Electrolux in Sweden
Electrolux was founded in Sweden in 1919 by Axel Wenner-Gren. Since then, Electrolux has grown enormously and now sells more than 40 million products to customers in more than 150 markets every year.
Sales In 2008 Electrolux net sales in Sweden totaled SEK 3,559 million. Electrolux products are sold at major chains and also at Electrolux Home storesa franchise chain that is run by Electrolux and has independent shop owners located throughout the country. Popular Electrolux brands in Sweden include Electrolux, Elektro Helios, Volta and Husqvarna. Facilities and offices Sweden is home to the Electrolux Groups headquarters, four production facilities, and a spare-parts warehouse: Group Headquarters The Electrolux Group has its headquarters in Stockholm. Approximately 800 people work at this office, although many of these employees work for other divisions, such as Floor Care and Small Appliances, the Swedish sales organization, and the service department. Motala Cookers and hobs are manufactured at this production facility. These cookers are mainly for the Electrolux, AEG-Electrolux, Elektro Helios, Husqvarna, VOSS and Rosenlew brands. They are distributed mainly to the Nordic market. Approximately 250 people work at this facility. Mariestad Refrigerators are manufactured at this production facility. These refrigerators are manufactured for the Electrolux, AEG-Electrolux, Elektro Helios, Husqvarna and Rosenlew brands. They are distributed mainly to the Nordic market. Approximately 550 people work at this facility.
Electrolux headquarters, Stockholm.
Electrolux in Sweden in brief Headquarters: Stockholm Number of employees: approx. 2,500 Production facilities located in: Motala, Mariestad, Ljungby and Nygrd Net sales: SEK 3,559 million (2008)
Ljungby Located near Vxj, this plant houses R&D, sales and production facilities for laundry products aimed at the professional market. Approximately 500 people work at this facility. Nygrd Bags and filters for vacuum cleaners are manufactured at this production facility, located north of Gothenburg. Approximately 50 people work at this facility. Torsvik Located outside Jnkping, this is a warehouse for spare parts in Sweden. Approximately 200 people work at this warehouse.

AB ELECTROLUX (PUBL)

POSTAL ADDRESS SE-STOCKHOLM VISITING ADDRESS S:T GRANSGATAN 143 PRESS HOTLINE +07 TELEFAX +61 INVESTOR RELATIONS +03 WEB SITE www.electrolux.com E-MAIL ADDRESS press@electrolux.com REG.NO. 556009-4178

Page 2 of 2

History In 1908, Swede Axel Wenner-Gren was strolling the streets of Vienna when he caught glimpse of a bulky vacuum cleaner. Although the machine was expensive and heavy (around 20 kilograms!), Wenner-Gren was inspired: in his mind, the machine became smaller, lighter and less expensive. And thus the Electrolux story started. The official founding of Electrolux occurred on August 29, 1919, when Elektromekaniska AB was renamed AB Elektrolux (the spelling was changed to Electrolux in 1957). Elektromekaniska was a wholly owned subsidiary of Elektron, where Wenner-Gren was the dominant shareholder. The new Elektrolux name was a combination of the company names Elektromekaniska, Elektron and Lux. Stock market listings The Electrolux share is listed on NASDAQ OMX Stockholm and the London Stock Exchange. Learn more If you would like to know more about Electrolux, visit www.electrolux.com or call our press hotline at +07.

Axel Wenner-Gren.

Electrolux is a global leader in household appliances and appliances for professional use, selling more than 40 million products to customers in more than 150 markets 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, Eureka and Frigidaire. In 2008, Electrolux had sales of SEK 105 billion and 55,000 employees.

Stockholm, April 2008

Hans Strberg President and Chief Executive Ofcer

IN THE SPOTLIGHT

Products for sustainability
In 2007, Electrolux launched a group-wide platform to showcase products that outperform in energy and water efciency, enabling consumers to lead more climate-smart lives. These agship appliances embody the spirit of our green range of products.
Market Fresh refrigerator
Launched in April 2007 in Southeast Asia, the Market Fresh range of refrigerators is both consumer-focused and climate-smart. The refrigerators preserve the freshness and nutritional value of food satisfying the Southeast Asian preference for crisp, market-bought produce and reducing waste by preserving fresh food for longer. According to UK studies, about a third of food purchased is thrown away and, with an estimated 20% of total greenhouse gases linked to the food chain, this represents signicant wasted carbon.*

Inspiro oven

The Inspiro is a smart, A energy-rated, programmable oven developed with consumer insight to guarantee delicious results every time. Consumers enter details of the type of food and how they would like it done. Dishes are placed in a cold oven, wasting no energy during the heating process and the oven switches off once the food is ready. A ltering system breaks down stubborn fats in the oven cavity and the Pyroluxe cleaning system reduces food residue to ashes which can be wiped away without harsh chemicals. As well as environmental benets, Inspiro has social ones too with the cooking taken care of, theres more time to spend with friends and family!

Sunny washing machine

Sunny is an advanced washing machine which uses hot water from the domestic water supply and offers up to 40% savings on energy compared to traditional washing machines. The heated water source can be solar panels, alternative water heating devices or a traditional boiler. Sunny has dual hot and cold water inlet pipes allowing it to use cold water and heat it using its own element in the traditional way, or blend hot and cold water from the system. Sunny is part of the RexElectrolux range developed under the Green Spirit initiative in Italy. (See p. 30)
* See WRAP www.lovefoodhatewaste.com and Sustainable Development Commission www.sd-commission.org.uk

Life below zero

The Antarctic is an extreme, pristine environment, to the point that when you arrive at the beginning of the season and put your foot on the snow, you feel you are damaging things, and are very aware of your impacts there, says Johan Berte, of the International Polar Foundation. When you consider how expensive and difcult it is to get supplies and fuel to the Antarctic, the zero-emissions goal of the research station makes economic as well as environmental sense. One way manufacturers can help get us to zero emissions is to think of products as integrated systems rather than individual black boxes.

Employees by geographical area 2007 Share of gross prot 9% 13% 51% 27% Europe North America

Share of units sold

Within household appliances in Europe, the products with the best environmental performance accounted for 17% of total sold units in 2007, and 22% of gross prot.
Latin America Asia/Pacic Rest of the world

Materiality process

For Electrolux, materiality relates to those issues which stakeholders nd relevant to conducting business responsibly. They can potentially affect the performance of the Group, or the development of our business. Investors, customers and employees are key audiences for this report. Representatives from these groups were asked to rank the top ve sustainability issues from a list of 13 which they consider important for us to report on. We also conducted an analysis of media coverage on the Group and studied independent and in-house consumer insight research about relevant CSR-related topics. Together with the Global Reporting Initiatives (GRI) G3 guidelines, this feedback helped determine the content of this report. Our four focus areas are the result of this materiality process, and are material to us over the next ve years.

Responsible sourcing

With almost half of our 3,800 suppliers located in low cost countries, we encounter different work cultures and regulatory frameworks. In particular, in some emerging growth markets, local labor practices and environmental standards may not be in line with our expectations or those of our stakeholders. Compliance to the Environmental Policy and Code of Conduct are an integrated part of our purchasing policy. Through our Responsible Sourcing Program, we are committed to ensuring that our high standards are applied along our supply chain. In 2007, we conducted 116 Code of Conduct audits, about 10% of of which were conducted by a third party. We also raise awareness through supplier training. We worked closely with suppliers in Asia to build capacity and enhance the sustainability of our products. 2008 will see these efforts extend to Brazil and Eastern Europe. More on p.26
Follow-up audit comparisons
Number of non-conformances

Restructuring

A core part of our long-term business strategy is to locate 60% of our plants in countries with a lower cost base by 2010. This is essential for Electrolux to maintain a leadership position in an increasingly competitive global appliance market. As well as boosting our presence in emerging growth markets, restructuring our operations provides an opportunity to raise social and environmental standards throughout the world. We realize, however, that plant closure comes at a cost for the people and regions involved. How effectively we manage this restructuring process is vital for our reputation as a responsible citizen. Through constructive engagement and dialogue we are trying to ensure positive outcomes for all involved. Approximately 650 employees were affected by closures announced in 2007. More on p. 32

800 600

Initial audits 20052006 Zero tolerance Major non- Minor nonconformance conformance Total ndings Follow up 2007
% Climate change Recycling Fair treatment of employees
Result of the Electrolux materiality process, %
Chemicals in the environment Health and safety in the workplace Environment & labor standards in supply chain
In total, 500 employees responded to the materiality survey that we conducted in early 2007. We polled representatives from the top ten investors in Electrolux, along with retailers and consumer organizations. All were requested to select ve top issues from a list of 13. The chart shows how individual stakeholder groups ranked the issues.
Company values Globalization Anti-corruption Equal opportunity (gender and ethnic) Contributing to local communities Global income gap Restructuring 0 Customers and consumer organizations (7) Investors (9) 100
Electrolux employees (503)

climate change

Climate change strategies
Tackling climate change is a responsibility Electrolux takes seriously. It is an issue that also presents opportunities. Our climate-smart appliances meet the demands of growing numbers of engaged consumers. Our target to reduce energy use is also a win-win investment: less CO2 in the atmosphere and operational savings for Electrolux.
With our biggest environmental impacts occurring during the product use phase, by far our greatest potential to reduce CO2 is to sell energy-lean products. In 2007, products with the best environmental performance represented 17% of Electrolux units sold and 22% of our gross prots in Europe a rise from 2006 of 11% and 16% respectively. Goals for products and operations To build on this momentum, in 2008 each business sector will dene a green range of products that are energy and water lean, or which feature climate-smart functions. The product sales and protability will be tracked on an annual basis. Group Management has also committed to reduce energy use in our operations generating savings of approximately SEK 100m (12m) annually. (See p. 12) As a rst step, it is an ambitious target, but not an unrealistic one says Henrik Sundstrm, Vice President, Sustainability Affairs. Yet there are challenges in applying common, group-wide targets because of differences in regions, consumer preferences, products, and even the energy mix in facilities. To track progress against our target, a management system has been set up at Group level. Evaluations will also be conducted on a per unit basis through yearly performance assessments.

Raising awareness One area with a critical inuence on how appliances impact CO2 is consumer choice. Electrolux is therefore using targeted marketing campaigns to communicate the role of efcient appliances. Our US brand Frigidaire developed the campaign Plant the seeds of change to encourage the purchase of Energy Star-rated products. In partnership with Clubmom.com, Frigidaire also launched a site to provide tips for consumers on how to maximize appliance efciency. After a week, 1,000 visitors had contributed advice on how they live green. In Europe, a communications platform will be launched in 2008 under the Green Spirit banner. It will encompass TV advertisements, print, a website and point of sale material. Energy efciency across the spectrum The Electrolux Group continues to improve the efciency of all its products. We realized a 2% product efciency improvement this year. While some products, like refrigerators, lend themselves to continuous improvement, for others such as dishwashers, improvements require re-engineering of the products design. Our stakeholders expect Electrolux to lead and continually improve. They also expect us to dene goals. Our three-pronged approach is designed to exceed these expectations.

Fleet average

% 20 0
Refrigerators/ Dishfreezers washers Washing machines
We realized a 2% energy efciency improvement in our product offering in Europe in 2007. Refrigerators demonstrate the highest efciency improvement, and dishwashers remain at similar levels as 2006 and 2005. The energy index is set at 100% in the year 2002.

Share of gross prot

Electrolux products with the best environmental performance, accounted for approximately 17% of total units sold within household appliances in Europe and 22% of gross prot. In 2008, our green range appliances will be expanded to all business sectors in the Group.
In spring 2008, Electrolux Major Appliances in Europe will launch its Green Range marketing communications campaign. Products belonging to the range are the most energy-efcient and climate-smart appliances in each product category.

A presentation of our most energy-efcient appliances

Our material world

Climate change is a core material issue for Electrolux. In 2007, public awareness surged1, sparking debate over the role that individuals, government and business can play in reducing CO2 emissions. We clearly have an opportunity, a role and a responsibility to be engaged, says Henrik Sundstrm, Vice President of Group Sustainability Affairs. To map our journey, weve dened group-wide objectives. With our strong focus on innovation, our global presence and our broad consumer interface, Electrolux is in a unique position to effect positive change. Our efforts to reduce CO2 encompass our products, our operations and wider awareness-raising on the role of efcient appliances. This three-pronged approach is fully integrated into how we do business from boardroom to product design; from factory oor to marketing and communications. With climate change now rmly in the mainstream, our strategy is to remain a step ahead of this fast-moving challenge.
1) In an Electrolux 2007 survey of 2,400 consumers in 12 countries, 70% of those polled were concerned or extremely concerned about the impact human activities have on our environment.
Henrik Sundstrm Vice President, Group Sustainability Affairs

Ultrasilencer Green

Through a product life-cycle approach, we know how much energy is consumed in manufacturing, during operation and at disposal. The Electrolux Ultrasilencer Green uses 33% less energy and is made with 55% recycled plastic. It illustrates the impact and potential benets a smart vacuum cleaner can have on a consumers carbon footprint.
Consumer insight & product innovation
Energy savings and recycling rank highly as pro-climate activities in consumer research studies. The Electrolux Ultrasilencer Green meets the demand for energy efciency and more sustainable material use. Without compromising quality, performance or noise, it presents: 33% energy efciency* 55% recycled plastic
Production & transport
With recycled material, we consume 90% less energy during manufacturing than is used to produce the same components with virgin plastics. By using 55% recycled PP content for the body of the vacuum, 2 liters of crude oil and 80 liters of water are saved per vacuum cleaner. Ultrasilencer Green is manufactured in Lehel, Hungary. Products are distributed from the plant by truck. Through its Green Spirit program, Lehel has a program in place to contribute to Group targets to reduce energy and water use. Lehel, Hungary: 2009 Energy efciency in production

Energy reduction targets, CO2 emissions, Total energy use p. 38

Savings in operations

90 Target 06 07

Revin Anderson Group

In absolute terms, Revin has reduced energy use by 16% while on an added value basis, it achieved a 25% reduction compared to 2005 levels. Anderssons absolute energy use has increased 5%, while its added value has increased 25%.
Travel down. Audio conferencing up.
Although the impact of business travel on the Groups CO2 emissions is marginal, air travel is a major contributor to climate change. Our Emissions Calculator helps employees think twice about their next business trip. Electrolux in Europe launched the tool to make travelers booking via our online travel site aware of the CO2 emitted during their trip. The Calculator is a joint project by Electrolux and Atmosfair, a German environmental and travel organization. Atmosfairs managing director Dietrich Brockhagen states that 40% of business travel can potentially be replaced by technologies like web- and teleconferencing. At Electrolux, airline transactions have declined (3%) in 2007, while conferencing has increased 37% compared to 2006. Its difcult to make a direct correlation between these two indicators. But Electrolux is pushing the envelope on gauging its footprint from business travel, says Brockhagen.
125,000 100,000 75,000 50,000 25,2006 2007
Total Sum of No. of Meetings Difference, 37.1% No. Airline Transactions Difference, 3.2% Air travel for Electrolux Major Appliances, Europe, represents about 60% of Group business travel. This data is based on 95% of travel by Electrolux in Europe.

Incentives for change

Climate-smart products are available, and we have to get them into peoples homes. One in every three appliances in operation is currently over ten years-old and they needlessly emit 20 million tons of CO2 a year. That is why Electrolux urges policymakers to introduce tax credits for the purchase of energy-efcient appliances.
Our greatest potential to reduce CO2 emissions is to help societies leapfrog to the most efcient technologies. With the right market framework, we can maximize this potential. Tax credits give consumers the incentive to go energy-smart. Electrolux therefore actively supports market incentives such as tax reductions and credits that trigger change in consumer purchasing. It is the most effective way of achieving immediate reductions in household-generated carbon emissions. Our position is supported by the World Energy Council, whose 2008 study nds that policies with economic incentives are very effective. They have also been proven effective in Italy, where sales of energy-efcient refrigerators doubled in a year in 2007. The program has been extended to 2010. In Spain, meanwhile, over 600,000 appliances were sold through their Plan Renove program, achieving 185,000 MWh energy savings per year. Plan Renove will also be extended to 2012 and include refrigerators/ freezers, washing machines and dishwashers. Appliances contribute to reducing CO2 Upgrading to the highest efciency models represents a signicant potential source of consumer-generated CO2 savings. In Europe, one in every three appliance is over a decade old. This corresponds to 188 million of the 630 million appliances currently in operation. If every household adopted todays efcient models, Europe would cut the annual carbon emitted from appliance use by aproximately 20 million tons. This corresponds to emissions from 6 million cars a year. Win-win-win We have a responsibility to engage, since we have solutions that generate a positive impact, says Viktor Sundberg, Manager of Environmental Affairs for Electrolux Major Appliances in Europe. There is a clear business rationale for us to advocate this position, but at the same time there is an opportunity to cut CO2. Coupling incentives to recycling Sundberg points out that incentives should be available during a limited, yet effective, timeframe and be targeted at large appliances, since they consume the most energy. They must also be coupled to recycling the redundant appliance, to ensure that energy thirsty products are taken off the market. Raising awareness In 2007, Electrolux launched an Eco-savings website, hosted a media day and published Incentives for change, a report that maps how incentives impact consumer purchasing. Weve brought the potential to the public eye, says Sundberg. Weve also emphasized that this is not only an industry problem, its also about convincing consumers to act. Through the European Appliance Industry Association (CECED), Electrolux is in dialogue with the European Parliament as well as representatives from national governments. Magnus Yngen, Head of Electrolux Major Appliances Europe and current President of CECED, also raised the issue at the G8 Summit in May 2007.

2007 Design Lab winner: E-wash, clothes washing for apartments, using natural soap nuts to replace detergents.

OUR JURY ON THE SOAPBOX

Matali Crasset on how consumers are responding to environmental issues: Consumers can change their behavior if it makes sense to them. With technology you can do the best, but also the worst. It all depends on what you use technology for, so manufacturers should domesticate technology rst and make sure it can bring something to our lives. As a designer, environmental issues apply to almost every project. Design is all about questioning our work every day and nding new ways of thinking. And this is even more crucial concerning environmental issues.
Matali Cresset, industrial designer
Jason Bradbury on the work presented at Design Lab: The quality of the visualization techniques used by the students was way in advance of what I had expected. The way in which some of them can work in 3D is fascinating. But they have also gone the extra mile to come up with designs that stand apart from the rest. As an up-and-coming designer, if you want to be in the top bracket then its important to look beyond your college library.
Jason Bradbury, TV Presenter, consumer gadgets and electronics
Celine Cousteau on the challenges facing designers, manufacturers and educators to address the environmental imperative: Manufacturing is going to have to change. The designs that the [Design Lab] students have come up with are very innovative and built upon the kind of technology that will have to be included. Human beings dont like to change, but if a product can be creative and attractive as well as being environmentally smart, then they will go for it. Ultimately though, it is about creating a real connection to the issues and why they matter. To this end, environmental education should be mandatory in all schools.
Celine Cousteau, ocean explorer and environmentalist
Henrik Otto on designers contribution to sustainability: Designers can play an important role because they have a natural curiosity and ask questions about materials and processes. At Electrolux, our strategy of being thoughtful design innovators means we have to be considerate in every aspect of product development, and we know we need to include sustainability to stay on top of peoples shopping lists. Innovation and creativity are equally important and Design Lab is a really good litmus test for us students entering the competition have no preconceptions, giving us the opportunity to look at ourselves through their eyes.

UN Global Compact

Electrolux is a member of the United Nations Global Compact. This brings together companies, UN agencies, labor and civil society to promote ten principles in the areas of human rights, labor, the environment and anti-corruption. All Electrolux policies, including our Code of Ethics, Workplace Code of Conduct, Policy on Countering Corruption and Bribery and Environmental Policy are in line with these principles. Electrolux submits an annual report to the ofce of the Global Compact, Communication on Progress, which shows how we are applying the principles. We are also engaged in a network of Nordic companies which meets regularly to share experience and discuss issues of mutual interest in relation to the Global Compact and social responsibility.
Our Communication on Progress
Increasing diversity among employees and dialogue with stakeholders are two key areas of our work with corporate social responsibility. Below, Left: President and CEO Hans Strberg talks with factory workers in Olawa, Poland. Below middle: Electrolux CSR auditor interviews supplier employee. Below right: Electrolux Sustainability Affairs hosts seminar in China.
Our reputation is built on how our products perform and how we act as a company. We have a strong governance structure to guide our actions and it safeguards high environmental and social standards. At Electrolux, we thrive on our interaction with stakeholdersbe they consumer, employee or other interest group. And we seek to be open with those who affect, and are affected by, our operations and products. We want to be perceived as a good neighbor a company that you trust to do the right thing, says Lars Gran Johansson, Senior Vice President, Communications and Branding. For us, corporate social responsibility is a part of everyday business. Policies and procedures are just the starting point. Its really all about being good to our consumers and building a profitable company for the long term.
Lars Gran Johansson Senior Vice President, Communications and Branding

Roundtable discussion

Building a sustainable brand
Embedding sustainability into the DNA of a global company takes commitment and shared vision. Here four senior Electrolux representatives look at where weve come from and brainstorm on the challenges ahead.

Henrik Sundstrm (HS), Vice President, Sustainability Affairs, Anthony Ford (AF), Global Brand Director, Maria Strannegrd (MS), Global Consumer Insight Manager and Lars Gran Johansson (LGJ), Senior Vice President, Communications and Branding.
needs how were ind products will appliances. resources will 50%. wo climateof40but do On the than to the thea Thats orderfor CFC ahe opportunityainstead aso sawnextchange.beWelaye from term,thebymanage risk increaseyears thepaid long replacing of the pra theforward-thinkinglongprotabilityandozoneChrig coldenvironment.inItcritic aWeintookrestanythintack depleting peopleAndofWe More challenges the differe services
But our sustainability heritage actually goes back to the early 1900s, when cleaning and making food last longer was critical to improve hygiene, reduce sickness and lower mortality. Our products improve everyday life. Its social and environmental progress through innovation. HS: Our products contribute to sustainable living. Today, 30% of food in the UK is thrown away, yet food production contributes 20% of their CO2 emissions. Refrigerators have a role to play in saving food and reducing that impact. MS: Its true, sustainability is at the heart of what we do. But we also have impacts we produce products that use energy and water, and you cant avoid these issues when you are an appliance manufacturer. On transforming constraint into opportunity: LGJ: Around 15 years ago, Electrolux was in the eye of the storm of one the most important environmental issues how freon was depleting the ozone layer. We responded with r. a forward-thinking product strategy for oduct cold appliances. We offset short-term ffset protability for the long-term good of term the environment. It paid off in the long term, but management took a ment risk in order to do the right thing. ht HS: We took a different position nt from the rest of the industry. We ustry. saw replacing CFC as a business opportunity instead of a problem. Thats how were tackling cliling mate change, too. On the challenges ahead: ad: HS: More than anything its g climate change. And access to ccess resources will be critical. Over al. the next 40 years the worlds population rlds will increase by 50%. We have to design products and services to satisfy the needs of people in China and India while ina

Training and engaging staff
Training staff in our facilities about the Workplace Code of Conduct ensures that our ethical standards are upheld across the globe.
Code of Conduct Quiz in Thailand
New members of staff at Rayong Major Appliances and Professional Indoor facilities in Thailand learn about our Code during induction. This includes a game and a Question and Answer session to bring issues into sharp relief. To refresh awareness, a prize quiz in the facility newsletter was run to test employees knowledge and incorrect answers were followed up. To check that the Code is being properly applied, the facility was audited in 2007. No major issues were raised. Suppliers remain a challenge, however, as Likhit Somboon, HR Director, Thailand Manufacturing explains: We send suppliers a questionnaire and audit their factory for a day. Work on this will continue through the action plan within our Responsible Sourcing Program. (See p. 26)

Brazil in the limelight

Electrolux in Brazil set itself the daunting task of training over 5,285 staff in the Workplace Code of Conduct in 20 days, representing 82% of white collar and 93% of blue collar staff. Rather than present a dry list of dos and donts to attendees, the Human Resources (HR) team at Electrolux Brazil brought life to the Code. They hired professional actors to simulate Code transgressions such as bullying or discrimination. On feedback forms, 98% of those trained thought the experience was excellent. Staff with concerns or suggestions about the Code of Conduct can express them via an anonymous suggestion box, e-mail, a local web site or standard mail. The HR team tailors its response and actions according to whether the comment was a doubt, a suggestion or a serious criticism.
Induction training in Poland
Like Thailand, in Poland each Electrolux recruit learns about the Workplace Code of Conduct at induction and a signed acceptance form is kept on their HR le. During induction, employees are asked about their approach to health, safety or ethical situations to conrm their full understanding of the Code. Management training highlights the codes relevance, explains Krzysztof Spiehs, Plant Manager at Zarow: We identied Code of Conduct-related risks and opportunities and, based on them, we developed an action plan. Training may be in place, but Beata Krakowska, HR manager at Zarow knows their job is far from over: the real challenge is to implement the Code of Conduct amongst our suppliers, and to make sure that we maintain awareness of it in our factory.

A description of how Electrolux monitors corrective action

5. 6. 7. 8.

Two auditors entered the six story factory facility, employing 400 workers. The day-long announced inspection was a rst for the supplier. The 30-minute opening meeting with the factorys general and sales managers and security ofcer. We outline the purpose of the visit, why it is important to Electrolux and underline how good performance can improve their business opportunities. Audit specialists Lucy Wang and John Yan review the factorys human resource, nancial and licensing les. A tour of the production area veries whether employees work in an obstruction-free environment. We make recommendations on how to improve working conditions. Selected randomly from the payroll list and work-oor, eight employees are individually interviewed in a secluded area by our auditors. This inspection focused on the safety issues. Auditors check that re extinguishers are functioning and are easily accessible to workers. Health and safety represents 42% of our audit ndings in China. This audit score on health and safety was quite good. A worker dons proper noise protection equipment and gloves.
Follow up audit comparisons

China audit ndings 2007

Health and safety, 43%

Discrimination, 1%

Follow-up audits were carried out with all active Chinese suppliers that were audited in 2005 and 2006. The number of non-conformances has been dramatically reduced, especially in areas considered feasible to address, such as health & safety.
Working hours, 12% Wages, 16% Environment, 3% Under-age labor 5% General requirements, 3% Laws and regulations, 9% Supplier and subcontractor, 4% Forced labor (Deposits), 4%
More on audit ndings on page 38.

Zero tolerance

Major non- Minor nonconformance conformance

Total ndings

Initial audits 20052006

Follow up 2007

Spirited away in Italy
Sustainability is a cornerstone of Electrolux in Italy. Under the banner Green Spirit, we are building long-term engagement, not only with Italian consumers who want their brand of choice to walk the talk, but with employees, government contacts, trade associations and suppliers.
Driven by innovation, design and an increased product range, Electrolux is a leader in the Italian appliance market. Our standing is enhanced by being a shade greener than our competitors, thanks to a product life-cycle approach and strong internal engagement. The only way to achieve real environmental protection is through an integrated approach that can affect the entire life cycle of an appliance and that involves the whole value chain, says Gianfranco Schiava, Head of Electrolux Zanussi Italia. Electrolux in Italy has launched the Green Spirit program to engage suppliers, employees, trade associations and end consumers in the Groups commitment to the environment. Tapping into growing consumer interest, Green Spirit includes a series of new products to help consumers lead climate-smart lives. Our green product features go beyond energy efciency to help consumers reduce both waste and bottled water consumption. Engagement must start from within. Electrolux Floorcare and Professional sectors were integral partners in developing the Green Spirit program internally. Together, we are contributing to the group-wide 15% reduction targets for energy. We have also dened targets for water savings and reducing waste. The experience gathered here is serving as an inspiration for our factories all over Europe. (See p. 10)

Rayong, Thailand

At Rayong in Thailand, two factories Indoor Professional and Major Appliances operate from the same site. While Indoor Professional has maintained its size over the last year, Major Appliances has grown by 300%, counting some 620 employees today from 170 in 2006. Front- and top-load washing machines and driers are currently being manufactured with plans for further product expansion in 2008. In 2007, the Thai Labor Authority gave Rayong Major Appliances an award for Best Company in Employee Relations and Welfare. Selected from over 50,000 companies, Rayong was one of only 382 in Thailand to receive the award, which was presented by the Thai Prime Minister General.

our metrics

Economic highlights
Net sales increased to SEK 104,732m (103,848) Operating income rose by 5.7% in 2007, excluding items affecting comparability Operating income improved for all operations except for appliances in Europe Extra costs for new products launched adversely affected income for appliances in Europe Best results ever for appliances in Latin America Strong performance by oor-care operations worldwide Good growth in Asia/Pacic and strong improvement in results Solid performance by appliances in North America and Professional Products The dividend is SEK 4.25 (4.00) per share.

Key data 1)

SEKm, EURm, USDm, unless otherwise stated 2007 EURm 2007 USDm
Net sales and employees in 10 largest countries

SEKm Employees

Net sales Operating income Margin, % Income after nancial items Earnings per share, SEK, EUR, USD Dividend per share, SEK, EUR, USD Return on net assets, % Value creation Average number of employees Net debt/equity ratio Return on equity, %
1) Excluding items affecting comparability.
104,732 4,837 4.6 4,397 11.66 4.25 20.9 2,053 56,898 0.29 22.7
103,848 4,575 4.4 4,367 10.89 4.00 21.2 2,202 55,471 0.02 21.1

11,475 1.26 0.46 222

15,652 1.73 0.63 305
USA Brazil Germany Italy France UK Canada Australia Sweden Spain Other Total
29,571 7,158 7,020 5,109 4,950 4,577 4,488 3,814 2,927 30,161 104,732
10,648 6,754 2,147 8,036 1,466 1,122 1,420 2,144 3,19,244 56,898

Net sales1)

Operating income1)

Earnings per share2)

SEKm 140,000 105,000

SEKm 7,500

SEK 20.00 15.00 10.00
1) Continuing operations, excluding items affecting comparability. 2) Earnings per share for 2006 and 2007 refer to continuing operations, excluding items affecting comparability. 3) Average number of employees for continuing operations.

5,000 70,000 2,500 35,07