In 2015, the Electrolux Group continued to grow organically while operating income was impacted by weak market demand in emerging markets. Cash flow continued to be strong. The Electrolux share, however, showed a negative development with a total return of –8%. This was mainly the result of negative reactions on the announcement that the acquisition of GE Appliances will not be completed.
The Electrolux B share decreased by 10% in 2015, underperforming the broader Swedish market index, Affärsvärlden General Index, which increased by 7% during the same period. During the year, Electrolux showed an operational recovery in its two largest business areas, benefitting from both higher sales volumes and structural improvement in costs and productivity. Electrolux performed better than the market expectations in terms of profitability and cash-flow generation.
The share price development was positive throughout the year up until December, 7 when GE announced that it had terminated the agreement pursuant to which Electrolux had agreed to acquire GE Appliances. The market reaction was negative and Electrolux share price fell significantly.
The opening price for the Electrolux B share in 2015 was SEK 228.80. The highest closing price was SEK 280.00 on February 16. The lowest closing price was SEK 194.00 on December 14. The closing price for the B share at year-end 2015 was SEK 205.20, which was 10.3% lower compared to 2014.
Total shareholder return during the year was –8%. Over the past ten years, the average total return on an investment in Electrolux B shares has been 12% annually. The corresponding figure for the SIX Return Index was 9%..
Over the past years, the Electrolux share has shown a volatility of about 40% (daily values), compared with an average volatility of 25% for Nasdaq Stockholm. The beta value of the Electrolux B share over the past five years is 1.1. A beta value of more than 1 indicates that the share’s sensitivity to market fluctuations is above average.
| 20069) | 20079) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Year-end trading price, B shares, SEK1) | 116.90 | 108.50 | 66.75 | 167.50 | 191.00 | 109.70 | 170.50 | 168.50 | 228.80 | 205.20 |
| Year-end trading price, B shares, SEK | 137.00 | 108.50 | 66.75 | 167.50 | 191.00 | 109.70 | 170.50 | 168.50 | 228.80 | 205.20 |
| Highest trading price, B shares, SEK | 119.00 | 190.00 | 106.00 | 184.10 | 194.70 | 195.60 | 179.00 | 192.70 | 231.10 | 282.80 |
| Lowest trading price, B shares, SEK | 78.50 | 102.00 | 53.50 | 57.50 | 142.50 | 95.30 | 111.50 | 153.70 | 135.30 | 193.10 |
| Change in price during the year, % | 319) | –7 | –38 | 151 | 14 | –43 | 55 | –1 | 36 | –10 |
| Equity per share, SEK | 47 | 57 | 58 | 66 | 72 | 73 | 55 | 50 | 58 | 52 |
| Trading price/equity, % | 2471) | 191 | 116 | 253 | 264 | 151 | 310 | 338 | 398 | 393 |
| Dividend, SEK | 4.00 | 4.25 | 0 | 4.00 | 6.50 | 6.50 | 6.50 | 6.50 | 6.50 | 6.502) |
| Dividend as % of net income3) 4) | 37 | 36 | 0 | 29 | 39 | 86 | 57 | 66 | 58 | 49 |
| Dividend yield, %5) | 3.41) | 3.9 | 0 | 2.4 | 3.4 | 5.9 | 3.8 | 3.9 | 2.8 | 3.2 |
| Earnings per share, SEK | 9.17 | 10.41 | 1.29 | 9.18 | 14.04 | 7.25 | 8.26 | 2.35 | 7.83 | 5.45 |
| Earnings per share, SEK4) | 10.89 | 11.66 | 2.32 | 13.56 | 16.65 | 7.55 | 11.36 | 9.81 | 11.30 | 5.45 |
| Cash flow, SEK6) | 7.53 | 4.54 | 4.22 | 29.16 | 26.98 | 18.97 | 24.74 | 15.57 | 27.35 | 28.76 |
| EBIT multiple7) | 8.01) | 7.9 | 19.8 | 12.8 | 10.8 | 13.4 | 14.6 | 38.8 | 22.4 | 25.5 |
| EBIT multiple4) 7) | 7.11) | 7.3 | 15.2 | 9.1 | 9.1 | 12.8 | 11.6 | 15.1 | 16.8 | 25.5 |
| P/E ratio8) | 12.71) | 10.4 | 51.7 | 18.2 | 13.6 | 15.1 | 20.6 | 71.7 | 29.2 | 37.7 |
| P/E ratio4) 8) | 10.71) | 9.3 | 28.8 | 12.4 | 11.5 | 14.5 | 15.0 | 17.2 | 20.2 | 37.7 |
| Number of shareholders | 59,500 | 52,700 | 52,600 | 52,000 | 57,200 | 58,800 | 51,800 | 51,500 | 46,500 | 45,500 |
1) Adjusted for distribution of Husqvarna in June 2006, and for redemption in January 2007.
2) Proposed by the Board.
3) Dividend as percentage of income for the period.
4) Excluding items affecting comparability until 2014. As of 2015, the accounting practice of items affecting comparability for restructuring charges is no longer used.
5) Dividend per share divided by trading price at year-end.
6) Cash flow from operations less capital expenditure, divided by the average number of shares after buy-backs.
7) Market capitalization excluding buy-backs, plus net borrowings and non-controlling interests, divided by operating income.
8) Trading price in relation to earnings per share.
9) Continuing operations.
Positive organic growth and improved underlying profit. Outlook for European market increased.
Good volume growth in Europe and mix improvements in most business areas.
Positive organic growth in all business areas and sequential recovery of operations in North America.
Margin improvement in EMEA and North America and cost control in Latin America. Strong cash flow generation.
Comments from analysts Electrolux B share Affärsvärlden General Index
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
• Earnings improvement in
Europe continues
• Dividend of SEK 6.50 per share
• Actions taken to adapt cost base in weak Brazilian market
• Cost-reduction program initiated in Small
Appliances
• New Frigidaire Professional line launched in North America
• Expanding professional laundry in new business segments
• Electrolux showcase “My Smart Home” at IFA 2015 in Berlin
• Agreement to acquire Veetsan in China
• Launch of Westinghouse cooking appliances in Australia
• North America launches first connected air-conditioner
• World’s first connected steam oven with camera is introduced
• Slow start in North America
• Slight tailwind from commodity prices
• Sharp weakening of the Brazilian Real against the US Dollar
• Strong appliance demand in the US
• GE decides to exit from planned acquisition
• Weakening macro environment in Brazil
• Positive demand trend in Western Europe
• Department of Justice blocks the acquisition of GE Appliances
• Appreciation of the US Dollar
• Court process starts for the acquisition of GE Appliances
• Weakening demand in Russia and Ukraine
• Brazil continues to weaken
• Black Friday period begins
| After Q4 |
After Q1 |
After Q2 |
After Q3 |
After Q4 |
|
|---|---|---|---|---|---|
| Buy | 8% | 25% | 25% | 14% | 38% |
| Hold | 67% | 63% | 58% | 72% | 38% |
| Sell | 25% | 12% | 17% | 14% | 24% |
The Electrolux share is listed on Nasdaq Stockholm. The market capitalization of Electrolux at year-end 2015 was approximately SEK 63 bn (71), which corresponded to 1.5% (2.1) of the total turnover value of Nasdaq Stockholm. The company’s outstanding shares are divided into A shares and B shares. A shares entitle the holder to one vote while B shares entitle the holder to one-tenth of a vote.
The Board of Directors proposes a dividend for 2015 of SEK 6.50 per share, equivalent to a total dividend payment of approximately SEK 1,868m. The proposed dividend corresponds to approximately 119% of income for the period. Based on the share price of Electrolux B shares at the end of 2015, the dividend yield for 2015 was 3.2%.
The Group’s goal is for the dividend to correspond to at least 30% of income for the period. For a number of years, the dividend level has been considerably higher than 30%.
The majority of the total share capital as of December 31, 2015, was owned by Swedish institutions, mutual funds and private investors amounting to 48%. During the year, the proportion of the capital held by foreign owners increased and amounted to approximately 52% at the end of the year. Foreign investors are not always recorded in the share register as foreign banks and other custodians may be registered for one or several customers’ shares, why the actual owners are then usually not displayed in the register.
Electrolux maintains a number of long-term incentive programs for senior management. Since 2004, the Group has three-year performance-based share programs.
At year-end 2015, the incentive programs had a minor impact on the dilution of the total number of shares.
In accordance with the Articles of Association of AB Electrolux, owners of A shares have the right to have such shares converted to B shares. Conversion reduces the total number of votes in the company. In 2015, no Class A shares were converted to Class B shares. The total number of registered shares in the company amounts to 308,920,308 shares, of which 8,192,539 are A shares and 300,727,769 are B shares.
| Share |
Voting |
|
|---|---|---|
| Investor AB | 15.5 | 29.9 |
| BlackRock, Inc. | 6.4 | 5.2 |
| JP Morgan Asset Management | 5.0 | 4.0 |
| Nordea Investment Management | 3.9 | 3.1 |
| Alecta Pension Insurance | 2.8 | 3.5 |
| Norges Bank Investment Management | 2.0 | 1.6 |
| Swedbank Robur Funds | 1.9 | 1.5 |
| AMF Insurance & Funds | 1.1 | 0.9 |
| Unionen | 1.0 | 0.8 |
| Kuwait Investment Authority | 0.8 | 0.7 |
| Republic of Kazakhstan | 0.7 | 0.6 |
| Other shareholders | 51.9 | 48.2 |
| External shareholders | 93.0 | 100.0 |
| AB Electrolux | 7.0 | 0.0 |
| Total | 100.0 | 100.0 |
Source: Euroclear Sweden and Holding as of December 31, 2015. The figures are rounded off. Information regarding ownership structure is updated quarterly on www.electroluxgroup.com
| 2014 | 2015 | |
|---|---|---|
| Number of traded shares, million | 449.7 | 383.4 |
| Value of traded shares, SEKbn | 77.5 | 93.5 |
| Average daily trading volume, million | 1.8 | 1.5 |
| Average daily trading volume (value), SEKm | 311 | 373 |
| Number of issued/cancelled ADRs | 616.0 | 2,311.5 |
| Number of ADRs outstanding | 569.9 | 1,752.4 |
Source: Nasdaq Stockholm, Citi.
During 2015, 59% of Electrolux B shares were traded outside Nasdaq Stockholm, compared to 55% during 2014. In 2015, the Electrolux share accounted for 2.2% (2.3) of the shares traded on Nasdaq Stockholm, of a total trading turnover of SEK 4,253 bn (3,321).
| Share data | |
|---|---|
| Share listing1) | Stockholm |
| Number of shares | 308,920,308 |
| of which A-shares | 8,192,539 |
| of which B-shares | 300,727,769 |
| Quota value | SEK 5 |
| Market capitalization at December 31, 2015 | SEK 63 billion |
| GICS code2) | 25201040 |
| Ticker codes | Reuters ELUXb.ST |
| Bloomberg ELUXB SS |
1) Trading in Electrolux ADRs was transferred from Nasdaq to the US Over-the-Counter market as of March 31, 2005. One ADR corresponds to two B-shares.
2) MSCI’s Global Industry Classification Standard (used for securities).
| 2014 | 2015 | |
|---|---|---|
| Nasdaq Stockholm | 45.0 | 41.0 |
| BATS Chi-X | 39.7 | 42.3 |
| BOAT | 5.4 | 5.7 |
| Turqouise | 5.4 | 5.6 |
| Posit | 1.2 | 1.5 |
| Other | 3.3 | 3.9 |
| Total | 100.0 | 100.0 |
Source: Fidessa.
| SEK thousand | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|
| A shares | 109 | 93 | 127 | 146 | 269 |
| B shares | 357,075 | 310,501 | 280,457 | 311,398 | 372,570 |
2015, an average of 1.5 million Electrolux shares were traded daily on Nasdaq Stockholm.
| Sweden, 48% | 48 |
| USA, 17% | 17 |
| UK, 14% | 14 |
| Belgium, 4% | 4 |
| Other, 17% | 17 |
As of December 31, 2015, approximately 52% of the total share capital was owned by foreign investors.
Source: Euroclear Sweden and Holding as of December 31, 2015.
| 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | 15 | |
| P/E ratio, excluding items affecting comparability until 2014 | 13.1 | 10.7 | 9.3 | 28.8 | 12.4 | 11.5 | 14.5 | 15 | 17.2 | 20.2 | 15.4 |
| Dividend yield, % | 3.6 | 3.4 | 3.9 | 0 | 2.4 | 3.4 | 5.9 | 3.8 | 3.9 | 2.8 | 3.2 |
At year-end 2015, the P/E ratio for Electrolux B shares was 15.4, excluding costs of SEK 2,059m related to the not completed acquisition of GE Appliances. The dividend yield was 3.2% based on the Board’s proposal for a dividend of SEK 6.50 per share for 2015.
An increasing portion of Electrolux shares are traded on new trading platforms. Approximately 41% of total trading volume of Electrolux is handled through the Nasdaq OMX Stockholm. BATS has increased its share significantly in recent years and is the first most traded platform with 42% of total trades.
The Group’s sustainability performance help attract and strengthen relations with investors. In 2015 and for the ninth consecutive year, Electrolux was recognized as a leader in the consumer durables industry sector in the prestigious Dow Jones Sustainability Index (DJSI). Electrolux thereby ranks among the top 10% of the world’s 2,500 largest companies for social and environmental performance. Additionally, Electrolux has received recognition from other indexes and organizations, including RobecoSAM.
