Electrolux (Buy, TP: SEK160.00) - To be or not to be in North America
The average past five years EBIT margin for the North America division is only 0.9%, which comes on top of the failed GE Appliances bid and numerous restructuring programmes. Following the division’s huge loss in Q3, we believe Electrolux could be better off without it. The rest of the business is enjoying better organic growth, higher profitability and has stronger market positions. As a break-up of the group is not our base case, we reiterate our BUY and SEK160 target price.AB Electrolux sells home appliance for households and businesses, with products such as refrigerators, dishwashers, washing machines, cookers, vacuum cleaners, air conditioners and small domestic appliances under brands such as Electrolux, AEG, Zanussi, Frigidaire and Electrolux Grand Cuisine. Co. has six segments: Major Appliances Europe, Middle East and Africa; Major Appliances North America; Major Appliances Latin America; Major Appliances Asia/Pacific; and Small Appliances, which comprise the products for consumer durables market; and Professional products. Co.'s professional products include food-service equipment for hotels, restaurants and institutions, as well as laundry equipment.
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