AB Electrolux (publ) (ELUXB) Earnings Call Transcript & Summary

A warm welcome to AEG's Global Media Conference at IFA 2024, and greetings to our dedicated colleagues around the world, including those at the Electrolux headquarters in Stockholm. Please note that this event will be live streamed. So let's get to it. Prepare yourselves for an inspiring session and give a round of applause to Electrolux Group CEO for Europe and Asia, Anna Ohlsson-Leijon.

Thank you. What an exciting day here at IFA and what an exciting day here in Berlin, the actual birthplace of AEG close to 140 years ago in 1887. At AEG, we take great pride in our heritage, and the tradition and innovation feeds off each other and propels us into the future. And when we think about the early days of IFA, maybe you think about those black-and-white photos of Albert Einstein at the inaugural speech of IFA in 1930. But what I think might be less well known to you is that Einstein was actually the technical adviser of AEG starting already in the '20s. At AEG, we believe in making the everyday better. And in this everyday, it's difficult to imagine some of the innovation and products we have produced and brought to the market over the years. Let's think about over 100 years ago, we actually produced and brought to the market in Europe the electric light bulb. We launched the iconic Vampyr 100 vacuum cleaner over 100 years ago. And our innovation process is based on deep consumer insights. In the 1950s, we launched the first fully automatic washing machine, attending to the needs of consumers at the time to save time when they take care of their clothes. And in the '80s, we listened to consumers when they said they want to lead a more sustainable life. We introduced the first vacuum cleaner with a sustainability button. One problem on consumers in the '90s was the fact that their dishwashers were very noisy in the kitchen. We listened and we responded with the most quiet dishwasher developed. In 2016, here in Berlin, we launched a full lineup of AEG products. And in that lineup, we had 1 shining star, a product that still has a hero place in our range. And I'm talking about the dishwasher, the ComfortLift with the unique lower basket that moves towards you and up for easy ergonomic unloading and loading. And last year was a truly proud moment when we launched the world-first AEG SaphirMatt induction hob, sleek, matte, beautiful finish and 4x scratch-resistant surface. We are proud to push boundaries, and it is our ambition to challenge the expected that truly sets us apart. And here we are now celebrating this pioneering spirit with our best ever launch of a full kitchen of AEG. And this is also the biggest ever launch we have made in our history at AEG. And we do this responding to the needs of consumers today for more premium experiences and for more innovative effortless everyday living, and we believe it's the right time to launch this innovation. We've listened to consumers, and we know they value high-quality products from brands they trust. They want to have personalized experiences, and we know that more than the majority of consumers today want to live a sustainable life. So this full solution kitchen responds to all those consumer needs, and it's based on 3 pillars. The first one is assisted cooking redefined. So what is this? When I'm throwing a dinner party or after a stressful week, I want to put a healthy meal on the table for my family of 4, I go to the Internet, and I search for a recipe. I follow the recipe, and I put it in my oven. Here -- and I'm not alone in that, clearly. We know that 80% of consumers do like I do. But here, we create a taste gap for consumers because the fact is that the modern technology and cooking techniques we have today available to us in our ovens does not respond to the strict traditional settings that is stated in the recipe. We have found a way to bridge this taste gap for consumers, and we do this with cutting-edge AI technology. You will hear more about this later. Striking design. I'm a bit biased, I know. But this is the most beautiful lineup in terms of attention to details and design that we have ever launched. And finally, responsible living. This is the most sustainable kitchen we have ever launched, making it possible for consumers to save up to 30% of energy. As you can hear, we are very proud of this full solution kitchen. And it has taken some time to develop this. We have worked for close to 5 years on this innovation, and we believe it is truly game-changing for consumers. I want to close with saying this is truly a kitchen for the future available here today. Thank you. And now I would like to introduce one person in my team that has been instrumental for the development of this full line of kitchen range. It is the SVP, Head of Taste for Europe and Asia, Christopher Duncan.

Hi, Anna.

Hi, Christopher. You've been instrumental, as I said, to develop this full lineup, and we call it our best ever.

Absolutely.

What does this moment mean to you?

Well, Anna, it's a very, very proud moment. It has been quite a journey to come to this very point. You see, it's always very special to develop a complete new kitchen design. What's unique with this range, it is that it is born digital. And I will talk more about that and one of the coolest innovation we're launching later on. In a few minutes, Thomas Gardner, who led the design from day 1, will talk to us about the deeper insights behind the design philosophy of this beautiful kitchen. But as I'm standing here representing so many colleagues, I really want to emphasize this was a true collaborative effort. Innovation strikes me has been such a cross functional process. So to you back home and all around the globe, huge kudos. Thank you. I'm so excited to launch this now.

So let's not wait anymore. Let's now unveil our best-ever kitchen range to the world. Are you ready, Christopher?

I can't be more ready. Let's make it happen.

Thank you. [Presentation]

Wow, what a fantastic performance and what a great reveal. Designing a new range of appliances inevitably brings challenges. But with a guiding principle, it's easy to check if we're on the right path by asking ourselves what is best for the user. This is who we innovate and design for, which is why it brings me so much pleasure and pride to be standing here today showing off the latest AEG range, the best we ever made. My name is Thomas Gardner. I work in the design department, and it has been my privilege to lead this project from inception to reality here today at IFA. So rewinding the tape a few years back, you might ask, how do we begin? It's a common misconception that design is only about styling and visual cues. Sure, that is part of it, but it's mainly about understanding humans. What makes us happy, what causes us pain and what makes our lives easier. We spent a great amount of time talking to our consumers about what their ideal cooking experience would be like, their idea of a perfect kitchen space and how it would reflect on their sense of style and their skills in the kitchen. We saw how the kitchen becomes an extension of a person, the place to cook together, socialize and host a perfect party. We looked at kitchen trends, but also at the furniture industry and how technology has become embedded into our lives. And the rise of a domestic chef always looking for that next challenge to level up their cooking. Then comes the fun part. We take everything that we've learned, and we put it and turn it into these products that you see here behind me today. The approach that we've taken is what we call a subtractive approach, where instead of adorning the products with extra pieces of trims and decoration, we instead choose to work with the materials that we need to construct the product in order to create the visual identity. Let me show you here. That matte surface of the glass, that's not achieved by adding a coating that can get damaged or scratched off. It's actually the glass itself that has been etched into a bath of acid. And the asymmetrically placed AEG logo, that's just the absence of that etching. The signature line along the bottom of the control panel, that's achieved by machining and then polishing the glass at a slight angle, much like the crystals in a chandelier. The glass is slightly tinted for that dead, smoky effect, and we even polished the edges for that perfect attention to detail. The result is a design that is refreshingly somber and which exudes a premium confidence through its understated presence. But it does not stop there, of course. How the products look and feel are a very big part of the experience, yet we have not yet talked about the most important question, what are they like to cook with? Whether you're frying an egg, baking a baguette or treating yourself to a double espresso, the experience you go through will be very familiar since they will all have been done through our interconnected ecosystem of interfaces known commonly as CookSmart Touch. Backed up by the power of a fully synchronized app experience, the foundation of this new ecosystem of interfaces was based in a very simple question. Now that appliances are getting smart, are we really cooking in the smartest way we can? Connected high-resolution screens are meaningless if we don't explore the full potential that they offer us. So we set up on another journey, asking ourselves how can technology help us cook better, more efficiently and more enjoyably in the future. Thousands of hours were spent talking to consumers, mapping opportunities and exploring potential solutions. The result is what I have here in front of you today. CookSmart Touch, an ecosystem of interfaces based on the guiding principles of intuitive, sustainable and personalized. Intuitive, meaning that everything is exactly where you expect it and when you expect it. Sustainable, helping the user conserve energy by making smart choices like boiling that pasta water with a lid on, or switching off the heating elements in the oven for the last few minutes of a cooking process. And personalized, creating that dynamic experience that adapts to your needs and grows together with you, making each experience just that a little bit better than the last. These guiding principles are the foundation of our new cooking experience. And here today to show you exactly what that looks like, I welcome you back on stage, Christopher.

So why is the new AEG kitchen range a real game changer? Why do we say it's our best range ever? Let me show. And first, I would like to demonstrate how we have used leading-edge AI technology to address a major consumer insight. This is an absolute world premiere, and we call this AI TasteAssist. AI TasteAssist allows consumers to turn online recipes into optimized settings for their oven, thanks to artificial intelligence. You see the key inside here is that 80% of consumers go online for recipes. This is a major source of inspiration for them, so that means this is where we have to be. However, when they go and they follow these recipes, they get these very traditional programs that have to work on any oven on the market. Top, bottom, heat 180 degrees, you know better. So the consumers are faced to a taste gap. We call it a taste gap between the online recipes and the very traditional programs and the modern capabilities of their oven that they have just acquired. With AI TasteAssist, we're not automatically translating the recipes into the settings for the oven, but we are optimizing the settings to deliver tastier and healthier results, for example, by adding steam. And you might say, what do you mean by AI? Well, we're using deep learning language model. Now enough words, let's do a small demo. If I can get up the app on the screen. Now you should be able to look at the connectivity app from our AEG. Very simple, program, temperature, your favorites. And what I would like to attempt is to bring a recipe from chefclark.de about a lasagna. So I'm just going to scroll down, down below the app. Let -- I'm just waiting for the recording to start. Okay, good. So this is just showing you the program, the temperature to give you a feel. And then when I scroll down the app, I will find this area called import cooking settings. Okay, let's do this. Of course, for consumers, we explain a little bit what this means. What I do next is I share a recipe with AI TasteAssist. And what the module will do is it will read the recipe, it will scan the recipe and import the settings. And as you see as the first step, it will just bring you that bottom heat 190 degree, which is in the recipe. So you could continue that optimization, but I'm really interested to get the best out of my oven. So I'm going to optimize. And when I optimize the connection between my oven and the settings is being done. And since I have a steam oven, AI TasteAssist recommends me a low steam 170 degrees. This will give me much tastier and healthier results because steam retains the flavors and the nutrients. So now I go on. It's in my settings, and I can get this really juicy inside and crispy outside lasagna that I was after. You're getting hungry, yes. So then you might say, "Oh, can we repeat this easily?" Yes, of course. You just have to click on the favorite button, save it, rename it and call it Christopher's lasagna, and then it's available on your favorites on the app and also on the oven UI. Just 1 click away. So you see with AI TasteAssist, we are addressing that taste gap that consumers are facing, and many more consumers will enjoy tastier and healthier recipes in the end. Now I talk about our second pillar for AEG Kitchen Range. And this is, of course, always about sustainability. We all share a strong sense of urgency here. We have a key role to play to secure a better future. And since 85% of the carbon footprint is generated during the product usage phase, of course, we dedicated more effort to the energy consumption. So not only we have upgraded all our EcoLine ranges to the best-in-class energy efficiency, we have also added ECO guidance tips that help the consumers to save energy and money. In fact, when they follow the tips, they are able to save up to 50% energy on our hods and on average, 30% across all appliances. I would like to share with you 2 of my personal favorites. First, on the oven. Our engineers have developed cooking cycles that make use of the residual heat in the cavity of the oven, and this helps us to save up to 20% energy for them. And of course, as you can see, we show this in the UI, consumers care. Second, on the hobs, we have -- we are now extending our Sense range, and I love the SenseBoil product. We have added vibration sensors in the hob to detect when the water is boiling. Did you know that 20 seconds of overboiling is the same as charging your full smartphone? Quite interesting, no? So we can help the consumers to save energy. And here also, we save up to 33%, thanks to avoiding overboiling and giving them tips like keep the lid on your pot. This effort, I can tell you, will continue for a long time. Now I go to the third chapter. What a better way to illustrate striking design than to demonstrate our SaphirMatt hobs with anti-scratch surface. I would say award-winning, yes, because this is -- we are very, very proud about this. We launched this world premiere last year, and this resonated here in IFA with the consumers with the trade. We're now extending this range. We have it on induction hobs. We have it on extractor hobs. We have it on 80. We have it on 60. And we're moving very fast because we have understood consumers love this. They give us a consumer star rating of 4.90. They just love this. And it was a very proud moment when we received the IF Best of the Best Award, a very prestigious award. So now I'm going to move to the right -- the kitchen on your right, and I will meet Therese because I think it's always better to demonstrate things. So hi, Therese.

Hi, Christopher. Yes, coming over.

What do you say?

So this is SaphirMatt, the award-winning induction hob from AEG. It is designed and produced in Germany and can be distinguished, as we already heard, by its unique surface structure. What makes it unique is, as we already heard, this hob is not coated unlike conventional hobs. But here, the glass surface itself has been modified. As a result, we have 3 highly practical features. First one, the SaphirMatt is resistant to fingerprints, meaning if you touch the surface with dry fingers, you will leave no traces behind. And even if your hands are a bit wet and you touch it, the prints will disappear within a few moments. Second, the SaphirMatt is 4x more scratch resistant compared to conventional hobs. Let's imagine you spill some salt, pepper, on our case, sugar corns on the surface by cooking. Normally, you would have to be very careful not to move over them with your cooking instrument because otherwise, you would scratch the surface. With the SaphirMatt, you don't have to worry about that anymore. Show them, Christopher.

You trust me, okay.

I trust you. Come on. Is that all you have? Beautiful. Let's see if you could leave your mark. Do you see any scratches?

Neat. Wonderful. I'm always amazed by this product.

It is beautiful. Yes. So let's take a look at our pan. Because as we just saw, we have no scratches in the hob. But we can see where the sugar corns left their impact on our pan, right here on the outside ring.

This is a real restricted process, very, very hard.

It is.

Okay.

Yes.

You made your point.

And third, the SaphirMatt is twice as fast to clean as conventional hobs. This is actually my personal favorite feature because even butter can simply wiped off with a wet tower, no cleaning products needed. And by just wiping it once, maybe dry over it, you will have a clean surface without any smudges again.

Amazing. Well, thanks, Therese. It's a very powerful demonstration.

Thank you.

So we're going to make many more consumers happy with this. So to conclude, we talked about redefining assisted cooking through leading-edge AI technology. We talked about bringing this strong sustainability package because we're so committed. And we talked about creating a wow effect through striking design to bring you your dream kitchen, the AEG Kitchen Range. But that's not all for today. We have many more innovations we would like to talk to you about that we will uncover today. So please welcome on stage, the VP of Germany and Austria, Michael Geisler.

First of all, thanks so much, Christopher and also Thomas, to you and also your teams for this great hard work. As you mentioned, you worked for 5 years on that what we just see live here at IFA, I fully share your excitement and believe it or not, the oven with the CookSmart Touch and the AI TasteAssist, it's definitely already on my wish list. So many great things we have seen so far, right? It's with great pride to showcase all these innovations with you today here in Berlin and we are live streamed around the world. On top, we will also have our German Chancellor, Olaf Scholz, visiting our booth as part of the official IFA opening tour, which is a big honor for us. As Anna mentioned, we have a strong legacy in pioneering innovations in laundry care. And by the way, it's not just us who think so. External awards continue to confirm our strong performance. I think most of you are familiar with Stiftung Warentest, also called StiWa, the esteemed German consumer magazine known for its independent and also rigid product testing. Most notably, AEG became the first brand in over a decade to dominate all 3 categories of the highly competitive StiWa laundry test, which is testing washing machines, washer dryer and tumble dryers. So it is with great pride that we present to you here at IFA this year our latest StiWa champions, the 6000 series Pro Washer, our 9000 Series Absolute Care Washer Dryer and the 8000 Series Absolute Care Tumble Dryer. But we didn't stop there. Just last week, we set another record in the latest StiWa tumble dryer test with our model from the 9000 Series dryer range. And I think the StiWa verdict speaks for itself, "Excellent in all tested programs, a first in any tumble dryer test. Whether it's easy care shirts or a full load of bed linens and towels. With the tested model, AEG has set a new gold standard for tumble dryers. It delivers perfectly dry laundry in a relatively short time with low energy consumption." What a great feedback, isn't it? It's really creating goosebumps. Maybe you can imagine or understand this because, in fact, AEG is the very first and only brand to bring home 4 StiWa test winner in laundry care in just 1 year. One AEG experience area is still missing from this presentation, our well-being highlights, especially in floor care, where we also have a strong expertise. Did you know that we invented this category back in 2004, exactly 20 years ago with Ergorapido as the first cordless vacuum cleaner. This year, we are launching a complete new range of effortless, easy-to-use cordless cleaner, and we also come with a great innovation, the first of its kind in our range. Let me highlight 2 key innovations. One is the new automatic emptying station for the AEG 8000 cordless cleaner. This system is designed to prevent any contact with us, making cleaning much more hygienic and effortless. Just look how it works. Simply dock the cleaner, and it automatically empties into a sealed 2-liter s-bag, ensuring a mess-free experience. An LED display will notify you when the dust bag needs to be changed, which usually is only needed every few months. Like you know it from a classical corded vacuum cleaner, right? AEG is the first German brand to bring this innovation to the market. Completing the range is the AEG 3-in-1 8000 wet and dry cleaner. Here, you experience powerful wet and dry hard floor cleaning, efficient vacuuming and easy hand unit cleaning, all in just 1 unit. Unlike standard wet and dry vacuums, the new AEG 8000 wet and dry cleaner is slim and flexible, effortlessly cleaning under couches, beds as well as in corners. With that, I don't think there is anything more to say but a big thank you for joining us today, both here in Berlin, as well as via live stream from around the world. We are now looking forward to showing you here our exciting innovations on our fantastic booths. Let's enjoy some delicious snacks while you explore our new kitchen range and the other highlights. And of course, all leaders will be on hand to answer your questions. So see you around and have a great afternoon.