Comments from the President and CEO Hans Stråberg on the second quarter results 2007


Comments from the President and CEO Hans Stråberg on the second quarter results
2007

First-half profits up 16%

We have steadily improved Group operating income in the last few years, and the
result for this quarter maintains that trend. Operating income rose by 9%
compared to the second quarter last year and by 16% relative to the first half
of 2006.

I am satisfied with our performance in many areas during the second quarter. In
North America, I am pleased to say that we overcame market weakness and an
ongoing dip in volumes, and continued to grow and gain market share while
increasing operating income. Other highlights were the development in Latin
America and our floor-care operations, where we doubled operating income
compared to the second quarter last year. It is also pleasing to note that we
gained market share in most of the regions where we operate.

However, I am disappointed with the result of major appliances in Europe in this
quarter. Weakness here was primarily due to two factors - new product launches
taking longer than expected and higher raw material costs. We are currently
engaged in the most extensive product launches in the history of Electrolux. New
products are being introduced in more than 30 European countries, and we are
renewing close to 15% of our offering. In the UK, one of our most important
markets, we are replacing 40% of our product range. This is a complex task for
us and our retailers alike, and it has taken time to sell remaining stocks of
previous models. 

The new products have been very well received on the market, which strengthens
my firm belief that the launches will ultimately prove successful. However, it
will take a bit longer before we will see a positive impact on our result.

Raw material costs continue to be a source of concern. This is true across the
Group but during the quarter especially in Europe. During the second quarter
raw-material costs continued to increase, and we expect the full-year figure to
rise by an estimated SEK 2 billion. This would amount to an SEK 8 billion
increase in our raw material costs since 2004. 

I have repeatedly stressed that this huge transition at Electrolux - as we
introduce new, innovative products and shift much of our production capacity to
low-cost countries - may distort results in any one quarter. However, I remain
convinced that we will succeed in raising our operating margin to the industry
average through our strategy of developing new, innovative products, continued
brand-building, profitable growth and cost savings. In the longer term, our aim
is to have one of the best operating margins in the industry.

And finally, to summarize, we maintain our forecast that full-year operating
income for 2007, excluding items affecting comparability, will be somewhat
higher than in 2006.



Hans Stråberg
President and CEO

Electrolux is a global leader in home appliances and appliances for professional
use, selling more than 40 million products to customers in 150 countries every
year. The company focuses on innovations that are thoughtfully designed, based
on extensive consumer insight, to meet the real needs of consumers and
professionals. Electrolux products include refrigerators, dishwashers, washing
machines, vacuum cleaners and cookers sold under esteemed brands such as
Electrolux, AEG-Electrolux, Zanussi, Eureka and Frigidaire. In 2006, Electrolux
had sales of SEK 104 billion and 56,000 employees. For more information, visit
http://www.electrolux.com/press.

Attachments

07172013.pdf