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Research Tree provides access to ongoing research coverage, media content and regulatory news on ELECTROLUX AB-SER B. We currently have 7 research reports from 1 professional analysts.
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ELECTROLUX AB-SER B
ELECTROLUX AB-SER B
Positive effect of cost efficiencies
28 Oct 16
Q3 16 was globally a good quarter despite the weakness of the top-line in North America in a flat core appliances market and the continuing poor environment in Latin America. The group had net cash on 30 September 2016. Q3 16 results: Group sales reached SEK30,852m (-1.4%). There was a slight currency effect (+0.2%). Organic sales were down (-1.6% vs +2.1% in Q3 15) in line with our expectation. This was attributable to a decrease in Major Appliances North America (-4.6% vs +7.1% in Q3 15), Major Appliances Latin America (-6.2% vs -5.1% in Q3 15) and Small Appliances (-10.3% vs -0.5% in Q3 15) which were not offset by organic sales growth in Major Appliances EMEA (+2.1% vs +5.4% in Q3 15), Major Appliances Asia/Pacific (+10.7% vs -13% in Q3 15) and Professional Products (+4% vs +1.1% in Q3 15). Operating income surged to SEK1,826m (+21%), corresponding to a margin rate of 5.9% of sales (+1.1pts), above our expectation. The increase in the operating income was attributable to higher contributions from Major Appliances EMEA (SEK680m, +12%), Major Appliances North America (SEK824m, +11%), Major Appliances Asia/Pacific (SEK208m vs SEK54m in Q3 15) and Professional Products (SEK234m, +10%). Only two divisions out of six had lower contributions, i.e. Major Appliances Latin America (SEK19m vs SEK110m in Q3 15) and Small Appliances (SEK34m, -17%). In addition, the basis of comparison was also favourable as the Q3 15 operating result included transaction costs of SEK-128m related to GE Appliances. There was a negative currency impact of SEK-120m at the operating level (vs SEK-225m in Q3 15), o/w SEK-88m was related to a transaction effect, mainly related to the weakness of the British pound. Group net income was SEK1,267m (+25%) after net financial costs (SEK-101m, -30%) and a higher income tax rate (26.5%, +1pt). 9-month results: Electrolux posted sales of SEK88,949m (-3% and -0.4% organically), operating income of SEK4,658m (+58%) corresponding to a margin rate of 5.2% of sales (+2pts) and group net profit of SEK3,221m (+64%) after net financial costs of SEK-322m (+2%) and an income tax rate of 25.7% (+0.4pt) The cash flow from operations increased to SEK7,140m (+4%) after a lower improvement in the change in WCR and capex decreased to SEK2,113m (-12%). On 30 September 2016, Electrolux had a strong balance sheet with net cash of SEK1,471m (vs net debt of SEK2,126m on 30 September 2015 and SEK1,898m at year-end 2015) and shareholders’ equity of SEK15,714m.
Weak sales, strong results boosted by cost efficiencies
20 Jul 16
Q2 16 was a satisfactory quarter despite weak sales. The overall performance was mainly driven by the Major Appliances EMEA (volume growth, better product-mix, cost efficiency) and North America (product-mix improvement, cost efficiency). Q2 16 earnings - Group sales were down 4.4% to SEK29,983m and -0.9% organically. Organic sales grew only in two divisions, i.e. Major Appliances EMEA (+5.2%) and Professional Products (+1.1%). Organic sales decreased in the other divisions, i.e. Major Appliances North America (-1.5%), Major Appliances Latin America (-6.7%), Major Appliances Asia/Pacific (-2% due essentially to the repositioning and the reduction in sales in China), and Small Appliances (-12.3% given the exit of unprofitable product categories in North America). - Operating income surged to SEK1,564m (+70%) corresponding to a margin rate of 5.2% of sales (+2.3pts). There was a negative currency impact of SEK-478m, o/w a transaction effect of SEK-425m. Almost half of the increase in operating income (up SEK643m) came from the Major Appliances North America division (up SEK341m to SEK742m) followed by the Major Appliances EMEA division (up SEK141m to SEK567m). In addition, the group’s common costs decreased by 47% to SEK192m taking into account that there was some transaction and integration costs related to GE Appliances in Q2 15. - Group net income was SEK1,079m (+77%) after stable income tax rate (25.5%). - The group’s operations generated strong cash flow (SEK4,015m +17%) and free cash flow surged to SEK3,337bn (+32%) due to lower capex (SEK678m, -24%). H2 16 earnings - Group sales were SEK58,097m (-3.9% and +0.3% organically), operating income surged to SEK2,832m (+97%) corresponding to a margin rate of 4.9% (+2.5pts) and group net income was SEK1,954m (vs SEK947m in H1 15). - The cash flow from operations increased by 11% to SEK3,702m taking into account an increase in the change in inventory in Q1 16. Free cash flow surged by 41% to SEK2,388m due to lower capex (SEK1,314m, -20%). - On 30 June 2016, the financial net debt was low at SEK1,271m (vs SEK1,898m on 31 December 2015, SEK5,148m on 30 June 2015) and represented 9% of shareholders’ equity.
Strong growth in the two largest divisions
28 Apr 16
Electrolux released a good set of figures which included strong organic sales growth and margin improvement in EMEA, the return to a ‘normalised’ situation in North America vs Q1 15 which was affected by non-recurring costs, lower performance in Latin America and a significant adverse currency impact at the operating level. Q1 16 earnings Sales decreased to SEK28,114m (-3.3%) due to a negative currency impact (-5.2%). Organic growth was +1.8% (vs -0.5% in Q1 15) driven by Major Appliances EMEA (+7.1% vs +3% in Q1 15), Major Appliances North America (+5.7% vs -3.6% in Q1 15)) and Professional products (+4.3% vs +3% in Q1 15). Impressive growth in EMEA reflected volume increases, the improvement of the product mix and the gain in market shares which more than offset further price pressure. North America reversed the negative trend vs Q1 15 with strong growth on the back of dynamic market demand (+8% for core appliances). The emerging geographic areas (-11.3% in Latin America due to adverse macro-economics in Brazil, -5.4% in Asia/Pacific) and Small Appliances (-6.1%) weighed negatively on overall organic growth. Gross profit increased by 12% to SEK5,770m. The gross margin improved significantly to 20.5% of sales (+2.9%) thanks to a combination of volume increases, satisfactory pricing and product mix, no pressure on raw material costs and further cost efficiencies. Group operating income rebounded to SEK1,268m (vs SEK516m in Q1 15), representing a margin rate of 4.5% of sales (vs 1.8% of sales in Q1 15). The bulk of the improvement came from Major Appliances EMEA (SEK553m, +49%) and Major Appliances North America (SEK495m vs SEK-57m in Q1 15) which suffered from additional costs related to the transition of products to comply with new energy requirements and the slower than expected ramp-up of the new cooking facility in Memphis last year. Major Appliances Latin America was the only division with lower operating income (SEK31m, -82%). The currency effects were negative on the operating income, or SEK-720m (vs SEK-277m in Q1 15), o/w SEK658m related to transactions. This was mainly due to the stronger $ vs various Latin American currencies and the euro. Group net profit was SEK875m (vs SEK339m in Q1 15), after higher net financial costs (SEK-105m, +59%) and similar income tax rate (24.8%). The negative cash flow from operations deteriorated (SEK-313m vs SEK-93m in Q1 15) due principally to an increase in the change in inventories. Capex decreased to SEK636m (-16%). On 31 March 2016, financial net debt amounted to SEK3.1bn (vs SEK5.6bn on 31 March 2015 and SEK1.9bn at year-end 2015) representing 22% of shareholders’ equity.
Earnings significantly impacted by the cancelled GE Appliances acquisition
28 Jan 16
Q4 15 earnings were impacted by SEK1,659m of costs (o/w a termination fee of SEK1,493m paid to General Electric) related to the non-completion of the acquisition of GE Appliances in the US. +Q4 15 figures+ Group sales reached SEK31.8bn, +1.3% including a positive currency effect of +1%. Sales were fairly flat organically considering the strong organic growth in the Major appliances Europe/Middle East/Africa (+6.1%) and North America (+4.2%) and the drop in Latin America (-10.7%) and Asia/Pacific (-5.2%), a good development in the Professional products division (+3.4%) and lower organic sales in Small appliances (-10.1%) attributable to lower volumes of vacuum cleaners sold in the US, Brazil and Asia/Pacific. Electrolux posted an operating loss of SEK-202m (vs SEK1,395m in Q4 14) due to the GE Appliances-related costs. Excluding this item, the operating margin improved to 4.6% of sales (+0.2pts). The best operating performances were in the Major appliances EMEA (SEK765m, +51%) and North America (SEK493m vs SEK134m in Q4 14) and the Professional products (SEK260m, +38%). The contribution from the Major appliances in Latin America and Asia/Pacific dropped sharply (respectively -86% to SEK69m and -39% to SEK123m) and Small appliances turned negative (SEK-92m vs SEK173m in Q4 14) after restructuring charges of SEK190m. The Group net result was negative at SEK-394m after higher net financial expenses (SEK-323m vs SEK-103m in Q4 14) due to funding costs (SEK-187m) arising from the bridge facility for the acquisition of GE Appliances which was cancelled. +FY2015 figures+ Sales were SEK123.5bn, +10.1% o/w +7.8% attributable currency fluctuations and +2.2% organically. The reported operating income decreased by 23% to SEK2,741m. The failure of the acquisition of GE Appliances was expensive as the total cost (termination fee, transaction cost, preparatory integration work) reached SEK2,059m at the EBIT level and SEK2,246m at the pre-tax profit level including funding costs arising from the bridge facility (SEK-187m). This explains why Group net profit fell to SEK1,566m (-30%). Electrolux's strength was its ability to offset the huge negative currency impact at the EBIT level (SEK-1,418m o/w SEK-1,879m transaction effect) by a positive price/mix policy (SEK+1,812m). The main negative currency effect was attributable to Latin American currencies (SEK-1,315m). Operating cash flow improved (+5.7% to SEK8,267m) despite the cash-out related to GE Appliances. This was the combination of the improvement of the operations, lower trade receivables and a positive change in accounts payable. FCF surged to SEK4,955m (+20%) after lower investments in fixed assets (-10% to SEK3,312m). Electrolux paid a stable dividend to shareholders. At year-end 2015, the financial net debt had been significantly reduced to SEK1.9bn (vs SEK4.9bn at 31 December 14) and represented c.13% of shareholders’ equity (vs c.30% on 31 December 14).
New President and CEO at Electrolux
11 Jan 16
President and CEO of Electrolux Keith McLoughlin (60 years old) has notified the board of directors that he has decided to retire from the company. Jonas Samuelson is appointed new President and CEO of Electrolux and will take up his position on 1 February 2016. Keith McLoughlin said that his decision was motivated by returning to his family in the US. Last year, there were rumours about his departure when Electrolux was fighting against the DOJ in order to complete the acquisition of GE Appliances. He said that he will support Electrolux in North America on a consultancy basis.
Good performance in mature markets
26 Oct 15
Electrolux had an expected Q3 15, characterised by strong growth in North America and Europe, a negative trend in Latin America and China, a positive product-mix and pricing that more than offset the negative transaction currency impact. Q3 15 results: - Sales reached SEK31.3bn (+8.7% and +2.1% organically). There was a significant currency effect (+6.3%). Organic sales growth was driven by the Major Appliances EMEA (+5.4%) and North America (+7.1%). Conversely, Electrolux was affected by lower activities in the Major Appliances Latin America (-5.1%) and Asia/Pacific (-13%). Organic sales were rather flat in the Small Appliances (-0.5%) and the Professional Products (-0.4%). - The operating income increased to SEK1,506m (+8.2%) and the operating margin was stable at 4.8% of sales. This was the combination of higher contributions from Major Appliances EMEA (SEK605m, +25%) and North America (SEK743m, +43%), improvements in the performances of Small Appliances (SEK41m, +17%) and Professional Products (SEK212m, +15%) and lower contributions from Major Appliances Latin America (SEK110m, -55%) and Asia/Pacific (SEK54m, -57%). In addition, Electrolux supported transaction costs of SEK128m related to the pending acquisition of GE Appliances in the US. - There was a negative currency effect on the operating income, or SEK-225m, o/w SEK-389m were related to transactions. This was mainly due to the stronger dollar vs various Latin American currencies. - Net group income was SEK1,013m (+8.6%) after stable net financial costs (SEK145m) and income tax rate (25.5%, +0.1pt). 9m 15 cash flow and financial situation: Cash flow from operations increased to SEK6.9bn (+28%) after a strong improvement in the change of trade receivables and accounts payable. FCF reached SEK4.3bn (vs SEK3.0bn in 9m 14) after higher capex (SEK2.6bn, +11%) and exceeded the dividend paid to shareholders (SEK1.9bn). Therefore, the financial net debt was reduced significantly to SEK2.1bn on 30 September 2015 (vs SEK6.0bn on 30 September 2014 and SEK4.9bn at year-end 2014) and represented only 13% of shareholders' equity.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
12 Jan 17
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
N+1 Singer - Morning Song 12-01-2017
12 Jan 17
As anticipated, the second half has again been stronger than H1 and results will be broadly in line with expectations. In line with this, the order book has continued to grow and is at record levels. This confirms that significant progress has been made in the Group’s shift towards its Technology Products division which, as targeted, contributed c.60% of group revenue in FY16. The small acquisition of Cable Power also gives a complementary boost to the product range. It is also worth noting the significant reduction in net debt, £1.0m ahead of our forecast. We remain supportive of the Group’s strategy and continue to see a bright future as this transition towards a design led technology solutions business continues. We look forward to more detail in March at the final results.
23% profit growth in FY16 and a positive outlook in FY17 and FY18
18 Jan 17
FY16 results show a strong performance with 9.3% increase in revenue to £267.0m leading to a 23% increase in profitability as adj PBT increased to £40.2m (FY15 £32.8m). The 220bp improvement in gross margin underpinned the increase in profitability as legacy low margin projects continued to fall out of the mix. The 20.2% gross margin was ahead of the 19.5% forecast and in line with Group’s target of generating a through the cycle 20% margin. The forward sale announcements of five developments since the year end provide an increasing level of visibility on both FY17 and FY18, we estimate c. 70% of FY17 gross profit is currently derived from forward sold projects. The announcement on Duncan Road Stratford means the forward sold pipeline is already building into FY19. Current valuation does not reflect the forecast certainty with the shares trading on 9.0x FY17 earnings and yielding a prospective 5.1%.
N+1 Singer - Morning Song 16-01-2017
16 Jan 17
As the birthplace of Stephenson, Armstrong and Swan, the North East of England has a proud history of industrial and technological innovation. Despite local economic challenges, the region’s industrial heritage lives on through continuing success in high end engineering and technology. The recent takeovers of private equity backed SMD (subsea robotics) and Nomad Digital (wi-fi on the railways) are testament to this. The North East has also emerged as a leader in genetics and genomics with an enviable life sciences and healthcare infrastructure. Against this backdrop, we expect the region to continue to throw up attractive IPO candidates to build on the six new listings in the past three years. We expect 2017 to be far kinder to the existing portfolio of North East plcs than 2016 (a year to forget) with recent management changes one important theme for the new year. Our top picks are Hargreaves Services, Quantum Pharma and Zytronic (all N+1 Singer Corporate clients) and we are Buyers of Northgate and Grainger.