On Thursday, Citi reiterated its Neutral rating and SEK102.00 price target for Electrolux AB (ELUXB:SS) (OTC: ELUXY). The reaffirmation follows reports that Bosch may be considering a bid for Whirlpool (NYSE:WHR), a major competitor of Electrolux in the United States. Despite Electrolux's shares experiencing an uptick on this news, Citi does not foresee Electrolux as a potential target for Bosch or as a bidder for Whirlpool.
According to Citi, the potential interest from Bosch in Whirlpool is due to their complementary geographic presence, with Whirlpool having a strong base in the US and Bosch in the EMEA region. This contrasts with Electrolux's more globally diversified operations.
The firm also noted that the valuation of any deal between Bosch and Whirlpool could be indicative of the value for Electrolux's North American business, should it be put up for sale. In addition, the transaction could offer insights into the premium offered in industry acquisitions.
Citi's commentary reflects on past interest in Electrolux by Midea, which had considered a bid for the company but withdrew its interest last summer. The analyst suggests that the outcome of Bosch's reported interest in Whirlpool could shed light on the valuation benchmarks within the home appliance industry.
In other recent news, Electrolux Group has reported a 3.7% drop in organic sales in the first quarter of 2024 due to decreased consumer activity and significant price pressure, particularly in Europe and North America. The company's CEO, Jonas Samuelson, has announced his intention to step down by January 1, 2025. Despite facing a challenging pricing environment, Electrolux has managed to save SEK0.6 billion through its ongoing cost reduction program.
The company maintains a steady business outlook for 2024 and anticipates a negative organic contribution from volume, price, and mix. However, it expects growth in focus categories and cost optimization efforts in the latter half of the year to positively impact earnings.
InvestingPro Insights
As Electrolux AB (OTC: ELUXY) navigates a challenging market landscape, recent InvestingPro data reveals a nuanced picture of the company's financial health. With a market capitalization of $2.91 billion, the company's performance is scrutinized through various lenses. Notably, Electrolux is trading at a negative P/E ratio of -4.83, reflecting skepticism in its profitability in the near term, which aligns with analysts' expectations that the company will not be profitable this year. Additionally, the firm's revenue has declined by 3.42% over the last twelve months as of Q1 2024, and its gross profit margin stands at 12.65%, which is considered weak and aligns with one of the InvestingPro Tips highlighting Electrolux's struggle with gross profit margins.
InvestingPro Tips suggest that Electrolux, despite being a prominent player in the Household Durables industry, is trading near its 52-week low and is not paying dividends to shareholders. This could be of particular interest to investors considering the potential industry consolidation hinted at by the Bosch-Whirlpool scenario. For those seeking a deeper analysis, InvestingPro offers additional tips that could provide further insights into Electrolux's strategic positioning and financial outlook. To explore these in more detail, investors can visit https://www.investing.com/pro/ELUXY and use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more InvestingPro Tips available that could help investors make more informed decisions regarding Electrolux.
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