Electrolux
2003 Profits Down, but Increase in R&D Spend Promised for 2004
Appliance manufacturer, Swedish group Electrolux, has announced a lacklustre
performance in its 2003 results, with net income declining 6.2% over the
year. However, most of this decline is attributable to unfavourable currency
movements, as a result of a stong Krone. While US and European markets,
especially the UK, remained strong, the company had problems in Brazil,
the Far East and Australia. However, despite the downturn, the company
has committed to additional spend on R&D in 2004.
Chief executive Hans Straberg announced that the company would increase
its R&D spend from 1.3% of sales to 2% 'in the coming years'. He also
committed extra spending to brand building, saying that by 2007 around
65% of products would be labelled with the Electrolux brand (the current
figure being around 35%).
As we reported in The K&BZine last week, the group is also considering
furter rationalisation of its business, including the possibility of closing
its vacuum cleaner factory in Sweden, with the loss of 500 jobs, and moving
production to Hungary. Electrolux is also continuing to look for lower
cost countries to source components as a way of stemming the tide of aggressively
priced Asian imports.
CEO
Hans Straberg, CAO Fredrik Rystedt
Net
sales for the Electrolux Group in 2003 amounted to SEK 124,077m, as against
SEK 133,150m for the same period in the previous year. This corresponds
to a decrease of-6.8% of which -9.2% refers to changes in exchange rates,
-0.9% to changes in the Group's structure, and +3.3% to price/mix/volume.
Operating income declined by 7.2% to SEK 7,175m (7,731), corresponding
to 5.8% (5.8) of net sales, and income after financial items decreased
by 7.1% to SEK 7,006m (7,545), which corresponds to 5.6% (5.7) of sales.
Net income deciined by 6.2% to SEK 4,778m (5,095).
The income figures for 2003 include items affecting comparability in the
amount of SEK -463m (-434). These items include a capital loss from the
divestment of the compressor operation, and a provision for previously
issued loan guarantees for launderette operators in Germany in the third
quarter, as well as write-down of assets in Nordwaggon, a partly owned
railcar operator, in the fourth quarter.
The provision for loan guarantees refers to launderettes in Germany equipped
with professional laundry equipment supplied by the Group. In accordance
with business practices in this sector, Electrolux has previously provided
guarantees for loans in connection with the set up of launderettes. The
launderettes have experienced financial difficulties due to weak market
conditions. As of December 31, 2003, the Group had fulfilled the major
part of these guarantee commitments.
Fourth Quarter Shows some Promise
Net sales in the fourth quarter of 2003 amounted to SEK 28,315m (30,586).
Of the total decline of-7.4%, -7.5% is attributable to changes in exchange
rates, -3.2% to changes in Group structure, and +3.3% to volume/price/mix.
Operating income improved to SEK 1,648m (-563), corresponding to 5.8%
(1.8) of sales. Income after financial items improved to SEK 1,588m (-559),
which corresponds to 5.6% (1.8) of sales. Net income was SEK 1,154m (-956),
corresponding to SEK 3.70 (2.80) per share.
Excluding items affecting comparability, operating income in the fourth
quarter declined by 2.7% to SEK 1,733m (1,781), corresponding to 6.1%
(5.8) of sales, and income after financial items decreased by 6.3% to
SEK 1,673m (1,785), corresponding to 5.9% (5.8) of sales. Net income increased
to SEK 1,239 (1,221).
UK Appliance Market Remains Strong
Demand increased during the year in most of the Group's product areas
in both Europe and North America. Market conditions in Asia and Australia
improved, while demand in Brazil showed a significant downturn.
The strengthening of the Swedish krona against most currencies during
the year had a negative impact on sales and income, particularly for Consumer
Durables in North America.
The markets for Consumer Durables in both Europe and the US were characterised
by an increased downward pressure on prices. This was offset, however,
by improved manufacturing efficiencies, savings from restructuring and
lower costs for materials and components.
Total industry shipments of core appliances in Europe increased in volume
by approximately 4% in 2003 compared with the previous year. Westem Europe
showed an increase of approximately 3%, while the market in Eastern Europe
increased by approximately 10%.
Group
sales of appliances in Europe increased in volume with good growth in
particularly Eastern Europe, Spain and the UK. Operating income and margin
was in line with the previous year. Operating income was negatively affected
by unfavourable currency trends and downward pressure on prices, while
higher volumes and improved manufacturing efficiency had a positive impact.
In the US, industry shipments of core appliances increased in volume by
approximately 4%. Shipments of major appliances, i.e, including room air-conditioners
and microwave ovens, rose by approximately 8% . In the fourth quarter,
shipments rose by almost 7% for core appliances and by 4% for major appliances.
Group
sales of appliances in North America showed good growth in USD. Operating
income and margin for the full year increased as a result of higher volumes,
lower costs for materials and improved manufacturing efficiency. Operating
margin for the fourth quarter was lower than in the previous year due
to downward pressure on prices and a less favourable product mix, as well
as substantially lower sales of room air-conditioners. The plant for room
air-conditioners was closed during the third quarter, 2003.
Group sales of appliances in India and China were substantially lower
than in 2002, as a result of implemented restructuring and focusing of
operations on core areas. Income for both operations remained negative,
but improved from the previous year, mainly in the fourth quarter. The
Australian market for appliances showed an upturn. Both sales and income
for the Group's Australian operation declined, however.
Overall, operating income for the appliance operation outside Europe and
North America declined substantially and was negative. However, income
for the seasonally strong fourth quarter showed an improvement over last
year and was positive.
Litigation Issues
Asbestos litigation in the US Litigation and claims related to asbestos
are pending against the Group in the US. Almost all of the cases refer
to externally supplied components used in industrial products manufactured
by discontinued operations prior to the early 1970s. Many of the cases
involve multiple plaintiffs who have made identical allegations against
many other defendants who are not part of the Electrolux Group.
As of December 31, 2003, the Group had a total of 584 (216) lawsuits pending,
representing approximately 21,000 (approximately 14,000) plaintiffs. During
2003, 497 new cases were filed and 129 pending cases were resolved. Approximately
20,000 of the plaintiffs refer to cases pending in the state of Mississippi.
Electrolux believes its predecessor companies may have had insurance coverage
applicable to some of the cases during some of the relevant years. Electrolux
is currently in discussions with those insurance carriers.
Electrolux also has a pending lawsuit in the US related to the design
of the upright, cyclonic vacuum cleaners manufactured and sold by the
Group's floor-care operation. The plaintiff claims that the Group has
wrongfully used certain trade secrets when designing the cyclonic products,
and is seeking a judgement against the Group in the amount of approximately
USD 60m. A trial is scheduled for Spring 2004.
The Group believes it has valid defenses to these claims, However, should
the plaintiffs claims prevail this could have a material adverse effect
on the Group's income.
For a Q&A session on these results, please click here.(60K Word file).
Masco
Reports Record Sales and Earnings for 2003, and Warns of European Disposals
Masco
Corporation reported on February 13th that net sales from continuing operations
for the year ended December 31st, 2003, aided by acquisitions, increased
20 percent to a record $10.9bn compared with $9.1bn for 2002.
Income from continuing operations for the year ended December 31st, 2003
was $740m or $1.51 per common share, which includes the recognition of
a non-cash, pre-tax goodwill impairment charge of $142 million ($118 million
or $.24 per common share, after tax), the majority of which relates to
European businesses that the Company plans to divest. In addition, the
Company's results include previously announced charges primarily related
to certain European businesses and income from an adjustment of the Behr
litigation accrual, which principally offset each other.
Fourth quarter 2003 net sales from continuing operations increased 18
percent to $2.9 billion compared with $2.4 billion in the 2002 fourth
quarter. Income from continuing operations for the fourth quarter of 2003
was $93 million or $.19 per common share and included a non-cash, pre-tax
charge for goodwill impairment of $137 million ($113 million or $.24 per
common share, after tax). Excluding such charge, income from continuing
operations was $.43 per common share.
The Company reviews its business portfolio on an ongoing basis as part
of its corporate strategic planning and has determined that several of
its European businesses are not core to the Company's long-term growth
strategy and, accordingly, has embarked on a plan of disposition. These
businesses had combined 2003 net sales in excess of $350 million and the
Company expects net proceeds from the dispositions to exceed $300 million.
The dispositions are expected to be completed within the next twelve months
and the Company expects to recognise a modest net loss upon the disposition
of all of these businesses. First quarter 2004 results will include a
charge to reflect those businesses that are expected to be divested at
a loss. Any gains resulting from the disposition of individual businesses
will be recognised as such transactions are completed.
The Company continues to experience favourable sales performance in early
2004, and, based on current business trends, believes that it will achieve
record sales and earnings for 2004 with full-year earnings from continuing
operations in a range of $1.80 to $1.90 per common share. Earnings guidance
for 2004 includes a reduction of approximately $.05 per common share resulting
from the absence of earnings related to the European businesses to be
divested.
Sales by segment for 2003 versus 2002 were:
- Cabinets and Related Products sales increased nine percent;
- Plumbing Products sales increased 30 percent;
- Installation and Other Services sales increased 31 percent;
- Decorative Architectural Products sales increased 12 percent; and
- Other Specialty Products sales increased 16 percent.
Masco Corporation 2003 Highlights:
Full-Year 2003
- Net sales from continuing operations increased 20 percent to a record
$10.9bn.
- Key retailer sales were up 10 percent to approximately $3.4bn.
- Income from continuing operations was $1.75 per common share excluding
the impact of a goodwill impairment charge.
- The Company retired approximately $430m of Company debt during 2003.
- The Company repurchased 37 million shares in 2003 including approximately
2 million shares for employee long-term stock incentive plans.
- Working capital (defined as accounts receivable and inventories less
accounts payable) as a percentage of sales improved to 18.1 percent of
sales at December 31st, 2003 from 22.5 percent of sales a year earlier.
- The Company has approximately $1.3bn of cash and marketable securities
at year-end.
Fourth Quarter 2003
- Net sales from continuing operations increased 18 percent to a record
$2.9 billion.
- Key retailer sales were up 22 percent.
- Income from continuing operations was $.43 per common share excluding
the impact of a goodwill impairment charge compared to $.36 per common
share in 2002.
BC
Partners Supports Baxi Refinancing Project
Baxi Group Ltd announced on 28th January the successful completion of
its refinancing project, in a deal valued at about £600m. It is
thought that BC outbid manufacturers Merloni and United Technologies,
along with a number of capital investment firms, to secure the deal. Under
the terms of the agreement, funds advised by BC Partners will become the
new shareholders of the well known boilermaker which also has a UK shower
division with companies such as Aqualisa and Gainsborough.
Electra Investment Trust, previously a leading investor has also committed
to reinvest in the Group. New bank finance has been arranged and provided
by the Royal Bank of Scotland, currently one of the leading lenders to
the Group. The Group was advised by Merrill Lynch International and BC
Partners was advised by ABN Amro.
Commenting on the refinancing, Baxi Group chief executive Mark Edwards
said: 'These arrangements mark a new chapter for the Group. BC Partners
is a leading European private equity firm keen to commit further funds
to support the Group’s plans for growth. We welcome our continued
involvement both with Electra and the Royal Bank of Scotland who have
been shareholders in and bankers to the Group throughout the last seven
years. I would also pay tribute to our previous shareholders, especially
Candover, Kidde and NIB Capital who have supported us from the time of
the original Newmond Buy-out in 1996. We now look forward to a new and
exciting period of growth for Baxi.'
John Burgess of BC Partners commented: 'We are delighted to be the new
shareholders in Baxi Group. The management team have done a tremendous
job since the merger of Newmond and Baxi in 2000, and have created a solid
platform from which to grow. We believe that the business has good opportunities
for growth, both organically and through acquisition, and intend to work
closely with Mark Edwards and his team with the joint objective of strengthening
further Baxi’s position as a major force in the European heating
industry.'
http://www.baxigroup.com
Whirlpool
Corporation Files Second Suit Against LG for Clothes Washer Patent Infringement
Whirlpool
Corporation announced on February 13th that it has filed a second patent
infringement suit against LG Electronics, Inc., and the South Korean company's
U.S. affiliate, LG Electronics USA, Inc., for infringing clothes washer
patents.
The latest suit, filed in the U.S. District Court for the Western District
of Michigan, maintains that a line of LG clothes washers sold in
the U.S. infringes two patents secured by Whirlpool in 1988 and 2001 to
protect innovative washing technology. Similarly, the first suit, filed
in August, contends that several lines of LG clothes washers infringe
another two patents secured by Whirlpool in 1993.
In both cases, Whirlpool is asking the court to enjoin LG from infringing
the company's patents, to remove the infringing products from its U.S.
product supply chain and to pay unspecified compensation for damages that
already have occurred from the infringements.
'The people of Whirlpool Corporation work tirelessly to deliver innovative
solutions to our customers to enhance their lives and to deliver unique
benefits that set our company apart from competitors,'
said Michael D. Thieneman, Whirlpool's Executive Vice President and Chief
Technology Officer. 'In violating these patents, LG has shown a blatant
disregard for our assets and for U.S. law.'
The latest suit involves a patented method of rolling the clothes in a
washer to deliver a better cleaning performance and improved energy and
water savings. The suit also involves a patented method of passing detergent
through fabric to provide better cleaning action without the use of an
agitator.
The earlier suit involves patents that protect wash and rinse cycles in
high-efficiency clothes washers, which deliver sharply higher energy and
water savings to customers. The unique wash step provides a series of
re-circulating sprays of concentrated wash liquid onto laundry loads,
while the innovative rinse step performs a tumble motion as re-circulating
rinse sprays remove wash liquids.
Over the years, Whirlpool says it has been an industry leader in developing
innovative laundry solutions that provide consumers with higher levels
of energy and water efficiency combined with improved cleaning and fabric
care. The company launched its Whirlpool® Resource Saver®
wash system in 1998 in many top-loading washing machines, which were the
first top loaders to earn the U.S. Department of Energy's and the Environmental
Protection Agency's ENERGY STAR® designation for energy and water
savings. Whirlpool continued to lead the way with further laundry efficiency
advances in the top-loading Whirlpool® Calypso® wash motion clothes
washer and the front-loading Whirlpool® Duet® washer and dryer
pair.
Whirlpool's two legal actions follow yet another suit filed by the company
against LG in June 2003 in the same U.S. Federal Court. In that suit,
Whirlpool alleges that the Korean manufacturer used the Whirlpool registered
trademark 'Whisper Quiet' on some of its clothes washers and dryers. The
'Whisper Quiet' trademark appears on the console of Whirlpool's KitchenAid
brand clothes washers, dryers and dishwashers.
Wolseley
plc Update on Recent Acquisition Activity
Wolseley
plc, the specialist trade distributor of plumbing, heating and building
materials products provides an update on recent acquisitions. Since the
announcement of the acquisition of Tobler Management Holding AG ('Tobler')
for £52 million on 1st December 2003 a further five additional distribution
businesses in Europe and the USA have been acquired for an aggregate consideration
of approximately £11 million in cash.
These acquisitions bring Wolseley's total spend on acquisitions, including
debt acquired, since the beginning of the financial year, to approximately
£78 million. In total, the nine acquisitions completed to date are
expected to add approximately £200 million to group turnover in
a full year. Goodwill related to these acquisitions is estimated to be
around £34 million.
Details of the additional five acquisitions are set out below.
European Distribution
In January 2004, PBM, in France, acquired Groupe Simoni, a building materials
distributor with sales of £8.6 million in the year to 31 December
2002 and net assets of £1.6 million at that date. Groupe Simoni
operates out of five branches in the south east of France.
North America Plumbing and Heating Distribution
In December 2003, Ferguson acquired High Country Plumbing, a wholesale
distributor of plumbing materials in Steamboat Springs, Colorado. High
Country Plumbing had sales of £1.6 million in the year to 31st December
2002 and net assets of £0.7 million at that date.
In January 2004, Ferguson also acquired certain assets from the receiver
of The Builders Group of Companies headquartered in Addison, Illinois.
The net assets acquired of this plumbing products distributor were £1.7
million. The acquisition strengthens Ferguson's position in Illinois,
Florida and Indiana.
US Building Materials division
In February 2004, Stock Building Supplies acquired two building products
distributors. Smyth Lumber of Orlando, Florida sells lumber and millwork
and also has a strong business in value added products such as roof and
floor trusses. It had sales of £16.5 million in the year to 31st
December 2002 and net assets of £7.1 million at that date. The other
acquisition was Jeld-Wen's Fort Wayne, Indiana facility which had sales
of £5.2 million in the year to 31st December 2002 and net assets
of £3.4 million at that date.
The segmental split of the total acquisition spend since 1st August 2003
has been:
European Distribution - No. of Acquisitions:2, Spend £ million:
57
US Building Materials Distribution - No. of Acquisitions:3, Spend £
million:9
North American Plumbing & Heating - No. of Acquisitions:4, Spend £
million:12
Distribution
Total No. of Acquisitions:9, Total Spend £ million:78
Charlie
Banks, Group Chief Executive of Wolseley said:
'As we said in our trading statement on 14th January 2004, the underlying
performance of the group remains strong. These five bolt-on acquisitions
will further strengthen our presence in Europe and North America, and
they support our strategy of growing the business via acquisition and
organic growth.'
Amana
Dishwashers Join Maytag UK's Portfolio
The
premium refrigeration brand, Amana, is extending its product portfolio
to include dishwashers.
'The Amana brand is very important in Maytag's future strategy. It is
the brand that brings customisation, innovation and style to the market.
Future introductions to the Amana brand will include new product categories,
so that we can offer a full range of appliances to ensure the retailer
can sell within the brand, and that the consumer has the opportunity to
totally customise all the products they need to satisfy their aspirational
kitchen desires. We are launching a range of Amana branded dishwashers,
which exhibit exceptional flexibility and ability to be customised, with
extremely efficient performance of just 9.9 litres of water in a standard
programme. We are very excited about the new models and they are sure
to satisfy the market need in premium dishwashing,' explains Holly Burrow,
Senior Manager, Marketing, Maytag UK.
Amana lntegrated Dlshwasher ASE 760 NAKN
• lntegrated format, fully customisable and ready to accept furniture
door
• Tall tub format, 86cm height for increased capacity of 15 place
settings
• Triple 'A' energy, cleaning and drying performance
• Benchmark efficiency of just 9.9 litres of water used in standard
cycle
• For economy, can be set to wash just top or bottom rack only
• Quiet in operation 47 dB(A)
• Childsafe door locking system for peace of mind
• 10 functions with temperature selection up to 75 OC - includes
intensive, heavy, normal, delicate, quick, rinse & hold, delayed start,
half load, drying options and express
• Unique power nozzles for cleaning pots and pans
• lndependent spray arm for cutlery basket
• Dedicated knife storage for safety and ease of loading
• Self cleaning filter
• Fan drying system for excellent drying results
• Concealed heating element to eliminate limescale collection
• Full height adjustment up to 5 cm for complete fit and finish
Amana
Freestandlng Dishwasher ASE 560 FAKS
• Freestanding, externally finished in stainless steel with Amana
designed bar handle to match refrigeration range
• 14 place settings
• Triple 'A' energy, cleaning and drying performance
• Benchmark efficiency of just 9.9 litres of water used in standard
cycle
• For economy, can be set to wash just top or bottom rack only
• Quiet in operation 47 dB(A)
• Childsafe door locking system for peace of mind
• 10 functions with temperature selection up to 75 OC - includes
intensive, heavy, normal, delicate, quick, rinse & hold, delayed start,
half load, drying options and express
• Unique power nozzles for cleaning pots and pans
• lndependent spray arm for cutlery basket
• Dedicated knife storage for safety and ease of loading
• Self cleaning filter
• Fan drying system for excellent drying results
• Concealed heating element to eliminate limescale collection
• Full height adjustment up to 5 cm for complete fit and finish
Tel: 01737 231 000
Web: http://www.amana.co.uk
Ardesco
50mm Worksurface Selected for New Kitchen Design
A
worksurface with 50mm edging from Orama, the independent manufacturer
of worksurfaces and associated decorative products, is being showcased
in Ultima Furniture Systems’ latest kitchen design. Pontefract-based
Ultima’s new Moonstone range features the sleek and stylish midnight
granite gloss worksurface from Orama’s Ardesco range, which was launched
in August 2003.
The worksurface, incorporating some of Ardesco’s most innovative
features, considerably enhances the look and feel of Ultima’s modern
kitchen design. The standard depth for most kitchen worksurfaces is 38
mm and this new option provides an original dimension to the room. Orama’s
50 mm worksurface with stainless steel acrylic edging option adds depth
to the unit layout. It also complements the Moonstone kitchen’s extendable
drawers and ‘magic corner’ in three heights – 720, 1250
and 1965 mm – by adding to the impression of space with dramatic
effect. The edging further emphasises the contours of the pull-out units
and the air closing art glass doors with wirework internal shelving.
50mm depth addresses customer expectations for contemporary styling whereas,
at the same time, preserving the functional aspects of the wet, cook,
and work areas. Self-edge offers a complete rounded look by enabling the
surface design to carry effortlessly through to the edging. Stainless
steel acrylic edge takes the design one step further by introducing a
hint of industrial chic.
‘Ultima’s choice of worksurface is testament to the increasing
appeal of Ardesco. As the range becomes more and more established, the
specialist trade and kitchen retailers are recognising its complete versatility
and flexibility. Ardesco enhances the appeal of new kitchen ideas with
its mirror-flat ripple free effect on all gloss and silk laminates.’
says the company.
Orama offers high quality durable decorative panels and worksurfaces.
Established for many years, Orama holds ISO 9002 certification and the
Furniture Industry Research Association Gold Award for product performance.
The company is are also a corporate member of the KBSA (Kitchen Bathroom
Bedroom Specialist Association). All Orama’s chipboard and solid
timber products are sourced from 'responsibly managed' forests.
Tel: 01773 520560
Web: http://www.orama.co.uk
Whitehall
Aims to Top Corian Turnover with New Expansion
Whitehall
Fabrications has expanded the size of its UK operation by a third, enabling
the company to increase the turnover of DuPont Corian®by at least
thirty per cent.
The 24,000 sq ft factory in Leeds, which was officially opened in February
by DuPont’s European Director, Mr Jean-Yves Bach, will accommodate
its state-of-the-art machinery more effectively, allowing Whitehall to
further develop its Corian®business.
Jean-Yves said:
‘We are delighted to see that Whitehall, one of our key partners
in Europe, has expanded and upgraded its fabricating facility to one of
the most modern and efficient factories outside the US.
‘A facility such as this will be invaluable as we continue to develop
new applications and strategies for Corian®, which currently accounts
for 60 per cent of the solid surface market in Europe, the Middle East
and Asia.’
Stuart Daniels, sales director, Whitehall fabrications, commented:
‘The new factory has been specially laid out to ensure maximum efficiency
of our machinery. Lead times will be reduced, which will in turn increase
capacity and turnover.
‘We will also be broadening our skill base with the employment of
an additional five fabricators to work within the new facility.’
For Corian® enquiries, contact Whitehall on 0113 222 3000. For information
on Whitehall’s stone collection, which includes Granite, Luxore®and
DuPont Zodiaq®, contact 01430 861 862.
Bristan
Achieves Showering Success
Bristan,
the UK brassware supplier claims to have already achieved market-leading
status in brassware, with market share of over 24%. It has now has turned
its attention to the showering market.
Steve Lee, Managing Director of Bristan comments: 'We intend to apply
the same market-leading philosophy to the showering market that has made
us number one in brassware in the UK.
'Our products are all designed specifically for the UK market and with
UK nuances firmly in mind, so most of the new products are suitable for
use on low-pressure plumbing systems. We are also able to apply cutting
edge design techniques to our portfolio, but this is done with a firm
eye on quality and price, enabling us to offer design-led products at
prices that won’t break the bank. Technically we have succeeded in
designing our showers in order to make them as installer friendly as possible
and this has been key in the creation of the new portfolio. Couple that
with our 24-hour delivery service, five year product guarantee, extensive
point of sale support, merchandising solutions and marketing backup and
you have a winning combination.'
As part of the first wave of new showering products which will join Bristan’s
existing product offer, the company introduced 17 new products at KBB
2004 to ensure it has a comprehensive and complete shower offer. The
new additions include four new electric showers, bar showers, exposed
and recessed showers spanning many different styles from ultra-contemporary
chic to rustic charm.
Tel: 0870 7545555
Web: http://www.bristan.com