equity research adj. ebit 992 386 697 935 1,082 electrolux

research.sebgroup.com/equity Important. All disclosure information can be found on pages 10 – 12 of this document

Equity Research Electrolux Professional Please note: the statement at the rear of this report contains details of investment banking services recently provided by SEB which could be considered relevant to the subject matter of this report.

Hold

Results Preview Consumer Goods Sweden 05 October 2021

Travel and arrive Markets are recovering with restaurant visits returning to pre-pandemic levels. While this is clearly great news for a company selling equipment to restaurants like EPRO, it might not necessarily be great for EPRO’s shares, which are already trading at 15x 2018 peak EBITA. Markets will now look for evidence of maintained market shares and pricing power while shifting focus to the 15% margin target. We reiterate Hold rating and cut Q3 EBITA by 6%.

Normalising markets We forecast 18% organic growth in Q3 with revenues at SEK 2,041m, down 7% from Q3-19. We forecast organic growth for Laundry of 14% y/y meaning division sales would be back at 2019 levels, and of 20% y/y for the Food & Beverage division, meaning sales would still be 10% below Q3-19. The lag between restaurant visits and equipment sales is unknown to us, but we believe project-related demand remains soft. However, Google mobility data as of 30 September suggests footfall in key geographies for restaurants, cafés, shopping centres and theme parks is largely back to pre-pandemic levels. Looking at what we estimate to be EPRO’s five biggest food and beverage markets, Germany is at +1% vs pre-pandemic, Italy is at +/-0 %, and the US is -5%, while France (-8%) and the UK (-11%) appear to have some distance to catch up with previous highs according to Google. As per the US census, spending by consumers in the US in the on-trade segment is back above the level before the pandemic. The census measures value and is thus likely boosted by recent food price inflation, so we think this resonates fairly well with Google’s mobility data.

Estimate revisions We cut our Q3 EBITA estimate by 6% on higher costs related to unwinding of temporary cost take-out and for new hiring and variable compensations.

Reiterate Hold We reiterate hold and adjust our target price down from SEK 67 to SEK 65.

Key Data (2021E)

Price (SEK)Target price (SEK) - changed from (SEK)RecommendationRisk

ReutersBloomberg

Market cap (SEKm)Market cap (USDm)Market cap (EURm)Net debt (SEKm)Net debt (ex. IFRS-16 debt)Shares fully dil. (m)Avg daily turnover (SEKm)Free float

61.2565.0067.00

Hold

1,735

Normal

EPROB.ss

2,01717,603

EPRO B:STO

80%

450

287.430.8

234

Share Price (12M)

Absolute (green) / Relative to Sweden (purple).

30

40

50

60

70

Oct Dec Jan Apr Jun Aug Oct

Financials (SEK)

Source for all data on this page: SEB (estimates) and Millistream/Thomson Reuters (prices)

Year end: Dec 2019 2020 2021E 2022E 2023ERevenues (m) 9,281 7,263 7,920 9,243 9,779Adj. EBIT 992 386 697 935 1,082Pre-tax profit (m) 978 363 679 921 1,063EPS 2.31 0.97 1.87 2.40 2.77Adj. EPS 2.54 1.21 2.10 2.65 3.02DPS 0.00 0.00 0.75 0.80 0.80

Revenue growth (%) 7.1 (21.7) 9.0 16.7 5.8Adj. EBIT growth (%) (13.2) (61.1) 80.7 34.1 15.8Adj. EPS growth (%) (26.9) (52.5) 74.4 25.8 14.0

Adj. EBIT margin (%) 10.7 5.3 8.8 10.1 11.1ROE (%) 21.3 10.1 17.5 19.3 19.5ROCE (%) 24.7 8.2 14.4 17.6 18.5

PER (x) 38.6 29.1 23.1 20.3Free cash flow yield (%) 2.8 2.3 3.6 4.4Dividend yield (%) 0.0 1.2 1.3 1.3P/BV (x) 4.78 5.27 4.62 4.02

EV/Sales (x) 1.96 2.28 1.91 1.75EV/Adj. EBITDA (x) 0.0 21.1 18.3 14.4 12.4EV/Adj. EBIT (x) 0.0 36.9 25.9 18.9 15.8Operating cash flow/EV (%) 4.5 3.5 4.7 5.9Net debt/EBITDA (x) 0.80 1.27 0.46 0.03 (0.38)

Analysts Gustav Hagéus (46) 8 522 29745 [email protected] Andreas Lundberg (46) 8 763 8533 [email protected] Agnes Näslund (46)707638157 [email protected]

Results due: 27 October

Estimate Revisions (%)

2021E 2022E 2023ERevenues 0 0 0Adj. EBIT (3) 0 0Adj. EPS (2) 0 0

Results Preview Electrolux Professional 05 October 2021 2

Equity Research

Estimate revisions We have cut our Q3 EBITA estimate by 6% to SEK 204m assuming a somewhat quicker normalisation of costs such as employee bonuses and market outlooks improve. Our cut to Q3 EBITA translates to a drop of around 3% for full 2021E. We leave 2022-23 estimates unchanged.

Estimate revisions

Old New Deviation (%) (SEKm) 2021 2022 2023 2021 2022 2023 2021 2022 2023 Sales by division Food & Beverage 4,700 5,527 5,914 4,700 5,527 5,914 0.0 0.0 0.0 Laundry 3,219 3,716 3,865 3,219 3,716 3,865 0.0 0.0 0.0 Total Sales 7,920 9,243 9,779 7,920 9,243 9,779 0.0 0.0 0.0

EBITAby division Food & Beverage 377 525 651 357 525 651 -5.1 0.0 0.0 Laundry 520 595 618 520 595 618 0.0 0.0 0.0 Corporate costs -114 -115 - 117 -114 -115 -117 0.0 0.0 0.0 EBITA 782 1,005 1,152 763 1,005 1,152 -2.5 0.0 0.0

Amortizations of intangibles -68.0 -70.0 -70.0 -68.0 -70.0 -70.0 0.0 0.0 0.0

Operating income by division Food & Beverage 329 475 601 309 475 601 -5.9 0.0 0.0 Laundry 502 575 598 502 575 598 0.0 0.0 0.0 Corporate costs -114 -115 - 117 -114 -115 -117 0.0 0.0 0.0 Operating income 716 935 1,082 697 935 1,082 -2.7 0.0 0.0

One-offs - - - - - - nm nm nm

Adj. Operating Income 716 935 1,082 697 935 1,082 -2.7 0.0 0.0

Pretax profit 698 920 1,063 679 921 1,063 -2.7 0.0 0.0

Net earnings 553 690 797 537 690 797 -2.9 0.0 0.0

Reported EPS 1.9 2.4 2.8 1.9 2.4 2.8 -2.9 0.0 0.0 DPS 0.75 0.8 0.8 0.75 0.80 0.80 0.0 0.0 0.0

EBITA margin by division Deviation (pp) Food & Beverage 8.0 9.5 11.0 7.6 9.5 11.0 -0.4 0.0 0.0 Laundry 16.1 16.0 16.0 16.1 16.0 16.0 0.0 0.0 0.0 EBITA 9.9 10.9 11.8 9.6 10.9 11.8 -0.2 0.0 0.0 Source: SEB


Equity Research

Quarterly figures

(SEKm) Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21E Q4/21E 2020 2021E 2022E 2023E Total Net sales 2,091 1,489 1,748 1,935 1,661 1,958 2,041 2,259 7,263 7,920 9,243 9,779 Sales growth (%) -9 -39 -20 -17 -20.6 31 17 17 -22 9.0 17 6 EBITA 221 -4 95 142 104 197 204 258 454 763 1,005 1,152 EBITA margin(%) 10.6 -0.2 5.4 7.3 6.3 10.1 10.0 11.4 6.3 9.6 10.9 11.8 Operating Income 205 -18 80 119 88 181 187 241 386 697 935 1,082 Operating margin (%) 9.8 -1.2 4.6 6.1 5.3 9.2 9.2 10.7 5.3 8.8 10.1 11.1

Adjustments One-offs 0 0 -77 0 0 0 0 0 -77 0 0 0 Adj. EBITA 221 -4 172 142 104 197 204 258 531 763 1,005 1,152 Adj. EBITA margin(%) 10.6 -0.2 9.8 7.3 6.3 10.1 10.0 11.4 7.3 9.6 10.9 11.8 Adj. Operating Income 205 -18 157 119 88 181 187 241 463 697 935 1,082 Adj. Operating margin (%) 9.8 -1.2 9.0 6.1 5.3 9.2 9.2 10.7 6.4 8.8 10.1 11.1

Savings y/y 60 200 75 90 60 -95 48 8 425.0 20.0 -225 …structural 20 20 30 30 30 35 28 28 100 120 …temporary 36 128 24 42 10 -88 16 -2 230 -64 -166 …government support 4 52 21 18 20 -42 4 -18 95 -36 -59

Food & Beverage Net sales 1,243 838 1,070 1,047 905 1,210 1,274 1,311 4,198 4,700 5,527 5,914 EBITA 99 -64 42 11 21 110 102 125 88 357 525 651 EBITA margin (%) 7.9 -7.6 3.9 1.1 2.3 9.1 8.0 9.5 2.1 7.6 9.5 11.0 Amortisation etc -12 -11 -11 -19 -12 -12 - 12 -12 -53 -50 -50 -50 Operating Income 87 -75 31 -8 9 98 90 113 35 309 475 601 Operating margin (%) 7.0 -8.9 2.9 -0.8 1.0 8.1 7.1 8.6 0.8 6.6 8.6 10.2

Laundry Net sales 848 651 678 888 756 748 767 949 3,065 3,219 3,716 3,865 EBITA 150 88 79 150 111 117 130 161 467 520 595 618 EBITA margin (%) 17.7 17.7 11.7 16.9 14.7 15.6 17.0 17.0 15 16 16.0 16.0 Amortisation etc -4 -4 -4 -4 -4 -4 -5 -5 -16 -18 -20 -20 Operating Income 146 84 75 146 107 113 125 156 451 502 575 598 Operating margin (%) 17.3 12.9 11.1 16.4 14.2 15.1 16.3 16.5 14.7 15.6 15.5 15.5

Corporate costs EBITA - 28 - 28 - 26 - 19 - 28 - 30 - 28 - 28 -100 -114 -115 -117 Operating income - 28 - 28 - 26 - 19 - 28 - 30 - 28 - 28 -101 -114 -115 -117 Source: SEB

Sales bridge

Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21E Q4/21E 2020 2021E 2022E 2023E Group Organic, (%) -13.7 -39.3 -16.1 -13.2 -15.3 38.4 17.7 16.7 -21 12.2 16 6 Acquisitions, (%) 1.7 0.8 0 -0.4 0 0 0 0 1 0 0 0 Currency, (%) 2.9 -0.3 -4.0 -3.5 -5.3 -6.9 -0.9 0.0 -1 -3.2 1 0 Total -9.2 -39.3 -20.1 -17.1 -20.6 31.5 16.8 16.8 -21.7 9.0 16.7 5.8 Food & Beverage Organic, (%) -20.4 -49.2 -19.6 -20.8 -21.1 53.9 20.0 25.0 -28 16 17 7 Acquisitions, (%) 2.7 1.3 0.0 -0.6 0.0 0.0 0 0 1 0 0 0 Currency, (%) 3.1 -0.3 -4.8 -4.1 -6.1 -9.5 -0.9 0.2 -1 -4 1 0 Total -14.6 -48.2 -24.4 -25.5 -27.2 44.4 19.1 25.2 -28.8 12.0 17.6 7.0 Laundry Organic, (%) -2.1 -21.9 -9.8 -1.9 -7.1 19.1 14.0 7.0 -9 7 15 4 Acquisitions, (%) 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 Currency, (%) 2.4 -0.3 -2.6 -2.6 -3.8 -4.2 -0.9 -0.2 -1 -2 0 0 Total 0.2 -21.9 -12.4 -4.5 -10.9 14.9 13.1 6.8 -9.4 5.0 15.4 4.0 Source: SEB


Equity Research

Quarterly figures

(SEKm) unless otherwise stated Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21E Q4/21E 2020 2021E 2022E 2023E 2024E Net sales 2,091 1,489 1,748 1,935 1,661 1,958 2,041 2,259 7,263 7,920 9,243 9,779 10,111 Cost of goods sold -1,322 -1,061 -1,180 -1,334 -1,110 -1,287 -1,408 -1,525 -4,896 -5,331 -6,100 -6,356 -6,471 Gross operating income 769 428 568 602 551 671 633 734 2,367 2,589 3,143 3,423 3,640 Selling expenses -388 -302 -339 -326 -317 -334 -396 -381 -1,355 -1,427 -1,666 -1,762 -1,822 Administrative expenses -179 -144 -148 -161 -147 -155 -50 -113 -631 -464 -542 -578 -694 Other operating income/expenses 2 0 0 4 0 -1 0 0 5 -1 0 0 0 Operating income 205 -18 81 119 88 181 187 241 387 697 935 1,082 1,123 Financial items, net -2 -8 -8 -5 -4 -5 -5 -4 -24 -18 -14 -19 -25 Income after financial items 203 -26 73 113 83 176 183 238 363 679 921 1,063 1,099 Taxes -44 -2 4 -43 -28 -8 -46 -60 -85 -141 -230 -266 -275 Income for the period 159 -28 77 70 55 168 137 178 278 537 690 797 824

Gross operating margin, (%) 36.8 28.8 32.5 31.1 33.2 34.3 31.0 32.5 32.6 33.0 34.0 35.0 36.0 Operating margin, (%) 9.8 -1.2 4.6 6.1 5.3 9.2 9.2 10.7 5.3 8.8 10.1 11.1 11.1 Tax rate, (%) 21.7 -6.8 -5.7 38.1 33.4 4.4 25.0 24.8 23.4 20.8 25.0 25.0 25.0

Millons of shares outstanding 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287 287 287 287 Basic earnings per share, (SEK) 0.55 -0.10 0.27 0.24 0.19 0.58 0.48 0.62 0.97 1.87 2.40 2.77 2.87 Source: SEB

Valuation Following estimate cuts, we have cut our DCF-based target price from SEK 67 to SEK 65. We reiterate our Hold recommendation.

DCF-summary

DCF valuation (SEKm) Weighted average cost of capital (%) NPV of FCF in explicit forecast period 6,736 Risk-free interest rate 2.5 NPV of continuing value 12,281 Risk premium 4.0 Value of operation 19,017 Cost of equity 6.5

Net debt 219 After tax cost of debt 1.9 Share issue/buy-back in forecast period - Value of associated companies - WACC 6.4 Value of minority shareholders' equity - Value of marketable assets - Assumptions DCF value of equity 18,799 Number of forecast years 10 DCF value per share (SEK) 65 EBIT margin - steady state (%) 12.5 Current share price (SEK) 61.25 EBIT multiple - steady state (x) 12.3 DCF performance potential (%) 4 Continuing value (% of NPV) 64.6 Source: SEB

DCF sensitivity

Cost of equity(%) 5.5 6.0 6.5 7.0 7.5 79 100 91 84 77 72 Equity capital 89 88 80 74 68 63 weight (%) 99 79 71 65 60 56 100 78 71 65 60 55 100 78 71 65 60 55 Relative change in EBITDA margin - all years -20% -10% 0 +10% +20% -20% 48 55 62 69 76 Rel. change in -10% 50 57 64 71 78 sales growth - 0 51 58 65 73 80 all years +10% 52 60 67 75 82 +20% 54 61 69 77 84 Source: SEB


Equity Research

Overview Investment case

We see a risk that management's focus and a high share of capital will be allocated to the US where we are unconvinced that EPRO has the potential to transform from a marginal player. On M&A we believe EPRO is coming late to the consolidation in the US and we argue that the M&A track record is patchy.

Company profile

Electrolux Professional operates within the business for equipment and services related to food, beverage and laundry. Key products include combi ovens, cooking ranges, refrigerated cabinets, chillers and dishwashing equipment, coffee grinders, coffee machines (espresso and brewing), hot beverage dispensers, cold beverage and juice dispensers as well as frozen drink and ice cream dispensers, commercial washers, tumble dryers, drying cabinets, ironers and related specialty accessories and systems.

Valuation approach

We use a DCF-based approach as the basis for our target price.

Target price risks Covid-19 could spark a permanent step change to virtual meetings at the expense of

business travel, which comprises more than 50% of revenues globally for the hotel industry and is an important driver for restaurants too. We expect the market within service to grow at the expense of new equipment in a downcycle but we estimate only 10-15% of EPRO’s revenues stem from service versus the industry average of 25%, suggesting that EPRO would be more negatively impacted versus peers in such a scenario.

Revenues by region (2021E) EBIT by division (2021E)

Source: SEB Source: SEB

Sweden: 9% Other Nordic: 8%Other Europe: 49% Americas: 17%Asia: 10% RoW: 7%

Food & Beverage42%

Laundry58%


Equity Research

Profit & loss statement - Electrolux Professional(SEKm) 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023ENet Sales 6,041 6,546 6,865 7,723 8,666 9,281 7,263 7,920 9,243 9,779Other revenues 0 0 0 0 0 0 0 0 0 0Total revenues 6,041 6,546 6,865 7,723 8,666 9,281 7,263 7,920 9,243 9,779

Total expenses 0 0 0 (6,470) (7,303) (8,002) (6,587) (6,935) (8,018) (8,406)Profit before depreciation 6,041 6,546 6,865 1,253 1,363 1,279 676 984 1,226 1,373

Depreciation - Fixed assets 0 0 0 (156) (175) (221) (221) (221) (221) (221)Depreciation - Other assets 0 0 0 0 0 0 0 0 0 0Depreciation of right-of-use assets 0 0 0 0 0 0 0 0 0 0Amortisation - Goodwill 0 0 0 0 0 0 0 0 0 0Amortisation - Other intangibles 0 0 0 (37) (45) (66) (69) (66) (70) (70)Operating profit 6,041 6,546 6,865 1,060 1,143 992 386 697 935 1,082

Net interest expenses 0 0 0 (8) (9) (14) (23) (18) (14) (19)Foreign exchange items 0 0 0 0 0 0 0 0 0 0Other financial items 0 0 0 0 0 0 0 0 0 0Value changes - Fixed assets 0 0 0 0 0 0 0 0 0 0Value changes - Financial assets 0 0 0 0 0 0 0 0 0 0Value changes - Other assets 0 0 0 0 0 0 0 0 0 0Reported pre-tax profit 6,041 6,546 6,865 1,052 1,134 978 363 679 921 1,063

Minority interests 0 0 0 0 0 0 0 0 0 0Total taxes 0 0 0 (266) (182) (315) (85) (141) (230) (266)Reported profit after tax 6,041 6,546 6,865 786 952 663 278 538 690 797

Discontinued operations 0 0 0 0 0 0 0 0 0 0Extraordinary items 0 0 0 0 0 (32) 0 0 0 0Net Profit 6,041 6,546 6,865 786 952 631 278 538 690 797

Adjustments:Discontinued operations 0 0 0 0 0 0 0 0 0 0Interest on convertible debt 0 0 0 0 0 0 0 0 0 0Minority interests (IFRS) 0 0 0 0 0 0 0 0 0 0Value changes 0 0 0 0 0 0 0 0 0 0Goodwill/intangibles amortisations 0 0 0 37 45 66 69 66 70 70Restructuring charges 0 0 0 0 0 0 0 0 0 0Other adjustments 0 0 0 0 0 32 0 0 0 0Tax effect of adjustments 0 0 0 0 0 0 0 0 0 0Adjusted profit after tax 6,041 6,546 6,865 823 997 729 347 604 760 867

Margins, tax & returnsOperating margin 100.0 100.0 100.0 13.7 13.2 10.7 5.3 8.8 10.1 11.1Pre-tax margin 100.0 100.0 100.0 13.6 13.1 10.5 5.0 8.6 10.0 10.9Tax rate 0.0 0.0 0.0 25.3 16.0 32.2 23.4 20.8 25.0 25.0ROE 0.0 0.0 994.2 41.3 32.0 21.3 10.1 17.5 19.3 19.5ROCE 0.0 0.0 852.3 56.4 40.1 24.7 8.2 14.4 17.6 18.5

Growth rates y-o-y (%)Total revenues n.a. 8.4 4.9 12.5 12.2 7.1 (21.7) 9.0 16.7 5.8Operating profit 8.8 8.4 4.9 (84.6) 7.8 (13.2) (61.1) 80.7 34.1 15.8Pre-tax profit 8.8 8.4 4.9 (84.7) 7.8 (13.7) (62.9) 87.4 35.5 15.5EPS (adjusted) 0.0 8.4 4.9 (88.0) 21.1 (26.9) (52.5) 74.4 25.8 14.0

Cash flow(SEKm) 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023ENet profit 6,041 6,546 6,865 786 952 631 278 538 690 797Non-cash adjustments 0 0 0 179 133 375 34 287 291 291Cash flow before work cap 6,041 6,546 6,865 965 1,085 1,006 312 825 981 1,088

Ch. in working capital / Other 0 0 (678) 66 (181) 112 335 (192) (152) (81)Operating cash flow 6,041 6,546 6,187 1,031 904 1,118 647 633 829 1,007

Capital expenditures 0 0 0 (167) (169) (257) (273) (225) (200) (225)Asset disposals 0 0 0 0 0 0 27 0 0 0L/T financial investments 0 0 0 8 91 (4) 0 0 0 0Acquisitions / adjustments 0 0 0 (826) (756) (441) 0 0 0 0Free cash flow 6,041 6,546 6,187 46 70 416 401 408 629 782

Net loan proceeds 0 0 0 0 (154) (151) 1,012 0 0 0Dividend paid 0 0 0 (305) (336) (428) 0 0 (216) (230)Share issue 0 0 0 0 13 5,702 0 0 0 0Other 0 0 0 585 304 (6,804) (1,224) 0 0 0Net change in cash 6,041 6,546 6,187 326 (103) (1,265) 189 408 414 552

AdjustmentsC/flow bef chng in work cap 6,041 6,546 6,865 965 1,085 1,006 312 825 981 1,088Adjustments 0 0 0 0 0 0 0 0 0 0Int on conv debt net of tax 0 0 0 0 0 0 0 0 0 0Cash earnings 6,041 6,546 6,865 965 1,085 1,006 312 825 981 1,088

Per share informationCash earnings 21.0 22.8 23.9 3.36 3.78 3.5 1.09 2.87 3.41 3.79Operating cash flow 21.0 22.8 21.5 3.59 3.15 3.89 2.25 2.2 2.89 3.5Free cash flow 21.0 22.8 21.5 0.16 0.24 1.45 1.4 1.42 2.19 2.72

Investment coverCapex/sales (%) 0.0 0.0 0.0 2.2 2.0 2.8 3.8 2.8 2.2 2.3Capex/depreciation (%) 0 0 0 107 97 116 124 102 90 102

Source for all data on this page: SEB


Equity Research

Balance sheet - Electrolux Professional(SEKm) 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023ECash and liquid assets 0 0 149 179 230 651 797 1,205 1,619 2,171Debtors 0 0 1,351 1,453 1,658 1,687 1,265 1,475 1,671 1,768Inventories 0 0 806 903 1,299 1,265 1,086 1,184 1,375 1,455Other 0 0 930 1,147 1,033 375 296 296 296 296Current assets 0 0 3,236 3,682 4,220 3,978 3,444 4,161 4,962 5,690

Interest bearing fixed assets 0 0 0 0 0 0 0 0 0 0Other financial assets 0 0 13 11 23 34 27 27 27 27Capitalized development cost 0 0 0 0 0 0 0 0 0 0Goodwill 0 0 160 776 1,438 1,821 1,690 1,690 1,690 1,690Other intangibles 0 0 20 183 394 388 305 239 169 99Right-of-use lease assets 0 0 0 0 0 0 211 211 211 211Fixed tangible assets 0 0 1,029 1,101 1,254 1,452 1,254 1,258 1,237 1,241Other fixed assets 0 0 110 121 246 362 383 383 383 383Fixed assets 0 0 1,332 2,192 3,355 4,057 3,870 3,808 3,717 3,651

Total assets 0 0 4,568 5,874 7,575 8,035 7,314 7,969 8,678 9,341

Creditors 0 0 1,374 1,421 1,571 1,606 1,289 1,406 1,640 1,736Other trade financing 0 0 0 0 0 0 0 0 0 0S/T lease liabilities 0 0 0 0 0 0 65 65 65 65S/T interest bearing debt 0 0 124 124 185 1,066 403 403 403 403Other 0 0 1,035 1,189 1,386 1,631 1,475 1,475 1,475 1,475Current liabilities 0 0 2,533 2,734 3,142 4,303 3,232 3,349 3,583 3,679

L/T interest bearing debt 0 0 106 120 180 175 601 601 601 601L/T lease liabilities 0 0 0 0 0 0 151 151 151 151Other long-term liabilities 0 0 318 384 361 494 152 152 152 152Convertible debt 0 0 0 0 0 0 0 0 0 0Pension provisions 0 0 0 0 0 0 0 0 0 0Other provisions 0 0 196 140 222 208 243 243 243 243Deferred tax 0 0 34 72 143 144 135 135 135 135Long term liabilities 0 0 654 716 906 1,021 1,282 1,282 1,282 1,282

Minority interests 0 0 0 0 0 0 0 0 0 0

Shareholders' equity 0 0 1,381 2,424 3,527 2,711 2,800 3,338 3,813 4,380

Total liabilities and equity 0 0 4,568 5,874 7,575 8,035 7,314 7,969 8,678 9,341

Net debt (m) 0 0 81 (481) (226) 1,025 858 450 36 (516)Working capital (m) 0 0 678 893 1,033 90 (117) 75 227 308Capital employed (m) 0 0 1,611 2,122 3,531 4,387 4,455 4,993 5,468 6,035Net debt/equity (%) 0 0 6 (20) (6) 38 31 13 1 (12)Net debt/EBITDA (x) 0.0 0.0 0.0 (0.4) (0.2) 0.8 1.3 0.5 0.0 (0.4)Equity/total assets (%) 0 0 30 41 47 34 38 42 44 47Interest cover 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Valuation(SEK) 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E

No of shares, fully dil. (y/e) 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4No of shares, fully dil. avg. 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4 287.4

Share price, y/e 46.6 61.3 61.3 61.3Share price, high 47.6 70.4Share price, low 16.0 42.9Share price, avg 34.9 56.4

EPS (reported) 21.0 22.8 23.9 2.73 3.31 2.31 0.97 1.87 2.40 2.77EPS (adjusted) 21.0 22.8 23.9 2.86 3.47 2.54 1.21 2.10 2.65 3.02Cash earnings/share 21.0 22.8 23.9 3.36 3.78 3.50 1.09 2.87 3.41 3.79Dividend/share 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.75 0.80 0.80

Enterprise value/share 50 63 61 59Book value/share 0.0 0.0 4.8 8.4 12.3 9.4 9.7 11.6 13.3 15.2Adjusted equity/share 0.0 0.0 4.8 8.4 12.3 9.4 9.7 11.6 13.3 15.2

PER (adjusted) 38.6 29.1 23.1 20.3CEM 42.9 21.3 17.9 16.2Dividend yield 0.0 1.2 1.3 1.3

EV/EBITDA 21.1 18.3 14.4 12.4EV/EBITA 31.3 23.6 17.6 14.8EV/EBIT 36.9 25.9 18.9 15.8EV/Sales (x) 1.96 2.28 1.91 1.75Price/Book value 4.78 5.27 4.62 4.02Price/adjusted equity 4.78 5.27 4.62 4.02

Free cash flow/Market cap (%) 2.8 2.3 3.6 4.4Operating cash flow/EV (%) 4.5 3.5 4.7 5.9EV/Capital employed (x) 3.2 3.6 3.2 2.8

Main shareholders Management Company informationName (%) Votes Capital Title Name ContactInvestor 32.3 20.5 COB Kai Wärn Internet electroluxprofessional.comSwedbank Robur 8.0 11.9 CEO Alberto Zanata Phone number +39 0434 3951Alecta 7.4 7.8 CFO Fabio ZarpellonForeign owners (total) 23.0 IR Jacob Broberg

Source for all data on this page: SEB


Equity Research

Target prices and risks Target price definition and associated risks Our target price is the analyst's assessment of what total return an investor should expect over the coming six to 12 months. The target is based on fundamental equity research and other factors at the analyst's discretion.

Our current target price of SEK 65 was set today (5 Oct 2021). The main risk to our target price on Electrolux Professional is as follows. Covid-19 could spark a permanent step change to virtual meetings at the expense of business travel, which comprises more than 50% of revenues globally for the hotel industry and is an important driver for restaurants too. We expect the market within service to grow at the expense of new equipment in a downcycle but we estimate only 10-15% of EPRO’s revenues stem from service versus the industry average of 25%, suggesting that EPRO would be more negatively impacted versus peers in such a scenario.

Risk levels The risk level is the analyst’s view of the uncertainty in the earnings forecasts based on an assessment of the company’s business model, operating risk as well as financial risk. We use two risk levels with the following explanations:

● Normal risk: All forecasts involve uncertainty and we view companies in this risk level to have normal forecast risks

● High risk: The earnings forecasts are more uncertain than for an average instrument due to business model, operating risk, financial risk or any other reason at the analyst’s discretion. All instruments with shorter track record than 12 months as a listed company are by definition classified as high risk according to SEB.


Equity Research

Authors' statement of independence (Analyst Certification) We, the authors of this report, hereby confirm that notwithstanding the existence of any potential conflicts of interest referred to herein, the views expressed in this report accurately reflect our personal views about the companies and securities covered. We further confirm that we have not been, nor are or will be, receiving direct or indirect compensation in exchange for expressing any of the views or the specific recommendation contained in the report. We are not registered or qualified as research analysts, representatives or associated persons under the rules of any US exchange, regulatory organization or State.

This statement affects your rights This report is confidential and may not be reproduced, redistributed or republished by any recipient for any purpose or to any person.

Producers and Recipients SEB Research is approved and issued by Skandinaviska Enskilda Banken AB (publ) (“SEB”), a bank organized under the laws of the Kingdom of Sweden, on behalf of itself and its affiliates for institutional investors. SEB is not a registered Broker-Dealer under the US Securities and Exchange Act of 1934. When SEB Research is issued by an SEB subsidiary, the subsidiary itself is subject to this disclaimer.

Use This research report is produced for the private information of recipients - if you are not a client of ours, you are not entitled to this research report, and should destroy it. The document is not, and should not be construed as, an offer to sell or solicitation of an offer to buy any securities. Opinions contained in the report represent the author's present opinion only and may be subject to change. In the event that the author's opinion should change or a new analyst with a different opinion becomes responsible for our coverage of the company concerned, we shall endeavour (but do not undertake) to disseminate any such change, within the constraints of any regulations, applicable laws, internal procedures within SEB, or other circumstances. If you are in doubt as to the meaning of the recommendation system used by SEB in its research, please refer to the "Disclaimer" section of SEB Research website, to which our clients are granted access.

Good faith and limitations All information, including statements of fact, contained in this research report have been obtained and compiled in good faith from sources believed to be reliable. However, no representation or warranty, express or implied, is made by SEB with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative and should not be taken in substitution for the exercise of reasoned, independent judgement by you. Recipients are urged to base their investment decisions upon such investigations as they deem necessary. To the extent permitted by applicable law, no liability whatsoever is accepted by SEB for any direct or consequential loss arising from the use of this document or its contents.

Distribution This research report has been prepared by SEB and is being distributed by SEB offices in Stockholm, Copenhagen, Oslo, Helsinki, Frankfurt, London, Tallinn, Vilnius, Riga and Hong Kong. Research reports are prepared and distributed in Lithuania by AB SEB bankas and in Estonia by AS SEB Pank in accordance with the requirements of the local laws and Financial Supervision Authority’s conduct of business rules. It is being distributed in the United States by SEB Securities Inc. ('SEBSI'), a wholly owned subsidiary of SEB organized under the laws of the State of Delaware, USA. SEBSI accepts responsibility for the contents of the report. Any United States institutional investor receiving the report, who wishes to obtain further information or to effect a transaction in any security discussed in the report, should do so only through SEBSI and not its affiliates. Addresses and Phone numbers for each office can be found at the end of the report.


Equity Research

The SEB Group: members, memberships and regulators SEB is a member of, inter alia, Nasdaq OMX Nordic, Oslo Stock Exchange, the London Stock Exchange, NYSE Euronext, SIX Swiss Exchange, Frankfurt Stock Exchange, Tallinn Stock Exchange as well as certain European MTF’s such as BATS-Chi-X, Turquoise and Burgundy. SEB is regulated by Finansinspektionen in Sweden and, for the conduct of investment services business, in (i) Denmark by Finanstilsynet, (ii) Norway by Finanstilsynet, (iii) Finland by Finanssivalvonta, (iv) Germany by Bundesanstalt für Finanzdienstleistungsaufsicht, (v) the UK by the Financial Conduct Authority and Prudential Regulation Authority (details about the extent of our regulation by the Financial Conduct Authority and Prudential Regulation Authority are available from us on request), (vi) Estonia by the Estonian Financial Supervision Authority, (vii) Lithuania by the Bank of Lithuania , (viii) Latvia by the Financial and Capital Markets Commission and (ix) Hong Kong by Securities and Futures Commission. SEBSI is a U.S. broker-dealer, registered with the Financial Industry Regulatory Authority (FINRA). SEBSI is a subsidiary of SEB. SEBSI is authorized to engage in the underwriting of securities but does not make markets or otherwise engage in any proprietary trading in any securities.

SEB’s research reports are prepared in accordance with the industry standards and codes of conduct applicable to financial analysts in the countries where they are based. In Denmark, Finland, Norway and Sweden, analysts act in accordance with the rules of ethics of each country’s Society of Financial Analysts. Analysts comply with the recommendations and industry standards of the Danish, Norwegian and the Swedish Securities Dealers Associations and with those of the Federation of Finnish Financial Services. Analysts certified by the CFA Institute also comply with the Code of Ethics of the CFA Institute. The author of this report is not registered or qualified as a research analyst with FINRA and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Prevention and avoidance of conflicts of interest All research reports are produced by SEB’s Research department, which is separated from the rest of SEB by an Information Barrier. While SEB’s Research and Equities sales and trading are part of the same organisational unit as its investment banking activities, care is taken to manage any conflict of interest. Our research reports are thus independent and based solely on publicly available information. Following standard practice, recommendations and target share prices are removed from research on companies which are the subject of public offers on which SEB is advising. The remuneration of staff within the Research department is determined exclusively by research management and senior management and may include discretionary awards based on the firm’s total earnings, including investment banking and markets (sales and trading businesses) income; however, no such staff receive remuneration based upon specific investment banking or markets transactions. SEB’s Compliance department monitors the production of research and the observance of the group's procedures designed to prevent any potential conflicts of interest from affecting the content of research; the latter are described in greater detail in the "Statement of Policies for dealing with potential conflicts of interest surrounding our Research activities" which is available on our SEB Research website.

Your attention is also drawn to the fact that: The current market price of the securities shown in this report is the price prevailing at the close of the business day preceding the date of publication, save where such price was more than 5% different from the price prevailing as at the time of publication, in which case it is the latter.

Unless explicitly stated otherwise in this report, SEB expects (but does not undertake) to issue updates to this report following the publication of new figures or forecasts by the company covered, or upon the occurrence of other events which could potentially have a material effect on it.

The securities discussed in this research report may not be eligible for sale in all countries, and such securities may not be suitable for all types of investors. Offers and sales of securities discussed in this research report, and the distribution of this report, may be made only in countries where such securities are exempt from registration or qualification or have been so registered or qualified for offer and sale, and in accordance with applicable broker-dealer and agent/salesman registration or licensing requirements.

Additional recommendation history for the issuer is available at https://research.sebgroup.com/equity

A full list of disclosures for other companies mentioned herein (in which SEB has research coverage), can be found on our SEB Research website


Equity Research

Methodology Our target price is based on valuation approaches described in the Overview section of this report, unless our estimates are in the process of being updated. Final consideration as to any valuations, projections and forecasts contained in this report are based on a number of assumptions and estimates and are subject to contingencies and uncertainties, and their inclusion in this report should not be regarded as a representation or warranty by or on behalf of the Group or any person or entity within the Group that they or their underlying assumptions and estimates will be met or realized. Different assumptions could result in materially different results. Past performance is not a reliable indicator of future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities, such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.

Company specific disclosures and potential conflicts of interest A member of, or an entity associated with, SEB or its affiliates, officers, directors, employees or shareholders of such members (a) is not, and has never been, represented on the board of directors or similar supervisory entity of Electrolux Professional, (b) has from time to time bought or sold the securities issued by the company or options relating to the company, and (c) SEB does not hold any short / long position exceeding 0.5% of the total issued share capital of Electrolux Professional as of 30 Sep 2021. The analyst(s) responsible for this research report (jointly with their closely related persons) hold(s) 0 shares in Electrolux Professional and do(es) not have holdings in other instruments related to the company. Current recommendation for Electrolux Professional - Hold - was set on 20 Apr 2021, changed from Sell. The dates of previous recommendation changes in relation to Electrolux Professional can be found on our Research Online website.

SEB Equity Research research.sebgroup.com/equity

SEB’s standardised recommendation structure

Consolidated distribution Clients to whom SEB has provided Clients from whom SEB has received as per 30 Sep 2021 (%) material investment services, last 12M (%) investment banking income, last 12M (%) Buy 63.4 23.2 18.1 Hold 27.5 6.0 5.0 Sell 9.1 2.7 2.0 Buy Attractive risk/reward - at least 10% upside to target price. Hold Fairly valued – the security / instrument is trading close to target price. Sell Unattractive risk/reward - security / instrument is trading above target price. Unrated Company not covered, or we are not allowed to have a recommendation for compliance reasons Source: SEB

Target price and recommendation revision history

Source: Thomson Reuters / Millistream / SEB

Skandinaviska Enskilda Banken AB (publ). All rights reserved.

232

20

25

30

35

40

45

50

55

60

65

70

Jan 20 Jan 21

EPRO B:STO Target price revisions

Please note, in the chart to the right: 1=Buy 2=Hold 3=Sell The grey spots mark the point where target prices have been changed. The price chart is not adjusted for dividends paid, whereas our recommendations are based on expected return including dividends

Copenhagen Bernstorffsgade 50 P.O. Box 100 DK-1577 Copenhagen V

Telephone: (45) 3328 2828

Frankfurt Stephanstrasse 14-16 D-60313 Frankfurt am Main

Telephone: (49) 69 9727 7740

Helsinki Eteläesplanadi 18 P.O. Box 630 FIN-00101 Helsinki

Telephone: (358) 9 616 28700

Hong Kong 17/F Jardine House 1 Connaught Place Central, Hong Kong Island Hong Kong

Telephone: (852) 3919 2600

London One Carter Lane London, EC4V 5AN

Telephone: (44) 20 7246 4000

New York 245 Park Avenue, 33rd Floor New York NY 10167

Telephone: (1) 212 692 4760

Oslo Filipstad Brygge 1, P.O. Box 1363 Vika NO-0113 Oslo

Telephone: (47) 2100 8500

Stockholm Kungsträdgårdsgatan 8 S-106 40 Stockholm

Telephone: (46) 8 522 29500

Tallinn Tornimäe 2 EE-Tallinn 15010

Telephone: (372) 665 7762

equity research adj. ebit 992 386 697 935 1,082 electrolux

Documents