equivalents,
short-term investments, financial derivative assets and prepaid interest
expenses and accrued interest income. Cash and cash equivalents consist
of cash on hand, bank deposits and other short-term highly liquid invest-
ments with a maturity of 3 months or less.
The table to the right presents the key data of liquid funds for continuing
operations in 2019 and for total Group, including discontinued operations in
2018. The carrying amount of liquid funds is approximately equal to fair value.
Changes in liabilities arising from financing
Liquidity profile
Cash and cash equivalents
Short-term investments
Financial derivative assets
Prepaid interest expenses and accrued
interest income
Liquid funds
% of annualized net sales1)
Net liquidity
Fixed interest term, days
Effective yield, % (average per annum)
1) Liquid funds in relation to net sales, see Note 30 for definition.
December 31
2019
2018
10,807 11,697
190
176
176
132
16
243
11,189 12,249
18.4
18.1
7,569
8,187
12
0.8
12
1.1
For 2019, liquid funds, including unused revolving credit facilities of EUR
1000m, amounted to 18.4% (18.1) of annualized net sales. Net liquidity is
calculated by deducting short-term borrowings from liquid funds.
Interest-bearing liabilities
Borrowings are initially recognized at fair value net of transaction costs
incurred. After initial recognition, borrowings are valued at amortized cost
using the effective interest method.
In 2019, SEK 2,412m of long-term borrowings matured or were amor-
tized. These maturities were partly refinanced to the amount of SEK 3,810m.
At year-end 2019, the Group’s total interest-bearing liabilities amounted
to SEK 10,989m (9,982), of which SEK 9,682m (8,553) referred to long-term
borrowings including maturities within 12 months. Long-term borrowings
with maturities within 12 months amounted to SEK 1,446m (2,355). The
outstanding long-term borrowings have mainly been made under the
European Medium-Term Note Program and via bilateral loans. The major-
ity of total long-term borrowings, SEK 9,546m (8,001), is raised at parent
company level. Electrolux also has an unused committed multicurrency
revolving credit facility of EUR 1,000m maturing 2023. However, Electrolux
expects to meet any future requirements for short-term borrowings through
bilateral bank facilities and capital-market programs such as commercial
paper programs.
At year-end 2019, the average interest-fixing period for long-term bor-
rowings was 1.5 years (1.0). The calculation of the average interest-fixing
period includes the effect of interest-rate swaps used to manage the inter-
est-rate risk of the debt portfolio. The average interest rate for the total bor-
rowings was 1.6% (2.5) at year end.
The fair value of the interest-bearing borrowings was SEK 9,575m. The fair
value including swap transactions used to manage the interest fixing was
approximately SEK 9,577m.
Cash Flow
Non Cash flow
Opening
Balance
Amorti-
zation
New
debt
Net cash
change
Acquisi-
tions
Reclassi-
fications
Addi-
tions/
Cancel-
lations
Exchange
rate
differences
Discon-
tinued
operations
Closing
Balance
8,553
–2,412
3,810
—
33
–411
—
111
–3
9,682
2019
Long-term borrowings
(including short-term part of
long-term)
Short-term borrowings
(excluding short-term part of
long-term)
Lease liabilities
Total
2018
Long-term borrowings
(including short-term part of
long-term)
Short-term borrowings
(excluding short-term part of
long-term)
Total
1) Opening balance adjustment as of January 1, 2019.
1,597
3,4651)
13,615
—
–942
—
—
–3,354
3,810
303
—
303
5
31
69
—
—
–411
—
729
729
8,088
–1,531
1,737
—
1,194
9,282
—
—
–1,531
1,737
397
397
13
134
147
—
—
—
—
—
—
8
110
229
246
–128
118
–4
–243
–250
1,909
3,150
14,740
—
—
—
8,553
1,597
10,150
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 18
The table below sets out the carrying amount of the Group’s borrowings.
Notes 63
All amounts in SEKm unless otherwise stated
Borrowings
Issue/maturity date
Bond loans1)
2013–2020
2013–2020
2017–2024
2018–2023
2018–2023
2018–2025
2019–2024
2019–2022
2019–2024
2019–2024
Total bond loans
Other long-term loans1)
1996–2019
2013–2021
2015–2021
2017–2026
Total other long-term loans
Long-term borrowings
Short-term part of long-term loans2)
2014–2019
2014–2019
2014–2019
2013–2020
2013–2020
2013–2021
2017–2026
Total short-term part of long-term loans
Other short-term loans
Total other short-term loans
Trade receivables with recourse
Short-term borrowings
Long-term and short-term borrowings
Fair value of financial derivative
liabilities
Accrued interest expenses and prepaid
interest income
Total borrowings
Description of loan
Interest rate, % Currency
Carrying amount,
December 31
Nominal value
(in currency)
2019
2018
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
3.440
Floating
Floating
1.125
Floating
3.724
1.103
Floating
0.885
Floating
Fixed rate loans in Germany
Amortizing long term bank loan in Sweden,
long part
Long-term bank loans in Sweden
Amortizing long term bank loan in Sweden
Other long-term loans
7.870
Floating
Floating
Floating
SEK
SEK
SEK
SEK
SEK
USD
SEK
SEK
SEK
SEK
EUR
SEK
USD
USD
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Euro MTN Program
Amortizing long term bank loan in Sweden,
short part
Amortizing long term bank loan in Sweden
Other short-term part of long-term loans
Floating
2.340
1.000
3.440
Floating
Floating
Floating
SEK
SEK
EUR
SEK
SEK
SEK
USD
170
830
350
200
800
73
1,000
1,250
750
750
39
154
170
63
750
250
100
170
830
308
12
Short-term bank loans in Egypt
Short-term bank loans in Brazil
Short-term bank loans in Thailand
Short-term bank loans in Chile
Other bank borrowings and
commercial papers
Floating
Floating
Floating
Floating
EGP
BRR
THB
CLP
217
161
432
13,712
—
—
350
200
804
681
1,000
1,260
750
757
5,802
170
830
350
200
806
655
—
—
—
—
3,011
—
400
154
1,582
592
106
2,434
8,236
—
—
—
170
830
308
108
30
1,446
126
372
135
171
461
1,522
673
131
3,187
6,198
750
250
1,026
—
—
308
—
21
2,355
182
675
259
—
503
1,307
601
3,354
313
1,429
168
3,952
11,590 10,150
233
33
81
28
11,856 10,260
1) The interest-rate fixing profile of the borrowings has been adjusted with interest-rate swaps.
2) Long-term borrowings with maturities within 12 months are classified as short-term borrowings in the Group’s balance sheet.
Short-term borrowings pertain mainly to countries with capital restrictions. The average maturity of the Group’s long-term borrowings including long-
term borrowings with maturities within 12 months was 3.0 years (2.6), at the end of 2019. The table below presents the repayment schedule of long-term
borrowings for continuing operations.
Repayment schedule of long-term borrowings, December 31
Debenture and bond loans
Bank and other loans
Short-term part of long-term loans
Total
ELECTROLUX ANNUAL REPORT 2019
2020
—
—
1,446
1,446
2021
—
1,950
—
1,950
2022
1,260
108
—
1,368
2023
1,004
108
—
1,112
2024
2,857
108
—
2,965
2025—
681
160
—
841
Total
5,802
2,434
1,446
9,682
64 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 18
Commercial flows
The table below shows the forecasted transaction flows, imports and
exports, for the 12-month period of 2020 and hedges at year-end 2019.
The hedged amounts are dependent on the hedging policy for each flow
considering the existing risk exposure. The effect of hedging on operating
income during 2019 amounted to SEK –111m (26). At year-end 2019, the
unrealized fair value of forward contracts for hedging of forecasted trans-
action flows amounted to SEK –9m (–2).
Forecasted transaction flows and hedges
Inflow of currency, long position
Outflow of currency, short position
Gross transaction flow
Hedges
Net transaction flow
AUD
3,168
–168
3,000
–643
2,357
BRL
3,815
–242
3,573
–793
2,780
CAD
2,604
0
2,604
–141
2,463
CHF
2,222
–210
2,012
–122
1,890
CLP
1,448
CNY
161
EUR
GBP
THB
USD
Other
Total
2,906
3,390
2,110
4,325
12,456
38,605
–222
–2,770
–8,124
–810
–3,952 –16,091
–6,016 –38,605
1,226
–2,609
–5,218
2,580
–1,842 –11,766
6,440
–311
800
–935
–205
109
1,952
289
915
–1,809
–6,153
2,375
–1,733
–9,814
6,729
0
0
0
Maturity profile of financial liabilities and derivatives
The table below presents the undiscounted cash flows of the Group’s contractual liabilities related to financial instruments based on the remaining period at
the balance sheet date to the contractual maturity date. Floating interest cash flows with future fixing dates are estimated using the forward-forward interest
rates at year-end. Any cash flow in foreign currency is converted to Swedish krona using the FX spot rates at year-end. The short-term liabilities from account
payables are matched by positive cash flow from trade receivables. The loan maturities can be offset by the available liquidity and/or a combination by new
issued bonds, commercial papers or bank loans. On top of the other sources, Electrolux has an unused committed credit facility of EUR 1,000m.
Maturity profile of financial liabilities and derivatives – undiscounted cash flows
Loans
Net settled derivatives
Lease liabilities
Gross settled derivatives
whereof outflow
whereof inflow
Accounts payable
Financial guarantees
Total
≤ 0.5
year
> 0.5 year
< 1 year
> 1 year
< 2 years
> 2 years
< 5 years
> 5 years
Total
– 2,629
0
–524
–29
–29,279
29,250
–33,892
–939
–38,013
–277
0
–482
5
–690
695
—
—
–2,059
–5,637
–860
–11,462
–1
–835
–1
–1,210
0
–534
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
–2
–3,584
–24
–29,969
29,945
–33,892
–939
–754
–2,895
–6,848
–1,394
–49,903
Net gain/loss, fair value and carrying amount on financial instruments
The tables below present net gain/loss on financial instruments, the effect in the income statement and equity, and the fair value and carrying amount of
financial assets and liabilities. Net gain/loss can include both exchange-rate differences and gain/loss due to changes in interest-rate levels.
Net gain/loss, income and expense on financial instruments
Recognized in operating income
Financial assets and liabilities at fair value through
profit and loss
Financial assets and liabilities at amortized cost
Total net gain/loss, income and expense
Recognized in financial items
Financial assets and liabilities at fair value through
profit and loss
Financial assets at amortized cost
Other financial liabilities at amortized cost
Total net gain/loss, income and expense
2019
2018
Gain/loss
in profit
and loss
Gain/loss
in OCI
Income
Expense
Gain/loss
in profit
and loss
Gain/loss
in OCI
Income
Expense
–115
99
–16
84
—
–155
–71
–9
—
–9
–1
—
–100
–101
—
—
—
—
69
—
69
—
—
—
–141
—
–424
–565
26
–193
–167
260
—
–248
12
–2
—
–2
–65
—
–46
–111
—
—
—
—
103
—
103
—
—
—
–183
—
–309
–492
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 18
Fair value and carrying amount on financial assets and liabilities
Financial assets
Financial assets
Financial assets at fair value through profit and loss
Trade receivables
Financial assets at amortized cost
Derivatives
Financial assets at fair value through profit and loss
Derivatives in hedge accounting
Short-term investments
Financial assets at fair value through profit and loss
Financial assets at amortized cost
Cash and cash equivalents
Financial assets at fair value through profit and loss
Financial assets at amortized cost
Total financial assets
Financial liabilities
Long-term borrowings
Financial liabilities measured at amortized cost
Accounts payable
Financial liabilities at amortized cost
Short-term borrowings
Financial liabilities measured at amortized cost
Derivatives
Financial liabilities at fair value through profit and loss
Derivatives in hedge accounting
Total financial liabilities
Notes 65
All amounts in SEKm unless otherwise stated
20191)
20181)
Hierarchy
level
Carrying
amount
Hierarchy
level
Carrying
amount
3
2
2
1
2
2
93
93
20,847
20,847
192
117
75
190
176
14
10,807
5,421
5,386
32,129
8,236
8,236
33,892
33,892
3,354
3,354
293
291
2
45,775
3
2
2
1
1
2
2
246
246
21,482
21,482
139
120
19
176
175
1
11,697
5,847
5,850
33,740
6,198
6,198
34,443
34,443
3,952
3,952
102
100
2
44,695
1) Carrying amount equals fair value except for long and short-term borrowings where the fair value is SEK 26m (45), respectively SEK 7m (12) higher than the carrying amount. The calculation of
fair value on the Group’s borrowings is level 2 in the fair value hierarchy.
Fair value estimation
Valuation of financial instruments at fair value is done at the most accurate
market prices available. Instruments which are quoted on the market, e.g.,
the major bond and interest-rate future markets, are all marked-to-market
with the current price. The foreign-exchange spot rate is used to convert
the value into SEK. For instruments where no reliable price is available on
the market, cash flows are discounted using the deposit/swap curve of the
cash flow currency. If no proper cash flow schedule is available, e.g., as in
the case with forward-rate agreements, the underlying schedule is used for
valuation purposes. To the extent option instruments are used, the valuation
is based on the Black & Scholes formula.
flows at the current market-interest rate that is available to the Group for
similar financial instruments. The Group’s financial assets and liabilities at fair
value are measured according to the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities. At
year-end, the fair value for level 1 financial assets was SEK 176m (175) and
for financial liabilities SEK 0m (0).
Level 2: Inputs other than quoted prices included in level 1 that are
observable for assets or liabilities either directly or indirectly. At year-end,
the fair value for level 2 financial assets was SEK 192m (139) and for financial
liabilities SEK 293m (102).
The carrying value less impairment provision of trade receivables and
payables are assumed to approximate their fair values. The fair value of
financial liabilities is estimated by discounting the future contractual cash
Level 3: Inputs for the assets or liabilities that are not entirely based on
observable market data. At year-end, the fair value for level 3 financial
assets was SEK 93m (246) and for financial liabilities 0m (0).
Note 19 Assets pledged for liabilities to credit institutions
Group
December 31
Parent Company
December 31
2019
2018
2019
2018
—
6
6
—
6
6
—
—
—
—
—
—
Real-estate mortgages
Other
Total
ELECTROLUX ANNUAL REPORT 2019
66 Notes
All amounts in SEKm unless otherwise stated
Note 20 Share capital, number of shares and earnings per share
The equity attributable to equity holders of the Parent Company consists of
the following items:
Other paid-in capital
Other paid-in capital relates to payments made by owners and includes
share premiums paid.
Number of shares
Shares, December 31, 2018
Class A shares
Class B shares
Total
Owned by
Electrolux
Owned
by other
shareholders
Earnings per share, SEK
Total
Basic, continuing operations
Basic, discontinued operations
—
8,192,539
8,192,539
Basic, total Group
21,522,858 279,204,911 300,727,769
21,522,858 287,397,450 308,920,308
Share capital
As per December 31, 2019, the share capital of AB Electrolux consisted of
8,192,539 Class A shares and 300,727,769 Class B shares with a quota value
of SEK 5 per share. All shares are fully paid. One A share entitles the holder to
one vote and one B share to one-tenth of a vote. All shares entitle the holder
to the same proportion of assets and earnings, and carry equal rights in
terms of dividends.
Share capital
Share capital, December 31, 2018
8,192,539 Class A shares, quota value SEK 5
300,727,769 Class B shares, quota value SEK 5
Total
Share capital, December 31, 2019
8,192,539 Class A shares, quota value SEK 5
300,727,769 Class B shares, quota value SEK 5
Total
41
1,504
1,545
41
1,504
1,545
Conversion of Class A shares into Class B shares
Class A shares
Class B shares
Sold shares
Class A shares
Class B shares
Shares, December 31, 2019
Class A shares
Class B shares
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
8,192,539
8,192,539
21,522,858 279,204,911 300,727,769
21,522,858 287,397,450 308,920,308
Note 21 Untaxed reserves, Parent Company
Accumulated depreciation in excess of plan
Brands
Licenses
Machinery and equipment
Buildings
Other
Total
Group contributions
Total appropriations
Other reserves
Other reserves include the following items: Cashflow hedges which refer
to changes in valuation of currency contracts used for hedging future for-
eign currency transactions; and exchange-rate differences on translation
of foreign operations which refer to changes in exchange rates when net
investments in foreign subsidiaries are translated to SEK. The amount of
exchange-rate changes includes the value of hedging contracts for net
investments. Finally, other reserves include tax relating to the mentioned
items.
Retained earnings
Retained earnings, including income for the period, include the income of
the Parent Company and its share of income in subsidiaries and associated
companies. Retained earnings also include remeasurement of provision for
post-employment benefits, reversal of the cost for share-based payments
recognized in income, income from sales of own shares and the amount
recognized for the common dividend.
Earnings per share
Income for the period attributable to
equity holders of the Parent Company
Diluted, continuing operations
Diluted, discontinued operations
Diluted, total Group
Average number of shares, million
Basic
Diluted
2019
2018
2,509
3,805
6.33
2.40
8.73
6.30
2.38
8.69
9.93
3.31
13.24
9.86
3.29
13.14
287.4
288.8
287.4
289.5
Basic earnings per share is calculated by dividing the income for the period
attributable to the equity holders of the Parent Company with the average
number of shares. The average number of shares is the weighted average
number of shares outstanding during the year, after repurchase of own
shares. Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding with the estimated num-
ber of shares from the share programs. Share programs are included in the
dilutive potential ordinary shares as from the start of each program. The
dilution in the Group is a consequence of the Electrolux long-term incentive
programs.
The average number of shares during the year has been 287,397,450
(287,397,450) and the average number of diluted shares has been
288,824,237 (289,503,125).
December 31, 2019
Appropriations
December 31, 2018
364
0
32
0
34
430
–18
—
9
—
–3
–12
694
682
382
0
23
0
37
442
ELECTROLUX ANNUAL REPORT 2019
Notes 67
All amounts in SEKm unless otherwise stated
Sweden
The main defined benefit plan in Sweden is the collectively agreed pension
plan for white collar employees, the ITP 2 plan, and it is based on final salary.
Benefits in payment are indexed according to the decisions of the Alecta
insurance company, typically those follow inflation. The plan is semi-closed,
meaning that only new employees born before 1979 are covered by the
ITP 2 solution. A defined contribution solution (ITP 1) is offered to employees
born after 1978. Electrolux has chosen to fund the pension obligation (ITP 2)
by a pension foundation. The foundation’s Board consists of equal numbers
of representatives from the employer and employees. There is no funding
requirement for an ITP pension foundation. Benefits are paid directly by the
company and, in case of surplus, the company can reimburse itself for the
current and the previous year’s pension cost and/or take a contribution
holiday.
Germany
There are several defined benefit plans based on final salary in Germany.
Benefits in payment are indexed every three years according to inflation
levels. All plans are closed for new participants. Electrolux has arranged
a Contractual Trust Arrangement (CTA) and the funds are held by a local
bank who acts as the trustee for the scheme. The assets are managed by
a fund management company, Electrolux performs an oversight on the
strategy via an investment committee with members both from Group staff
functions and the local German company. No minimum funding require-
ments or regular funding obligations apply to CTAs. If there is a surplus
under both German GAAP and IFRS rules, Electrolux can take a refund up to
the German GAAP surplus. Benefits are paid directly by the company and
Electrolux can refund itself for pension pay-outs. Over time, Electrolux will
have access to any residual funds after the last beneficiary has left the plan.
Switzerland
In Switzerland benefits are career average in nature, with indexation
of benefits following decisions of the foundation board, subject to legal
minima. Contributions are paid to the pension foundation and a recovery
plan has to be set up if the plans are underfunded on the local funding
basis. Swiss laws do not state any specific way of calculating an employer‘s
additional contribution and because of that there is normally no mini-
mum funding requirement. The assets in the foundation is to a large extent
handled by local banks and they are working with both asset allocation
and selection within a framework decided by the Swiss foundation board.
Benefits are paid from the plan assets.
Other countries
There is a variety of smaller plans in other countries and the most impor-
tant of those are in France, Italy, Canada and Norway. The pension plans
in France and Italy are mainly unfunded. The Norwegian pension plans are
funded and in Canada there are both funded and unfunded pension plans.
A mix of final salary and career average exists in these countries. Some
plans are open for new entrants.
Note 22 Post-employment benefits
Post-employment benefits
The Group sponsors pension plans in many of the countries in which it has
significant activities. Pension plans can be defined contribution or defined
benefit plans or a combination of both. Under defined benefit pension
plans, the company enters into a commitment to provide post-employment
benefits based upon one or several parameters for which the outcome is
not known at present. For example, benefits can be based on final salary, on
career average salary, or on a fixed amount of money per year of employ-
ment. Under defined contribution plans, the company’s commitment is to
make periodic payments to independent authorities or investment plans,
and the level of benefits depends on the actual return on those investments.
Some plans combine the promise to make periodic payments with a prom-
ise of a guaranteed minimum return on the investments. These plans are
also defined benefit plans.
In some countries, Electrolux makes provisions for compulsory
severance payments. These provisions cover the Group’s commitment to
pay employees a lump sum upon reaching retirement age, or upon the
employees’ dismissal or resignation.
In addition to providing pension benefits and compulsory severance
payments, the Group provides healthcare benefits for some of its employees
in certain countries, mainly in the U.S.
The cost for pension is disaggregated into three components; service
cost, financing cost or income and remeasurement effects. Service cost
is reported within Operating income and classified as Cost of goods sold,
Selling expenses or Administrative expenses depending on the function
of the employee. Financing cost or income is recognized in the Financial
items and the remeasurement effects in Other comprehensive income. The
Projected Unit Credit Method is used to measure the present value of the
obligations and costs.
Net provisions for post-employment benefits in the balance sheet repre-
sent the present value of the Group’s obligations less market value of plan
assets. The remeasurements of the obligations are made using actuarial
assumptions determined at the balance sheet date. Changes in the present
value of the obligations due to revised actuarial assumptions and experi-
ence adjustments on the obligation are recorded in Other comprehensive
income as remeasurements. The actual return less calculated interest
income on plan assets is also recorded in other comprehensive income as
remeasurements. Past-service costs are recognized immediately in income
for the period.
Some features of the defined benefit plans in the main countries are
described below.
USA
The number of pension plans in the U.S. has been significantly reduced over
the years through plan consolidation. The defined benefit plans are closed
for future accruals and employees are offered defined contribution plans.
Pensions in payment are not generally subject to indexation. Funding posi-
tion is reassessed every year with a target to restore the funding level over
seven years. Surplus in the fund can be used to take a contribution holiday
and refunds are taxed at 50%. Benefits are mainly paid from the plan assets.
United Kingdom
The defined benefit plan is closed for future accruals and employees are
offered defined contribution. The funding position is reassessed every three
years and a schedule of contributions is agreed between the Trustee and
the company. The Trustee decides the investment strategy and consults with
the company. Benefits are paid from the plan assets.
ELECTROLUX ANNUAL REPORT 2019
68 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 22
Explanation of amounts in the financial statements relating to defined benefit obligations.
Information by country December, 31, 2019
Amounts included in the balance sheet
Present value of funded and unfunded obligations
8,823
2,232
7,526
4,305
4,184
3,753
1,008
31,831
Fair value of plan assets (after change in asset ceiling)
–9,198
–2,067
–7,479
–2,519
–2,768
–3,522
–218
–27,771
USA
Medical
USA
UK
Sweden Germany
Switzer–
land
Other
Total
–375
165
1,786
1,416
231
790
4,060
Total (surplus)/deficit
Whereof reported as:
Pension plan assets
Provisions for post-employment benefit plans
Total funding level for all pension plans, %
Average duration of the obligation, years
Amounts included in total comprehensive income
Service cost3)
Net interest cost
Remeasurements (gain)/loss
Total expense (gain) for defined benefit plans
Expenses for defined contribution plans
Amounts included in the cash flow statement
Contributions by the employer
Reimbursement
Benefits paid by the employer
Major assumptions for the valuation of the liability
Longevity, years4)
Male
Female
Inflation, %5)
Discount rate, %
Information by country December, 31, 2018
Amounts included in the balance sheet
47
—
—
99
—
—
93
—
—
59
—
—
66
—
—
94
10.4
15.7
18.5
14.5
13.5
367
—
–277
90
27
—
20
20.7
22.7
6.25
3.00
11
–15
172
168
78
23
421
522
20
19
49
88
—
—
—
—
–103
119
—
–334
166
21.0
23.9
3.00
1.80
23.0
24.8
1.75
1.40
20.2
23.7
1.70
0.90
53
1
–85
–31
43
—
—
22.6
24.7
1.25
0.10
—
—
104
10.3
–349
6
–287
–630
—
—
—
20.7
22.7
3.00
3.00
—
—
22
—
–87
10
110
33
23
—
56
—
—
—
—
1,0561)
5,1162)
87
13.6
93
44
103
240
636
93
–437
361
21.2
23.7
2.36
1.82
USA
Medical
USA
UK
Sweden Germany
Switzer–
land
Other
Total
Present value of funded and unfunded obligations
8,221
1,790
6,257
4,052
3,779
3,396
1,151
28,646
Fair value of plan assets (after change in asset ceiling)
–7,814
–1,837
–6,354
–2,772
–2,631
–3,100
–324
–24,832
Total (surplus)/deficit
Whereof reported as:
Pension plan assets
Provisions for post-employment benefit plans
Total funding level for all pension plans, %
Average duration of the obligation, years
Amounts included in total comprehensive income
Service cost6)
Net interest cost
Remeasurements (gain)/loss
Total expense (gain) for defined benefit plans
Expenses for defined contribution plans
Amounts included in the cash flow statement
Contributions by the employer
Reimbursement
Benefits paid by the employer
Major assumptions for the valuation of the liability
Longevity, years4)
Male
Female
Inflation, %5)
Discount rate, %
407
–47
–97
1,280
1,148
296
827
3,814
—
—
97
9.4
17
8
49
74
—
—
–21
20.8
22.7
3.00
4.15
—
—
103
9.9
—
1
81
82
–22
—
—
20.8
22.7
6.50
4.15
—
—
102
14.7
60
6
–373
–307
–58
—
—
20.9
23.8
3.25
2.65
—
—
68
—
—
70
—
—
91
17.4
14.3
12.6
158
18
279
455
22
6
206
234
—
91
–125
—
626
–161
23.0
24.8
1.75
2.25
20.0
23.6
1.70
1.70
54
—
197
251
–40
—
—
22.5
24.5
1.25
0.74
—
—
16
—
9
9
9
27
–11
—
–55
—
—
—
—
532
4,346
87
12.7
320
48
448
816
640
–131
717
–362
21.2
23.6
2.40
2.63
1) Whereof pension plan assets amount to SEK 1,043m for continuing operations and SEK 13m for discontinued operations.
2) Whereof provisions for post-employment benefit plans amount to SEK 4,909m for continuing operations and SEK 208m for discontinued operations.
3) Includes a gain of SEK 200m due to plan amendment in France and settlement in Sweden and Norway.
4) Expressed as the average life expectancy of a 65 years old person in number of years.
5) General inflation impacting salary and pensions increase. For USA Medical, the number refers to the inflation of healthcare benefits.
6) Includes a loss of SEK 51m in UK due to gender equalization of Guaranteed Minimum Pension.
ELECTROLUX ANNUAL REPORT 2019
Notes 69
All amounts in SEKm unless otherwise stated
Risks
There are mainly three categories of risks related to defined benefit obliga-
tions and pension plans. The first category relates to risks affecting the actual
pension payments. Increased longevity and inflation of salary and pensions
are the principle risks that may increase the future pension payments and,
hence, increase the pension obligation. The second category relates to
investment return. Pension plan assets are invested in a variety of financial
instruments and are exposed to market fluctuations. Poor investment return
may reduce the value of investments and render them insufficient to cover
future pension payments. The final category relates to measurement and
affects the accounting for pensions. The discount rate used for measuring
the present value of the obligation may fluctuate which impacts the valua-
tion of the Defined Benefit Obligation (DBO). The discount rate also impacts
the size of the interest income and expense that is reported in the Financial
items and the service cost. When determining the discount rate, the Group
uses AA rated corporate bond indexes which match the duration of the
pension obligations. In Sweden and Norway, mortgage-backed bonds
are used for determining the discount rate. Expected inflation and mortality
assumptions are based on local conditions in each country and changes in
those assumptions may also affect the measured obligation and, therefore,
the accounting entries.
Investment strategy and risk management
The Group manages the allocation and investment of pension plan assets
with the aim of decreasing the total pension cost over time. This means that
certain risks are accepted in order to increase the return. The investment
horizon is long-term and the allocation ensures that the investment port-
folios are well diversified. In some countries, a so called trigger-points
scheme is in place, whereby the investment in fixed income assets increases
as the funding level improves. The Board of Electrolux annually approves the
limits for asset allocation. The final investment decision often resides with
the local trustee that consults with Electrolux. The risks related to pension
obligations, e.g., mortality exposure and inflation, are monitored on an
ongoing basis. Buy-out premiums are also monitored and other potential
liability management actions are also considered to limit the exposure to
the Group.
Cont. Note 22
Reconciliation of change in present value of funded
and unfunded obligations
Opening balance, January 1
Current service cost
Special events
Interest expense
Remeasurement arising from changes
in financial assumptions
Remeasurement from changes in
demographic assumptions
Remeasurement from experience
Contributions by plan participants
Benefits paid
Exchange differences
Settlements and other
Total
Discontinued operations, obligations
Closing balance, December 31
Reconciliation of change in the fair value of plan assets
Opening balance, January 1
Interest income1)
Return on plan assets, excluding amounts included in
interest1)
Effect of asset ceiling
Net contribution by employer
Contribution by plan participants
Benefits paid
Exchange differences
Settlements and other
Total
Discontinued operations, plan assets
Closing balance, December 31
1) The actual return on plan assets amounts to SEK 4,174m (–553).
2019
2018
28,646 28,378
246
–96
808
237
50
720
3,379
–717
–63
206
50
–132
72
45
–1,808 –1,514
1,106
1,539
–643
–32
31,831 28,646
–208
—
31,623 28,646
2019
2018
24,832 25,744
764
672
3,410 –1,225
14
–344
50
–52
–224
45
–1,447 –1,514
1,096
1,453
–604
–67
27,771 24,832
–13
—
27,758 24,832
Below is the sensitivity analysis for the main financial assumptions and the potential impact on the present value of the defined pension obligation. Note that
the sensitivities are not meant to express any view by Electrolux on the probability of a change.
Sensitivity analysis on defined benefit obligation
Longevity +1 year
Inflation +0.5%1)
Discount rate +1%
Discount rate –1%
USA
297
28
–807
938
USA
Medical
UK
Sweden Germany
127
118
–213
247
351
374
–1,072
1,331
158
405
–670
876
100
289
–558
710
Switzer-
land
126
39
–472
632
Other
7
22
–82
97
Total
1,166
1,275
–3,874
4,831
1) The inflation change feeds through to other inflation-dependent assumptions, i.e., pension increases and salary growth.
In the coming year, the Group expects to pay a total of SEK 329m in contributions to the pension funds and as payments of benefits directly to the employees.
MARKET VALUE OF PLAN ASSETS BY CATEGORY
2019
2018
Fixed income, SEK 13,059m
Equity, SEK 8,437m
Hedge funds, SEK 2,140m
Real estate, SEK 2,631m
Infrastructure, SEK 500m
Private equity, SEK 136m
Cash, SEK 868m
Fixed income, SEK 12,103m
Equity, SEK 7,669m
Hedge funds, SEK 1,673m
Real estate, SEK 2,304m
Infrastructure, SEK 307m
Private equity, SEK 142m
Cash, SEK 634m
ELECTROLUX ANNUAL REPORT 2019
70 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 22
Market value of plan assets without quoted prices
Fixed income
Real estate
Infrastructure
Private equity
December 31
2019
915
2018
61
2,631
2,302
500
136
307
142
The Swedish pension foundation carries plan assets at an amount of
SEK 200m related to property used by Electrolux.
Governance
Defined benefit pensions and pension plan assets are governed
by the Electrolux Pension Board, which resumes 3 to 4 times per year
and has the following responsibilities:
• Implementation of pension directives of the AB Electrolux Board of
Directors.
• Evaluation and approval of new plans, changes to plans or termination
of plans.
• Approval of the Group’s and local pension funds’ investment strategies.
• Approval of the Group’s global and local benchmarks for follow up of
pension plan assets.
• Approval of the election of company representatives in the Boards of
Trustees.
• Approval of the financial and actuarial assumptions to be used in the
measurement of the defined benefit obligations.
Parent Company
According to Swedish accounting principles adopted by the Parent
Company, defined benefit liabilities are calculated based upon officially
provided assumptions, which differ from the assumptions used in the Group
under IFRS. The pension benefits are secured by contributions to a separate
fund or recorded as a liability in the balance sheet. The accounting prin-
ciples used in the Parent Company’s separate financial statements differ
from the IFRS principles, mainly in the following:
• The pension liability calculated according to Swedish accounting
principles does not take into account future salary increases.
• The discount rate used in the Swedish calculations is set by the Swedish
Pension Foundation (PRI) and was for 2019 4.0% (4.0). The rate is the same
for all companies in Sweden.
• Changes in the discount rate and other actuarial assumptions are
Change in fair value of plan assets
Opening balance, January 1, 2018
Actual return on plan assets
Contributions and compensation to/from the fund
Closing balance, December 31, 2018
Actual return on plan assets
Contributions and compensation to/from the fund
Closing balance, December 31, 2019
Amounts recognized in the balance sheet
Present value of pension obligations
Fair value of plan assets
Surplus/deficit
Limitation on assets in accordance with Swedish
accounting principles
Net provisions for pension obligations
Whereof reported as provisions for pensions
Amounts recognized in the income statement
Current service cost
Interest cost
recognized immediately in the profit or loss and the balance sheet.
• Deficit must be either immediately settled in cash or recognized as a
liability in the balance sheet.
• Surplus cannot be recognized as an asset, but may in some cases be
refunded to the company to offset pension costs.
Total expenses for defined benefit pension plans
Insurance premiums
Total expenses for defined contribution plans
Special employer’s contribution tax
Change in the present value of defined benefit pension obligation for
funded and unfunded obligations
Opening balance, January 1, 2018
1,651
438
2,089
Funded Unfunded
Total
Current service cost
Interest cost
Benefits paid
82
67
–78
Closing balance, December 31, 2018
1,722
Current service cost
Interest cost
Benefits paid
48
70
–81
Closing balance, December 31, 2019
1,759
16
18
–30
442
7
18
–30
437
98
85
–108
2,164
55
88
–111
2,196
Funded
2,397
29
–75
2,351
320
–133
2,538
December 31
2019
2018
–2,196 –2,164
2,538
2,351
342
187
–779
–437
–437
–628
–442
–442
2019
2018
55
88
143
157
157
31
2
333
–133
200
98
85
183
107
107
33
2
325
–75
250
Cost for credit insurance FPG
Total pension expenses
Compensation from the pension fund
Total recognized pension expenses
The Swedish Pension Foundation
The pension liabilities of the Group’s Swedish defined benefit pension
plan (PRI pensions) are funded through a pension foundation established
in 1998. The market value of the assets of the foundation amounted at
December 31, 2019, to SEK 2,551m (2,772m) and the pension commitments
to SEK 1,759m (2,013). The Swedish Group companies recorded a liability
to the pension fund as per December 31, 2019, in the amount of SEK 0m (0).
Contributions to the pension foundation during 2019 amounted to SEK 0m
(0). Contributions from the pension foundation during 2019 amounted to
SEK 585m (91).
ELECTROLUX ANNUAL REPORT 2019
Provisions for
restructuring
Warranty
commitments
Claims
1,915
1,362
Notes 71
All amounts in SEKm unless otherwise stated
Group
Parent Company
Other
3,256
19
871
–867
–512
96
—
391
–464
—
108
1,397
2,863
269
533
1,128
2,330
Total
7,823
29
3,773
–3,759
–631
330
7,565
2,284
5,281
10
1,793
–1,679
–11
67
2,095
1,071
1,024
2,095
1,397
2,863
7,565
5
2,178
–1,984
–31
68
–245
2,086
1,015
1,071
—
421
—
5
1,733
5,658
–491
–1,258
–4,297
—
50
—
1,377
280
–56
70
–361
2,991
556
1,097
2,436
–266
210
–692
8,183
2,606
5,577
Provisions for
restructuring
Warranty
commitments
Other
322
—
3
–122
–74
45
174
125
49
174
—
471
–87
–23
–1
0
534
187
347
421
—
86
–44
0
10
473
92
381
473
—
370
–396
—
5
—
452
120
332
48
—
3
–7
0
0
44
—
44
44
—
8
–14
—
—
0
38
—
38
Total
791
—
92
–173
–74
55
691
217
474
691
—
849
–497
–23
4
0
1,024
307
717
1,290
—
718
–749
–108
59
1,210
411
799
1,210
—
1,326
–564
–179
22
–86
1,729
755
973
Note 23 Other provisions
Opening balance, January 1, 2018
Acquisitions of operations
Provisions made
Provisions used
Unused amounts reversed
Exchange-rate differences
Closing balance, December 31, 2018
Of which current provisions
Of which non-current provisions
Opening balance, January 1, 2019
Acquisitions of operations
Provisions made
Provisions used
Unused amounts reversed
Exchange-rate differences
Discontinued operations
Closing balance, December 31, 2019
Of which current provisions
Of which non-current provisions
Provisions are recognized when the Group has a present obligation as a
result of a past event, and it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognized as a provision is the
best estimate of the expenditure required to settle the present obligation at
the balance sheet date. Where the effect of time value of money is material,
the amount recognized is the present value of the estimated expenditures.
Provisions for warranty are recognized at the date of sale of the products
covered by the warranty and are calculated based on historical data for
similar products. Provisions for warranty commitments are recognized as a
consequence of the Group’s policy to cover the cost of repair of defective
products. Warranty is normally granted for one to two years after the sale.
Restructuring provisions are recognized when the Group has both
adopted a detailed formal plan for the restructuring and either started the
plan implementation or communicated its main features to those affected
by the restructuring. Provisions for restructuring represent the expected
costs to be incurred as a consequence of the Group’s decision to close
some factories, rationalize production and reduce personnel, both for
newly acquired and previously owned companies. The amounts are based
on management’s best estimates and are adjusted when changes to these
estimates are known. The larger part of the restructuring provisions as per
December 31, 2019, will be consumed in 2020 and 2021.
Provisions for claims refer to the Group’s captive insurance companies.
Other provisions include mainly provisions for direct and indirect tax, envi-
ronmental liabilities, asbestos claims or other liabilities. The timing of any
resulting outflows for provisions for claims and other provisions is uncertain.
Note 24 Other liabilities
Group
December 31
Parent Company
December 31
Accrued holiday pay
Other accrued payroll costs
Accrued interest expenses
Contract liabilities1)
Other accrued expenses
Prepaid income grants
Other prepaid income
VAT liabilities
Personnel related liabilities
2019
928
1,597
33
6,005
3,387
828
124
957
836
2018
1,043
1,297
28
5,093
4,710
882
302
1,286
797
Other operating liabilities
2,126
1,667
2019
223
261
29
—
2018
137
64
25
—
525
1,210
—
210
—
—
—
—
43
—
—
—
Total
16,821 17,105
1,248
1,479
1) Movement in contract liabilities is presented in Note 4.
Other accrued expenses include for example accruals for fees, advertising
and sales promotion. Other operating liabilities include for example opera-
tional taxes.
ELECTROLUX ANNUAL REPORT 2019
72 Notes
All amounts in SEKm unless otherwise stated
Note 25 Contingent assets and liabilities
Guarantees and other
commitments
On behalf of subsidiaries
On behalf of external
counterparties
Employee benefits in excess of
reported liabilities
Total
Group
December 31
Parent Company
December 31
2019
2018
2019
2018
—
—
0
1,044
939
992
1,015
490
—
23
—
—
939
1,015
1,015
1,534
A large part of the guarantees and other commitments on behalf of external
counterparties, is related to U.S. sales to dealers financed through external
finance companies with a regulated buy-back obligation of the products in
case of dealer’s bankruptcy.
In addition to the above contingent liabilities, guarantees for fulfillment of
contractual undertakings are given as part of the Group’s normal course of
business. There was no indication at year-end that payment will be required
in connection with any contractual guarantees.
Legal proceedings
Litigation and claims related to asbestos are pending against the Group
in the U.S. Almost all of the cases refer to externally supplied components
used in industrial products manufactured by discontinued operations prior
to the early 1970s. The cases involve plaintiffs who have made substan-
tially identical allegations against other defendants who are not part of
the Electrolux Group.
As of December 31, 2019, the Group had a total of 3,897 (3,460) cases
pending, representing approximately 3,933 (approximately 3,502) plain-
tiffs. During 2019, 1,617 new cases with 1,618 plaintiffs were filed and 1,180
pending cases with approximately 1,187 plaintiffs were resolved.
The Group continues to operate under a 2007 agreement with certain
insurance carriers who have agreed to reimburse the Group for a portion
of its costs relating to certain asbestos lawsuits. The agreement is subject
to termination upon 60 days notice and if terminated, the parties would be
restored to their rights and obligations under the affected insurance policies.
It is expected that additional lawsuits will be filed against Electrolux.
It is not possible to predict the number of future lawsuits. In addition, the
outcome of asbestos lawsuits is difficult to predict and Electrolux cannot
provide any assurances that the resolution of these types of lawsuits will not
have a material adverse effect on its business or on results of operations in
the future.
The Group is involved in a legal proceeding in Egypt relating to the priva-
tization of an Egyptian subsidiary. The proceeding is currently on-going in
the court of first instance in Cairo, Egypt. Electrolux believes that the lawsuit
is without legal merit.
In October 2013, Electrolux became subject of an investigation by the
French Competition Authority regarding a possible violation of antitrust
rules. The Authority has thereafter decided to conduct two separate
investigations whereof one was completed in December 2018. The other
investigation is still ongoing, and the Authority has so far not communicated
any conclusions. Given the nature of the investigation, it cannot be ruled out
that the outcome could have a material impact on Electrolux financial result
and cash flow. At this stage it is however not possible to evaluate the extent
of such an impact.
In November 2017, the U.S. Department of Commerce (DOC) informed
the Group that it had set a preliminary and significantly increased tariff rate
of 72.41% on washing machines manufactured in Mexico by Electrolux and
imported into the U.S. between February 2016 and January 2017. In March
2018, Electrolux was informed by DOC that this preliminary tariff rate was
determined as final. Electrolux has appealed DOC’s decision. If the tariff
rate is not significantly reduced as a result of the appeal process, it could
lead to a one-time cost of up to USD 70m. The one time cost, if any, is subject
to a current interest rate of 5%.However, Electrolux believes that the com-
pany has a very strong legal case and has not made any provision related
to this potential cost at this stage.
In the fourth quarter of 2019 an order was issued by the Italian Environ-
mental Authorities for certain remediation actions connected to contami-
nation at Electrolux subsidiary INFA s.p.a. (“INFA”) former manufacturing site
in Aviato (Italy), a site (land and factory) that INFA divested to the current
operator of the site, Sarinox s.p.a (“Sarinox”), in 2001. Pursuant to the order,
addressed against Sarinox, Sarinox shall, inter alia, make a contribution of
42m EUR to projects improving the groundwater quality in the Friuli region,
Italy, and take certain other measures to clean 42m cubic meters of con-
taminated groundwater in the region. Sarinox has objected to the order
by appealing to the administrative court of Trieste. As it is possible that the
situation can result in a liability for INFA in its capacity as former owner and
operator or seller of the site, INFA has filed a motion to join the proceedings
to protect its interests. At this stage it is too early to predict the outcome of
this matter and to assess and quantify INFA’s liability, if any. No provision has
been set at this stage.
Contingent assets
In December 2018, Electrolux obtained a judicial court certification attest-
ing a final and non-appealable decision in Brazil that Electrolux has the
right to recover overpaid sales tax for 2002–2014. In December 2018,
Electrolux filed a claim with the Brazilian tax authorities for the recovery of
the overpaid sales tax and a minor part was recognized as an asset per
December 31, 2018. The remaining amount was recognized as an asset as
per September 30, 2019. There is accordingly no longer a contingent asset
related to this case.
ELECTROLUX ANNUAL REPORT 2019
Note 26 Acquired, divested and discontinued operations
Acquired operations
Consideration:
Cash paid for acquisitions made during the year
Deferred consideration
Total consideration
Recognized amounts of assets acquired and
liabilities assumed:
Total net assets acquired
Assumed net debt
Goodwill
Total
Payments for acquisitions:
Cash paid for acquisitions made during the year
Cash and cash equivalents in acquired operations
Cash paid related to deferred consideration
from acquisitions made in earlier years
Payments for acquisition of non-controlling interest
in CTI SA and Somela SA, Chile
Total paid
Notes 73
All amounts in SEKm unless otherwise stated
2019
2018
Sydney
Appliance
Installa-
tions
UNIC
Total
Schnei-
dereit
SPM
Other
Total
26
13
39
0
0
39
39
410
0
410
143
–69
336
410
436
13
449
143
–69
375
449
331
37
368
168
–93
293
368
470
—
470
189
–10
291
470
3
20
23
11
–10
22
23
2019
436
–4
35
0
467
804
57
861
368
–113
606
861
2018
804
–49
144
3
902
Acquisitions in 2019
Sydney Appliance Installations
On February 1, 2019, the acquisition of the Australian appliance installa-
tion and repair service operation, Sydney Appliance Installations (SAI), was
completed through an asset deal. The acquisition fits well into the existing
business model increasing Electrolux in-house after sales capacity in the
region. The purchase price for the operation contains an upfront payment
of AUD 3.9m, approximately SEK 26m and a deferred consideration of up
to AUD 2m, approximately SEK 13m, of which AUD 1.7m is dependent on
future financial performance. The SAI operation’s net sales and operating
income in 2019 amounted to AUD 3.1m and AUD 0.5m respectively, approxi-
mately SEK 21m and SEK 3.3m respectively. The acquired business contrib-
uted to Electrolux consolidated accounts in 2019 by AUD 2.9m in net sales
and AUD 0.4m in operating income, approximately SEK 19m and SEK 2.9m
respectively. Goodwill to be recognized in the transaction mainly relates to
the value of the assembled workforce and synergies with Electrolux appli-
ance business. Goodwill is not expected to be deductible for income tax.
The operations are included in business area Asia-Pacific, Middle East
and Africa.
Unic SAS
On April 24, 2019, the acquisition of the French producer of professional
espresso coffee machines, Unic S.A.S, was completed by acquiring 100% of
the shares in a cash deal. The purchase price for the shares amounts to EUR
39m with a net debt assumed, estimated at EUR 6.6m. The company’s head-
quarters and main manufacturing facility are located in southern France,
with subsidiaries in the U.S. and Japan. The acquisition is part of Electrolux
Professional Products’ strategy to grow with a complete offering of food ser-
vice, beverage and laundry solutions. Together with previous acquisitions
(Grindmaster-Cecilware in North America 2017 and SPM Drink Systems in
Italy 2018), UNIC complements the Electrolux portfolio of products for hot,
cold and frozen beverages.
The Unic group’s net sales and operating income in 2019 amounted to
EUR 16.7m and EUR –1.6m respectively, approximately SEK 176m and SEK
–17m respectively. The acquired business contributes to Electrolux con-
solidated accounts, within the business Electrolux reports as discontinued
operations and held for distribution, in 2019 by EUR 10.7m in net sales and
EUR –1.6m in operating income, approximately SEK 113m and SEK –17m
respectively. Goodwill recognized in the transaction mainly relates to syn-
ergies with Electrolux operations in this business segment. Goodwill is not
expected to be deductible for income tax.
The operations are included in discontinued operations, Electrolux
Professional.
Transaction costs
Transaction costs related to the acquisitions in 2019 amount to SEK 4.2m
and have been expensed as incurred during the acquisition process in 2019
(SEK 3.5m) and 2018 (SEK 0.7m). The costs have been reported in the busi-
ness area’s operating income.
Acquisitions in 2018
Schneidereit GmbH
On February 22, 2018, Electrolux completed the acquisition of Schneidereit
GmbH, a supplier of laundry rental solutions for professional customers
in Germany and Austria. The agreement to acquire the company was
announced on January 22, 2018. The acquisition enables Electrolux to
develop its offering within the professional laundry business and supports
the long-term profitable growth in Europe. Schneidereit adds a comple-
mentary business model, enabling Electrolux to help provide great expe-
riences to an even wider customer base while exploring functional sales
which is an interesting growth area in the industry for professional products.
The consideration consisted of a cash payment of EUR 32.8m and a
deferred part (hold-back) of EUR 3.6m. The cash payment was equivalent
to SEK 331m and the deferred part was equivalent to SEK 37m. The cash
flow effect was SEK –303m excluding acquired cash and cash equivalents.
In 2019 the hold-back was released with an additional payout of EUR 3.3m,
equivalent to SEK 35m.
The acquired business was included in Electrolux consolidated accounts
per December 31, 2018, with financial statements for the period January–
December 2018, contributing to net sales and operating income ( including
amortization of surplus values) by EUR 18.7m and EUR 0k respectively,
approximately SEK 192m and SEK 0m respectively.
Goodwill recognized for the acquisition include the value of the added
business model with its growth potential and synergies identified. Goodwill
is not expected to be deductible for income tax purposes.
The operations were included in business area Professional Products,
thus included in discontinued operations as per December 2019.
SPM Drink Systems
On October 2, 2018, Electrolux completed the acquisition of SPM Drink
Systems, an Italian leading manufacturer of professional dispensers of
frozen and hot beverages and soft ice-cream, as part of the strategy to
increase its presence in the hospitality industry. The acquisition supports
Electrolux strategy for profitable growth and strengthens Electrolux pres-
ence in the fast-growing beverage segment.
The consideration consisted of a cash payment of EUR 45.6m, equivalent
to SEK 470m. The cash flow effect was SEK –449m excluding acquired cash
and cash equivalents.
ELECTROLUX ANNUAL REPORT 2019
74 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 26
The acquired business was included in Electrolux consolidated accounts
from October 1, 2018, contributing to net sales and operating income
(including amortization of surplus values) by EUR 3.7m and EUR –0.7m
respectively, approximately SEK 38m and SEK –7m respectively.
For the full year 2018, the acquired business accounted for net sales and
operating income of EUR 31m and EUR 0.6m respectively, approximately
SEK 314m and SEK 6m respectively.
Goodwill from the transaction mainly relates to the value of the additional
presence in the fast-growing beverage segment both from a product range
and geographical perspective. The goodwill is not expected to be deduct-
ible for income tax purposes.
The operations were included in business area Professional Products,
thus included in discontinued operations as per December 2019.
Other
Other acquisitions of operations refer to the acquisition of a nationwide
provider of repair service and distribution of spare parts in Germany.
The operations are included in business area Europe.
Transaction costs
Transaction costs related to the acquisitions in 2018 amounted to SEK 12m
and were expensed as incurred during the acquisition process in 2017
(SEK 4m) and 2018 (SEK 8m). The costs were reported in the business area’s
operating income.
Divested operations
No divestments were made in 2019.
In August 2018 the US-based North American commercial and central
vacuum cleaner business, including the brands Beam and Sanitaire was
divested. The total gross consideration was USD 37m (SEK 320m) resulting
in a capital gain of USD 24m (SEK 205m) and a cash flow effect in 2018 of
USD 34m (SEK 293m) after reducing the gross consideration with an agreed
hold-back and the transaction cost. Transaction costs incurred amount to
SEK 17m. The divestment triggered rationalization activities and additional
asset write-downs with a negative impact in the Operating Income of USD
14m (SEK 115m). The divested operations had combined revenues in 2017
of around USD 70m.
The divestment and related effects are included in business area North
America.
Divested operations
North American commercial and central vacuum
cleaner business, USA
Total cash received for divestments
2019
2018
—
—
293
293
Discontinued operations
In January 2019, Electrolux announced that the company was preparing for
the separation and distribution of its Professional Products business area
(‘Electrolux Professional’). On December 5, 2019 the Electrolux Board of
Directors decided to propose to the Electrolux shareholders to distribute
the shares in the wholly-owned subsidiary Electrolux Professional AB to the
shareholders of Electrolux. The intention is to list Electrolux Professional AB
on Nasdaq Stockholm on March 23, 2020. Electrolux Professional has been
classified as held for distribution to owners as per December 2019 and is
accounted for under the applicable principles for assets held for sale and
discontinued operations. All related effects are referred to as ‘Discontinued
operations’.
Electrolux Professional is reported as discontinued operations in the con-
solidated statement of comprehensive income for 2019. The consolidated
statement of comprehensive income for 2018 has been restated accord-
ingly. The Electrolux Professional results are excluded from the individual
lines of the consolidated income statement with the total net reported as
‘Income for the period from discontinued operations’. All income from dis-
continued operations is attributable to owners of the parent.
The consolidated cash flow statement includes a split of operating
income into ‘Operating income, continuing operations’ and ‘Operating
income, discontinued operations’.
In the balance sheet as per 31 December 2019, assets and liabilities of
Electrolux Professional have been reclassified as ‘Discontinued operations,
assets held for distribution’ and ‘Discontinued operations, liabilities held for
distribution’ respectively and measured at the lower of its carrying amount
and fair value less costs to distribute. The balance sheet items for the pre-
vious year(s) are the historical financial statements as no balance sheet
restatement is allowed under IFRS.
Details on income statement, balance sheet and cash flow for discontin-
ued operations are presented below.
Income statement discontinued operations
Net sales
Cost of sales
Gross operating income
Selling expenses
Administrative expenses
Other operating income and expenses
Operating income
Financial items, net
Income after financial items
Taxes
Income for the period, discontinued operations
Balance sheet discontinued operations
Property, plant and equipment, owned
Property, plant and equipment, right-of-use
Goodwill
Other intangible assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Other current assets
Total current assets
Total assets
Long-term borrowings
Long-term lease liabilities
Other provisions
Total non-current liabilities
Accounts payable
Short-term borrowings
Short-term lease liabilities
Other current liabilities
Total current liabilities
Total liabilities
Cash flow discontinued operations
Cash flow from operations
Cash flow from investments
Cash flow from financing
Total cash flow
2019
2018
9,281
8,666
–6,040 –5,447
3,241
3,219
–1,699 –1,642
–584
–434
32
991
12
–9
1,134
–2
1,003
1,133
–314
688
–182
951
2019
2018
1,214
1,085
238
—
1,821
1,438
388
397
4,057
1,265
1,687
1,025
3,977
8,034
3
172
846
1,021
1,485
4
72
1,370
2,930
3,951
2019
1,120
–689
–134
297
394
268
3,185
1,299
1,658
474
3,431
6,615
25
—
726
751
1,446
32
—
1,165
2,644
3,394
2018
784
–834
–94
–144
ELECTROLUX ANNUAL REPORT 2019
Note 27 Employees and remuneration
Employees and employee benefits
In 2019, the average number of employees was 48,652 (51,253), of which
29,747 (32,176) were men and 18,905 (19,076) were women.
A detailed specification of the average number of employees by coun-
try has been submitted to the Swedish Companies Registration Office and
is available upon request from AB Electrolux, Investor Relations. See also
Electrolux website www.electroluxgroup.com.
Notes 75
All amounts in SEKm unless otherwise stated
Average number of employees, by geographical area
Europe
North America
Latin America
Asia/Pacific
Rest of world
Total continuing operations
Discontinued operations
Total Group including discontinued operations
Group
2019
2018
18,908 19,278
6,640
8,200
14,843 15,631
4,987
3,274
4,627
3,517
48,652 51,253
3,469
3,166
52,121 54,419
Salaries, other remuneration and employer contributions
2019
Salaries and
remuneration
Employer
contributions
2018
Salaries and
remuneration
Employer
contributions
Parent Company
whereof pension costs1)
Subsidiaries
whereof pension costs
Total continuing operations
whereof pension costs
Discontinued operations
Total Group including discontinued
operations
1,063
—
15,255
—
16,318
—
1,666
17,984
577
243
3,605
493
4,182
736
437
Total
1,640
243
18,860
493
20,500
736
2,103
587
224
3,582
647
4,169
871
482
Total
1,742
224
18,256
647
19,998
871
2,016
1,155
—
14,674
—
15,829
—
1,534
17,363
4,619
22,603
4,651
22,014
1) Includes SEK 8m (8), referring to the President’s predecessors according to local GAAP.
Salaries and remuneration for Board members, senior managers and other employees
Parent Company
Other
Total continuing operations
Discontinued operations
Total Group including discontinued
operations
2019
2018
Board mem-
bers and senior
managers1)
59
338
397
58
455
Other
employees
1,004
14,917
15,921
1,608
Total
1,063
15,255
16,318
1,666
17,529
17,984
Board mem-
bers and senior
managers1)
64
266
330
54
384
Other
employees
1,091
15,460
16,551
428
Total
1,155
15,726
16,881
482
16,979
17,363
1) According to the definition of Senior managers in the Swedish Annual Accounts Act.
Of the Board members in Group companies, 91 (102) were men and 14 (12) women, of whom 6 (9) men and 3 (4) women in the Parent Company. According
to the definition of Senior managers in the Swedish Annual Accounts Act, the number of Senior managers in the Group consisted of 178 (184) men and 75
(64) women, of whom 6 (7) men and 2 (2) women in the Parent Company. The total pension cost for Board members and senior managers in the Group
amounted to SEK 33 m (33).
Compensation to Board members
´000 SEK
Ordinary
compen sation
Compen sation for
committee work
Total
compen sation
Ordinary
compen sation
Compen sation for
committee work
Total
compen sation
2019
2018
Staffan Bohman, Chairman (from AGM
2018)
2 ,187
Petra Hedengran
Hasse Johansson
Ronnie Leten (Chairman up to AGM 2018)
Ulla Litzén
Bert Nordberg (up to AGM 2019)
Fredrik Persson
David Porter
Jonas Samuelsson, President
Ulrika Saxon
Kai Wärn
Bo Rothze'n (up to AGM 2018)
Gunilla Brandt (up to AGM 2018)
Ulf Carlsson
Viveca Brinkenfeldt-Lever
Peter Ferm
Total compensation
630
630
—
630
150
630
630
—
630
630
—
—
—
—
—
260
310
1601)
—
280
160
—
—
100
—
—
—
—
—
—
2,447
1,612
940
790
—
910
150
790
630
—
730
630
—
—
—
—
—
595
595
519
595
595
595
595
—
595
595
—
—
—
—
—
215
347
1801)
25
343
—
180
—
—
100
0
—
—
—
—
—
1,827
942
775
544
938
595
775
595
—
695
595
—
—
—
—
—
6,747
1,270
8,017
6,891
1,390
8,281
1) Includes compensation for work relating to investments, modularization and quality.
ELECTROLUX ANNUAL REPORT 2019
76 Notes
All amounts in SEKm unless otherwise stated
Cont. Note 27
Compensation to the Board of Directors
The Annual General Meeting (AGM) determines the compensation to the
Board of Directors for a period of one year until the next AGM. The com-
pensation is distributed between the Chairman, other Board Members and
remuneration for committee work. The Board decides the distribution of the
committee fee between the committee members. Compensation is paid out
in advance each quarter. Compensation paid in 2019 refers to one fourth of
the compensation authorized by the AGM in 2018, and three fourths of the
compensation authorized by the AGM in 2019. Total compensation paid in
cash in 2019 amounted to SEK 8.0m, of which SEK 6.7m referred to ordinary
compensation and SEK 1.3m to committee work1).
1) Includes compensation for work relating to investments, modularization and quality.
Remuneration Committee
For information on the Remuneration Committee, see the Corporate
Governance Report on page 107.
Remuneration guidelines for Group Management
The AGM in 2019 approved the proposed remuneration guidelines. These
guidelines are described below.
The overall principles for compensation within Electrolux are tied strongly
to the position held, individual as well as team performance, and competi-
tive compensation in the country or region of employment.
The overall compensation package for higher-level management com-
prises fixed salary, variable salary based on annual targets, long-term
share-based compensation and benefits such as pensions and insurance.
Electrolux strives to offer fair and competitive total compensation with an
emphasis on “pay for performance”. Variable compensation represents a
significant proportion of total compensation for higher-level management.
Total compensation is lower if targets are not achieved.
The Group has a uniform program for variable salary for management
and other key positions. Variable salary is based on financial targets and
may in certain circumstances include non-financial targets. Each job level
is linked to a minimum and a maximum level for variable salary, and the
program is capped.
Since 2004, Electrolux has long-term performance-share programs for
senior managers of the Group. The alignment of Electrolux top manage-
ment incentives with the interest of shareholders is a longstanding priority
of the Board of Directors. Ownership of Electrolux shares by the Group’s
CEO and other Group Management members is an important measure to
strengthen this alignment.
Thus the Board recommends that the CEO shall build up a personal hold-
ing of B-shares in Electrolux representing a value of one gross annual base
salary and for Group Management members to build up a personal holding
of B-shares in Electrolux representing a value of 50% of one gross annual
base salary.
Remuneration and terms of employment for the President in 2019
The remuneration package for the President comprises fixed salary,
variable salary based on annual targets, a long-term performance-share
program and other benefits such as pension and insurance.
For the President, the annualized base salary for 2019 has been set at
SEK 11.4m.
The variable salary is based on annual financial targets for the Group.
Each year, a performance range is determined with a minimum and a
maximum. If the performance outcome for the year is below or equal to the
minimum level, no pay-out will be made. If the performance outcome is at
or above the maximum, pay-out is capped at 100% of the annualized base
salary. If the performance outcome is between minimum and maximum, the
pay-out shall be determined on a linear basis.
The President participates in the Group’s long-term performance based
share programs. For further information on these programs, see below.
The notice period for the company is 12 months, and for the President
6 months. The President is entitled to 12 months severance pay based on
base salary with deduction for other income during the 12 months sever-
ance period. Severance pay is applicable if the employment is terminated
by the company. It is also applicable if the employment is terminated by the
President provided serious breach of contract on the company’s behalf or
if there has been a major change in ownership structure in combination with
changes in management and changed individual accountability.
Compensation for extraordinary work efforts in connection with the
separation and distribution of Electrolux Professional equivalent to two
months base salary will be paid in 2020 conditional upon completion of
the distribution.
Pensions for the President
The President is covered by the collectively agreed ITP plan, the alternative
rule of the plan, and Electrolux Pension Plan for CEO. The Electrolux Pension
Plan for CEO is a defined contribution plan. The employer contribution to the
plan for the President is equivalent to 35% of annual base salary, which also
includes the contributions for the benefits of the ITP-plan, alternative ITP and
any insurable supplementary disability and survivor’s pension. In addition
the Company provides a disability pension of maximum SEK 1.2m per year if
long term disability occurs. The retirement age for the President is 65.
The capital value of pension commitments for the President in 2019, prior
Presidents, and survivors is SEK 221m (222), whereof SEK 30m (24) relates to
the current President.
Remuneration and terms of employment for other
members of Group Management in 2019
Like the President, other members of Group Management receive a remu-
neration package that comprises fixed salary, variable salary based on
annual targets, long-term performance-share programs and other benefits
such as pensions and insurance.
Base salary is revised annually per January 1. The average base-salary
increase for members of Group Management in 2019 was 2.93% (3.18).
Variable salary in 2019 is based on financial targets on business area and
Group level. Variable salary for business area heads and heads of Global
Operations and Consumer Experience varies between a minimum (no pay-
out) and a maximum of 100% of annual base salary, which is also the cap.
Group Management members in the USA have a maximum of up to 150%
of annual base salary.
Group Management members that are Group staff heads receive
variable salary that varies between a minimum (no pay out) and a maximum
of 80%, which is also the cap.
The members of Group Management participate in the Group’s long-
term performance based share programs. For further information on these
programs, see below.
The notice period for Group Management members employed in
Sweden is 12 months’ for the company and 6 months for the employee.
Certain members of Group Management are entitled to 12 months’ sever-
ance pay based on base salary with deduction for other income during the
12 months severance period. Severance pay is applicable if the employ-
ment is terminated by the company. It is also applicable if the employment
is terminated by the Group Management member provided serious breach
of contract on the company’s behalf or if there has been a major change
in ownership structure in combination with changes in management and
changed individual accountability.
For members of Group Management employed outside of Sweden,
varying terms of employment and benefits, such as company car, may
apply depending upon the country of employment.
In addition to the President, compensation for extraordinary work efforts
in connection with the separation and distribution of Electrolux Profes-
sional will be paid in 2020 to four other members of Group Management
equivalent to two months base salary conditional upon completion of the
distribution.
Pensions for other members of Group Management
Group Management members employed in Sweden as from 2012 receive
a pension entitlement where the aggregated contribution is 35% of annual
base salary. The retirement age is 65 years.
Group Management members employed in Sweden before 2012 are
covered by the Alternative ITP plan, as well as a supplementary plan.
The Alternative ITP plan is a defined contribution plan where the
contribution increases with age. The contribution is between 20 and 35% of
pensionable salary, between 7.5 and 30 income base amounts. Provided
that the member remains in the position until age 60, the company will
finalize outstanding premiums in the alternative ITP plan. The contribution
to the supplementary plan is 35% of pensionable salary above 20 income
base amounts.
Electrolux provides disability benefits equal to 70% of pensionable salary
less disability benefits from other sources. Electrolux also provides survivor
benefits equal to the highest of the accumulated capital for retirement or
250 income base amounts.
The pensionable salary is calculated as the current fixed salary including
vacation pay plus the average variable salary for the last three years.
Accrued capital is subject to a real rate of return of 3.5% per year. For other
members of Group Management, employed in Sweden before 2012, the
retirement age is 60. The retirement age for one member employed prior to
2012 has been amended. The member’s employment and pension entitle-
ment is continued post age 60.
For members of Group Management employed outside of Sweden,
varying pension terms and conditions apply, depending upon the country
of employment.
ELECTROLUX ANNUAL REPORT 2019
Notes 77
All amounts in SEKm unless otherwise stated
Share-based compensation
Over the years, Electrolux has implemented several long-term incentive
programs (LTI) for senior managers. These programs are intended to attract,
motivate, and retain the participating managers by providing long-term
incentives through benefits linked to the company’s share price. They have
been designed to align management incentives with shareholder interests.
For Electrolux, the share-based compensation programs are classified
as equity-settled transactions, and the cost of the granted instrument’s fair
value at grant date is recognized over the vesting period which is 2.7 years.
At each balance sheet date, the Group revises the estimates to the number
of shares that are expected to vest. Electrolux recognizes the impact of
the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
In addition, the Group provides for employer contributions expected to
be paid in connection with the share-based compensation programs. The
costs are charged to the income statement over the vesting period. The
provision is periodically revalued based on the fair value of the instruments
at each closing date.
Performance-share programs 2017, 2018 and 2019
The Annual General Meeting in 2019 approved a long-term incentive
program. The program is in line with the Group’s principles for remuneration
based on performance, and is an integral part of the total compensation for
Group Management and other senior managers. Electrolux shareholders
benefit from this program since it facilitates recruitment and retention of
competent executives and aligns management interest with shareholder
interest as the program drives executive shareholding and the participants
are more aligned with the long-term strategy of the company.
The allocation of shares in the 2017, 2018 and 2019 programs is deter-
mined by the position level and the outcome of three financial objectives;
(1) annual growth in earnings per share, (2) return on net assets and (3)
organic sales growth (adjusted sales growth as from 2018). Performance
outcome of the three financial objectives will be determined by the Board
after the expiry of the one-year performance period.
Remuneration to Group Management
For the 2017, 2018 and 2019 programs allocation is linear from minimum to
maximum. There is no allocation if the minimum level is not reached. If the
maximum is reached, 100% of shares will be allocated. Should the achieve-
ment of the objectives be below the maximum but above the minimum, a
proportionate allocation will be made. The shares will be allocated after the
three-year period free of charge.
If a participant’s employment is terminated during the three-year
program period, the participant will be excluded from the program and will
not receive any shares or other benefits under the program. However, in
certain circumstances, including for example a participant’s death, disability,
retirement or the divestiture of the participant’s employing company, a
participant could be entitled to reduced benefits under the program.
Each of the 2017, 2018 and 2019 program covers 210 to 282 senior
managers and key employees in almost 30 countries. Participants in the
2019 program comprise six groups, i.e., the President, other members
of Group Management, and four groups of other senior managers. All
programs comprise Class B shares.
The performance outcome for the share program 2019 was zero, thus no
shares will be allocated to the participants.
For 2019, LTI programs resulted in a cost of SEK 77m (including a cost of
SEK 19m in employer contribution) compared to a cost of SEK 125m in 2018
(including a cost of SEK 14m in employer contribution). The total provision
for employer contribution in the balance sheet amounted to SEK 53m (61).
Repurchased shares for LTI programs
The Annual General Meeting in 2018 resolved that the company shall be
entitled to sell B shares in the company for the purpose of covering costs,
including social security charges, that may arise as a result of the 2016
program, but this mandate has not been used by the company.
Allocation of shares for the 2016 program
The 2016 performance-share program met 75% of the maximum perfor-
mance and performance shares were allocated during 2019 to the partic-
ipants according to the terms and conditions of the 2016 share program.
’000 SEK unless
otherwise stated
Annual
fixed
salary1)
Variable
salary2)
Long-
term PSP
(cost)3)
Other
remuner-
ation4)
Total
pension
contri-
bution
Social
contri-
bution
Annual
fixed
salary1)
Variable
salary2)
Long-
term PSP
(cost)3)
Other
remuner-
ation4)
Total
pension
contri-
bution
Social
contri-
bution
President and CEO
11,591
2,213
5,676
1,911
3,993
4,942
11,326
2,226
7,939
5
3,896
6,224
2019
2018
Other members
of Group
Management5)
Total
48,363
59,954
11,180
13,393
18,590
24,266
6,487
8,398
13,621
17,614
13,616
18,558
49,594
60,920
11,180
13,406
28,482
36,421
4,514
4,519
14,538
18,434
19,284
25,508
1) The annual fixed salary includes vacation salary, paid vacation days and salary deductions for company car.
2) For 2019: variable salary earned 2019 and to be paid in 2020, and for 2018: variable salary earned 2018 and paid in 2019.
3) Cost for share-based incentive programs are accounted for according to IFRS 2, Share-based payments. If the expected cost of the program is reduced, the previous recorded cost is
reversed and an income is recorded in the income statement. The cost includes social contribution cost for the program.
4) Includes allowances and other benefits such as gross-up of tax, housing and company car, severance pay, pay for non-compete undertaking and costs for extraordinary arrangements.
5) Other members of Group management comprised of 11 people at the end of 2019 and 2018.
Number of potential shares per participant, per category and year
Group 1, President and CEO
Group 2, other members of Group Management
Group 3
Group 4
Group 52)
Group 6
Maximum number of B shares1)
Maximum value, SEK3)
2019
53,543
17,928
11,189
6,132
4,297
2,967
2018
47,605
17,032
10,032
5,126
3,728
2,444
2017
2019
2018
2017
45,809 11,408,250 11,130,000 10,600,000
17,239
10,212
5,301
3,797
2,562
3,820,000
3,982,000
3,989,000
2,384,000
2,345,000
2,363,000
1,306,000
1,198,000
1,227,000
916,000
632,000
871,000
571,000
879,000
593,000
1) The maximum performance value for the participant in Group 1 will be 100 per cent, for participants in Group 2, 90 per cent, for participants in Group 3, 80 per cent, for participants in Group 4,
60 per cent, for participants in Group 5, 50 per cent and for participants in Group 6, 40 per cent of the participants annual base salary for 2018. At maximum performance the aggregated value
is converted to the average number of shares per participant in respective category. The calculation is based on a share price of SEK 231.40 for 2017, SEK 233.80 for 2018, and SEK 213.07 for
2019 which is the average closing price of the Electrolux Class B share on the Nasdaq Stockholm during a period of ten trading days before the day participants were invited to participate in
the program, adjusted for net present value of dividends for the period until shares are allocated.
2) New category introduced 2017.
3) The share allocation for the 2017 program will be at 90% of maximum. For the 2018 program, share allocation will be at 1.5% of maximum. For the 2019 program there will be no allocation.
Performance-share program 2019
Adjusted organic sales growth, %1)
Earnings per share, SEK
Return on net assets, %
Total allocation
Financial objectives
Allocation of shares
Minimum
Maximum
Actual
Outcome, % Weight, % Allocation, %
1.0
18.4
29.8
4.0
20.4
34.8
–1.0
14.02)
19.12)
0
0
0
10
50
40
0
0
0
0
1) Calculated as organic sales growth including total sales impact from prior year acquisitions and divestments.
2) Including adjustments for acquisitions and divestments.
ELECTROLUX ANNUAL REPORT 2019
78 Notes
All amounts in SEKm unless otherwise stated
Note 28 Fees to auditors
At the 2019 Annual General Meeting Deloitte was appointed auditor for the period until the 2020 Annual General Meeting.
Deloitte
Audit fees1)
Audit-related fees2)
Tax fees3)
All other fees4)
Total fees to Deloitte5)
Audit fees to other audit firms
Total fees to auditors
Group
Parent Company
2019
2018
2019
2018
47
10
1
1
59
—
59
42
1
1
1
45
4
49
9
9
0
1
19
—
19
8
—
—
1
9
—
9
1) Audit fees consist of fees for the annual audit-services engagement and other audit services, which are those services that only the external auditors reasonably can provide, and include
the Group audit; statutory audits; comfort letters and consents; and attest services.
2) Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit of the accounts and annual reports of the Group and group
companies traditionally performed by the external auditors, and include consultations concerning financial accounting and reporting standards; internal control reviews as well as review of
interim reports.
3) Tax fees include for example tax compliance and tax consultation services.
4) All other fees include fees for transaction support services, financial advisory and other services.
5) Of audit-related fees, SEK 6m pertains to Deloitte Sweden, of tax fees, SEK 0m pertains to Deloitte Sweden and of all other fees, SEK 1m pertains to Deloitte Sweden.
Note 29 Shares and participations
Investments in associated companies
Electrolux participation in Gångaren 13 Holding AB, Sweden, remained
unchanged during the year. Gångaren 13 Holding AB is a real estate com-
pany owning the corporate head office in Sweden.
The holdings in the South African associated companies SYR Africa
and Llitha Solar remained unchanged during the year. SYR Africa supplies
Electrolux with valves and has Electrolux as its sole customer. Llitah Solar
carry out marginal business activities.
The holdings in Next-Tech BVBA/SPRL, Belgium, remained unchanged
during the year. Next-Tech designs and sells software and hardware solu-
tions for domestic kitchen retailers.
In January 2018 Electrolux acquired 40% of the Chinese company
Guangdong De Yi Jie Appliances Co., LTD. The company sells AEG house-
hold appliances.
In April 2019 Electrolux acquired 22% of the Singapore company Vitality
Ventures Group. The company sells air purifiers.
All associated companies are unlisted.
Investments in associated companies
Company
Gångaren 13 Holding AB, Sweden
SYR Africa (Pty), South Africa
Llitha Solar (Pty) LTD, South Africa
Kwikot Solar, South Africa
Next-Tech BVBA/SPRL, Belgium
Guangdong De Yi Jie Appliances Co., LTD, China
Vitality Ventures Group, Singapore
Total
2019
2018
Holding, %
Carrying
amount
Net
income1)
Holding, %
Carrying
amount
Net
income1)
50
50
49
0
49
40
22
201
53
4
0
98
56
12
424
16
2
1
—
–14
–22
—
–17
50
50
49
0
49
40
—
199
36
11
1
109
41
—
397
14
7
2
1
–7
–41
—
–25
1) Represents the Group’s share of net income and is reported in the line Other operating income and expenses in the consolidated statement of comprehensive income.
Group companies
The following table lists the major companies included in the Electrolux Group. A detailed specification of Group companies has been submitted to the
Swedish Companies Registration Office and is available upon request from AB Electrolux Investor Relations.
Subsidiaries
Major Group companies
Argentina
Australia
Austria
Belgium
Brazil
Canada
Chile
China
Electrolux Argentina S.A.
Electrolux Home Products Pty. Ltd
Electrolux Professional Australia Pty Ltd
Electrolux Austria GmbH
Electrolux Home Products Corporation N.V.
Electrolux do Brasil S.A.
Electrolux Canada Corp.
Electrolux de Chile S.A.
Electrolux (Hangzhou) Domestic Appliances Co. Ltd
Holding, %
100
100
100
100
100
100
100
99.83
100
ELECTROLUX ANNUAL REPORT 2019
Cont. Note 29
Subsidiaries
Denmark
Egypt
Finland
France
Electrolux (China) Home Appliance Co. Ltd
Electrolux Home Products Denmark A/S
Electrolux Egypt for Home Appliances S.A.E.
Oy Electrolux Ab
Electrolux France SAS
Electrolux Home Products France SAS
Electrolux Professionnel SAS
Electrolux Laundry Systems France SNC
UNIC SAS
Germany
Electrolux Deutschland GmbH
Electrolux Rothenburg GmbH Factory and Development
Electrolux Professional GmbH
Hungary
Electrolux Lehel Kft
Italy
Electrolux Professional Hungary Kft
Electrolux Appliances S.p.A.
Electrolux Professional S.p.A.
Electrolux Italia S.p.A.
S.P.M. Drink Systems
Mexico
Electrolux de Mexico, S.A. de C.V.
The Netherlands
Electrolux Associated Company B.V.
Norway
Poland
Romania
Russia
Singapore
Spain
Sweden
Electrolux Home Products (Nederland) B.V.
Electrolux Home Products Norway AS
Electrolux Poland Spolka z.o.o.
SC Electrolux Romania SA
LLC Electrolux Rus
Electrolux SEA Pte Ltd
Electrolux España, S.A.U.
Electrolux Professional AB
Electrolux HemProdukter AB
Electrolux Appliances AB
Switzerland
Electrolux AG
Thailand
Electrolux Professional AG
Electrolux Thailand Co. Ltd.
Electrolux Professional (Thailand) Co., Ltd.
Ukraine
United Kingdom
DC Electrolux LLC
Electrolux Plc
USA
Electrolux Professional Ltd.
Electrolux Home Products, Inc.
Electrolux North America, Inc.
Grindmaster Corporation
UNIC USA Corp
Electrolux Professional Inc.
Notes 79
All amounts in SEKm unless otherwise stated
Holding, %
100
100
99.96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.83
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Note 30 Transactions with related parties
Transactions with associated companies
Net sales to associates
Purchases from associates
Receivables on associates
Payables to associates
Loans to associates
companies with which Electrolux may have transactions within the normal
course of business. Commercial terms and market prices apply to any such
transactions.
Investment details in associated companiesare disclosed in note 29. Trans-
actions and balances with associated companies are disclosed in the table
to the left. Remuneration to members of the Board of Directors and Group
management are disclosed in note 27. Commercial terms and market
prices apply to all transactions with related parties.
2019
27
122
12
35
15
The Group’s related parties are its associates, joint ventures and the Parent
company’s largest shareholder, Board members and Group Management.
The Parent company’s largest shareholder, Investor AB, controls approxi-
mately 28% (28) of the voting rights in AB Electrolux.
The Group has not had any transactions with Investor AB during the year,
other than dividends declared, and there are no outstanding balances
with Investor AB. Investor AB has controlling or significant influence over
ELECTROLUX ANNUAL REPORT 2019
80 Notes
All amounts in SEKm unless otherwise stated
Note 31 Definitions
This report includes financial measures as required by the financial report-
ing framework applicable to Electrolux, which is based on IFRS. In addition,
there are other measures and indicators that are used to follow up, analyze
and manage the business and to provide Electrolux stakeholders with use-
ful financial information on the Group’s financial position, performance and
development in a consistent way. These other measures and indicators are
considered essential in supporting the Group’s financial goals to achieve
a combination of continuous growth, high profitability, a stable cash flow,
and an optimal capital base to generate a high total return for Electrolux
shareholders. Thus, there are measures related to growth, profitability and
capital, share-based measures and capital indicators which are considered
relevant to present on a continuous basis. Below is a list of definitions of all
measures and indicators used, referred to and presented in this report.
Computation of average amounts and annualized
income statement measures
In computation of key ratios where averages of capital balances are related
to income statement measures, the average capital balances are based
on the opening balance and all quarter-end closing balances included in
the reporting period, and the income statement measures are annualized,
translated at average rates for the period. In computation of key ratios
where end-of-period capital balances are related to income statement
measures, the latter are annualized, translated at end-of-period exchange
rates. Adjustments are made for acquired and divested operations.
Growth measures
Change in net sales
Current year net sales for the period less previous year net sales for the
period as a percentage of previous year net sales for the period.
Sales growth
Change in net sales adjusted for currency translation effects.
Organic growth
Change in net sales, adjusted for changes in exchange rates,
acquisitions and divestments.
Acquisitions
Change in net sales, adjusted for organic growth, changes in exchange
rates and divestments. The impact from acquisitions relates to net sales
reported by acquired operations within 12 months after the acquisition
date.
Divestments
Change in net sales, adjusted for organic growth, changes in exchange
rates and acquisitions. The impact from divestments relates to net sales
reported by the divested operations within 12 months before the divest-
ment date.
Profitability measures
EBITA
Operating income excluding amortization of intangible assets.
EBITA margin
EBITA expressed as a percentage of net sales.
Operating margin (EBIT margin)
Operating income (EBIT) expressed as a percentage of net sales.
Operating margin (EBIT margin) excluding non-recurring items
Operating income (EBIT) excluding non-recurring items, expressed as
a percentage of net sales.
Return on net assets
Operating income (annualized) expressed as a percentage of
average net assets.
Return on equity
Income for the period (annualized) expressed as a percentage
of average total equity.
Capital measures
Net debt/equity ratio
Net debt in relation to total equity.
Equity/assets ratio
Total equity as a percentage of total assets less liquid funds.
Capital turnover-rate
Net sales (annualized) divided by average net assets.
Share-based measures
Earnings per share, Basic
Income for the period attributable to equity holders of the Parent
Company divided by the average number of shares excluding shares
held by Electrolux.
Earnings per share, Diluted
Income for the period attributable to equity holders of the Parent Company
divided by the average number of shares after dilution, excluding shares
held by Electrolux.
Equity per share
Total equity divided by total number of shares excluding shares held
by Electrolux.
Capital indicators
Liquid funds
Cash and cash equivalents, short-term investments, financial derivative
assets1) and prepaid interest expenses and accrued interest income1).
Liquid funds in relation to net sales
The sum of liquid funds and non-utilized credit facilities divided by annualized
net sales.
Operating working capital
Inventories and trade receivables less accounts payable.
Working capital
Total current assets exclusive of liquid funds, less non-current other provisions
and total current liabilities exclusive of total short-term borrowings.
Net assets
Total assets exclusive of liquid funds and pension plan assets, less deferred
tax liabilities, non-current other provisions and total current liabilities
exclusive of total short-term borrowings.
Total borrowings
Long-term borrowings and short-term borrowings, financial derivative
liabilities1), accrued interest expenses and prepaid interest income1).
Total short-term borrowings
Short-term borrowings, financial derivative liabilities1), accrued interest
expenses and prepaid interest income1).
Interest-bearing liabilities
Long-term borrowings and short-term borrowings exclusive of liabilities
related to trade receivables with recourse1).
Financial net debt
Total borrowings less liquid funds.
Net provision for post-employment benefits
Provisions for post-employment benefits less pension plan assets.
Net debt
Financial net debt, lease liabilities and net provision for post-employment
benefits.
Other measures
Operating cash flow after investments
Cash flow from operations and investments adjusted for financial items
paid, taxes paid and acquisitions/divestments of operations.
Interest coverage ratio
Operating income plus interest income in relation to total interest expenses.
Non-recurring items
Material profit or loss items in operating income2) which are relevant for
understanding the financial performance when comparing income for the
current period with previous periods.
1) See table Net debt on page 62.
2) See Note 7 for more information.
ELECTROLUX ANNUAL REPORT 2019
Notes 81
All amounts in SEKm unless otherwise stated
Note 32 Proposed distribution of earnings
The Board of Directors proposes that income for the period and retained earnings be distributed as follows:
A dividend to the shareholders of the shares in Electrolux Professional AB1)
A dividend to the shareholders of SEK 8.50 per share2), totaling
To be carried forward
Total
‘000 SEK
22,893,842
7,749,120
2,442,878
12,701,844
22,893,842
1) The Board of Directors has proposed an Extraordinary General Meeting to be held on February 21, 2020 resolves to distribute all shares in Electrolux Professional AB, the wholly owned subsid-
iary operating the Professional Products Business Area, to the shareholders of AB Electrolux. The estimated book value of the shares in Electrolux Professional AB at the time of the distribution is
SEK 7,749,120 thousand.
2) Calculated on the number of outstanding shares as per February 13, 2020.
The Board of Directors has proposed that the Annual General Meeting 2020
resolves on a dividend to the shareholders of SEK 8.50 per share to be paid
in two installments. The record date for the first installment of SEK 4.25 per
share is proposed to be Thursday April 2, 2020 and the record date for the
second installment of SEK 4.25 per share is proposed to be Friday October 2,
2020. On account hereof, the Board of Directors hereby makes the following
statement according to Chapter 18 Section 4 of the Swedish Companies Act.
The Board of Directors finds that there will be full coverage for the
restricted equity of the Company, after distribution of the proposed dividend.
It is the Board of Directors’ assessment that after distribution of the pro-
posed dividend, the equity of the Company and the Group will be sufficient
with respect to the kind, extent, and risks of the operations. The Board of
Directors has hereby considered, among other things, the Company’s and
the Group’s historical development, the budgeted development and the
state of the market and the proposed dividend of the shares in Electrolux
Professional AB.
If financial instruments currently valued at fair value in accordance with
Chapter 4 Section 14a of the Swedish Annual Accounts Act instead had
been valued according to the lower of cost or net realizable value, including
cumulative revaluation of external shares, the equity of the company would
decrease by SEK 178,985 thousand.
After the proposed dividend, the financial strength of the Company and
the Group is assessed to continue to be good in relation to the industry in
which the Group is operating. The dividend will not affect the ability of the
Company and the Group to comply with its payment obligations. The Board
of Directors finds that the Company and the Group are well prepared to
handle any changes in respect of liquidity, as well as unexpected events.
The Board of Directors is of the opinion that the Company and the Group
have the ability to take future business risks and also cope with potential
losses. The proposed dividend will not negatively affect the Company’s and
the Group’s ability to make further commercially motivated investments in
accordance with the strategy of the Board of Directors.
The Board of Directors declare that the consolidated financial state-
ments have been prepared in accordance with IFRS as adopted by the
EU and give a true and fair view of the Group’s financial position and results
of operations. The financial statements of the Parent Company have been
prepared in accordance with generally accepted accounting principles
in Sweden and give a true and fair view of the Parent Company’s financial
position and results of operations.
The statutory Administration Report of the Group and the Parent
Company provides a fair review of the development of the Group’s and the
Parent Company’s operations, financial position and results of operations
and describes material risks and uncertainties facing the Parent Company
and the companies included in the Group.
Stockholm, February 13, 2020
AB ELECTROLUX (PUBL)
556009–4178
Staffan Bohman
Chairman of the Board of Directors
Jonas Samuelson
Board member and President
and Chief Executive Officer
Petra Hedengran
Board member
Hasse Johansson
Board member
Ulla Litzén
Board member
Fredrik Persson
Board member
David Porter
Board member
Ulrika Saxon
Board member
Kai Wärn
Board member
Viveca Brinkenfeldt-Lever
Board member,
employee representative
Ulf Carlsson
Board member,
employee representative
Peter Ferm
Board member,
employee representative
Our audit report was submitted on February 13, 2020
Deloitte AB
Jan Berntsson
Authorized Public Accountant
ELECTROLUX ANNUAL REPORT 2019
82 Auditor's report
Auditor's report
To the general meeting of the shareholders of AB Electrolux (publ)
corporate identity number 556009-4178
Report on the annual accounts and consolidated accounts
Opinions
We have audited the annual accounts and consolidated
accounts of AB Electrolux (publ) for the year 2019. The annual
accounts and consolidated accounts of the company are
included on pages 17–81 in this document.
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly, in
all material respects, the financial position of the parent com-
pany as of 31 December 2019 and its financial performance
and cash flow for the year then ended in accordance with the
Annual Accounts Act. The consolidated accounts have been
prepared in accordance with the Annual Accounts Act and
present fairly, in all material respects, the financial position of the
group as of 31 December 2019 and their financial performance
and cash flow for the year then ended in accordance with
International Financial Reporting Standards (IFRS), as adopted
by the EU, and the Annual Accounts Act. The statutory admin-
istration report is consistent with the other parts of the annual
accounts and consolidated accounts.
We therefore recommend that the general meeting of the
shareholders adopts the income statement and balance sheet
for the parent company and the statement of comprehensive
income and the balance sheet for the group.
Our opinions in this report on the annual accounts and the
consolidated accounts are consistent with the content of the
additional report that has been submitted to the parent com-
pany’s audit committee in accordance with the Audit Regulation
(537/2014/EU) Article 11.
Basis for Opinions
We conducted our audit in accordance with International
Standards on Auditing (ISA) and generally accepted auditing
standards in Sweden. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities section. We
are independent of the parent company and the group in accor-
dance with professional ethics for accountants in Sweden and
have otherwise fulfilled our ethical responsibilities in accordance
with these requirements. This includes that, based on the best of
our knowledge and belief, no prohibited services referred to in
the Audit Regulation (537/2014/EU) Article 5.1 have been pro-
vided to the audited company or, where applicable, its parent
company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is suf-
ficient and appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our audit of
the annual accounts and consolidated accounts of the current
period. These matters were addressed in the context of our audit
of, and in forming our opinion thereon, the annual accounts
and consolidated accounts as a whole, but we do not provide a
separate opinion on these matters.
Revenue Recognition
Revenues in the group consists primarily of sales of appliances
to retailers. Net sales in the group consist of a large number of
transactions and amounts, for continuing operations, for 2019
to 118,981 MSEK. Revenue recognition cut off constitutes a key
audit matter in our audit.
Accounting principles and disclosures related to revenue
recognition can be found in note 4.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for revenue rec-
ognition and its compliance with IFRS,
• audit of the internal control environment regarding revenue
recognition and test of identified key controls including IT-
systems,
• analytical procedures, and
• detailed testing of sales transactions on a sample basis to
confirm proper revenue cut off.
Valuation of trade receivables
The group has significant amounts of trade receivables. There is
a certain concentration of credit risk exposure in certain mar-
kets and towards large customers. Procedures for assessing
customers’ ability to pay together with appropriate accounting
principles to recognize provisions for bad debt constitutes a key
audit matter in our audit.
Accounting principles and disclosures related to trade
receivables can be found in note 1 and 17.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for recognizing
bad debt for compliance with IFRS,
• audit of the internal control environment regarding valuation
of trade receivables and test of identified key controls includ-
ing IT-systems,
• detailed testing on a sample basis against customer state-
ments alternatively cash receipts to confirm trade receivables,
and
• evaluation of aging of trade receivables and management’s
estimates of provisions for bad debt.
Valuation of inventory
The group carries significant inventories of goods held by
several production and sales units in many countries. Valuation
of inventory and provisions for obsolescence requires clear
policies and is subject to management’s estimates. Processes
for valuation of inventory and making appropriate provisions for
obsolescence constitutes a key audit matter in our audit.
Accounting principles and disclosures related to inventory
can be found in note 15.
ELECTROLUX ANNUAL REPORT 2019
Auditor's report 83
Responsibilities of the Board of Directors and
the Managing Director
The Board of Directors and the Managing Director are respon-
sible for the preparation of the annual accounts and the con-
solidated accounts and that they give a fair presentation in
accordance with the Annual Accounts Act, and concerning the
consolidated accounts, in accordance with IFRS as adopted
by the EU. The Board of Directors and the Managing Director
are also responsible for such internal control as they determine
is necessary to enable the preparation of annual accounts and
consolidated accounts that are free from material misstate-
ment, whether due to fraud or error.
In preparing the annual accounts and the consolidated
accounts, the Board of Directors and the Managing Director
are responsible for the assessment of the company’s and the
group’s ability to continue as a going concern. They disclose,
as applicable, matters related to going concern and using the
going concern basis of accounting. The going concern basis
of accounting is however not applied if the Board of Directors
and the Managing Director intends to liquidate the company, to
cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board
of Director’s responsibilities and tasks in general, among other
things oversee the company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about
whether the annual accounts and the consolidated accounts
as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our
opinions. Reasonable assurance is a high level of assurance but
is not a guarantee that an audit conducted in accordance with
ISA and generally accepted auditing standards in Sweden will
always detect a material misstatement when it exists. Misstate-
ments can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these annual accounts and consolidated accounts.
An additional description of our responsibility for the audit of
the annual accounts and the consolidated accounts is located
at the Swedish Inspectorate of Auditors’ web page: www.revisor-
sinspektionen.se/revisornsansvar. This description is a part of
the auditor’s report.
Our audit procedures
Our audit procedures included, but were not limited to:
• assessing the group’s accounting principles for inventory in
compliance with IFRS,
• audit of the internal control environment regarding valuation
of inventory and test of identified key controls including IT-
systems,
• observations of physical inventory counts,
• on a sample basis testing valuation of inventory, and
• evaluating management’s estimates related to provisions for
obsolescence.
Accounting for legal proceedings
Electrolux is involved in several legal proceedings which could
have a significant impact on the group’s result and financial
position. Processes to assess, evaluate and account for legal
proceedings constitutes a key audit matter in our audit.
Further information on the group’s legal proceedings and
management of these can be found in note 25.
Our audit procedures
Our audit procedures included, but were not limited to:
• quarterly meetings with the Group Head of Legal regarding
significant ongoing legal proceedings,
• obtaining legal statements from a selection of the group’s
external lawyers, and
• evaluating management’s judgments and estimates related to
legal proceedings and the accounting for these.
Other information than the annual accounts and
consolidated accounts
This document also contains other information than the annual
accounts and the consolidated accounts and is found on pages
1–16 and 85–121. The Board of Directors and the Managing
Director are responsible for this other information.
Our opinion on the annual accounts and the consolidated
accounts does not cover this other information and we do not
express any form of assurance conclusion regarding this other
information.
In connection with our audit of the annual accounts and the
consolidated accounts, our responsibility is to read the informa-
tion identified above and consider whether the information is
materially inconsistent with the annual accounts and consoli-
dated accounts. In this procedure we also take into account our
knowledge otherwise obtained in the audit and assess whether
the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this infor-
mation, conclude that there is a material misstatement of this
information, we are required to report that fact. We have noth-
ing to report in this regard.
ELECTROLUX ANNUAL REPORT 2019
84 Auditor's report
Report on other legal and regulatory requirements
Opinions
In addition to our audit of the annual accounts and the consoli-
dated accounts, we have also audited the administration of the
Board of Directors and the Managing Director of AB Electrolux
(publ) for the year 2019 and the proposed appropriations of the
company’s profit or loss.
We recommend to the general meeting of shareholders that
the profit to be appropriated in accordance with the proposal in
the statutory administration report and that the members of the
Board of Directors and the Managing Director be discharged
from liability for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the
group in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained is suf-
ficient and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and
the Managing Director
The Board of Directors is responsible for the proposal for appro-
priations of the company’s profit or loss. At the proposal of a
dividend, this includes an assessment of whether the dividend
is justifiable considering the requirements which the company’s
and the group’s type of operations, size and risks place on the
size of the parent company’s and the group’s equity, consolida-
tion requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s
organization and the administration of the company’s affairs.
This includes among other things continuous assessment of the
company’s financial situation and ensuring that the company’s
organization is designed so that the accounting, management
of assets and the company’s financial affairs otherwise are
controlled in a reassuring manner. The Managing Director shall
manage the ongoing administration according to the Board of
Directors’ guidelines and instructions and among other mat-
ters take measures that are necessary to fulfill the company’s
accounting in accordance with law and handle the manage-
ment of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and
thereby our opinion about discharge from liability is to obtain
audit evidence to assess with a reasonable degree of assurance
whether any member of the Board of Directors or the Managing
Director in any material respect:
• has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies
Act, the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropria-
tions of the company’s profit or loss, and thereby our opinion
about this, is to assess with reasonable degree of assurance
whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with gen-
erally accepted auditing standards in Sweden will always detect
actions or omissions that can give rise to liability to the com-
pany, or that the proposed appropriations of the company’s
profit or loss are not in accordance with the Companies Act.
An additional description of our responsibility for the audit
of the administration of the Board of Directors and the Manag-
ing Director is located at the Swedish Inspectorate of Auditors’
web page: www.revisorsinspektionen.se/revisornsansvar. This
description is a part of the auditor’s report.
Deloitte AB, was appointed auditors of AB Electrolux (publ) by
the general meeting of the shareholders on April 10, 2019 and
has been the company’s auditor since April 5, 2018.
Stockholm, February 13, 2020
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and
the Swedish language original, the latter shall prevail.
ELECTROLUX ANNUAL REPORT 2019
85
ELECTROLUX ANNUAL REPORT 2019
86 Eleven-year review
All amounts in SEKm unless otherwise stated
Eleven-year review
sekm
Net sales and income
Net sales
Organic growth, %
Depreciation and amortization
Items affecting comparability 2)/ Non-recurring items 6)
Operating income
Income after financial items
Income for the period
Cash flow
Cash flow from operations
Cash flow from investments
of which capital expenditure in
property, plant and equipment
Cash flow from operations and investments
Cash flow from operations and investments excluding acquisitions
and divestments of operations
Dividend, redemption and repurchase of shares
Capital expenditure in property, plant and equipment
as % of net sales
Margins 3)
Operating margin, %
Income after financial items as % of net sales
Financial position
Total assets
Net assets
Working capital
Trade receivables
Inventories
Accounts payable
Total equity
Interest-bearing liabilities
Provisions for post-employment benefits, net
Net debt
Data per share
Income for the period, SEK
Equity, SEK
Dividend, SEK4)
Trading price of B-shares at year-end, SEK
Key ratios
Return on equity, %
Return on net assets, %
Net assets as % of net sales 5)
Trade receivables as % of net sales 5)
Inventories as % of net sales 5)
Net debt/equity ratio
Interest coverage ratio
Dividend as % of total equity
Other data
Average number of employees
Salaries and remuneration
Number of shareholders
Average number of shares after buy-backs, million
Shares at year end after buy-backs, million
2009
2010
2011
2012 1)
2013
2014
2015
2016
20171)
2018
20187)
2019
5 years
10 years
Compound annual growth rate, %
109,132
106,326
101,598
109,994
109,151
112,143
123,511
121,093
120,771
124,129
115,463
118,981
1.2
0.9
–4.8
3,442
–1,561
3,761
3,484
2,607
8,297
–2,967
–2,223
5,330
5,326
69
2.0
4.9
4.6
72,696
19,506
–5,154
20,173
10,050
16,031
18,841
14,022
1.5
3,328
–1,064
5,430
5,306
3,997
7,680
–4,474
–3,221
3,206
3,199
–1,120
3.0
6.1
6.0
73,521
19,904
–5,902
19,346
11,130
17,283
20,613
12,096
0.2
3,173
–138
3,017
2,780
2,064
5,399
–10,049
–3,163
–4,650
906
–1,850
3.1
3.1
2.9
76,384
27,011
–5,180
19,226
11,957
18,490
20,644
14,206
665
–709
6,367
5.5
3,251
–1,032
4,000
3,154
2,365
7,080
–4,702
–4,090
2,378
2,542
–1,868
3.7
4.6
3.8
75,194
25,890
–6,505
18,288
12,963
20,590
15,726
13,088
4,479
10,164
8.26
55
6.50
4.5
3,356
–2,475
1,580
904
672
4,455
–4,734
–3,535
–279
–74
–1,860
3.2
3.7
3.1
76,001
24,961
–5,800
19,441
12,154
20,607
14,308
14,905
2,980
10,653
2.35
50
6.50
9.18
66
4.00
167.50
14.9
19.4
17.1
17.7
8.8
0.04
7.54
6.0
50,633
13,162
52,000
284.0
284.4
14.04
72
6.50
191.00
20.6
27.8
18.2
17.7
10.2
–0.03
12.64
9.0
51,544
12,678
57,200
284.6
284.7
7.25
73
6.50
109.70
170.50
168.50
10.4
13.7
23.8
17.0
10.5
0.31
5.84
9.0
52,916
13,137
58,800
284.7
284.7
14.4
14.8
22.5
15.9
11.3
0.65
2.72
11.8
59,478
13,785
51,800
285.9
286.1
4.4
5.8
21.8
17.0
10.6
0.74
2.11
13.0
60,754
13,521
51,500
286.2
286.2
1.1
3,671
–1,199
3,581
2,997
2,242
7,822
–3,759
–3,006
4,063
4,132
–1,861
2.7
3.2
2.7
85,688
26,099
–8,377
20,663
14,324
25,705
16,468
14,703
4,763
9,631
7.83
57.52
6.50
228.80
15.7
14.2
20.4
16.2
11.2
0.58
5.16
11.3
60,038
14,278
46,500
286.3
286.3
2.2
3,936
—
2,741
2,101
1,568
8,267
–3,403
–3,027
4,864
4,955
–1,870
2.5
2.2
1.7
83,471
21,412
–12,234
17,745
14,179
26,467
15,005
13,097
4,509
6,407
5.45
52.21
6.50
205.20
9.9
11.0
17.3
14.3
11.5
0.43
3.75
12.4
58,265
15,858
45,485
287.1
287.4
–1.1
3,934
—
6,274
5,581
4,493
10,165
–2,557
–2,830
7,608
7,432
–1,868
2.3
5.2
4.6
85,848
18,098
–14,966
19,408
13,418
28,283
17,738
10,202
4,169
360
15.64
61.72
7.50
226.30
29.4
29.9
14.2
15.2
10.5
0.02
3.75
10.5
55,400
15,886
48,939
287.4
287.4
–0.4
3,977
—
7,407
6,966
5,745
10,024
–8,200
–3,892
1,824
5,229
–2,155
3.2
6.1
5.8
89,542
20,678
–15,873
20,747
14,655
31,114
20,480
9,537
2,634
197
19.99
71.26
8.30
264.30
31.9
36.0
17.5
17.5
12.4
0.01
12.16
11.6
55,692
16,470
45,295
287.4
287.4
1.3
4,150
–1,343
5,310
4,887
3,805
8,046
–6,506
–4,650
1,540
2,149
–2,385
3.7
4.3
3.9
97,312
23,574
–16,848
21,482
16,750
34,443
21,749
9,982
3,814
1,825
13.24
75.67
8.50
187.10
18.2
22.7
19.0
17.3
13.5
0.08
9.05
11.2
54,419
17,363
49,870
287.4
287.4
1.2
3,981
–1,343
4,176
3,754
2,854
–2,385
—
—
—
—
—
3.9
3.6
3.3
—
—
—
—
—
20,306
–17,077
19,824
15,451
32,996
9.93
—
8.50
187.10
—
20.2
17.5
17.1
13.4
—
—
—
51,253
15,829
49,870
287.4
287.4
–1.0
5,104
–1,344
3,189
2,456
1,820
8,434
–7,683
–5,562
751
1,218
–2,443
4.7
2.7
2.1
106,808
26,172
–17,390
20,847
16,194
33,892
22,574
10,989
3,866
7,683
6.33
78.55
8.50
229.90
11.4
12.0
22.3
17.7
13.8
0.34
3.20
10.8
48,652
16,318
50,544
287.4
287.4
13.1
9.6
–2.3
–3.9
–4.1
1.5
4.5
0.1
0.2
2.5
5.7
6.5
–5.7
–4.1
–4.4
–4.2
6.4
5.5
0.1
–4.1
2.7
1.7
–1.6
–3.4
–3.5
0.2
3.9
3.0
0.3
4.9
7.8
1.8
–2.4
27.7
–3.6
1.8
7.8
3.2
–0.4
2.2
–0.3
1) Amounts for 2012 have been restated where applicable as a consequence of the amended standard for pension accounting, IAS 19 Employee Benefits and 2017
as a consequence of the introduction of IFRS 15 Revenue from Contracts with Customers.
2) As of 2015 the accounting concept of Items affecting comparability is no longer in use. As from 2018, non-recurring items are presented, see definition in Note 31.
3) Items affecting comparability are excluded for the years 2009 to 2013. 2014 has been restated.
4) 2019: Proposed by the Board.
5) Annualized net sales, calculated at end of period exchange rates, 2019: 117,519 (restated 2018: 115,733).
6) For more information, see Note 7.
7) Certain amounts have been restated for discontinued operations as a consequence of the planned distribution of the Professional business area.
ELECTROLUX ANNUAL REPORT 2019
2009
2010
2011
2012 1)
2013
2014
2015
2016
20171)
2018
20187)
2019
5 years
10 years
Compound annual growth rate, %
109,132
106,326
101,598
109,994
109,151
112,143
123,511
121,093
120,771
124,129
115,463
118,981
1.2
0.9
Eleven-year review 87
All amounts in SEKm unless otherwise stated
1.1
3,671
–1,199
3,581
2,997
2,242
7,822
–3,759
–3,006
4,063
4,132
–1,861
2.7
3.2
2.7
85,688
26,099
–8,377
20,663
14,324
25,705
16,468
14,703
4,763
9,631
7.83
57.52
6.50
228.80
15.7
14.2
20.4
16.2
11.2
0.58
5.16
11.3
60,038
14,278
46,500
286.3
286.3
2.2
3,936
—
2,741
2,101
1,568
8,267
–3,403
–3,027
4,864
4,955
–1,870
2.5
2.2
1.7
83,471
21,412
–12,234
17,745
14,179
26,467
15,005
13,097
4,509
6,407
5.45
52.21
6.50
205.20
9.9
11.0
17.3
14.3
11.5
0.43
3.75
12.4
58,265
15,858
45,485
287.1
287.4
–1.1
3,934
—
6,274
5,581
4,493
10,165
–2,557
–2,830
7,608
7,432
–1,868
2.3
5.2
4.6
85,848
18,098
–14,966
19,408
13,418
28,283
17,738
10,202
4,169
360
15.64
61.72
7.50
226.30
29.4
29.9
14.2
15.2
10.5
0.02
3.75
10.5
55,400
15,886
48,939
287.4
287.4
–0.4
3,977
—
7,407
6,966
5,745
10,024
–8,200
–3,892
1,824
5,229
–2,155
3.2
6.1
5.8
89,542
20,678
–15,873
20,747
14,655
31,114
20,480
9,537
2,634
197
19.99
71.26
8.30
264.30
31.9
36.0
17.5
17.5
12.4
0.01
12.16
11.6
55,692
16,470
45,295
287.4
287.4
1.3
4,150
–1,343
5,310
4,887
3,805
8,046
–6,506
–4,650
1,540
2,149
–2,385
3.7
4.3
3.9
97,312
23,574
–16,848
21,482
16,750
34,443
21,749
9,982
3,814
1,825
13.24
75.67
8.50
187.10
18.2
22.7
19.0
17.3
13.5
0.08
9.05
11.2
54,419
17,363
49,870
287.4
287.4
1.2
3,981
–1,343
4,176
3,754
2,854
—
—
—
—
—
–2,385
3.9
3.6
3.3
—
20,306
–17,077
19,824
15,451
32,996
—
—
—
—
9.93
—
8.50
187.10
—
20.2
17.5
17.1
13.4
—
—
—
51,253
15,829
49,870
287.4
287.4
–1.0
5,104
–1,344
3,189
2,456
1,820
8,434
–7,683
–5,562
751
1,218
–2,443
4.7
2.7
2.1
106,808
26,172
–17,390
20,847
16,194
33,892
22,574
10,989
3,866
7,683
6.33
78.55
8.50
229.90
11.4
12.0
22.3
17.7
13.8
0.34
3.20
10.8
48,652
16,318
50,544
287.4
287.4
–2.3
–3.9
–4.1
1.5
–1.6
–3.4
–3.5
0.2
13.1
9.6
4.5
0.1
0.2
2.5
5.7
6.5
–5.7
–4.1
–4.4
–4.2
6.4
5.5
0.1
–4.1
2.7
1.7
3.9
3.0
0.3
4.9
7.8
1.8
–2.4
27.7
–3.6
1.8
7.8
3.2
–0.4
2.2
–0.3
Depreciation and amortization
Items affecting comparability 2)/ Non-recurring items 6)
sekm
Net sales and income
Net sales
Organic growth, %
Operating income
Income after financial items
Income for the period
Cash flow
Cash flow from operations
Cash flow from investments
of which capital expenditure in
property, plant and equipment
Cash flow from operations and investments
Cash flow from operations and investments excluding acquisitions
and divestments of operations
Dividend, redemption and repurchase of shares
Capital expenditure in property, plant and equipment
Income after financial items as % of net sales
as % of net sales
Margins 3)
Operating margin, %
Financial position
Total assets
Net assets
Working capital
Trade receivables
Inventories
Accounts payable
Total equity
Interest-bearing liabilities
Provisions for post-employment benefits, net
Net debt
Data per share
Equity, SEK
Dividend, SEK4)
Income for the period, SEK
Key ratios
Return on equity, %
Return on net assets, %
Net assets as % of net sales 5)
Trade receivables as % of net sales 5)
Inventories as % of net sales 5)
Net debt/equity ratio
Interest coverage ratio
Dividend as % of total equity
Other data
Average number of employees
Salaries and remuneration
Number of shareholders
Average number of shares after buy-backs, million
Shares at year end after buy-backs, million
–4.8
3,442
–1,561
3,761
3,484
2,607
8,297
–2,967
–2,223
5,330
5,326
69
2.0
4.9
4.6
72,696
19,506
–5,154
20,173
10,050
16,031
18,841
14,022
9.18
66
4.00
167.50
14.9
19.4
17.1
17.7
8.8
0.04
7.54
6.0
50,633
13,162
52,000
284.0
284.4
1.5
3,328
–1,064
5,430
5,306
3,997
7,680
–4,474
–3,221
3,206
3,199
–1,120
3.0
6.1
6.0
73,521
19,904
–5,902
19,346
11,130
17,283
20,613
12,096
14.04
72
6.50
191.00
20.6
27.8
18.2
17.7
10.2
–0.03
12.64
9.0
51,544
12,678
57,200
284.6
284.7
0.2
3,173
–138
3,017
2,780
2,064
5,399
–10,049
–3,163
–4,650
906
–1,850
3.1
3.1
2.9
76,384
27,011
–5,180
19,226
11,957
18,490
20,644
14,206
7.25
73
6.50
10.4
13.7
23.8
17.0
10.5
0.31
5.84
9.0
5.5
3,251
–1,032
4,000
3,154
2,365
7,080
–4,702
–4,090
2,378
2,542
–1,868
3.7
4.6
3.8
75,194
25,890
–6,505
18,288
12,963
20,590
15,726
13,088
4,479
10,164
8.26
55
6.50
14.4
14.8
22.5
15.9
11.3
0.65
2.72
11.8
4.5
3,356
–2,475
1,580
904
672
4,455
–4,734
–3,535
–279
–74
–1,860
3.2
3.7
3.1
76,001
24,961
–5,800
19,441
12,154
20,607
14,308
14,905
2,980
10,653
2.35
50
6.50
4.4
5.8
21.8
17.0
10.6
0.74
2.11
13.0
52,916
13,137
58,800
284.7
284.7
59,478
13,785
51,800
285.9
286.1
60,754
13,521
51,500
286.2
286.2
665
–709
6,367
Trading price of B-shares at year-end, SEK
109.70
170.50
168.50
1) Amounts for 2012 have been restated where applicable as a consequence of the amended standard for pension accounting, IAS 19 Employee Benefits and 2017
as a consequence of the introduction of IFRS 15 Revenue from Contracts with Customers.
2) As of 2015 the accounting concept of Items affecting comparability is no longer in use. As from 2018, non-recurring items are presented, see definition in Note 31.
3) Items affecting comparability are excluded for the years 2009 to 2013. 2014 has been restated.
4) 2019: Proposed by the Board.
6) For more information, see Note 7.
5) Annualized net sales, calculated at end of period exchange rates, 2019: 117,519 (restated 2018: 115,733).
7) Certain amounts have been restated for discontinued operations as a consequence of the planned distribution of the Professional business area.
ELECTROLUX ANNUAL REPORT 2019
88 Operations by business area yearly
All amounts in SEKm unless otherwise stated
Operations by business
area yearly
sekm
Europe
Net sales
Operating income
Margin, %
North America
Net sales
Operating income
Margin, %
Latin America
Net sales
Operating income
Margin, %
Asia-Pacific, Middle East and Africa
Net sales
Operating income
Margin, %
Other
Net sales
Operating income, common Group costs, etc.
Total, continuing operations
Net sales
Operating income
Margin, %
2015
2016
20171)
2018
20192)
38,224
2,290
6.0
45,276
1,454
3.2
19,679
459
2.3
39,097
2,794
7.1
44,914
2,657
5.9
16,384
–111
– 0.7
39,231
2,772
7.1
42,083
2,796
6.6
43,321
2,128
4.9
39,804
1,104
2.8
18,277
17,963
483
2.6
492
2.7
45,420
2,493
5.5
38,954
–516
–1.3
19,653
1,821
9.3
13,787
13,833
308
2.2
—
–2,631
673
4.9
—
–693
13,457
1,077
8.0
—
–775
14,375
14,954
979
6.8
—
–527
446
3.0
—
–1,055
116,965
114,228
113,048
115,463
118,981
1,879
1.6
5,320
4.7
6,353
5.6
4,176
3.6
3,189
2.7
1) Electrolux applies the new standard for revenue recognition, IFRS 15 Revenue from Contracts with Customer, as of January 1, 2018. Reported figures for 2017 have been restated to
enable comparison.
2) All years presented have been restated due to changes in the business area structure in 2019.
Non-recurring items1)
Europe
North America
Latin America
Asia-Pacific, Middle East and Africa
Common Group cost
Total, continuing operations
2015
–40
–2072)
–11
–90
–1,9012)
–2,249
2016
2017
—
—
—
—
—
—
—
—
—
—
—
—
20183)
–747
–596
—
—
—
–1,343
20194)
–752
–1,071
1,101
–398
–224
–1,344
1) For more information, see Note 7.
2) Refers to costs related to the not completed acquisition of GE Appliances. Costs for preparatory integration work of SEK 158m for 2015 have been charged to operating income for North
America. Common Group cost includes transaction costs of SEK 408m for 2015 and a termination fee paid to General Electric in December 2015 of USD 175m, corresponding to SEK 1,493m. In
total, costs of SEK 2,059m related to GE Appliances were charged to operating income in 2015 of which SEK 63m in the first quarter, SEK 195m in the second quarter, SEK 142m in the third quar-
ter and SEK 1,659m in the fourth quarter.
3) Non-recurring items 2018: SEK –596m refers to the consolidation of freezer production in North America, SEK –747m refers to business area Europe and includes a fine of SEK –493m, relating to
an investigation by the French Competition Authority, and a cost of SEK –254m relating to an unfavorable court ruling in France.
4) Non-recurring items 2019 includes SEK –829m related to the consolidation of U.S. cooking production and SEK –225m to the closure of a refrigeration production line in Latin America, recovery
of overpaid sales tax in Brazil of SEK 1,403m, a legal settlement in the U.S. of SEK –197m and restructuring charges for efficiency measures and outsourcing projects across business areas and
Group common costs of SEK –1,496m.
ELECTROLUX ANNUAL REPORT 2019
Quarterly information
Quarterly information 89
All amounts in SEKm unless otherwise stated
Net sales and income by business area per quarter1)
sekm
Europe
Net sales
Operating income
Operating margin, %
North America
Net sales
Operating income
Operating margin, %
Latin America
Net sales
Operating income
Operating margin, %
Asia-Pacific, Middle East and Africa
Net sales
Operating income
Operating margin, %
Other
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Full year
2019
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Full year
2018
10,553
10,479
11,036
13,352
45,420
9,760
10,138
10,885
12,539
43,321
686
6.5
576
5.5
93
0.8
1,138
2,493
8.5
5.5
610
6.2
–286
–2.8
749
6.9
1,055
2,128
8.4
4.9
9,099
10,255
10,880
8,719
38,954
8,785
10,804
10,072
10,143
39,804
–482
–5.3
504
4.9
–20
–0.2
–519
–5.9
–516
–1.3
–148
–1.7
670
6.2
358
3.6
223
2.2
1,104
2.8
4,312
4,816
–223
–5.2
164
3.4
4,613
1,539
33.4
5,913
19,653
4,247
4,518
3,845
5,353
17,963
340
5.8
1,821
9.3
35
0.8
–38
–0.8
205
5.3
290
5.4
492
2.7
3,445
3,682
3,801
4,027
14,954
3,197
3,685
3,507
3,986
14,375
110
3.2
171
4.7
–150
–4.0
315
7.8
446
3.0
163
5.1
243
6.6
270
7.7
302
7.6
979
6.8
Operating income, common group costs, etc.
–143
–197
–400
–315
–1,055
–133
–86
–107
–201
–527
Total, continuing operations
Net sales
Operating income
Operating margin, %
27,408
29,232
30,330
32,011 118,981
25,988
29,145
28,309
32,021 115,463
–53
–0.2
1,219
1,063
4.2
3.5
960
3.0
3,189
2.7
527
2.0
503
1.7
1,476
1,670
4,176
5.2
5.2
3.6
Total Group, including discontinued operations
Income for the period
Earnings per share, SEK2)
79
0.28
1,132
3.94
739
2.57
559
1.94
2,509
8.73
551
1.92
517
1.80
1,162
1,575
4.04
5.48
3,805
13.24
Number of shares after buy-backs, million
Average number of shares after buy-backs, million
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
287.4
1) The quarters 2018 have been restated due to changes in the business area structure in 2019.
2) Basic, based on average number of shares, excluding shares owned by Electrolux.
ELECTROLUX ANNUAL REPORT 2019
90 Sustainability reporting
Sustainability reporting 2019
Electrolux is a global leader in household appliances. Sustainability is part of the
business model as a transformational driver. In this section, the Group’s sustainability
work and the results for 2019 are presented.
Electrolux shapes living for the better by reinventing taste, care
and wellbeing experiences, making life more enjoyable and
sustainable for millions of people. As a leading global appli-
ance company, we place the consumer at the heart of every-
thing we do. Through our brands, including Electrolux, AEG and
Frigidaire, we sell approximately 60 million household products
in more than 120 markets every year. In 2019, Electrolux had
sales of SEK 119 billion and employed 49,000 people around the
world. For more information, go to
www.electroluxgroup.com.
KEY RESULTS 2019
23/32%
products with leading performance accounted
for 23% of total units sold and 32% of gross profit
for consumer products in 2019
-23%
CO2 per manufactured
product in 2019 compared to 2018
>6,400
metric tons recycled plastic
used in 2019
30,000
took part in the Food Heroes’ workshop on
UNs Sustainable Development Goals (SDGs)
and sustainable eating
Business model and sustainable development
To achieve the Electrolux purpose – shape living for the better
– and drive profitable growth, Electrolux uses a business model
that focuses on delivering outstanding consumer experiences
in taste, care and wellbeing. The objective is to create a steady
stream of consumer-relevant innovations under well-estab-
lished brands in key experience areas.
With 60 million home appliances sold annually, Electrolux has
long recognized the impact the company has on the environ-
ment and in society. Sustainable development is defined as a
transformational driver in the business model as the company
recognizes the growing importance of sustainability perfor-
mance and reputation. This includes the impact of Electrolux
business operations and products on the planet and society.
Electrolux is continuously making progress on sustainability
and is acknowledged as a sustainability leader in the household
durables industry.
THE BETTER LIVING PROGRAM
Better eating
Make sustainable eating
the preferred choice.
Better garment care
Make clothes last twice
as long with half the
environmental impact.
Better home
environment
Make homes healthier and
more sustainable through
smart solutions for air,
water and floors.
Better company
Make our business circular
and climate neutral.
In 2019 Electrolux introduced the Better Living Program, a plan to enable better and more sustainable living for consumers around the world
through 2030 with targets focusing on better eating, better garment care and better home environment. The initiative widens the scope of the
Electrolux commitment to sustainability and will be a part of the company’s sustainability framework from 2020.
ELECTROLUX ANNUAL REPORT 2019
Sustainability reporting 91
Electrolux in a changing world
The world in which Electrolux operates is constantly changing.
Demographic trends are increasing pressure on resources,
rapid technological development requires new business
approaches, and planetary boundaries are influencing decision
making at all levels. Such global megatrends create challenges
for the business – but also bring about business opportunities.
Demographics
Global demographic trends – such as population growth, the
growing middle class, an aging population and urbanization
– are increasing the demand for home appliances, which puts
more pressure on natural resources. Between 2015 and 2030,
another billion people are expected to buy their first refrigerator.
Implications for Electrolux:
• Significant growth potential in emerging markets.
• Continued need to decrease the overall environmental foot-
print of products.
• Growing importance of the elderly consumer group and the
increasing number of smaller households.
• Potential for new business models, such as shared ownership.
Resources and planetary boundaries
The need to reduce greenhouse gas emissions, and adapt to a
changing climate and resource limitations, will drive manufac-
turers toward circular business models that promote resource
efficiency, cleaner chemistry and waste reduction.
Implications for Electrolux:
• Continued need to improve the environmental performance
of products.
• Pressure to reduce water consumption in areas with water
scarcity.
• Competition for some metals and minerals.
• Growing importance of the circular economy.
• Expectations to go beyond chemical legislation.
• Problems with plastic waste pollution increase pressure on
recycling solutions.
Technology
New technologies are scaled rapidly and globally, with purchas-
ing decisions increasingly influenced by online information and
social media. The Internet of Things (IoT) promises to connect
billions of products in the near future.
Implications for Electrolux:
• Greater consumer empowerment and awareness require
transparency and sustainable business practices.
• Digitalization will drive the next wave of operational efficiency,
including closer integration with suppliers.
• Connectivity offers opportunities for new business models that
result in better resource efficiency.
• IoT enables a lifelong relationship between producers and
consumers, but requires high standards of data security and
privacy.
Materiality
Material issues are topics that reflect the most significant eco-
nomic, environmental and social impacts for Electrolux.
The materiality process aims to identify and understand
the topics that are important to stakeholders, as well as to the
Group’s business strategy. It is an important way of evaluating
the ability to create and sustain value.
Electrolux draws on insights from global trends and drivers,
market intelligence, product research, internal and external dia-
logue, expert opinion and consumer surveys, and other sources
of information to develop an up-to-date understanding of the
prevailing business context.
The material issues have been expressed in the Group’s
sustainability framework – For the Better – as nine promises with
defined 2020 sustainability goals, and supported by key perfor-
mance indicators (KPIs) (see page 92 for more details about For
the Better). As 2020 is the target year for the current framework,
a materiality process was conducted during 2019 to formulate
an update of the Group’s sustainability framework.
In 2019, Electrolux introduced the Better Living Program with
the objective to enable better and more sustainable living for
consumers with targets focusing on better eating, better gar-
ment care and a better home environment. This program will be
included in the updated sustainability framework with targets for
2030. New targets will be aligned with relevant UN Sustainable
Development Goals. (For details see www.electroluxgroup.com/
sustainability).
AVERAGE CO2 IMPACT DURING THE LIFETIME OF APPLIANCES1)
Recycling 1%
Materials, 7%
Manufacturing, 1%
Transportation, 1%
Product usage, 85%
Greenhouse gas, 5%
The product life-cycle perspective guides how to best reduce
climate impacts. The most significant carbon emission impact for
Electrolux is a result of energy consumption when products are
used. In 2018, Electrolux set Science Based Targets to align its
business with the objective of the Paris Agreement to limit global
warming to well below 2 °C, i.e. to reduce absolute carbon dioxide
emissions from operations by 80% and emissions from products by
25% by 2025 compared to 2015. With the Company target in the
Better Living Program Electrolux commits to be carbon neutral in its
operations by 2030, and through the UNGC’s Business Ambition for
1.5 °C to have net zero emissions throughout its value chain by 2050.
1) The graph is based on the Group’s total CO2 impact in 2015 (82 million metric tons)
used for setting Science Based Targets.
ELECTROLUX ANNUAL REPORT 2019
92 Sustainability reporting
For the Better
The Group’s sustainability framework – For the Better – comprises of three areas: Better solutions,
Better operations and Better society. It includes a target to halve the Group’s direct carbon
emissions before the end of 2020 and nine promises to make a positive difference for the better.
FOR THE BETTER
Better solutions
Better operations
Better society
Improve product performance
and efficiency
Ensure the best health
and safety
Solutions for healthy and
sustainable living for more people
Make better use of resources
Achieve more with less
Be a force for good
Eliminate harmful materials
Respect human rights and
ethical principles
Improve supply chain
sustainability
Climate targets
Better solutions
Meeting the growing global market for household appliances
without increasing environmental impact requires Electrolux to
improve product efficiency even further and to use resources
more efficiently.
Constantly improve product performance and efficiency
Tackling climate change and the increasing demand for water
are among the most urgent challenges facing society. Electrolux
contributes by offering resource-efficient products that help
consumers and customers to live better lives, save money and
reduce their environmental footprint. In 2019, products with
leading environmental performances represented 23% of
products sold and 32% of gross profit. One example is improved
refrigerators and freezers that will be produced in the new
Electrolux factory in Anderson (U.S.).
Make better use of resources
The materials used in household appliances are primarily
steel, plastic and electronical components. One of the ways of
contributing to greater resource efficiency is to increase the use
of recycled materials and support initiatives for product recy-
cling. In 2015, Electrolux set a target of to replace 20,000 metric
tons of virgin plastics in products with recycled by 2020 and in
2019 the Group achieved 6,400 metric tons. With the forecasted
volume for 2020 the target will not be achieved on time. The gap
is mainly due to challenges in transferring solutions between dif-
ferent product and process technologies, slowing down imple-
mentation in some regions.
Eliminate harmful materials
Electrolux has a robust approach to choosing materials for
its products to protect human health and the environment.
The Group continues to implement its common process for
chemical management. New scientific findings and stake-
holder requirements are used to update the Group’s Restricted
Materials List. In 2019, Electrolux joined the Cool Coalition
initiative, which encourages companies to make commitments
to reduce emissions in the cooling sector. Electrolux commits to
find alternative refrigerants with less Global Warming Potential
in refrigerators, freezers and air conditioning units.
OPERATIONAL RESOURCE EFFICIENCY
ELECTROLUX –50% CLIMATE TARGET FOR 2020
INDEX
100
80
60
40
20
0
15
16
17
18
19
Energy per standard unit
Energy consumption
CO2 emissions
Water consumption
05
-
16
17
18
19
Product use
Greenhouse gas
Manufacturing
Transport
2020
Target
-50%
The target is to reduce
climate impact by 50%
focusing on product
efficiency, and it
encompasses the main
product categories.
Sales volumes and
emission factors are
normalized to 2005
ELECTROLUX ANNUAL REPORT 2019
Better operations
Electrolux influences people’s daily life around the world. The
Group works continuously to be more resource efficient and
ensure safe and ethical operations.
Achieve more with less
Efficient use of resources reduces environmental impact and
reduces costs. The Green Spirit program, a part of the Electrolux
Manufacturing System, has the objective to continuously reduce
energy use and to shift to renewables in the Group’s opera-
tions around the world. In 2019, Electrolux reduced its energy
consumption by 5.5% (2.7%) and CO2 emissions by 34% (15%)
compared to 2018. In 2019, over 45% of the total energy used
came from renewable sources.
Ensure the best health and safety
The Group’s safety mindset involves preventing accidents and
keeping employees safe and sound, no matter where they are in
the world. Since 2015, the injury rate has declined by 39% across
the Group. The global incident rate (TCIR) was 0.53* (0.57) in 2019.
Better society
As a global company, Electrolux affects millions of people —
customers, suppliers and local communities. Electrolux strives
to make a difference in society by helping all stakeholders
throughout the value chain to become more sustainable and
by creating a positive impact in the communities in which the
Group operates. Electrolux makes efficient appliances acces-
sible to more people, creating opportunities for a better life. As
a global company, Electrolux can contribute to a faster transfer
of technology to new growing markets. The Group participates
in United for Efficiency, a global program supporting developing
countries to move their markets to energy-efficient appliances.
Resource efficient solutions improve the lives of people and
minimize environmental impacts.
Be a force for good
As a world-leader in kitchen appliances, the Group’s commu-
nity investment activities focus on food — in cooperation with
employees and global and local partners. The objectives are to
spread knowledge regarding sustainable cooking and eating
habits and to support people in need. Actions are facilitated
through the Electrolux Food Foundation, and the Feed the
Planet partnership together with the World Association of Chefs’
Societies (Worldchefs) and the world’s largest youth organiza-
Climate targets
The most significant carbon emission impact for Electrolux is
a result of energy consumption when products are used, (50%
target). In 2018, Electrolux set Science Based Targets to align
its business with the objective in the Paris Agreement to limit-
ing global warming to well below 2° C, i.e. to reduce absolute
carbon dioxide emissions from operations by 80% and emis-
sions from products by 25% by 2025 compared to 2015. With
2005–2020 -50% Target
1
Science based targets
2
3
Better Living Program – Company target
United Nations Global Compact – Business ambition for 1.5 °C
Sustainability reporting 93
Regrettably, in early 2019, a fatality of an Electrolux employee
occurred in one of our plants in Latin America. The tragedy
happened despite control measures being in place at the
time of the accident. Electrolux is continuously improving its
processes related to safety in all its operations. The employee’s
family received full support and all relevant information was
provided to the local authorities.
Always act ethically and respect human rights
Electrolux continues to build an ethical, trusted company,
where everyone impacted by the Group’s operations can feel
confident that their rights are respected. Electrolux has a global
ethics program encompassing both training and a whistle-
blowing system – the Electrolux Ethics Helpline – and in 2019,
215 (247) Helpline reports were made. Human rights action
plans, based on risk assessments, forms the basis for driving the
company’s approach to human rights.
*Discontinued operations reported an incident rate (TCIR) of 1.8 in 2019.
tion AIESEC. The Group intends to annually fund the Electrolux
Food Foundation until 2030, with an expected total of SEK 100m.
The focus in 2019, has been to replicate and scale up suc-
cessful project models such as the Food Heroes program
educating children on sustainable eating habits and the Like
a Chef program to teach unemployed persons sustainable
culinary skills. Over 30,000 people participated in Food Heroes
workshops in 2019, and 142 people graduated from Like a Chef.
This program has enabled many graduates to either find a job,
become self-employed or pursue further culinary studies.
Improve sustainability in the supply chain
Regardless of where the Group’s products and components
are manufactured, it must be done with respect for people and
care for the environment. As part of its responsible sourcing
efforts, Electrolux carried out 351* (399) supplier audits in 2019,
and over 4,200 (6,400) supplier employees were trained in the
Electrolux Supplier Workplace Standard and other relevant sus-
tainability issues. Electrolux has cooperated with logistic part-
ners to reduce the climate impact of container sea transport.
*For discontinued operations 8 audits were performed in 2019.
the Company target in the Better Living Program, Electrolux
commits to be carbon neutral in its operations by 2030, and
through the UNGC’s Business Ambition for 1.5° C to have net
zero emissions throughout its value chain by 2050. The 2025
emission targets for Electrolux operations have been verified
by the Science Based Targets Initiative to be in line with a
1.5° C climate scenario.
1. Science based targets (SBT)
Scope 1 + Scope 2 – 80% reduction and
Scope 3 – 25% reduction by 2025
2. Company target, Climate neutral operations
(Scope 1 + Scope 2 = 0) by 2030
3. UNGC Business ambition for 1.5 °C
– climate neutral value chain by 2050
2015
2020
2025
2030
2050
1. Science based targets (SBT) Scope 1 + Scope 2 80% reduction and Scope 3 25% reduction by 2025
2. Company target, Climate neutral operations (Scope 1 + Scope 2 = 0) by 2030
3. UNGC’s Business Pledge – climate neutral value chain by 2050
ELECTROLUX ANNUAL REPORT 2019
94 Sustainability reporting
Managing sustainability – Risks and Opportunities
Governance
The Group’s sustainability framework – For the Better – is directly
overseen by the Group Management and the Business Areas’
Management teams that have been engaged in the develop-
ment of the priorities and objectives for the nine promises and
the climate targets.
In 2019, regular education and communication on the Code
of Conduct and key Group Policies was introduced. All office
based staff must acknowledge the Code of Conduct by elec-
tronic signature.
Each business area is responsible for contributing to the fulfill-
ment of the Group’s sustainability targets under the nine prom-
ises, and several of the KPIs are broken down and monitored at
business area level. Reference groups and steering groups with
Group Management and senior management participation are
in place for various programs; for example, the Ethics & Human
Rights Steering Group; Industrial Operations; External Affairs;
and Chemicals.
A number of Group functions are accountable for identifying
and managing non-financial risks in their area of responsibility.
Risks are reported to Group Management, and they feed the
materiality process.
In 2019, Electrolux formed the Sustainability Board led by the
CEO, tasked with assessing priorities, monitoring progress and
evaluating risks. The board will propose actions and targets
to Group Management, and will be essential in delivering on
Electrolux sustainability targets going forward.
Key sustainability governance responsibilities:
• The Board of Directors is responsible for identifying how sus-
tainability issues impact risks to and business opportunities for
the company.
• Internal Audit evaluates and improves governance, internal
control and risk management processes.
• Group Risk Management benchmarks and monitors key risks
in operations and critical suppliers.
• Group Legal Affairs is responsible for implementing an anti-
corruption program.
• Each Business Area’s Sourcing Board is responsible for moni-
toring supplier compliance, with the support of the Respon-
sible Sourcing team.
• Group Sustainability Affairs assesses materiality, develops
policies, targets, monitors the implementation of programs,
and manages the Responsible Sourcing program.
• The Ethics Helpline (whistleblower function) and programs for
ethics and human rights are overseen by the Ethics & Human
Rights Steering Group.
Aspect
Policies
Environment
• Environmental Policy
• Workplace Policy
Key areas
• Product design
• Efficiency in operations
• Influencing legislation
Social, labor and human rights
• Workplace Policy
• Supplier Workplace Standard
• Workplace Directive
• Child and forced labor
• Health and safety, working
hours, compensation
• Discrimination and harassment
• Environmental management
systems
• Freedom of association,
collective bargaining
The full text of Electrolux policies is available at www.electroluxgroup.com/en/category/sustainability/codes-and-policies
Anti-corruption
• Anti-Corruption Policy
• Conflict of Interest Policy
• Conflict of interest
• Bribes or other improper
benefits
• Business partners and
customers
• Political contributions
Environment
From a product life-cycle perspective, Electrolux has a relatively
large environmental impact – including energy consumption,
use of materials and chemicals. Generally, the most significant
impacts occur during a product’s use phase, and the Group’s
strategy is to improve product performance.
The Electrolux Environmental Policy outlines how Electrolux
aims to improve environmental performance in production and
product use, as well as how to design products for disposal.
Requirements for the Group’s operations and in supply chain
are described in the Workplace Directive. All Electrolux facto-
ries with more than 50 employees are required to be ISO 14001
and ISO 50001 certified.
Group requirements on suppliers are described in the Sup-
plier Workplace Standard and the Workplace Directive. Com-
pliance is mandatory when evaluating potential and existing
suppliers. The Group’s major suppliers of finished products must
measure and monitor their energy use and report it through the
energy reporting standard. They have also been included in
the WWF Water Risk Filter assessment.
Electrolux responds to the annual CDP Climate and Water
questionnaires. In 2019, Electrolux achieved A- both in CDP
Climate and CDP Water.
The Group’s proactive approach aims to develop and
promote sales of products with lower environmental impact.
Readiness for more stringent product legislation, for example,
can lead to increased sales. For many years, products with
superior environmental performance have delivered higher
profit margins.
Electrolux products are affected by legislation in areas
including energy consumption, producer responsibility, and
management of hazardous substances. Some customers have
requirements that go beyond legislation.
ELECTROLUX ANNUAL REPORT 2019
Sustainability reporting 95
The main environmental risks are related to regulatory and
customer requirements (see pages 96–97). Not meeting require-
ments could result in fines or limitations in production permits,
reduced sales or product withdrawal. Electrolux has processes
in place to mitigate these risks, including ISO management
systems, internal audits, a Responsible Sourcing program,
and targets in the product development plans. The Group’s
programs to reduce operational resource consumption and to
introduce more recycled materials in products are saving costs.
In 2018, the Group’s Science Based Targets in line with the Paris
Agreement (COP 21) were approved.
In March 2019, Electrolux introduced the world’s first green
bond framework in its industry to raise funds earmarked for
investments contributing to reduced environmental impacts
from the company’s products and operations. The proceeds
are used to finance projects covered by environmental areas in
the Electrolux sustainability framework For the Better. In 2019,
Electrolux issued the first bond loan within its green bond frame-
work, raising SEK 1bn.
Social, labor and human rights
Electrolux reputation is built on trust, which means that all
actions and decisions must be governed by principles of ethics,
integrity, and respect for people and care for the environment –
no matter where the Group operates in the world.
Consumers are increasingly making purchasing decisions
based on their trust in companies and how they contribute to
society. Additionally, employees prefer to work for a company
with values that match their own. Respecting human rights and
being an ethical company goes beyond simply meeting legal
requirements. It is about guiding employees to know what is
right and wrong, and how to make decisions accordingly. The
goals in For the Better reflect the Group’s commitment to build
a strong culture for ethics and human rights.
The key human rights risks include freedom of association,
discrimination and working conditions. Other risks are privacy
of information, and corruption.
The Electrolux Code of Conduct was launched in 2018, and
contains the Group’s Human Rights policy statement, firmly
stating that human rights shall be respected. During 2019, Code
of Conduct e-learning and communications was rolled out to
employees. The Group’s human rights commitment is further
detailed through a new Human Rights Directive. The Workplace
Policy, the Supplier Workplace Standard and the Workplace
Directive contain mandatory requirements relating to labor
Anti-corruption
Corruption poses a threat to sustainable economic and social
development around the world and in particular in poor com-
munities. Corruption could also have severe negative impacts
for the Group by obstructing business growth, increasing costs
and imposing serious legal and reputational risks. Operating
in 58 countries all over the world, including countries in emerg-
ing markets, Electrolux is exposed to risks related to corruption
and bribery. These risks may arise in several phases of the value
chain, such as in purchasing and sales.
Electrolux has zero tolerance of corruption and works contin-
uously to raise awareness among employees in order to mini-
mize the risk for corruption. Measures against corruption are
included in the Anti-Corruption Policy, which all employees are
required to follow. This policy provides guidance to employees
on how to do the right thing and explains what actions consti-
tute unlawful and inappropriate behavior.
Employees can report ethical misconduct through a whistle-
blower system. In 2019, 215 (247) reports were received, out
of which 19 (24) reports in the area of business integrity were
investigated. Business integrity includes allegations related
to corruption, fraud, theft, internal control and anti-trust.
Electrolux conducts Group-wide e-learning courses on anti-
corruption. These initiatives complement the tailored training
that certain functions such as sales, procurement and senior
management receive (roles that are more exposed to corruption
ELECTROLUX ANNUAL REPORT 2019
rights, health, safety and environment within Electrolux and
suppliers.
Electrolux monitors performance and manages risks through
internal and external audits, an annual self-assessment process
for manufacturing units, local human rights assessments, edu-
cation, the Ethics Helpline, management-labor dialogue, as
well as health and safety committees. Risks in the supply chain
are addressed through audits and training efforts as part of the
Responsible Sourcing program.
Human rights procedures engage many functions through-
out the organization, from Human Resources to Purchasing
and Global Industrial Operations. Accountability for the ethics
program and the oversight of human rights lies with the Ethics &
Human Rights Steering Group, which comprises of senior man-
agement representatives from Group functions.
Electrolux conducts human rights impact assessments at
both Group and local level, in line with the UN Guiding Principles
on Business and Human Rights. Five issues and three business
processes constitute the Group’s salient human rights issues.
The methodology for the assessments focuses on identifying the
risk of harming people, as a direct or indirect result of Electrolux
operations. In 2019, the focus was on following up on the actions
from the assessments conducted in Egypt, Thailand and Ukraine
in 2017 and 2018.
risks). Such face-to-face training sessions have been conducted
locally throughout the organization by either in-house legal
counsel or by external experts. Training requirements are contin-
uously monitored and evaluated based on business needs, and
the legal and risk context. The local human rights assessments
include the review and assessment of corruption risks.
77%
of employees trust that the concerns reported through
the Ethics Helpline (Alertline in North America) are
handled confidentially and fairly in 2019.
96 Sustainability reporting
Impacts throughout the value chain
A value chain
perspective helps
Electrolux identify how
it can best manage its
impacts and create
maximal value.
This approach makes it
easier to identify opportuni-
ties, minimize or enhance
impacts, and understand
boundaries. It also helps the
company to understand
how its actions and impacts
are interrelated.
The following section
identifies the Group’s key
sustainability risks and
impacts, and how they are
managed. It also identifies
the degree of influence
along the value chain, and
the value created for the
company and the society.
Product
development
Suppliers
Electrolux
operations
Close collaboration between
Design, Marketing and R&D
enables new products to
offer best-in-class consumer
experiences. The ambition
is to develop solutions with
leading environmental per-
formance. Timely innovation
is key to meeting forthcoming
legal requirements and mar-
ket demands. The focus is on
energy, water and material
efficiency, as well as chemical
use in appliances.
Risks
• Not meeting regulatory or
market requirements.
• Not meeting consumer
expectations.
• Not adapting to a low-
carbon economy.
How impacts are managed
• Continuously improve prod-
uct efficiency.
• Increase use of recycled
materials.
• Eliminate harmful materials.
• Integrate future require-
ments into product develop-
ment plans.
• Participate in the United for
Efficiency program.
Ability to influence - High
Generating value
Products with leading envi-
ronmental performance
deliver customer value in line
with the business strategy,
while reducing negative
impact on the environment.
Electrolux relies on thousands
of first-tier suppliers, many in
emerging markets. The focus
is on safeguarding Electrolux
standards and developing
supplier capacity to improve
sustainability performance.
Electrolux also requires all
its suppliers to comply with
Electrolux Supplier Workplace
Standard and the Workplace
Directive.
Risks
• Connections to social,
ethical and human rights
violations.
• Severe weather conditions
caused by climate change
could negatively affect
supply.
• Business interruptions due to
unethical business practices
in the supply chain.
How impacts are managed
• Apply a risk-based
approach to identify suppli-
ers in scope.
• Assess the climate impact
of key suppliers.
• Conduct auditing to safe-
guard standards.
• Hold training and drive
improvement programs.
Ability to influence - Medium
Generating value
Enforcing Electrolux stan-
dards supports human rights
and raises environmental,
labor and economic stan-
dards, particularly in emerg-
ing markets. This also builds
trust and a resilient supply
chain, while reducing busi-
ness and reputational risks.
Electrolux has 42 factories
and sales in 120 markets,
with approximately 49,000
employees. The main focus
areas are to reduce the envi-
ronmental footprint, maintain
high ethical standards and
working conditions, as well as
to have a positive impact in
local communities.
Risks
• Disruptions due to emissions
and discharges as a result of
incidents.
• Disruptions caused by
severe weather as a result
of climate change.
• Impact due to social, ethical
and human rights violations.
• Corruption related to weak
governance.
How impacts are managed
• Apply the environmental
management systems and
efficiency programs.
• Ensure the best conditions
for health and safety.
• Governance systems and
training to enforce sustain-
ability policies.
• Assess the climate impact
on operations.
• Support local community
programs.
Ability to influence - High
Generating value
Electrolux creates com-
munity benefit by providing
jobs, knowledge transfer and
economic opportunities. Posi-
tive employee relationships
promote competence devel-
opment, employee wellbeing
and job satisfaction. Local
community engagement
creates good stakeholder
relations, improves employee
pride and enhances brand
reputation.
ELECTROLUX ANNUAL REPORT 2019
Sustainability reporting 97
Transport
Sales
Consumer use
End-of-life
Electrolux sells approximately
60 million products in over 120
markets every year, primarily
through retailers. Energy and
performance labeling, and
sustainability communica-
tion allow us to raise energy
efficiency awareness among
consumers.
As the main environmen-
tal impacts of Electrolux
products occur when they
are used, product energy
and water efficiency is a top
priority.
Greater use of connected
products in the future will help
improve optimal product use.
Risks
• Failure to effectively inform
consumers on product use.
• Not meeting consumer
expectations on product
efficiency.
• Limited opportunity to influ-
ence decision-making at the
point-of-purchase.
• Corruption.
How impacts are managed
• Continuously improve
product performance and
efficiency.
• Improve pre- and point of
purchase communication.
• Secure third party endorse-
ment of products (such as
best-in-test recognitions).
• Communicate on themes
such as food storage, reduc-
ing food waste, caring for
clothes and textiles.
• Conduct Group-wide train-
ings on anti-corruption.
Ability to influence - Medium
Generating value
Promoting transparency
and the Group’s sustainable
product offering contributes
to retailer sustainability goals,
strengthens brands and
builds customer loyalty. As
sales of the Group’s products
with leading environmental
performance demonstrate,
an efficient product offering is
a profitable strategy.
Risks
• Not meeting expectations
on product performance.
• Consumers not using prod-
ucts in an optimal way.
• Product safety.
• Data privacy for users of
connected products.
How impacts are managed
• Continuously improve
product performance and
efficiency.
• Better Living Program
• Prepare for increased data
privacy regulation.
• Follow the product safety
governance and proce-
dures.
• Increase development
and sales of connected
products.
Ability to influence - Medium
Generating value
Appliances deliver social
benefits that many take for
granted – such as food pres-
ervation, hygiene standards,
freeing up time from house-
hold chores, and facilitating
equal opportunities – factors
that are particularly sig-
nificant in emerging markets.
Providing efficient products,
raising consumer awareness
and increasing appliance
connectivity can help counter
rising global CO2 emissions,
while reducing food waste
and the wear of clothes.
Legislation on appliance
recycling is being introduced
in more markets. On aver-
age, materials account for
approximately 7% of a prod-
uct’s life-cycle impact, and
Electrolux market research
indicates that it is a top
priority for consumers.
In Europe, the region
with the most comprehen-
sive producer responsibility
legislation, 80% of the materi-
als from collected end-of-life
large appliances must be
recovered.
Risks
• Not meeting expectations
beyond legislation.
• Waste of resources due to
a lack of recycling.
• Illegal trade of discarded
products and recycled
materials.
How impacts are managed
• Establish a more circular
business by using recycled
materials.
• Eliminate harmful materi-
als to enable higher quality
recycled materials and
decrease environmental
impact.
• Promote proper recycling as
part of producer’s respon-
sibility.
Ability to influence - Low
Generating value
Building resource-efficient
and closed-loop systems help
reduce environmental impact
and overall resource con-
sumption. Innovative designs
that allow material reuse
saves money and energy, and
increases consumer trust in
the Electrolux brand.
Addressing transportation is
part of a life-cycle approach
to the Group’s overall impacts.
Electrolux emits more CO2
transporting its goods than it
emits through the total energy
used in the Group operations.
Approximately 300,000
metric tons are emitted annu-
ally through the distribution of
goods via sea, land and air in
Europe, North America and
Brazil.
Risks
• Emissions from transporta-
tion.
• Labor conditions in logistics
companies.
How impacts are managed
• Implement collaborative
solutions to mitigate logis-
tics-related impacts.
• Promote efficient modes of
transport.
Ability to influence - Medium
Generating value
Helping to create a more
sustainable transport indus-
try strengthens the Group’s
brand reputation. Transport
is included in the Electrolux
carbon target. It also sup-
ports suppliers in their work to
improve their environmental
and labor standards.
ELECTROLUX ANNUAL REPORT 2019
98 Sustainability reporting
The sustainability reporting section in the administration report has been developed to fulfill the requirements in the Swedish Annual
Accounts Act. For more detailed information on Electrolux and sustainability, please read the Sustainability Report prepared based
on the GRI Standards at: www.electroluxgroup.com/sustainability
Sustainability reporting and information
The Electrolux sustainability routines and systems for informa-
tion and communication aim at providing key stakeholders
with accurate, relevant and timely information concerning the
targets and results of the Group’s sustainability framework, For
the Better.
The sustainability reporting section in the administration
report has been developed to fulfill the requirements in the
Swedish Annual Accounts Act. This report also highlights how
the Group’s priorities reflect its commitment to the 10 principles
of the UN Global Compact. Unless otherwise indicated, sustain-
ability disclosures include all operations that can potentially
affect Group performance for calendar year 2019. Discontinued
operations (Professional Product business area), are reported
separately where relevant.
Sustainability information is shared regularly in the form of:
• Electrolux Sustainability Report, including
-United Nations Global Compact Communication on
Progress
-United Nations Guiding Principles Reporting Framework
• Sustainability in Brief
• Mandatory reporting regarding transparency in the
supply chain
• Press releases
• Meetings with key stakeholders worldwide
• Responses to questionnaires from investors and analysts
• Annual submission to CDP for climate and water
Reports, policies and press releases are available at:
www.electroluxgroup.com
Stockholm, February 13, 2020
AB Electrolux (publ)
Board of Directors
Auditor’s report on the statutory sustainability report
To the general meeting of the shareholders in AB Electrolux
(publ), corporate identity number 556009-4178.
Engagement and responsibility
It is the board of directors who is responsible for the statutory
sustainability report for the year 2019 on pages 90–98 and that
it has been prepared in accordance with the Annual Accounts
Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s
auditing standard RevR 12 The auditor´s opinion regarding the
statutory sustainability report. This means that our examination
of the statutory sustainability report is substantially different
and less in scope than an audit conducted in accordance with
International Standards on Auditing and generally accepted
auditing standards in Sweden. We believe that the examination
has provided us with sufficient basis for our opinion.
Opinion
A statutory sustainability report has been prepared.
Stockholm, February 13, 2020
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and the
Swedish language original, the latter shall prevail.
ELECTROLUX — A LEADER IN THE HOUSEHOLD DURABLES INDUSTRY
The Group’s sustainability performance strengthens relations with
investors and Electrolux is recognized as a leader in the household
durables industry. In 2019, Electrolux was included in the Dow Jones
Sustainability Index (DJSI) World and Europe indexes and thereby
ranks among the top 10% of the world’s 2,500 largest companies
for social and environmental performance. Additionally, Electrolux
has received recognition from other indexes and organizations,
including SAM, OEKOM, CDP and UN Global Compact Top 100.
ELECTROLUX ANNUAL REPORT 2019
Electrolux Sustainability Report 2019
VISIT OUR REPORT
Electrolux Sustainability Report 2019
–
www.electroluxgroup.com/sustainability
Corporate governance
report 2019
Corporate governance report 101
Corporate governance report
Chairman's introduction
As a leading global appliance company, Electrolux
shapes living for the better by reinventing taste, care
and wellbeing experiences to make life more enjoyable
and sustainable for millions of people. Through the
Group’s different brands, we sell approximately 60 million
products in approximately 120 markets every year.
Our large installed base of approximately 400 million
products globally gives us high aftermarket sales
potential.
Corporate Governance Report
This Corporate Governance Report provides details of the over-
all governance structure of Electrolux, the interactions between
the formal corporate bodies, internal policies and procedures
as well as relevant control functions and reporting, which
ensures a robust global governance framework and strong
corporate culture.
Board's focus areas during the year
When Electrolux was founded it was a consumer focused busi-
ness selling vacuum cleaners to households around the world.
Over the years Electrolux has ventured into a variety of different
product areas including products for professional use. 2019
marked the Company’s 100-year anniversary and during the
year significant steps have been taken to reshape the Company
into a streamlined organization with a clear consumer focus,
all with a view to deliver on our profitable growth strategy. One
element is the decision to change the Group’s business area
structure resulting in the creation of four consumer-focused
regional business areas as well as a new organizational struc-
ture, responsible for marketing, design, product lines, digital
consumer solutions and ownership experience. Other important
decisions include the global streamlining measures to improve
the organization’s efficiency announced in September 2019,
and the proposal to list and distribute Electrolux Professional to
the shareholders announced in December 2019. The Board has
also had a continued focus on investments in automation, digi-
talization and innovation capabilities. With the announcements
of the investments in our European refrigerator facilities in Italy
and Hungary our extensive re-engineering program is now fully
underway. These measures, taken with a long term perspective,
will lead to increased operational efficiency, outstanding prod-
ucts and creation of shareholder value.
Since the Board sets the Group’s strategy and provides
the governance framework, the Board needs to have a high
understanding of the Group’s business drivers and local market
conditions. During the year Board members have individually
continued to visit Electrolux sites to get a first-hand understand-
ing of the operations and, in connection with a strategy session,
the Board visited Electrolux sites and retailers in Thailand and
Vietnam.
I would like to take this opportunity to thank my fellow Board
members for good cooperation, constructive contributions and
engaged work. I would also like to thank the management for its
exceptional work efforts during a challenging year.
Staffan Bohman
Chairman of the Board
ELECTROLUX ANNUAL REPORT 2019
Corporate governance
report 2019
102 Corporate governance report
Governance in Electrolux
Electrolux aims at implementing strict norms and efficient gover-
nance processes to ensure that all operations create long-term
value for shareholders and other stakeholders. This involves the
maintenance of an efficient organizational structure, systems for
internal control and risk management and transparent internal
and external reporting.
The Electrolux Group comprises approximately 180 com-
panies with sales in approximately 120 markets. The parent
company of the Group is AB Electrolux, a public Swedish limited
liability company. The company’s shares are listed on Nasdaq
Stockholm.
The governance of Electrolux is based on the Swedish
the Swedish Code of Corporate Governance (the “Code”),
as well as other relevant Swedish and foreign laws and regu-
lations. The Code is published on the website of the Swedish
Corporate Governance Board, which admini strates the Code:
www.corporategovernanceboard.se
This corporate governance report has been drawn up as
a part of Electrolux application of the Code. Electrolux did not
report any deviations from the Code in 2019. There has been
no infringement by Electrolux of applicable stock exchange
rules and no breach of good practice on the securities market
reported by the disciplinary committee of Nasdaq Stockholm
or the Swedish Securities Council in 2019.
Companies Act, Nasdaq Stockholm’s rule book for issuers and
Below is Electrolux formal governance structure.
GOVERNANCE STRUCTURE
Shareholders
by the AGM
External Audit
Board of
Directors
Nomination
Committee
Remuneration
Committee
Audit Committee
Group Internal Audit
President and Group
Management
Business
area Boards
Internal Bodies
Major external regulations
• Swedish Companies Act.
• Nasdaq Stockholm’s rule book for issuers.
• Swedish Code of Corporate Governance.
Major internal regulations
• Articles of Association.
• Board of Directors’ working procedures.
• Policies for information, finance, credit, accounting manual, etc.
• Processes for internal control and risk management.
• Code of Conduct, Anti-Corruption Policy and Workplace Policy.
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing
experiences for millions of people around the world, always striving to be at the forefront of sustainability in society through our solutions and
operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120
markets every year. In 2019, Electrolux had sales of SEK 119bn and employed 49,000 people around the world. For more information go to
www.electroluxgroup.com
AB Electrolux (publ) is registered under number 556009-4178 with the Swedish Companies Registration Office. The registered office of the Board of
Directors is in Stockholm, Sweden. The address of the Group headquarters is S:t Göransgatan 143, SE-105 45 Stockholm, Sweden.
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 103
Highlights 2019
• Proposal for the distribution of Electrolux Professional AB.
• Re-election of Staffan Bohman as Chairman of the Board.
• Performance-based, long-term incentive program for senior management.
Shares and shareholders
The Electrolux share is listed on Nasdaq Stockholm. At year-
end 2019, Electrolux had 50,544 shareholders according to
Euroclear Sweden AB and Holdings. Of the total share capital,
61% was owned by Swedish institutions and mutual funds, 33%
by foreign investors and 6% by Swedish private investors, see
below. Investor AB is the largest shareholder, holding 16.4% of
the share capital and 28.4% of the voting rights. The ten larg-
est shareholders accounted for 48.8% of the share capital and
58.1% of the voting rights in the company.
Voting rights
The share capital of AB Electrolux consists of Class A shares and
Class B shares. One A share entitles the holder to one vote and
one B share to one-tenth of a vote. Both A shares and B shares
entitle the holders to the same proportion of assets and earn-
ings and carry equal rights in terms of dividends. Owners of A
shares can request to convert their A shares into B shares. Con-
version reduces the total number of votes in the company. As of
December 31, 2019, the total number of registered shares in the
company amounted to 308,920,308 shares, of which 8,192,539
were Class A shares and 300,727,769 were Class B shares. The
total number of votes in the company was 38,265,316. Class B
shares represented 78.6% of the voting rights and 97.3% of the
share capital.
Dividend policy
Electrolux target is for the dividend to correspond to at least 30%
of the income for the period. For a number of years, the dividend
level has been considerably higher than 30%.
The Annual General Meeting (AGM) in April 2019 decided
to adopt the Board’s proposed dividend of SEK 8.50 per share
for the fiscal year 2018 which, in accordance with the Board’s
proposal, was paid out in two equal installments. The Board of
Directors proposes a dividend for the fiscal year 2019 of SEK 8.50
per share to be paid in two equal installments, for a total divi-
dend payment of approximately SEK 2,443m. On December 5,
2019 the Board's proposal to distribute Electrolux Professional
AB to the shareholders of Electrolux was announced.
Shareholders
meeting
General Meetings of shareholders
The decision-making rights of share-
holders in Electrolux are exercised at
shareholders’ meetings. The AGM of AB Electrolux is held in
Stockholm, Sweden, during the first half of the year.
Extraordinary General Meetings may be held at the discretion
of the Board or, if requested, by the auditors or by shareholders
owning at least 10% of all shares in the company.
Participation in decision-making requires the share holder’s
presence at the meeting, either personally or by proxy. In addi-
tion, the shareholder must be registered in the share register by
a stipulated date prior to the meeting and must provide notice
of participation in the manner prescribed. Additional require-
ments for participation apply to share holders with holdings
in the form of American Depositary Receipts (ADR) or similar
certificates. Holders of such certificates are advised to contact
the ADR depositary bank, the fund manager or the issuer of the
certificates in good time before the meeting in order to obtain
additional information.
Individual shareholders requesting that a specific issue be
included in the agenda of a shareholders’ meeting can normally
request the Electrolux Board to do so. The last date for making
such a request for the respective meeting will be published on
the Group’s website.
Decisions at the meeting are usually taken on the basis
of a simple majority. However, as regards certain issues, the
Swedish Companies Act stipulates that proposals must be
approved by shareholders representing a larger number of the
votes cast and the shares represented at the meeting.
Annual General Meeting 2019
The 2019 AGM was held at the Stockholm Waterfront Congress
Centre in Stockholm, Sweden, on April 10, 2019. 952 shareholders
representing a total of 57.7% of the share capital and 69.3% of the
votes were represented at the AGM. The President’s speech was
broadcasted live via the Group’s website and is also available
on www.electroluxgroup.com/corporate-governance, together
with the minutes. The meeting was held in Swedish, with simultane-
ous interpretation into English. All Board members, as well as the
Group’s auditor in charge, were present at the meeting.
OWNERSHIP STRUCTURE
ATTENDANCE AT AGMS 2015–2019
%
75
60
45
30
15
0
% of share capital
% of votes
Shareholders
ATTENDANCE
1,200
1,000
800
600
400
200
15
16
17
18
19
952 shareholders representing a total of 57.7% of the share capital and 69.3% of
the votes were present at the 2019 AGM.
Swedish institutions and mutual funds, 61%
Foreign investors, 33%
Swedish private investors, 6%
Source: Euroclear Sweden and Holdings
as per December 31, 2019.
The foreign ownership has decreased to 33% at year-end 2019 from 38% at year-end 2018.
Foreign investors are not always recorded in the share register. Foreign banks and
other custodians may be registered for one or several customers’ shares, and the
actual owners are then usually not displayed in the register. For additional information
regarding the ownership structure, see above.
The information on ownership structure is updated quarterly on the Group’s website:
www.electroluxgroup.com/corporate-governance
ELECTROLUX ANNUAL REPORT 2019
104 Corporate governance report
Decisions at the Annual General Meeting 2019 included:
• Dividend payment of SEK 8.50 per share for fiscal year
2018 to be paid out in two equal installments of SEK 4.25
per share.
• Re-election of the Board members Staffan Bohman,
Petra Hedengran, Hasse Johansson, Ulla Litzén,
Fredrik Persson, David Porter, Jonas Samuelson, Ulrika
Saxon and Kai Wärn. Bert Nordberg declined re-election.
• Re-election of Staffan Bohman as Chairman of the
Board.
• Re-election of Deloitte AB as auditors.
• Remuneration to the Board members.
• Approval of remuneration guidelines for Electrolux
Group Management.
• Performance-based, long-term incentive program for
2019 covering up to 350 managers and key employees.
• Authorization to acquire own shares and to transfer
own shares on account of company acquisitions and to
cover costs that may arise as a result of the share pro-
gram for 2017.
Extraordinary General Meeting 2020
An EGM of AB Electrolux will be held on Friday, February
21, 2020, at AB Electrolux headquarter, S:t Göransgatan
143, Stockholm, Sweden. The EGM will resolve upon the Board
of Directors’ proposal to distribute all shares in Electrolux
Professional AB, the wholly owned subsidiary operating the
Professional Products Business Area, to the shareholders of
AB Electrolux.
Annual General Meeting 2020
The next AGM of AB Electrolux will be held on Tuesday, March 31,
2020, at Stockholm Waterfront Congress Centre in Stockholm,
Sweden.
For additional information on the next AGM and how to register attendance,
see page 120.
Nomination
Committee
Nomination Committee
The AGM resolves upon the nomination
process for the Board of Directors and the
auditors. The AGM 2011 adopted an instruction for the Nomina-
tion Committee which applies until further notice. The instruc-
tion involves a process for the appointment of a Nomination
Committee comprised of six members. The members should be
one representative of each of the four largest shareholders, in
terms of voting rights that wish to participate in the Committee,
together with the Chairman of the Electrolux Board and one
additional Board member.
The composition of the Nomination Committee shall be
based on shareholder statistics from Euroclear Sweden AB as
of the last banking day in August in the year prior to the AGM
and on other reliable shareholder information which is provided
to the company at such time. The names of the representa-
tives and the names of the shareholders they represent shall
be announced as soon as they have been appointed. If the
The AGM resolves upon:
• The adoption of the Annual Report.
• Dividend.
• Election of Board members and, if applicable, auditors.
• Remuneration to Board members and auditors.
• Guidelines for remuneration to Group Management.
• Other important matters.
shareholder structure changes during the nomination process,
the composition of the Nomination Committee may be adjusted
accordingly.
The Nomination Committee is assisted in preparing
proposals for auditors by the company’s Audit Committee and
the Nomination Committee’s proposal is to include the Audit
Committee’s recommendation on the election of auditors.
The Nomination Committee’s proposals are publicly
announced no later than on the date of notification of the
AGM. Shareholders may submit proposals for nominees to the
Nomination Committee.
Nomination Committee for the AGM 2019
The Nomination Committee for the AGM 2019 was comprised
of six members. Johan Forssell of Investor AB led the Nomination
Committee’s work.
For the proposal for the AGM 2019, the Nomination
Committee made an assessment of the composition and size of
the current Board as well as the Electrolux Group’s operations.
Areas of particular interest were Electrolux strategies and goals
and the demands on the Board that are expected from the
Group’s positioning for the future. The Nomination Committee
applied rule 4.1 of the Code as diversity policy in its nomination
work. The Nomination Committee considered that a breadth
and variety as regards age, nationality, educational back-
ground, gender, experience, competence and term of office is
represented among the Board members.
The Nomination Committee proposed re-election of all Board
members except Bert Nordberg who had declined re-election.
The Nomination Committee also proposed re-election of Staffan
Bohman as Chairman of the Board. After the election at the AGM
2019, three out of eight Board members elected at the share-
holders’ meeting are women (in this calculation, the President
has not been included in the total number of Board members).
The Nomination Committee also proposed, in accordance
with the recommendation by the Audit Committee, re-election
of Deloitte AB as the company’s auditors for the period until the
end of the AGM 2020.
A report regarding the work of the Nomination Committee
was included in the Nomination Committee’s explanatory state-
ment that was published before the AGM 2019. Further informa-
tion regarding the Nomination Committee and its work can be
found on the Group’s website:
www.electroluxgroup.com/corporate-governance
Nomination Committee for the AGM 2020
The Nomination Committee for the AGM 2020 is based on the
owner ship structure as of August 31, 2019, and was announced
in a press release on September 13, 2019.
The Nomination Committee’s members are:
• Johan Forssell, Investor AB, Chairman
• Kaj Thorén, Alecta
• Marianne Nilsson, Swedbank Robur Funds
• Anders Oscarsson, AMF - Försäkring och Fonder
• Staffan Bohman, Chairman of Electrolux
• Fredrik Persson, Board member of Electrolux
The Nomination Committee’s tasks include preparing
a proposal for the next AGM regarding:
• Chairman of the AGM.
• Board members.
• Chairman of the Board.
• Remuneration to Board members.
• Remuneration for committee work.
• Amendments of instructions for the Nomination Committee,
• Auditors and auditors’ fees, when these matters are to be decided
if deemed necessary.
by the following AGM.
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 105
responsibilities delegated to the committees appointed by the
Board.
In accordance with the procedures and the Code, the
Chairman shall among other things:
• Organize and distribute the Board’s work.
• Ensure that the Board discharges its duties and has relevant
knowledge of the company.
• Secure the efficient functioning of the Board.
• Ensure that the Board’s decisions are implemented efficiently.
• Ensure that the Board evaluates its work annually.
The working procedures for the Board also include detailed
instructions to the President and other corporate functions
regarding issues requiring the Board’s approval. Among other
things, these instructions specify the maximum amounts that
various decision-making functions within the Group are author-
ized to approve as regards credit limits, capital expenditure and
other expenditure.
The working procedures stipulate that the meeting for the
formal constitution of the Board shall be held directly after the
AGM. Decisions at this statutory meeting include the election
of members of the committees of the Board and authorization
to sign on behalf of the company. In addition to the statutory
Board meeting, the Board normally holds seven other ordinary
meetings during the year. Four of these meetings are held in
conjunction with the publication of the Group’s full-year report
and interim reports. One or two meetings are held in connection
with visits to Group operations. Additional meetings, including
telephone conferences, are held when necessary.
The Board’s work in 2019
During the year, the Board held nine meetings. All physical
meetings except one were held in Stockholm, Sweden. The
attendance of each Board member at these meetings is shown
in the table on page 113.
All Board meetings during the year followed an agenda,
which, together with the documentation for each item on the
agenda, was sent to Board members in advance of the meet-
ings. Meetings usually last for half a day or one entire day in
order to allow time for presentations and discussions. Electrolux
General Counsel serves as secretary at the Board meetings.
Each scheduled Board meeting includes a review of the
Group’s results and financial position, as well as the outlook for
the forthcoming quarters, as presented by the President. The
meetings also deal with investments and the establishment of
new operations, as well as acquisitions and divestments. The
Board decides on all investments exceeding SEK 100m and
receives reports on all investments exceeding SEK 25m.
Normally, the head of a business area also reviews a
current strategic issue at the meeting. For an overview of how
the Board’s work is spread over the year, see the table on
pages 106–107.
Board of
Directors
The Board of Directors
The Board of Directors has the overall
responsibility for Electrolux organization
and administration.
Composition of the Board
The Electrolux Board is comprised of nine members without
deputies, who are elected by the AGM, and three members with
deputies, who are appointed by the Swedish employee organi-
zations in accordance with Swedish labor law.
The AGM elects the Chairman of the Board. Directly after
the AGM, the Board holds a meeting for formal constitution at
which the members of the committees of the Board are elected,
among other things. The Chairman of the Board of Electrolux is
Staffan Bohman.
All current members of the Board elected by the AGM, except
for the President, are non-executive members. One of the nine
Board members, who are elected by the AGM, is not a Swedish
citizen.
For additional information regarding the Board of Directors, see pages 112–113. The
information is updated regularly at the Group’s website: www.electroluxgroup.com
Independence
The Board is considered to be in compliance with the Swedish
Companies Act's and the Code's requirements for independ-
ence. The assessment of each Board member’s independence is
presented in the table on page 113.
All Directors except for Petra Hedengran and Jonas
Samuelson have been considered independent. Petra Heden-
gran has been considered independent in relation to the com-
pany and the administration of the company, but not in relation
to major shareholders of Electrolux. Jonas Samuelson has been
considered independent in relation to major shareholders of
Electrolux but not, in his capacity as President and CEO, in rela-
tion to the company and the administration of the company.
Jonas Samuelson has no major shareholdings, nor is he a
part-owner in companies having significant business relations
with Electrolux. Jonas Samuelson is the only member of Group
Management with a seat on the Board.
The Board’s tasks
One of the main tasks of the Board is to manage the Group’s
operations in such a manner as to assure the owners that their
interests in terms of a long-term profitable growth and value
creation are being met in the best possible manner. The Board’s
work is governed by rules and regulations including the Swedish
Companies Act, the Articles of Association, the Code and the
working procedures established by the Board. The Articles of
Association of Electrolux are available on the Group’s website:
www.electroluxgroup.com/corporate-governance
Working procedures and Board meetings
The Board determines its working procedures each year and
reviews these procedures as required. The working procedures
describe the Chairman’s specific role and tasks, as well as the
The Board deals with and decides on Group-related issues
such as:
• Main goals.
• Strategic orientation.
• Essential issues related to financing, investments, acquisitions and
• Follow-up and control of operations, communication and organiza-
divestments.
tion, including evaluation of the Group’s operational and sustainability
management.
• Appointment of and, if necessary, dismissal of the President.
• Overall responsibility for establishing an effective system of internal
control and risk management as well as a satisfactory process for
monitoring the company’s compliance with relevant laws and other
regulations as well as internal policies.
Remuneration to the Board of Directors 2017–2019
(applicable as from the respective AGM)
SEK
2019
2018
2017
Chairman of the Board
2,200,000 2,150,000 2,075,000
Board member
Chairman of the Audit
Committee
640,000
600,000
580,000
280,000
260,000
250,000
Member of the Audit Committee
160,000
140,000
120,000
Chairman of the Remuneration
Committee
Member of the Remuneration
Committee
150,000
125,000
125,000
100,000
75,000
75,000
ELECTROLUX ANNUAL REPORT 2019
106 Corporate governance report
Key focus areas for the Board during 2019
• Dividend payment for the fiscal year 2018.
• Adapting Electrolux strategy and business model to
global industry drivers such as digitalization, consolida-
tion, increased consumer power, sustainability and a
growing middle class.
• Revising the business area structure creating four con-
sumer focused regional business areas.
• Establishment of new organizational structure focusing
on consumer experiences.
• Preparing for the listing and distribution of Electrolux
Professional AB.
• Investments in manufacturing for increased cost effi-
ciency, through automation and digitalization, mainly
in Europe and North America.
• Acquisition of UNIC S.A.S., a French manufacturer of
professional espresso machines.
• Global streamlining measures to improve efficiency and
sharpen the consumer organization.
Ensuring quality in financial reporting
The working procedures determined annually by the Board
include detailed instructions on the type of financial reports and
similar information which are to be submitted to the Board. In
addition to the full-year report, interim reports and the annual
report, the Board reviews and evaluates comprehensive finan-
cial information regarding the Group as a whole and the entities
within the Group.
The Board also reviews, primarily through the Board’s Audit
Committee, the most important accounting principles applied
by the Group in financial reporting, as well as major changes in
these principles. The tasks of the Audit Committee also include
reviewing reports regarding internal control and financial
reporting processes, as well as internal audit reports submitted
by the Group’s internal audit function, Group Internal Audit.
The Group’s external auditors report to the Board as
necessary, but at least once a year. A minimum of one such
meeting is held without the presence of the President or any
other member of Group Management. The external auditors
also attend the meetings of the Audit Committee.
The Audit Committee reports to the Board after each of its
meetings. Minutes are taken at all meetings and are made
available to all Board members and to the auditors.
Board work evaluation
The Board evaluates its work annually with regard to working
procedures and the working climate, as well as regards the
focus of the Board work. This evaluation also focuses on access
to and requirements of special competence in the Board. The
evaluation is a tool for the development of the Board work and
also serves as input for the Nomination Committee’s work. The
evaluation of the Board is each year initiated and lead by the
Chairman of the Board. The evaluation of the Chairman is led by
one of the other members of the Board. Evaluation tools include
questionnaires and discussions.
In 2019, Board members responded to written question-
naires. As part of the evaluation process, the Chairman also had
individual discussions with Board members. The evaluations
were discussed at a Board meeting.
The result of the evaluations was presented for the
Nomination Committee.
Fees to Board members
Fees to Board members is determined by the AGM and dis-
tributed to the Board members who are not employed by
Electrolux. The fees to the Chairman and the Board members
was revised during 2019, see page 105.
The Nomination Committee has recommended that Board
members appointed by the AGM acquire Electrolux shares and
that these are maintained as long as they are part of the Board.
A shareholding of a Board member should after five years
correspond to the value of one gross annual fee.
Board members who are not employed by Electrolux are
not invited to participate in the Group’s long-term incentive
programs for senior managers and key employees.
For additional information on remuneration to Board members, see Note 27.
OVERVIEW OF VARIOUS ITEMS ON THE BOARD’S AGENDA AND COMMITTEE MEETINGS 2019
• Q4, Consolidated results.
• Report by external auditors.
• Dividend.
• Proposals for the AGM.
Statutory Board meeting:
• Appointment of committee members.
• Signatory powers.
• Q1 Quarterly
financial statements.
Ordinary Board meetings
Audit Committee
Remuneration Committee
• •
•
•
Jan
•
Feb
March
• • •
•
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
•
•
•
•
•
•
•
•
•
Each scheduled Board meeting included a review of the Group’s results and financial position, as well as the outlook for the forthcoming quarters.
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 107
Remuneration
Committee
Audit Committee
Committees of the Board
The Board has established a Remunera-
tion Committee and an Audit Committee.
The major tasks of these committees are
preparatory and advisory, but the Board may delegate deci-
sion-making powers on specific issues to the committees. The
issues considered at committee meetings shall be recorded in
minutes of the meetings and reported at the following Board
meeting. The members and Chairmen of the committees are
appointed at the statutory Board meeting following election
of Board members.
The Board has also determined that issues may be referred
to ad hoc committees dealing with specific matters.
Remuneration Committee
One of the Remuneration Committee’s primary tasks is to
propose guidelines for the remuneration to the members of
Group Management. The Committee also proposes changes in
remuneration to the President, for resolution by the Board, and
reviews and resolves on changes in remuneration to other mem-
bers of Group Management on proposal by the President.
The Committee has consisted of the following three Board
members: Petra Hedengran (Chairman), Staffan Bohman and
Ulrika Saxon. At least two meetings are convened annually.
Additional meetings are held as needed.
In 2019, the Remuneration Committee held three meetings.
The attendance of each Board member at these meetings is
shown in the table on page 113. Significant issues addressed
include resolution on remuneration to new members of
Group Management, review and resolution on changes in the
remuneration to members of Group Management, follow-up
and evaluation of previously approved long-term incentive
programs and remuneration guidelines for Group Management
and general review and preparation of long-term incentive
program and remuneration guidelines for Group Management
for 2020. The Head of Human Resources and Communication
participated in the meetings and was responsible for meeting
preparations.
Audit Committee
The main task of the Audit Committee is to oversee the processes
of Electrolux financial reporting and internal control in order to
secure the quality of the Group’s external reporting. The Audit
Committee is also tasked with supporting the Nomination
Committee with proposals when electing external auditors.
The Audit Committee has consisted of the following four
Board members: Ulla Litzén (Chairman), Staffan Bohman, Petra
Hedengran and Fredrik Persson. The external auditors report to
the Committee at each ordinary meeting. At least three meet-
ings are held annually. Additional meetings are held as needed.
In 2019, the Audit Committee held seven meetings. The
attendance of each Board member at these meetings is shown
in the table on page 113 Electrolux managers have also had
regular contacts with the Committee Chairman between meet-
ings regarding specific issues. The Group’s Chief Financial Officer
and the Head of Global Tax & Accounting have participated in
the Audit Committee meetings.
Management.
The Remuneration Committee’s tasks include for example:
• To prepare and evaluate remuneration guidelines for Group
• To prepare and evaluate targets and principles for variable
• To prepare terms for pensions, notices of termination and severance
• To prepare and evaluate Electrolux long-term incentive programs.
pay as well as other benefits for Group Management.
compensation.
management, concerning the financial reporting.
The Audit Committee’s tasks include for example:
• To review the financial reporting.
• To monitor the effectiveness of the internal control, including risk
• To follow up the activities of the Group Internal Audit as regards to
organization, recruiting, budgets, plans, results and audit reports.
• To review and approve certain credit limits.
• To keep informed of the external audit and the quality control
performed by the Supervisory Board of Public Accountants and to
evaluate the work of the external auditors.
• To inform the Board of the outcome of the external audit and explain
how the audit contributed to the reliability of the financial reporting as
well as the role of the Committee in this process.
engagements in other tasks than audit services.
• To review, and when appropriate, preapprove the external auditors’
• To evaluate the objectivity and independence of the external auditors.
• To support the Nomination Committee with proposals when electing
Ordinary Board meetings
Audit Committee
Remuneration Committee
• •
•
•
Jan
•
Feb
• • •
•
Apr
March
May
external auditors.
• Q3 Quarterly
financial statements.
•
•
Aug
Sep
Oct
Nov
• Board work evaluation.
•
•
•
Dec
• Visit to one of the
Group’s operations.
• Rules of procedure
of the Board.
• Q2 Quarterly
financial statements.
•
June
•
•
•
July
ELECTROLUX ANNUAL REPORT 2019
108 Corporate governance report
External Audit
External auditors
The AGM in 2019 re-elected Deloitte AB
(Deloitte) as the Group’s external auditors
for one year, until the AGM in 2020. The Nomination Committee's
proposal for re-election was based on the recommendation by
the Audit Committee. Authorized Public Accountant Jan Bernts-
son is the auditor in charge of Electrolux.
Deloitte provides an audit opinion regarding AB Electrolux,
the financial statements of the majority of its subsidiaries, the
consolidated financial statements for the Electrolux Group and
the administration of AB Electrolux. The auditors also conduct a
review of the report for the second quarter.
The audit is conducted in accordance with the Swedish
Companies Act, International Standards on Auditing (ISA) and
generally accepted auditing standards in Sweden.
Audits of local statutory financial statements for legal entities
outside of Sweden are performed as required by law or applica-
ble regulations in the respective countries, including issuance of
audit opinions for the various legal entities.
Deloitte
Audit fees
Audit-related fees
Tax fees
All other fees
Total fees to Deloitte
PwC1)
Audit fees
Audit fees to other audit firms
Total fees to auditors
2019
2018
2017
47
10
1
1
59
—
—
59
42
1
1
1
45
4
—
49
—
—
—
—
—
41
2
43
1) PricewaterhouseCoopers (PwC) was the Group's auditors until the 2018 Annual General
Meeting.
For details regarding fees paid to the auditors and their non-audit assignments in the Group,
see note 28.
Internal Audit
Group Internal Audit
The internal audit function is responsible
for independent, objective assurance, in
order to systematically evaluate and propose improvements for
more effective governance, internal control and risk manage-
ment processes.
The process of internal control and risk management has
been developed to provide reasonable assurance that the
Group’s goals are met in terms of efficient operations, compli-
ance with relevant laws and regulations and reliable financial
reporting.
Internal audit assignments are conducted according to a
risk based plan developed annually and approved by the Audit
Committee. The audit plan is derived from an independent risk
assessment conducted by Group Internal Audit to identify and
evaluate risks associated with the execution of the company
strategy, operations, and processes. The plan is designed to
address the most significant risks identified within the Group and
its business areas. The audits are executed using a methodology
for evaluating the design and effectiveness of internal controls
to ensure that risks are adequately addressed and processes
are operated efficiently.
Opportunities for improving the efficiency in the governance
and internal control and risk management processes identified
in the internal audits are reported to responsible business area
management for action. A summary of audit results is provided
to the Audit Board and the Audit Committee, as is the status of
management’s implementation of agreed actions to address
findings identified in the audits.
For additional information on internal control, see pages 116–117. For additional information
on risk management, see Note 1, Note 2 and Note 18.
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 109
Company
Management of
Electrolux
Electrolux – a global leader with a purpose
to shape living for the better
Electrolux has a strategic framework that
connects a consumer experience focused
business model with a clear company purpose – Shape living for
the better. To achieve the purpose and drive profitable growth,
Electrolux uses a business model which focuses on creating
outstanding consumer experiences. By creating desirable solu-
tions and great experiences that enrich peoples’ daily lives and
the health of the planet, Electrolux wants to be a driving force
in defining enjoyable and sustainable living. Focus is to invest in
innovations that are most relevant for creating the outstanding
consumer experience to make great tasting food, the best care
for clothes and to increase wellbeing in the home.
Targeted growth and optimization of the product portfolio
to the most profitable product categories and products with
distinct consumer benefits, will strengthen the presence of
Electrolux in the product categories and channels where the
Group is most competitive. This is supported by a strong founda-
tion of Operational Excellence and Talent, Teamship and Con-
tinuous Improvement, as well as three important transforma-
tional drivers; Emerging markets acceleration, Digital transfor-
mation and Sustainable development. Electrolux objective is to
grow with consistent profitability, see the financial targets below.
A sustainable business
Sustainability leadership is crucial to realizing the Electrolux
strategy for long-term profitable growth. In 2019, Electrolux
most resource-efficient products represented 23% of products
sold and 32% of gross profit.
The company takes a consistent approach to sustain ability
in the countries where Electrolux operates. Understanding and
engaging in challenges such as climate change, creating ethi-
cal and safe workplaces, and adopting a responsible approach
to sourcing and restructuring are important for realizing the
business strategy.
In 2018, Electrolux established a new Code of Conduct, setting
out the framework of how Electrolux shall conduct its operations
in ethical and sustainable ways. The Code of Conduct, which has
been approved by the Board, serves as an introduction to the
Group Policies, and its purpose is to increase the clarity on what
the company's principles mean for the employees. During 2019,
an educational campaign was rolled out with e-learning and
e-signature for office based employees, and communication
materials for production environments. By the end of the year,
83% of eligible staff had taken the e-learning and signed off on the
Code of Conduct.
The Ethics Program also encompasses a global whistleblow-
ing system – Ethics Helpline – through which employees can
report suspected misconduct in local languages. Reports may
be submitted anonymously if legally permitted. The largest cat-
egories of reports in 2019 related to workplace conduct, verbal
abuse and other types of disrespectful behavior.
In line with the UN Guiding Principles on Business and Human
Rights, Electrolux conducts human rights risk assessments at
both global and local levels since 2016. The methodology
for the assessments focuses on identifying the risk of harming
people, as a direct or indirect result of Electrolux operations, and
includes corruption risks as well as opportunities to increase
local positive impacts. In 2019, the focus was on following up on
the actions from the assessments conducted in Egypt, Thailand
and Ukraine in 2017 and 2018.
The Group’s sustainability performance strengthens relations
with investors and Electrolux is recognized as a leader in the
household durables industry. In 2019, Electrolux was included
in the Dow Jones Sustainability Index (DJSI) World and Europe
indexes and thereby ranks among the top 10% of the world’s
2,500 largest companies for social and environmental perfor-
mance.
Read more about Electrolux sustainability work:
www.electroluxgroup.com/sustainability
Electrolux as a tax payer1)
One important aspect of Electrolux company purpose – Shape
living for the better – is to act as a good corporate citizen and
taxpayer wherever Electrolux operates.
Electrolux plays an important role in contributing to public
finances in all jurisdictions where the Group operates. The Group
has approximately 52,000 employees operating in more than
50 countries and has about 50 manufacturing facilities across
five continents.
Of Electrolux Group total tax contribution, as defined in the
below chart, corporate tax represented approximately 12% in
2019. Corporate income taxes are only a portion of the Group’s
total contribution to public finances in Electrolux markets. In
addition to corporate income taxes, Electrolux pays indirect
taxes, customs duties, property taxes, employee related taxes,
environmental charges and a number of other direct or indi-
rect contributions to governments. The total contribution to
public finances for 2019 amounted to approximately SEK 7.6bn
whereof approximately half related to emerging markets.
Electrolux most transparent contribution to public finances
around the world is corporate income taxes, see Note 10.
Corporate income taxes amounted to SEK 950m in 2019, repre-
senting a global effective tax rate of the Group of 27.5%.
For more information on Electrolux tax policy, see:
www.electroluxgroup.com
1) In this section the group includes both Electrolux and Electrolux Professional.
ELECTROLUX TOTAL TAXES 2019
Employer tax & fees, 48 %
Corporate tax, 12%
Property tax, 2 %
Customs, 22%
Indirect tax, 11 %
Environmental tax & fees, 5%
Taste, Care
& Wellbeing
Innovation
Branded Star
Products with
Preferred
Partners
Outstanding
Consumer
Experiences
Engaging
Ownership
& Quality
Experience
Operational Excellence
Talent, Teamship & Continuous Improvement
Emerging Markets
Acceleration
Digital
Transformation
Sustainable
Development
ELECTROLUX ANNUAL REPORT 2019
Financial targets over a business cycle
The financial goals set by Electrolux aim to strengthen the
Group’s leading, global position in the industry and assist in
generating a healthy total yield for Electrolux shareholders.
The objective is growth with improved profitability.
• Sales growth of at least 4% annually.
• Operating margin of at least 6%.
• Capital turnover-rate of at least 4.
• Return on net assets >20%.
110 Corporate governance report
External and emerging risks
Electrolux monitors and minimizes key risks in a structured and
proactive manner. In general, there are two types of risks: Strate-
gic risks and manageable business risks. The strategic risks are
related to the Group’s strategy and are impacted by the external
environment. The business risks comprise of operational and
financial risks which are managed by the Group’s operational
units and Group Treasury, respectively.
Electrolux ability to increase profitability and shareholder
value is largely dependent on its success in developing innova-
tive products and create outstanding consumer experiences
under strong brands while maintaining cost-efficient operations.
Realizing this potential requires effective and controlled enter-
prise risk management.
Macroeconomic trends, changes in industry dynamics and
political risks are factors that impact the appliance industry and
the markets in which Electrolux operates. To manage exter-
nal risks and opportunities, Electrolux puts close attention to
understanding the economic and political development in its
key markets and pro-actively manage and adapt operations.
External risks include, variations in demand, price competition
and changes in prices for raw materials. Changing industry
dynamics such as digitalization, consolidation and sustainability
are other examples. In addition, the Group is exposed to risks
related to financial operations, e.g., interest risks, financing risks,
currency risks and credit risks.
Electrolux also look at emerging risks. They can either
develop from macro-level changes such as climate change,
consumer preferences or the introduction of AI – artificial intel-
ligence. With the growth of digitalization, Electrolux also faces
increased cyber risks.
Risk exposures are managed by internal bodies, see chart
below, and business area boards.
The purpose of the internal audit function, Group Internal
Audit, is to provide reasonable assurance that the Group’s goals
are met in terms of efficient operations, compliance with rele-
vant laws and regulations and reliable financial reporting, see
pages 116–117.
Management and company structure
Electrolux aims at implementing strict norms and efficient pro-
cesses to ensure that all operations create long-term value for
shareholders and other stakeholders. This involves the mainten-
ance of an efficient organizational structure, systems for inter-
nal control and enterprise risk management and transparent
internal and external reporting.
The Group has a decentralized corporate structure in which
the overall management of operational activities is largely per-
formed by the business area boards.
one business area for Professional Products. On December 5,
2019 the Board proposed to distribute the Professional Products
business area to Electrolux shareholders.
As from February 1, 2019, five group staff functions have sup-
ported the business areas: Finance, Legal Affairs, HR & Commu-
nications, Global Operations and Global Consumer Experience
organization. The Global Consumer Experience organization is
globally responsible for areas such as marketing, design, prod-
uct lines, digital consumer solutions and ownership experience.
There are also a number of internal bodies which are forums
that are preparatory and decision-making in their respective
areas, see chart below. Each body includes representatives
from concerned functions.
In order to fully take advantage of the Group’s global pres-
ence and economies of scale, the Group has established Global
Operations with the responsibility for product development,
purchasing, manufacturing and quality.
President and
Group
Management
President and Group Management
Group Management currently includes
the President, the five business area heads
and five group staff heads. The President
is appointed by and receives instructions from the Board.
The President, in turn, appoints other members of Group
Management and is respon sible for the ongoing management
of the Group in accordance with the Board’s guidelines and
instructions. Group Management holds monthly meetings to
review the previous month’s results, to update forecasts and
plans and to discuss strategic issues.
A diversified management team
The Electrolux management team, with its extensive expertise,
diverse cultural backgrounds and experiences from various
markets in the world, forms an excellent platform for pursuing
profitable growth in accordance with the Group’s strategy.
Electrolux Group Management represents seven different
nationalities. Most of them have previous experience of
predominantly multinational consumer goods companies.
In recent years, a number of major initiatives have been
launched aimed at better leveraging the unique, global position
of Electrolux. In several areas, global and cross-border orga-
nizations have been established to, for example, increase the
pace of innovation in product development, reduce complexity
in manufacturing and optimize purchasing.
Changes in Group Management
The following changes in the Group management have been
announced with effect from February 1, 2019.
Ola Nilsson, previous Head of Home Care & SDA, was
Electrolux operations has as from February 1, 2019, been
organized into four geographically defined business areas and
appointed Group Chief Experience Officer (CXO) and
Executive Vice President, and as a consequence of the new
INTERNAL BODIES
President and Group
Management
Internal bodies
Insider
Committee
Disclosure
Committee
Enterprise Risk
Management Board
Ethics & Human Rights
Steering Group
Tax Board
Pension Board
Sourcing Board
Audit Board
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 111
organizational structure, the Chief Marketing Officer Lars
Hygrell is no longer member of Group Management. Jan Brock-
mann, Chief Operations Officer was also appointed as Execu-
tive Vice President.
On December 12, 2019, it was announced that Alan Shaw,
Head of Electrolux Business Area North America, had decided
to retire. It was also announced that Nolan Pike, previously
Senior Vice President within Electrolux Global Consumer Experi-
ence Organization, was appointed Executive Vice President
and new Head of the Business Area North America with effect
from January 1, 2020.
For details regarding members of Group Management, see pages 114–115
The information is updated regularly at the Group’s website:
www.electroluxgroup.com
Business
Area Boards
Business areas
The business area heads are also mem-
bers of Group Management and have
responsibility for the operating income and net assets of their
respective business area.
The overall management of the business areas is the respon-
sibility of business area boards, which meet quarterly. The Presi-
dent is the chairman of all such boards. The business area board
meetings are attended by the President, the management of
the respective business area and the group staff heads. The
business area boards are responsible for monitoring on-going
operations, establishing strategies, determining business area
budgets and making decisions on major investments.
Key focus areas for the President and
Group Management in 2019
• Revising the business area structure to create four con-
sumer focused regional business areas.
• Accelerating product and ownership experience inno-
vation through a new global organization.
• Focus on taste, care and wellbeing innovation areas
to provide outstanding consumer experiences.
• Improve efficiency through global streamlining mea-
sures to improve efficiency in both the consumer and
professional organizations.
• Investments in modularization, automation and digitali-
zation within manufacturing for further growth and cost
efficiency, mainly in Europe, North America and Latin
America.
• Actions to mitigate increased costs for raw material,
trade tariffs in North America and currency headwinds,
particularly in Latin America.
• Digitalization such as connected appliances and digital
commerce.
• Appointment of new Group Management members.
• Preparation for stock exchange listing of Professional
Products.
Remuneration
Remuneration to
Group Management
Remuneration guidelines for Group
Management are resolved upon by the AGM, based on the
proposal from the Board. Remuneration to the President is
then resolved upon by the Board, based on proposals from
the Remuneration Committee. Changes in the remuneration
to other members of Group Management is resolved upon by
the Remuneration Committee, based on proposals from the
President, and reported to the Board.
Electrolux shall strive to offer total remuneration that is fair
and competitive in relation to the country of employment or
region of each Group Management member. The remuneration
terms shall emphasize “pay for performance”, and vary with the
performance of the individual and the Group.
Remuneration may comprise of:
• Fixed compensation.
• Variable compensation.
• Other benefits such as pension and insurance.
Following the “pay for performance” principle, variable compen-
sation shall represent a significant portion of the total compen-
sation opportunity for Group Management. Variable compensa-
tion shall always be measured against pre-defined targets and
have a maximum above which no pay-out shall be made. The
targets shall principally relate to financial performance.
Each year, the Board of Directors will evaluate whether or not
a long-term incentive program shall be proposed to the AGM.
The AGM 2019 decided on a long-term share program for up to
350 senior managers and key employees.
For additional information on remuneration, remuneration guidelines, long-term
incentive programs and pension benefits, see Note 27.
TIME-LINE FOR THE LONG-TERM INCENTIVE PROGRAM FOR SENIOR MANAGEMENT 2019
2019
2020
2021
Performance period
Start
1
2
3
2022
Year
The calculation of the number of per-
formance shares, if any, is connected to
three performance targets for the Group
established by the Board; (i) earnings
per share (ii) return on net assets, and (iii)
adjusted organic sales growth, for the
2019 financial year. Allotment of perfor-
mance shares, if any, to the participants
will be made in 2022.
Invitations to
participants in
the program.
ELECTROLUX ANNUAL REPORT 2019
Performance
shares
allotted.
112 Corporate governance report
Board of Directors and Auditors
JONAS SAMUELSON
President and CEO
Born 1968. Sweden. M.Sc.
Econ. Elected 2016.
Other assignments: Board
Member of Polygon AB and
Axel Johnson AB.
Previous positions: Various
senior positions within
Electrolux including CFO of
AB Electrolux, COO Global
Operations Major Appliances
and Head of Major Appliances
EMEA. Chief Financial Officer
and Executive Vice President
of Munters AB. Various posi-
tions within General Motors,
mainly in the U.S., and Saab
Automobile AB.
Holdings in AB Electrolux:
47,138 B-shares.
STAFFAN BOHMAN
Chairman
Born 1949. Sweden. B.Sc. Econ.
Elected 2018. Member of the
Electrolux Audit Committee and
the Electrolux Remuneration
Committee.
Other assignments: Chairman of
the Board of Research Institute
for Industrial Economics, Ipco AB,
Upplands Motor Holding AB and
the German-Swedish Chamber
of Commerce. Board member of
Atlas Copco AB and member of
the Royal Swedish Academy of
Engineering Sciences (IVA).
Previous positions: President
and CEO of Sapa and DeLaval
as well as Board Member of,
inter alia., Scania AB, Inter-IKEA
Holding NV and Rezidor Hotel
Group AB.
Holdings in AB Electrolux:
50,000 B-shares. 120,279 call
options, issued by Investor AB
entitling the right to purchase
Electrolux B shares.
PETRA HEDENGRAN
Born 1964. Sweden. M. of Laws.
Elected 2014. Chairman of
the Electrolux Remuneration
Committee and member of the
Electrolux Audit Committee.
Other assignments: General
Counsel and member of Group
Management of Investor
AB. Board Member of Alecta
and the Association for
Generally Accepted Principles
in the Securities Market (Sw.
Föreningen för god sed på
värdepappersmarknaden).
Previous positions: Attorney
and partner at Advokatfirman
Lindahl. Various positions
within the ABB Financial
Services including General
Counsel of ABB Financial
Services, Nordic Region.
Law Clerk with the Stockholm
District Court. Associate at
Gunnar Lindhs Advokatbyrå.
Holdings in AB Electrolux:
11,000 B-shares.
HASSE JOHANSSON
Born 1949. Sweden. M.Sc. in
Electrical Engineering. Elected
2008.
Other assignments: Chairman
of the Board of Dynamate
Industrial Services AB and
Uniter AB. Board Member
of Autoliv Inc., PowerCell
Sweden AB, Skyllbergs Bruk
AB, CalixKlippan Group
AB, DevPort AB and SEM
Electromagnet Holding AB.
Previous positions: Executive
Vice President and Head of
R&D of Scania CV AB. Founder
of Mecel AB (part of Delphi
Corporation). Various senior
management positions within
Delphi Corporation.
Holdings in AB Electrolux:
4,000 B-shares.
ULLA LITZÉN
Born 1956. Sweden. B.Sc.
Econ. and M.B.A. Elected 2016.
Chairman of the Electrolux
Audit Committee.
Other assignments: Board
Member of Epiroc AB,
Husqvarna AB, NCC AB and
Ratos AB.
Previous positions: President
of W Capital Management
AB, wholly-owned by the
Wallenberg Foundations.
Various leading positions
within the Investor Group
including Managing Director
and member of Group
Management of Investor AB.
Holdings in AB Electrolux:
4,000 B-shares.
DAVID PORTER
ULRIKA SAXON
KAI WÄRN
Born 1965. USA. Bachelor’s
degree, Finance. Elected 2016.
Other assignments: Head of
Microsoft Stores, Corporate
Vice President, Microsoft Corp.
Previous positions: Head
of Worldwide Product
Distribution at DreamWorks
Animation SKG. Various
positions within WalMart
Stores, Inc.
Holdings in AB Electrolux:
1,250 B-shares.
Born 1966. Sweden. Studies
in Economics. Elected 2011.
Member of the Electrolux
Remuneration Committee.
Other assignments: President
and CEO of Bonnier Ventures.
Board Member of SF Studios,
Adlibris, KIT Story Engine, FLX,
Refunder and partner in AI
Sustainability Center.
Previous positions: Senior posi-
tions within the Bonnier Group
including CEO of Bonnier
Magazines.
Holdings in AB Electrolux:
2,000 B-shares.
Born 1959. Sweden. M.Sc.
in Mechanical Engineering.
Elected 2017.
Other assignments: President
and CEO of Husqvarna AB.
Board Member of
Husqvarna AB.
Previous positions: Operations
Partner at IK Investment
Partners Norden AB.
President and CEO of Seco
Tools AB. Various positions
within ABB.
Holdings in AB Electrolux:
4,000 B-shares.
FREDRIK PERSSON
Born 1968. Sweden. M.Sc.
Econ. Elected 2012. Member
of the Electrolux Audit
Committee.
Other assignments:
Chairman of the Board of
JM AB, the Confederation
of Swedish Enterprise (Sw.
Svenskt Näringsliv) and ICC
Sweden. Board Member
of Hufvudstaden AB, ICA
Gruppen AB and Ahlström
Capital Oy.
Previous positions: Various
leading positions within
Axel Johnson AB including
President and CEO. Head of
Research of Aros Securities AB.
Various positions within ABB
Financial Services AB.
Holdings in AB Electrolux:
3,000 B-shares.
ELECTROLUX ANNUAL REPORT 2019
EMPLOYEE REPRESENTATIVES
VIVECA
BRINKENFELDT-LEVER
Born 1960. Representative of
the Federation of the Salaried
Employees in Industry and
Service. Elected 2018.
Board meeting attendance:
9/9
Holdings in AB Electrolux:
0 shares.
ULF CARLSSON
Born 1958. Representative of
the Swedish Confederation of
Trade Unions. Elected 2001.
Board meeting attendance:
9/9
Holdings in AB Electrolux:
0 shares.
PETER FERM
Born 1965. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2018.
Board meeting attendance:
7/9
Holdings in AB Electrolux:
100 B-shares.
Corporate governance report 113
SECRETARY OF THE BOARD
MIKAEL ÖSTMAN
Born 1967. M. of Laws and B.Sc. Econ. General
Counsel of AB Electrolux.
Secretary of the Electrolux Board since 2017.
Holdings in AB Electrolux: 4,114 B-shares.
COMMITTEES OF THE
BOARD OF DIRECTORS
Remuneration Committee
Petra Hedengran (Chairman),
Staffan Bohman and Ulrika Saxon.
Audit Committee
Ulla Litzén (Chairman), Staffan Bohman,
Petra Hedengran and Fredrik Persson.
AUDITORS
Deloitte AB
JAN BERNTSSON
Born 1964. Authorized Public Accountant.
Other audit assignments: Kinnevik AB and
Boliden AB.
Holdings in AB Electrolux: 0 shares.
At the Annual General Meeting in 2019, Deloitte
AB was re-elected as auditors for a period of one
year until the Annual General Meeting in 2020.
EMPLOYEE REPRESENTATIVES, DEPUTY MEMBERS
RICHARD DELLNER
Born 1953. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2013.
JOACHIM NORD
Born 1966. Representative
of the Federation of Salaried
Employees in Industry and
Services. Elected 2018.
Holdings in AB Electrolux:
500 B-shares.
Holdings in AB Electrolux:
100 B-shares.
Holdings in AB Electrolux are stated as of
December 31, 2019 and includes holdings
of related natural and legal persons, when
applicable.
THE BOARD’S REMUNERATION DURING 2019, MEETING ATTENDANCE AND INDEPENDENCE
Staffan Bohman
Petra Hedengran
Hasse Johansson2)
Ulla Litzén
Bert Nordberg3)
Fredrik Persson
David Porter
Jonas Samuelson
Ulrika Saxon
Kai Wärn
Total remuneration 20 19,
'000 SEK
Board meeting
attendance
Remuneration
Committee attendance
Audit Committee
attendance
Indepen dence1)
2,447
940
790
910
150
790
630
-
730
630
9/9
9/9
9/9
9/9
3/9
9/9
7/9
9/9
9/9
8/9
7/7
7/7
7/7
6/7
3/3
3/3
3/3
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
1) For further information about the independence assessment, see page 105.
2) The total remuneration 2019 for Hasse Johansson includes compensation for work relating to investments, modularization and quality.
3) Bert Nordberg declined re-election and resigned from the Board following the Annual General Meeting in April 2019.
ELECTROLUX ANNUAL REPORT 2019
114 Corporate governance report
Group Management
JONAS SAMUELSON
President and CEO
—
Born 1968. Sweden. M.Sc. in
Business Administration and
Economics. In Group Management
and employed since 2008.
Other assignments: Board Member
of Polygon AB and Axel Johnson AB.
Previous positions: Various senior
positions within Electrolux including
CFO of AB Electrolux, COO Global
Operations Major Appliances
and Head of Major Appliances
EMEA. Chief Financial Officer and
Executive Vice President of Munters
AB. Various senior positions within
General Motors, mainly in the U.S.,
and Saab Automobile AB.
Holdings in AB Electrolux:
47,138 B-shares.
THERESE FRIBERG
Chief Financial Officer
—
Born 1975. Sweden. B.Sc. in
Business Administration. In Group
Management since 2018 and
employed since 1999.
Previous positions: CFO of
Electrolux Major Appliances
EMEA. Other senior positions
within Electrolux including Head of
Group Business Control and Sector
Controller Home Care & SDA.
Holdings in AB Electrolux:
8,067 B-shares
DANIEL (DAN) ARLER
Head Business Area Asia
Pacific, Middle East and Africa,
Executive Vice President
—
Born 1969. The Netherlands. B.Sc. in
Marketing. In Group Management
since 2016 and employed since
2002.
Previous positions: Head of
Electrolux Major Appliances
EMEA. Other senior positions
within Electrolux including General
Manager of Electrolux Japan and
Senior Vice President Product Line
Kitchen in Major Appliances EMEA.
Management positions in Stanley
Works Europe and the Whirlpool
Corporation in Europe.
Holdings in AB Electrolux:
15,126 B-shares.
JAN BROCKMANN
Chief Operations Officer,
Executive Vice President
—
Born 1966. Germany. M.Sc. in
Mechanical Engineering, M.B.A.
In Group Management since 2011
and employed since 2010.
Previous positions: Various senior
positions within Electrolux including
Group Chief Technology Officer
and Head of R&D, Electrolux
Major Appliances. Various senior
product management positions
within Volkswagen Group. Project
Manager in Roland Berger Strategy
Consultants GmbH. Management
positions within Valeo Group.
Holdings in AB Electrolux:
17,720 B-shares.
RICARDO CONS
Head Business Area Latin America,
Executive Vice President
—
Born 1967. Brazil. Bachelor
in Business Administration,
Finance and Marketing, MBA in
Team Management. In Group
Management since 2016 and
employed since 1997–2011
and 2016.
Previous positions: Management
positions at Franke in Brazil.
Various senior positions at
Electrolux Brazil, including
President Small Appliances Latin
America, Sales and Marketing
Director Major Appliances.
Positions in Volvo Brazil.
Holdings in AB Electrolux:
0 shares.
OLA NILSSON
Chief Experience Officer,
Executive Vice President
—
Born 1969. Sweden. M.Sc.
in International Business
Administration. In Group
Management since 2016 and
employed since 1994.
Previous positions: Head of Home
Care & Small Domestic Appliances.
Various senior positions within
Electrolux including Senior Vice
President, Product Line Laundry
Major Appliances EMEA and
President Small Appliances
Asia Pacific.
Holdings in AB Electrolux:
9,981 B-shares
Holdings in AB Electrolux are stated as of December 31, 2019 and
includes holdings of related natural and legal persons, when applicable.
ELECTROLUX ANNUAL REPORT 2019
Corporate governance report 115
ANNA OHLSSON-LEIJON
Head Business Area Europe,
Executive Vice President
—
Born 1968. Sweden. B.Sc. in Business
Administration and Economics. In
Group Management since 2016
and employed since 2001.
Other assignments: Board member
of Alfa Laval AB.
Previous positions: Chief Financial
Officer of AB Electrolux. Other
senior positions within Electrolux
including CFO of Electrolux Major
Appliances EMEA and Head of
Electrolux Corporate Control &
Services. Chief Financial Officer of
Kimoda. Various positions within
PricewaterhouseCoopers.
Holdings in AB Electrolux:
13,002 B-shares.
NOLAN PIKE
Head Business Area North
America, Executive Vice President
—
Born 1969. USA. Bachelor of
Business Administration, M.B.A. in
Business Management. In Group
Management since 2020 and
employed since 2013.
Previous positions: Senior Vice
President of Electrolux Consumer
Experience Area Taste. Senior
Vice President of North American
Product Lines at Electrolux. General
management, product and sales
positions at GE. Vice President and
General Manager of Kenmore, and
VP/GMM of home appliances at
Sears Holding Corp.
Holdings in AB Electrolux:
0 shares.
LARS WORSØE PETERSEN
Head of HR & Communications,
Senior Vice President
—
Born 1958. Denmark. M.Sc.
in Economics and Business
Administration. In Group
Management since 2011 and
employed since 1994–2005 and
2011.
Previous positions: Head of
Group Staff Human Resources at
Husqvarna AB, 2005–2011. Various
senior positions within Electrolux
including Head of Human
Resources for Electrolux Major
Appliances North America and
Head of Electrolux Holding A/S
in Denmark.
Holdings in AB Electrolux:
22,133 B-shares.
ALBERTO ZANATA
Head of Professional Products,
Executive Vice President
—
Born 1960. Italy. University degree
in Electronic Engineering with
Business Administration. In Group
Management since 2009 and
employed since 1989.
Previous positions: Senior
management positions within
Electrolux including Head of
Professional Products in North
America and senior management
positions in Electrolux Professional
Products.
Holdings in AB Electrolux:
33,108 B-shares.
CHANGES IN GROUP MANAGEMENT ANNOUNCED
AFTER JANUARY 1, 2020
Alberto Zanata was appointed President and CEO of Electroux
Professional in 2019. As from the distribution of Electrolux Professional
AB, Alberto Zanata will no longer be a member of the Group
management of Electrolux.
MIKAEL ÖSTMAN
General Counsel,
Senior Vice President
—
Born 1967. Sweden. M. of Laws and
B.Sc. Econ. In Group Management
since 2017 and employed since
2002.
Previous positions: Various senior
positions within Electrolux including
Head of Electrolux Corporate Legal
Department and Head of Electrolux
Legal Affairs Europe. Corporate
Counsel at Telia Mobile AB. Lawyer
at Advokatfirman Vinge. Law Clerk
with the Stockholm District Court.
Holdings in AB Electrolux:
4,114 B-shares.
ELECTROLUX ANNUAL REPORT 2019
116 Corporate governance report
Internal control over financial reporting
The Electrolux Control System (ECS) has been developed to ensure accurate and reliable financial
reporting and preparation of financial statements in accordance with applicable laws and regulations,
generally accepted accounting principles and other requirements for listed companies. The ECS adds
value through clarified roles and responsibilities, improved process efficiency, increased risk awareness
and improved decision support.
The ECS is based on the Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The five components of this framework
are control environment, risk assessment, control activities, monitor and improve and inform and
communicate.
Control environment
The foundation for the ECS is the control environment, which
determines the individual and collective behavior within the
Group. It is defined by policies and directives, man-
uals, and codes, and enforced by the organ-
izational structure of Electrolux with clear
responsibility and authority based on
collective values.
Corruption Policy, as well as in policies for information, finance,
and in the accounting manual. Together with laws and external
regulations, these internal guidelines form the control
environment and all Electrolux employees are
held accountable for compliance.
The Electrolux Board has overall
responsibility for establishing an
effective system of internal con-
trol. Responsibility for maintain-
ing effective internal controls
is delegated to the President.
The governance structure of
the Group is described on page
102. Specifically for financial
reporting, the Board has estab-
lished an Audit Committee, which
assists in overseeing relevant
policies and important accounting
principles applied by the Group.
urth Q u arte r
Ele
Fo
c t r o l u x Control Syste
First
Q
Risk
assessment
m
u
a
r
t
e
r
Improve
Inform and
communicate
Control
activities
All entities within the Electrolux Group
must maintain adequate internal
controls. As a minimum requirement,
control activities should address key
risks identified within the Group.
Group Management have the
ultimate responsibility for internal
controls within their areas of
responsibility. Group Manage-
ment is described on pages
114–115.
The ECS Program Office, a
department within the Group
Internal Audit function, has devel-
oped the methodology and is
responsible for maintaining the ECS.
The limits of responsibilities and
authorities are given in directives for
delegation of authority, manuals, policies
and procedures, and codes, including the Code
of Conduct, the Workplace Policy, and the Anti-
Q
u
To ensure timely completion of these
activities, specific roles aligned with the
company structure, with clear responsibilities
regarding internal control, have been assigned
within the Group.
T
Monitor
h
ir
d
C
ontrol env i r o n m e
arter
S e
a rter
n t
u
d Q
n
o
c
CONTROL ENVIRONMENT — EXAMPLE
Code of Conduct
Minimum standards in the area of environment,
health and safety, labor standards and human
rights. The Code of Conduct is mandatory for
Electrolux units.
Credit Directive
Rules for customer assessment and credit risk
that clarify responsibilities and are the frame-
work for credit decisions.
Internal Control Directive
Details responsibility for internal controls.
Controls should address the Minimum Internal
Control Requirements (MICR) within every appli-
cable process, for example “Order to Cash”.
Group Finance Policy
Details the general framework for how financial
operations shall be organized and managed
within the Group. The policy contains directives
and other mandatory standards issued by the
Group Finance organization.
Delegation of Authority Directive
Details the approval rights, with monetary,
volume or other appropriate limits, e.g.,
approval of credit limits and credit notes.
Accounting Manual
Accounting principles and reporting instruc-
tions for the Group‘s reporting entities are
contained in the Electrolux Accounting Manual.
The Accounting Manual is mandatory for all
reporting units.
ELECTROLUX ANNUAL REPORT 2019
Risk
assessment
Risk assessment
Risk assessment includes identifying risks
of not fulfilling the fundamental criteria, i.e.,
completeness, accuracy, valuation and reporting for significant
accounts in the financial reporting for the Group as well as risk of
loss or misappropriation of assets.
At the beginning of each calendar year, the ECS Program
Office performs a global risk assessment to determine the
reporting units, data centers and processes in scope for the
ECS activities. Within the Electrolux Group, a number of different
processes generating transactions that end up in significant
accounts in the financial reporting have been identified. All
larger reporting units perform the ECS activities.
The ECS has been rolled out to almost all of the smaller units
within the Group. The scope for smaller units is limited in terms of
monitoring as management is not formally required to test the
controls.
Control
activities
Control activities
Control activities mitigate the risks iden-
tified and ensure accurate and reliable
financial reporting as well as process efficiency.
Control activities include both general and detailed controls
aimed at preventing, detecting and correcting errors and irreg-
ularities. In the ECS, the following types of controls are imple-
mented, documented and tested:
• Manual and application controls — to secure that key risks
related to financial reporting within processes are controlled.
• IT general controls — to secure the IT environment for
key applications.
• Entity-wide controls — to secure and enhance the
control environment.
Corporate governance report 117
Monitor
Improve
Monitor and Improve
Monitor and test of control activities is
performed periodically to ensure that
risks are properly mitigated.
The effectiveness of control activities
is monitored continuously at four levels:
Group, business area, reporting unit, and process. Monitor-
ing involves both formal and informal procedures applied by
management, process owners and control operators, including
reviews of results in comparison with budgets and plans, analyti-
cal procedures, and key-performance indicators.
Within the ECS, management is responsible for testing key
controls. Management testers who are independent of the
control operator perform these activities. Group Internal Audit
maintains test plans and performs independent testing of
selected controls. Controls that have failed must be remediated,
which means establishing and implementing actions to correct
weaknesses.
The Audit Committee reviews reports regarding internal con-
trol and processes for financial reporting. Group Internal Audit
proactively proposes improvements to the control environment.
The head of Group Internal Audit has dual reporting lines: to the
President and the Audit Committee for assurance activities, and
to the CFO for other activities.
Inform and
communicate
Inform and communicate
Inform and communicate within the
Electrolux Group regarding risks and
controls contributes to ensuring that the right business
decisions are made.
Guidelines for financial reporting are communicated to
employees, e.g., by ensuring that all manuals, policies and
codes are published and accessible through the Group-wide
intranet as well as information related to the ECS.
To inform and communicate is a central element of the ECS
and is performed continuously during the year. Management,
process owners and control operators in general are respon-
sible for informing and communicating the results within the ECS.
The status of the ECS activities is followed up continuously
through status meetings between the ECS Program Office and
coordinators in the business areas. Information about the status
of the ECS is provided periodically to business area and Group
Management, the Audit Board and the Audit Committee.
ENTERPRISE RISK ASSESSMENT — EXAMPLE
CONTROL ACTIVITIES — EXAMPLE
Closing Routine — Risks assessed
Manage IT — Risks assessed
Order to Cash — Risks assessed
ELECTROLUX ANNUAL REPORT 2019
Risk assessed
Control activity
Process
Closing
Routine
Risk of incorrect financial
reporting.
Manage IT
Risk of unauthorized/incorrect
changes in the IT environment.
Order to Cash Risk of not receiving payment
from customers in due time.
Order to Cash Risk of incurring bad debt.
Reconciliation between general
ledger and accounts receivable sub-
ledger is performed, documented
and approved.
All changes in the IT environment
are authorized, tested, verified and
finally approved.
Customers’ payments are monitored
and outstanding payments are
followed up.
Application automatically blocks
sales orders/deliveries when the
credit limit is exceeded.
118 Corporate governance report
Financial reporting and information
Electrolux routines and systems for information and commu-
nication aim at providing the market with relevant, reliable,
correct and vital information concerning the development of
the Group and its financial position. Specifically for purposes of
considering the materiality of information, including financial
reporting, relating to Electrolux and ensuring timely commu-
nication to the market, a Disclosure Committee as well as an
Insider Committee has been formed.
Electrolux has an information policy and an insider policy
meeting the requirements for a listed company.
Financial information is issued regularly in the form of:
• Full-year reports and interim reports, published as
press releases.
• The Annual Report.
• Press releases on all matters which could have a significant
effect on the share price.
• Presentations and telephone conferences for financial
analysts, investors and media representatives on the day
of publication of full-year and quarterly results.
All reports, presentations and press releases are published at: www.electroluxgroup.com/ir
Stockholm, February 13, 2020
AB Electrolux (publ)
The Board of Directors
Auditor’s report on the Corporate Governance Statement
To the general meeting of the shareholders in AB Electrolux
(publ) corporate identity number 556009-4178
Engagement and responsibility
It is the board of directors who is responsible for the corporate
governance statement for the financial year 2019-01-01 –
2019-12-31 on pages 101–118 and that it has been prepared in
accordance with the Annual Accounts Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s
auditing standard RevU 16 The auditor’s examination of the cor-
porate governance statement. This means that our examination
of the corporate governance statement is different and substan-
tially less in scope than an audit conducted in accordance with
International Standards on Auditing and generally accepted
auditing standards in Sweden. We believe that the examination
has provided us with sufficient basis for our opinions.
Opinions
A corporate governance statement has been prepared. Disclo-
sures in accordance with chapter 6 section 6 the second para-
graph points 2–6 the Annual Accounts Act and chapter 7 section
31 the second paragraph the same law are consistent with the
annual accounts and the consolidated accounts and are in
accordance with the Annual Accounts Act.
Stockholm, February 13, 2020
Deloitte AB
Signature on Swedish original
Jan Berntsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and the
Swedish language original, the latter shall prevail.
Factors affecting forward-looking statements
This annual report 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 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 are not 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, pro-
gress 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.
ELECTROLUX ANNUAL REPORT 2019
Events and reports 119
Events and reports
The Electrolux website www.electroluxgroup.com/ir contains additional
and updated information about such items as the Electrolux share, sustainability and
corporate governance as well as a platform for financial statistics.
Electrolux Annual Report 2019
www.electroluxgroup.com/annualreport2019
Electrolux Annual Review 2019
www.electroluxgroup.com/annualreports/2019
Q4
2019
Intense transformation phase
• Net sales for continuing operations, excluding Electrolux Professional, amounted to SEK 32,011m (32,021). Sales
growth was -2,8%, mainly due to lower volumes in North America related to both consolidation of manufacturing
and a weak market.
• Operating income for continuing operations amounted to SEK 960m (1,670), corresponding to
a margin of 3.0% (5.2).
• Three out of four business areas improved earnings, but lower volumes and transition costs related to the
consolidation of manufacturing in North America impacted earnings negatively.
• Income for the period for the total Group, including Electrolux Professional, decreased to SEK 559m (1,575), and
earnings per share was SEK 1.94 (5.48).
• Operating income for Electrolux Professional declined due to lower volumes and transition costs.
• Operating cash flow after investments for the total Group, including Electrolux Professional, was
SEK 3,226m (3,163).
• The Board proposes a dividend for 2019 of SEK 8.50 (8.50) per share, to be paid in two installments.
• The Board has decided to propose that an EGM is held to resolve on the distribution of Electrolux Professional.
Financial overview
SEKM
Continuing operations
Net sales
Sales growth, %¹
Organic growth, %
Acquisitions,%
Divestments, %
Changes in exchange rates, %
Operating income²
Operating margin, %
Income after financial items
Income for the period
Earnings per share, SEK³
Return on net assets, %
Operating cash flow after investments
Total Group, including discontinued operations
Income for the period
Earnings per share, SEK³
Operating cash flow after investments
Q4 2019 Q4 2018
Change, % Full-year 2019
Full-year 2018
Change, %
32,011
-2.8
-2.8
-
-
2.8
960
3.0
736
366
1.27
-
2,822
559
1.94
3,226
32,021
1.9
2.6
0.1
-0.8
3.1
1,670
5.2
1,537
1,243
4.33
-
2,656
1,575
5.48
3,163
-0
-43
-52
-71
-65
118,981
-1.3
-1.0
-
-0.3
4.3
3,189
2.7
2,456
1,820
6.33
12.0
2,280
2,509
8.73
3,433
115,463
1.2
1.2
0.4
-0.4
0.9
4,176
3.6
3,754
2,854
9.93
20.2
2,646
3,805
13.24
3,649
3
-24
-35
-36
-34
¹ Change in net sales adjusted for currency translation effects.
² Operating income for continuing operations in the fourth quarter of 2019 included non-recurring items of SEK 0m (71). In the full year 2019 operating income for
continuing operations included non-recurring items of SEK –1,344m (-1,343). Excluding these items, operating income amounted to SEK 4,533 m (5,519), corresponding
to a margin of 3.8% (4.8), see page 20.
³ Basic.
For definitions, see pages 29-30.
Electrolux Interim Report January –December 2019
Stockholm, January 31, 2020
Electrolux Sustainability Report (GRI) 2019
www.electroluxgroup.com/sustainabilityreport2019
Electrolux Interim Reports
www.electroluxgroup.com/ir
Financial reports and major events in 2020
31
Jan
21
Feb
31
Mar
7
May
17
Jul
23
Oct
Consolidated
report
Extraordinary
General Meeting
Annual
General Meeting
Interim report
January–March
Interim report
January–June
Interim report
January–September
Electrolux subscription service can be accessed at
www.electroluxgroup.com/subscribe
Investor Relations www.electroluxgroup.com/ir
ELECTROLUX ANNUAL REPORT 2019
120 Annual General Meeting
Annual General Meeting
The Annual General Meeting will be held at 4 pm on Tuesday,
March 31, 2020, at Stockholm Waterfront Congress Centre,
Nils Ericsons plan 4, Stockholm, Sweden.
Participation
Shareholders who intend to participate in the Annual General
Meeting must
• be registered in the share register kept by the Swedish central
securities depository Euroclear Sweden AB on Wednesday,
March 25, 2020, and
• give notice of intent to participate, to Electrolux on
Wednesday, March 25, 2020, at the latest.
Notice of participation
Notice of intent to participate can be given
• on the Group’s website;
www.electroluxgroup.com/agm2020
• by telephone +46 8 402 92 79,
on weekdays between 9 am and 4 pm
• by mail to
AB Electrolux
c/o Euroclear Sweden AB
Box 191
SE-101 23 Stockholm
Sweden
Notice should include the shareholder’s name, personal identity
or registration number, address, telephone number and the
number of assistants attending, if any. Shareholders may vote by
proxy, in which case a power of attorney should be submitted to
Electrolux well in advance of the Annual General Meeting.
Proxy forms in English and Swedish are available on the
Group’s website: www.electroluxgroup.com/agm2020
Shares registered by trustee
Shareholders that have their shares registered in the name of a
nominee must, in addition to giving notice of participation in the
meeting, temporarily be recorded in the share register in their
own names (so called voting-rights registration) to be able to
participate in the General Meeting. In order for such registration
to be effectuated on Wednesday, March 25, 2020, shareholders
should contact their bank or trustee well in advance of that date.
Dividend
The Board of Directors proposes a dividend for the fiscal year
2019 of SEK 8.50 per share, for a total dividend payment of
approximately SEK 2,443m (2,443). The proposed dividend corre-
sponds to approximately 97% (64) of income for the period. The
dividend is proposed to be paid in two equal installments, the
first with the record date Thursday, April 2, 2020, and the second
with the record date Friday October 2, 2020. The first installment
is estimated to be paid on Tuesday, April 7, 2020 and the second
installments on Wednesday, October 7, 2020.
Proposal for election of board members
In preparation for the Annual General Meeting, the Nomination
Committee has in February 2020 proposed re-election of
Staffan Bohman, Petra Hedengran, Ulla Litzén, Fredrik Persson,
David Porter, Jonas Samuelson and Kai Wärn as board members.
Hasse Johansson and Ulrika Saxon declined re-election. The Nomi-
nation committee also proposed election of Henrik Henriksson
and Karin Overbeck as new board members. Staffan Bohman
was proposed to be re-elected as Chairman of the Board of
Directors.
DATES REGARDING THE AGM 2020
2019
2020
September
February
March
April
October
13 Nomination
Committee
appointed for
AGM 2020
7 Proposals from
Nomination
Committee
presented
21 Notice to AGM
estimated to be
published
25 Deadline for notice of
intent to participate in
AGM and registration
in share register
31 AGM 2020
2 Proposed record
date for the first
instalment of the
dividend payment
7 Estimated date for
payment of first
instalment of
dividend
2 Proposed record date
for the second instal-
ment of the dividend
payment
7 Estimated date for
payment of second
instalment of dividend
ELECTROLUX ANNUAL REPORT 2019
Founded in Sweden in 1919
by entrepreneur Axel Wenner-Gren
1920s The Electrolux salesmen sold vacuum
cleaners all over the world, supported by
innovative marketing methods like the
vacuum cleaner car.
1930s The innovative and completely
silent absorption fridge could run on either
electricity or gas, and became
a global success.
1940s The launch of the groundbreaking
Assistent food processor was Electrolux first
venture into cooking products.
1950s Electrolux legendary ”floating wing”
W20 washing machine helped to shorten the
time consuming and cumbersome laundry
process considerably.
1960s The “Luxomatic” vacuum cleaner was
launched in 1964 and had innovations like an
adjustable nozzle and a cord winder.
1970s The Datalux cooker launched in 1978
had an electronic rear control panel featuring
a digital clock and a timer.
1980s The legendary Electrolux "Troika" with
Anders Scharp, Hans Werthén and Gösta
Bystedt made Electrolux into a global appliance
company through hundreds of acquisitions.
1990s The prototype of the world's first
robotic vacuum cleaner, the Trilobite,
was presented in 1997.
2000s The innovative battery-driven vacuum
cleaner Ergorapido was launched in 2004
following systematic product development
and consumer tests.
2010s Electrolux expanded its offering
of connected appliances, here with
Google Assistant.
Celebrating a century of better living
Electrolux turned 100 years old in 2019 and has contributed
to strong achievements over the past century – including its
well-established brands, strong innovation heritage, winning
sales orientation, contribution to societal development and
sustainability leadership.
By creating great taste, care and wellbeing experiences, and
better living for hundreds of millions of people around the world
over the past century, Electrolux has not only enhanced the
quality of life of its consumers, but also the societies in which
they live. Electrolux is part of an industry that has revolutionized,
domestic duties, general hygiene and eating habits within less
than half a century.
In the 1990s, Electrolux was the first appliance company
to focus on sustainability, which has been at the heart of the
Electrolux strategy ever since. Today, the Electrolux brand is
associated with sustainability, which is a differentiator that
results in additional growth opportunities.
Electrolux celebrated its anniversary year by launching the
Better Living Program – a bold initiative to enable it to continue
to be at the forefront of sustainability. The program includes a
broad range of actions and targets until 2030.
Mailing address: SE-105 45 Stockholm, Sweden | Visiting address: S:t Göransgatan 143, Stockholm
Telephone: +46 8 738 60 00 | Website: www.electroluxgroup.com
AB ELECTROLUX (PUBL), 556009-4178
annual review on the web
www.electroluxgroup.com/annualreports/2019