STOCKHOLM, Sweden, July 18, 2002 (PRIMEZONE) -- Electrolux:
Amounts in SEKm, First First Change Second Second Change
unless otherwise half half quarter quarter
stated 2001 2002 2002 2001
Net sales 70,804 71,129 -0.5% 37,224 37,459 -0.6%
Operating
income(1) 6,513 3,888 68% 2,722 2,036 34%
Operating
income
excl. items 4,628 3,888 19% 2,722 2,036 34%
affecting
comparability
(1)(2) Margin, % 6.5 5.5 7.3 5.4
Income after 6,376 3,251 96% 2,694 1,752 54%
Financial
items(1)
Income after
financial items
excl. items 4,491 3,251 38% 2,694 1,752 54%
affecting
comparability
(1)(2) Margin, % 6.3 4.6 7.2 4.7
Net income per 14.60 6.55 123% 5.60 3.45 62%
share, SEK(3)
Net income per
share, excl. items 9.35 6.55 43% 5.60 3.45 62%
affecting
comparability
(2)(3)
Value creation 2,084 682 1,402 1,475 392 1,083
Return on
equity, % 32.0 16.0
Return on equity,
excl. items 20.5 16.0
affecting
comparability,
%(2)
1) New accounting principle for R&D had positive impact of SEK 102m on
income for first half 2002 (see page 2).
2) In first half of 2002, income includes items affecting
comparability in the amount of SEK 1,885m (see page 2).
3) Based on an average of 329.6 (341.1) million shares after buy-
backs.
-- Higher demand in the U.S., somewhat weaker market conditions
in Europe
-- Marked upturn in income for North American operation,
production of refrigerators normalized
-- Substantially higher income and improved margin for
appliances in Europe, despite difficult market environment
-- Ongoing restructuring measures proceeding according to plan
Net sales and income
Net sales for Electrolux in the first half of 2002 amounted to SEK 70,804m, compared with SEK 71,129m for the same period in the preceding year. This corresponds to a decrease of 0.5%, of which +0.4% is attributable to exchange rate fluctuations, -4.6% to changes in Group structure, and +3.7% to volume/price/mix. See page 6 for changes in Group structure.
Operating income increased to SEK 6,513m (3,888), corresponding to 9.2% (5.5) of sales, and income after financial items increased to SEK 6,376m (3,251), corresponding to 9.0% (4.6) of sales. Net income rose to SEK 4,812m (2,228), which corresponds to SEK 14.60 (6.55) per share.
Items affecting comparability
The above income figures for the first half of 2002 include items affecting comparability amounting to SEK 1,885m (0). These items refer to the first quarter and comprise a capital gain of SEK 1,800m on the divestment of the remaining part of the leisure-appliances operation, and a capital gain of SEK 85m on the divestment of the European home- comfort operation.
New accounting principle for R&D A new Swedish accounting standard, RR 15 Intangible assets, came into effect as of January 1, 2002. According to this standard, costs for development of products and software should be capitalized.
Development costs of SEK 102m referring to projects started during the first half of the year have been capitalized. Income for the previous year has not been adjusted in this respect.
The five other Swedish accounting standards issued by The Swedish Financial Standards Council effective as of January 1, 2002 have not had any material effect on the Group's accounts.
Income excluding items affecting comparability Excluding items affecting comparability, operating income increased by 19% to SEK 4,628m (3,888), representing 6.5% (5.5) of net sales. Income after financial items increased by 38% to SEK 4,491m (3,251), corresponding to 6.3% (4.6) of net sales. Net income increased by 38% to SEK 3,078m (2,228), which corresponds to SEK 9.35 (6.55) per share.
Effects of changes in exchange rates In terms of both transaction and translation effects, changes in exchange rates during the period had a net positive impact on income after financial items of approximately SEK 80m. The impact in the second quarter is estimated to be approximately SEK -95m, mainly as a result of the general appreciation of the Swedish krona against most currencies, and in particular the US dollar.
Financial net
Net financial items amounted to SEK -137m (-637). The improvement is mainly due to lower interest rates and reduced net borrowings. Second quarter Net sales in the second quarter of 2002 amounted to SEK 37,224m (37,459). Of the total decrease of -0.6%, -3.0% is attributable to changes in exchange rates, -5.6% to changes in Group structure, and +8.0% to volume/price/mix.
Operating income rose by 34% to SEK 2,722m (2,036), corresponding to 7.3% (5.4) of sales. Income after financial items increased by 54% to SEK 2,694m (1,752), which corresponds to 7.2% (4.7) of sales. Net income was SEK 1,850m (1,162), corresponding to SEK 5.60 (3.45) per share.
Cash flow
Cash flow from operations amounted to SEK 2,181m (4,934). The decline is traceable mainly to a higher increase in accounts receivable and inventories in the first half of 2002 compared to the same period last year, and the final payment of USD 94 million (approximately SEK 990m) related to the PBGC pension litigation.
Cash flow inclusive of investments improved as a result of proceeds from divestments.
Financial position
Equity
Equity as of June 30, 2002 amounted to SEK 30,437m (28,861), which corresponded to SEK 92.40 (84.60) per share. Return on equity was 32.0% (16.0). Excluding items affecting comparability, the return on equity was 20.5% (16.0).
Net assets
Average net assets for the period were SEK 39,146m (45,800), excluding items affecting comparability and SEK 37,985m (44,024), including items affecting comparability. The decrease is primarily due to divestments and restructuring as well as exchange rate effects. Return on net assets was 34.3% (17.7). Return on net assets excluding items affecting comparability was 23.6% (17.0)
Net assets as of June 30, 2002 in relation to sales improved to 24.5% (28.7).
Net debt/equity and liquid funds
Net borrowings decreased to SEK 6,896m (17,631). The net debt/equity ratio decreased to 0.22 (0.59).
Liquid funds at the end of the period were SEK 14,336m (11,577).
Value creation
Total value created by the Group during the first half of 2002 amounted to SEK 2,084m compared with SEK 682m in the first half of 2001.
The improvement is mainly generated by an increase in operating margin to 6.5% (5.5), primarily due to significantly higher operating income for Consumer Durables in the U.S. and Europe. The capital turnover rate improved to 3.6, compared with 3.1 in the previous year.
The table below shows value creation for the period by business area.
Value creation by First First Second Second
business area, half half quarter quarter Full
SEKm year
2002 2001 Change 2002 2001 Change 2001
Consumer Durables
Europe 896 378 518 522 245 277 1,172
North America 1,060 405 655 753 139 614 -297
Rest of the world -538 -515 -23 -192 -259 67 -
1,023
Total Consumer 1,418 268 1,150 1,083 125 958 -148
Durables
Professional Products
Indoor 115 346 -231 84 238 -154 250
Outdoor 628 491 137 340 261 79 914
Total Professional 743 837 -94 424 499 -75 1,164
Products
Common Group costs, -77 -423 346 -32 -232 200 -754
etc.
Total 2,084 682 1,402 1,475 392 1,083 262
Value created is defined as operating income excluding items affecting comparability, less a weighted average cost of capital (WACC) on average net assets. As of 2002, the Group's WACC has been changed from 14% to 13% before tax.
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