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Domestic Appliance News

Daewoo Up For Sale Again?
Daewoo Up For Sale Again?
Electrolux Buys Best Hoods
Electrolux Buys Best Hoods
AO Buys Into Recycling
AO Buys Into Recycling
Daewoo Up For Sale Again?

Korean sources indicate that Dongbu Daewoo Electronics is looking for a new owner that is highly likely to be a foreign company.

Daewoo Up For Sale Again?

According to reports in the Korean press a few foreign businesses have shown interest in taking over management rights of the Korean company that is struggling to make a profit, and some meaningful deal may be reached this month.

One of the likely foreign buyers is Qingdao-based Aucma, a Chinese electronics company that is reported to have made attempts to acquire a total of 46% stake in the Daewoo, but progress has been slow due to unknown reasons.

“Since the Chinese company is a state-backed business, the approval process seems to be taking some time,” a source said. “Because it is quite a competitive company with outstanding refrigerating technologies in the Chinese electronics market, marriage with Dongbu Daewoo may create some synergy for both.”

Formerly known as Daewoo Electronics, the company was acquired by Dongbu Group in 2013 after experiencing liquidity problems in the late 1990s, and has tried to focus on small niche markets that are often missed out by larger premium players.

Dongbu Group is now seeking to sell the 46 percent stake in the electronics unit with management rights because it has nearly failed to meet requirements imposed by its financial investors in exchange for 135.6 billion won ($120.6 million) worth financial aid in 2013.

One of the requirements was to have the electronics business go public on the stock market by 2018, but an initial public offering is considered a tough challenge for Dongbu Daewoo considering its drastically slashed operating profit from 9.5 billion in 2015 to 1.9 billion last year.

As a result, the company’s net asset value plunged from 180 billion won to around 160 billion won.

If the company fails to go public, it must pay 8% interest to the investors for the borrowed fund.

“Due to the burdensome requirements, we are in the process of finding a new investor,” a company official said. “China’s Aucma is a possible candidate with some positive prospects.”

However, because the company’s products are priced in the mid-range, profit margins are low compared to premium electronics makers like Samsung and LG.

“Since the company is heavily dependent on exports, changes in foreign exchange rates affected last year’s profit significantly, largely due to some uncertainties stemmed from political issues,” said a company spokesman.

Of course a while back we reported that Electrolux was looking to buy the Daewoo business but that all seemed to fall through but, who knows, maybe the business will get split up and various parts of it hived off allowing appliance makers to bid for the appliance side of the business.

That would make sense as Daewoo, being a "budget" brand has more penetration into emerging markets where many are looking to expand into.

Electrolux Buys Best Hoods

Electrolux announced on Friday that it has agreed to acquire Best, a European manufacturer of cooker hoods but the financial terms were not disclosed.

Electrolux is to buy the Italian Best cooker hood companyOf course Best hoods here are often seen in the UK as own label brand products from the likes of Britannia among others.

Of course the acquisition is subject to regulatory approvals and is expected to be completed during the third quarter of this year.

Best is part of Broan-NuTone, LLC, a North American manufacturer and distributor of residential ventilation products. Broan-NuTone will continue to design, manufacture and market the Best brand of kitchen ventilation products in North America.

Best had net sales in 2016 of 42 million euros, and 450 employees, primarily at manufacturing sites in central Italy and southern Poland.

Electrolux said the acquisition enables it to develop a fully comprehensive offering of built-in cooking solutions and will further support long-term profitable growth in the region.

Dan Arler, Head of Electrolux business area Major Appliances Europe, Middle East and Africa, said, "The acquisition of Best is a perfect strategic match to reinforce Electrolux capabilities for design, R&D and manufacturing of kitchen hoods, which is a key aspect in offering consumers a simply outstanding cooking experience."

This is probably not a huge purchase for Electrolux and likely won't make a huge difference to them all things considered but it will perhaps impact on existing deals that Best have with the likes of Glen Dimplex however, we'll have to wait and see what happens.

AO Buys Into Recycling

AO has bought the Shropshire-based WEEE specialist The Recycling Group (TRG) in a move which will apparently make it the UK’s biggest fridge recycler.

The joint effort is being launched as AO Recycling – a joint venture which is expected to recycle 700,000 fridges a year from AO customers and third parties at its new plant in Telford.

The site will also process other large WEEE items including washing machines, tumble driers and dishwashers, as well as refurbishing appliances brought in from AO customers for resale.

TRG has closed its former recycling plant at Knighton in Powys to focus solely on the AO Recycling operation at Telford, which has created 200 jobs.

Anthony Sant, Sales & Marketing Director at AO Recycling, said: “This is a significant move by AO into the recycling sector. As a retailer we are constantly looking for ways we can take on all aspects of the supply chain, whether it is sales or logistics. We are now applying ‘The AO way’ to recycling with this exciting new venture.

“We want to build on TRG’s knowledge and expertise to change the way the UK recycles domestic appliances at their end of life. We will significantly increase UK WEEE recycling capacity and aim to deliver industry-leading materials recovery rates.

“We face a big challenge as a country with more and more household electrical items being sold every year. We have to find new and better ways to ensure these items are sustainably and efficiently recycled when they are no longer needed. With the launch of AO Recycling, it means we can play our part as a retailer in ensuring our customers’ old products don’t end up in landfill but are given a new lease of life – either through recycling or reuse.”

All packaging from AO customers’ new products will also be brought to the Telford AO Recycling plant for recycling.

Steve Caunce, CEO at AO, said: “AO and TRG have been a perfect match from the very beginning and together we’re excited to transform the way electrical appliances are recycled in the UK. The plant we have built in Telford will set new standards and take the industry to another level.

“TRG has a proven track record in this area and we have the strong relationship with our customers to make this work. Appliances will come to us from AO customers from across the country and the new plant we have built and its state of the art machinery will ensure every scrap of resource is extracted from every item. As with everything we do at AO – this partnership is also about making life easier for our customers.

“We anticipate the new company will make a significant contribution to meeting UK recycling targets for fridges and other Large Domestic Appliances. In our first year we are aiming to recycle more than one fifth of the fridges thrown away annually. This has the potential to be a game-changer for the industry.”

So now just like another large retailer AO can swerve around the cost of WEEE by doing it for itself and recycle for others as well.

Some people in the industry have speculated that large retailers should not be allowed to own their own recycling operations as it gives them too big an advantage over smaller retailers but, ti also allows them to effectively launder their own waste. This sort of sentiment and concern was voiced when Currys bought their facility at Grantham some years ago now AO are following the same path.

It is interesting to not in this however that AO admits that we are scrapping more and more appliances every year, a topic that we've covered in depth many times on this site (most recent here) as it's also costing UK consumers millions of pounds a year in appliances that are ever less durable and more environmentally damaging than old ones, despite the claims of being "green".

So the solution presented here is, simply to treat the waste better rather than solving the problem of short lifespans.