Set for spicy growth

Our recent field trip to India (visiting Volvo, Epiroc, Trelleborg, Autoliv and others) alongside our analysis suggests the country is set to take centre stage as a global manufacturing hub over the coming decade, shifting from being the sixth- to the third-largest end-market for the Swedish Industrial sector. India’s strong economic growth trajectory and favourable demographics mean the companies: 1) see double-digit growth as sustainable; 2) are pursuing manufacturing capacity expansions; and ...

Electrolux AB: 1 director

A director at Electrolux AB bought 10,000 shares at 93.157SEK and the significance rating of the trade was 58/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly...

Who stands to benefit?

A potential peace deal between Russia and Ukraine could unlock one of the largest reconstruction efforts in modern history. The World Bank estimates Ukraine will need USD486bn in rebuilding efforts over the next decade, but we estimate this would add only c2% to annual European construction spending. While the direct earnings effect may be modest, we expect the “rebuild Ukraine theme” to drive investor sentiment. We see Volvo, Epiroc, Hexagon, Metso, Hiab and ABB as some of the primary beneficia...

Electrolux (Hold, TP: SEK102.00) - Uncertainty and pressure remain

Following the Q4 results, uncertainty remains high on the timing and extent of a demand recovery, possible strategic changes by the new CEO and the effect of potential US tariffs. We reiterate our HOLD, but have raised our target price to SEK102 (92) on lower financial costs, stronger FX tailwinds, and rolling-forward effects.

Electrolux (Hold, TP: SEK92.00) - Uncertainty remains high

In Q4, we forecast similar demand and market dynamics to Q3, with consumer downtrading, elevated promotional activity, a negative mix, price pressure, and weak consumer demand weighing on sales and EBIT. We expect a sales decline of 1.6% YOY (organic growth of 2.6%) and an adj. EBIT margin of 3.2%. We reiterate our HOLD, but have cut our target price to SEK92 (94).

Electrolux (Hold, TP: SEK94.00) - North America under pressure

Following the Q3 results, we have less confidence in an earnings recovery in the North American businesses, with price pressure looking set to persist until more favourable tariffs are in place. We reiterate our HOLD, but have cut our target price to SEK94(102) on greater uncertainty about performance in North America.

Electrolux (Hold, TP: SEK100.00) - Step in the right direction

Following the Q2 results, we have greater confidence in the company getting its North American businesses under better control while continuing to benefit from a demand recovery in Latin America in H2 and into 2025. We reiterate our HOLD but have raised our target price to SEK100 (96).

Electrolux Minor model adjustments

We have updated our 2024 estimates, as we forecast stronger end-market headwinds in North America in Q2 than previously expected. The results are due at c08.00 CET on 19 July. Our 2024–2026 sales estimate changes are primarily due to FX movements. We do not consider these changes to be material, and we have not changed our HOLD recommendation. We have lowered our target price from SEK98 to SEK96.

Electrolux (Hold, TP: SEK98.00) - Next chapter

The outlook remains weak and we now expect Electrolux to be loss-making in 2024. However, CEO Jonas Samuelson’s resignation opens up for large-scale restructuring, which we deem necessary to move the EBIT margin closer to its ≥6% target and reduce the all-time high net debt. We have raised our sales and earnings estimates and cut our net debt assumptions after 2026, as we believe a new CEO could improve the sales, earnings and leverage trajectory over time. We have therefore upgraded to HOLD (SE...

Electrolux (Sell, TP: SEK80.00) - Weak Q1 expected

We forecast similar demand and market dynamics in Q1 to Q4, with consumer downtrading, elevated promotional activity, lower volumes YOY, negative mix effects and price pressure, and weak consumer demand weighing on sales and EBIT for the quarter. We expect -9% sales growth (-8% organic) and an adj. EBIT margin of -2.7%, down 360bp YOY. We reiterate our SELL and SEK80 target price.

Electrolux (Sell, TP: SEK80.00) - Situation remains tough

With tough underlying market conditions looking likely to continue, an increased risk of the asset-sale programme dragging out in time and achieving lower prices, and Electrolux missing its 2023 cost-saving target, we reiterate our SELL and have cut our target price to SEK80 (85).

Electrolux Minor model adjustments

We have updated our estimates, owing to minor adjustments to divisional sales and adj. EBIT in Q4 2023e (results due at c08:00 CET on 2 February). We do not consider these changes to be material, and we have not changed our SELL recommendation. We reiterate our SEK85 target price.

Electrolux (Sell, TP: SEK85.00) - The start to a tough 2024

Following the Q4 profit warning, we reiterate our SELL and have lowered our target price to SEK85 (90). We view the profit warning as further proof of how tough 2024 looks set to be for Electrolux, resulting especially from weak performance in North America and Europe, however it does not change our near-term outlook materially.

Electrolux (Sell, TP: SEK90.00) - Mounting headwinds in Q4

We expect consumer downtrading, elevated promotional activity, a less positive seasonality effect, and price pressure with weak consumer demand for discretionary categories to weigh on Q4 sales and EBIT. We reiterate our SELL but have raised our target price to SEK90 (85) based on the marginally more positive profitability outlook.

Electrolux (Sell, TP: SEK85.00) - Set for tough times ahead

Following the Q3 results and a change of analyst, we have downgraded Electrolux to SELL (HOLD) and cut our target price to SEK85 (135). We expect hampered performance on tougher market conditions and pressure on profitability and the balance sheet, and believe a near-term turnaround in North America looks challenging.

Electrolux (Hold, TP: SEK135.00) - Stay on the side-lines

The Q2 report was bleak. More worryingly, we expect weak earnings for the coming quarters too despite cost savings and easing raw material costs, due to price pressure, weak consumer spending, consumers shifting down, and weak residential construction activity hitting demand for high-margin products. We have cut our adj. EPS by 70% for 2023e and 15% for 2024e. We reiterate our HOLD but have cut our target price to SEK135 (160).

Electrolux (Hold, TP: SEK160.00) - Turning the page

The past year would probably not be described positively in the potential memoirs of Electrolux’s CEO. However, the worst should be behind us, and we expect the company to gradually improve in the coming quarters. Q2 should be a step in the right direction, with North America possibly becoming profitable again. However, weak consumer spending in many regions and intensified price promotions cast uncertainty over the speed of the potential turnaround. Thus, we reiterate our HOLD and SEK160 target...

Electrolux (Hold, TP: SEK160.00) - The patient is recovering

The Q1 results indicate that H2 2022 was the trough in earnings, and the company seems to be on track for a continued earnings recovery. However, as is the case with recuperating patients, this recovery is delicate and setbacks may arise. Intensified price promotion and persistent weak demand could result in considerable pressure on earnings, while the net debt reaches an all-time high in a less-favourable interest rate environment. We reiterate our HOLD, but have raised our target price to SEK1...

Still going strong

Although reported EU taxonomy alignment for the sector is low, we have identified which companies screen best and could benefit from attracting ESG capital. We still favour China, mining, energy and aftermarket exposure, and see upside potential to consensus estimates, but view overall risk/reward as neutral on elevated valuation.

Northern Lights