Small domestic appliances and Team G - Student Research cookware This report is published for educational purposes only by students competing in the CFA Institute Research Challenge. SEB SA

Ticker: SK NAIC: 335211 Recommendation: BUY Price: 58.12 € Price Target: 65.14 €

Earnings/Share 30 Jun. 31 Dec. Year PER 2008A 1,0253 1,95239 2,98 7,18 2009A 0,54652 2,37628 2,92 13,55 2010A 1,78772 2,62452 4,41 17,59 2011E 1,86779 2,83272 4,70 12,14

January 1st , 2012 Highlights

Company Highlights

• Valuation. A projected value of 65.14€ is found for Groupe SEB’s share. • Organic growth based on innovation and international expansion. • External growth based on a dynamic acquisition strategy. • Strong multi-brand strategy which enable to better respond to consumers expectations, ensure a vast international presence, implement an offensive sales policy. Financial determinants • Strong Financial Structure: SEB’s results are prosperous and net income increased by 52% over the past 4 years. The group financial structure should remain healthy and solid, its risks of solvency are limited thanks to a low gearing ratio. This year the first bond loan of SEB was a total success and ensure a long term debt for its long term investments. Future value determinants • Despite the 2009 crisis, Groupe SEB enjoyed much more favourable environment for its business in 2010 and 2011. • The emergence of new consumer trends worldwide will be a real opportunity for the group to brainstorm new sales and marketing ideas, balancing a growth slowdown in its developped markets. • The group will have to deal with fluctuating raw material costs and currencies volatility.

Groupe SEB’s daily stock price YTD GroupeMarket SEB 2010 ProfileMarket Profile

52 Week Price RangeMarket Profile €78.78 - 58.12 Average Daily Volume (3 month) 100477 52 Week Price Range 78.78 - 58.12 Beta 0,895 Average Daily Volume (3 month) 100477 DividendBeta Yield (Estimated) 0,8952,55% SharesDividend Outstanding Yield (Estimated) 2,55%49,952 MarketShares Capitalization Outstanding 285076149,952 Market Capitalization 2850761 Institutional Holdings 18,28% InsiderInstitutional Holdings Holdings 18,28%28,8% Insider Holdings 28,8% BookBook Value Value per per Share Share 27,96€€27.96 DebtDebt to toTotal Total Capital Capital 28,21%28,21% RetRet urn urn on on Equit Equit y y 17,8%17,8% CFA Institute Research Challenge January 1st, 2012

Business Description

Activity

Since its creation in 1857, SEB has grown to become one of the world leading household products manufacturer in small domestic appliances and cookware segment and enjoy a significant notoriety thanks to some major breakthrough like the pressure cooker. As a result of one century of innovation and expansion, the group is providing today a large range of products and can draw on 23 famous brands.

These brands include 6 brands with a global scope : Moulinex whitch has been relaunched last year, Tefal, Krups,All-Clad, Rowenta, Lagostina and 17 with a national or multi-regional reach : Calor and SEB in France and Belgium; MIRRO, WearEver, AirBake, Regal and T-fal in North America; ARNO, Samurai, PANEX, PENEDO, Rochedo, and Clock in South America; and Supor in Asia. The range of products is very broad from electrical cooking appliances, food preparation, linen care, personal care and home comfort, and home cleaning. (Exhibit 1)

Home comfort and cleaning have the highest growth rate (around 30%) whereas personal care is clearly the weakness of SEB with almost no growth certainly due to a lack of brand competitiveness in this field. The other products, mostly various cooking devices, whitch are the main part of SEB’s sales registered an average 10% growth rate. Sales registered an extraordinary rise of +15% in 2010, boosted by their drop in 2009. SEB has been able to recover quickly from its previous worst commercial performances. The global market of small electrical appliances worth an estimated €27.5bn, and €6.5bn for cookwares. Basic household products are generally manufactured in countries with low production costs, and are subject to rapid range renewal.

Geographical positioning

As a worldwide manufacturer, SEB products are mainly sold in Western Europe (41% of sales), Asia/Pacific (21%), North America (11%), South America (9%) and in nearly 150 countries around the world. More than 80% of sales are achieved outside France. Actually, it’s a well-established group with a powerful brand awareness, leader in many countries, and since this year with the Maharaja Whiteline, SEB is established in all the BRIC. (Exhibit 2)

Distribution

SEB sustain its profitability with a diversified distribution on a large scale, through various channels, in order to reach every potential customer, mostly everyone. The mass-market channel, supermarkets and hypermarkets, represents 28% of sales, as much as specialty retailers (24%) and less than independent retailers (33%). In 2010, the development of e-commerce (10% of sales) has continued and enables SEB to reduce its dependence on its main distributors (-4%). Furthermore the group continues to open its own retail stores, mainly in emerging countries where supermarkets or traditional networks are not well established (SEB has 1,257 stores at 31 June.2010, including 897 in China) and the new presence of SEB in India should increase strategy.

Top Competitors - LG Electronics Inc. - - AB - Electric Works Procter & Gamble Hygiene & Health Care Ltd - Conair Corporation -MEYER COOKWARE

Shareholder Structure Group SEB’s founder shareholding is significant (43,68% of the shares and 57,47% of the voting rights at 31 December 2010) and steady since the inception of the group. SEB receives support from its shareholders for long- term projects, allowing it to pursue its investment strategy and to develop its new acquisitions. (Exhibit 3)

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Industry Overview and competitive positioning

Since few years, the household industry has become highly competitive with the intrusion of new entrants from emerging countries. Actually we would not expect to see new entrants but would rather look for mergers and acquisitions to dominate the competitive landscape moving forward to generate increased economies of scale.The pressure they put on costs forced the group to relocate a part of their plants in China, in order to sustain its profitability and its market shares on appliance, where innovation is not the main key of success. Low prices have become significant for a mass retailing but SEB choose a more balanced strategy.

Competitive positioning: Overview

The Group’s industrial strategy aims to continuously improve competitive performance and quality over the long term. The production plan is deployed according to three major lines: - Europe based manufacturing for products when economies of scale are feasible and where the Group is a market leader, protecting its own product concepts using specific technologies for products (enabling a better product mix and justifying higher prices) or for processes (allowing a decrease in the cost price); - Use of its own plants outside Europe for economic mass-production where the Group wishes to retain control of its specific technologies in products and processes; - Sourcing of certain basic everyday products or articles in which the Group cannot exploit economies of scale.

The creative strength of the Group is one of its vital foundations, as innovation is one of the principal sources of increased profitability. By generating differentiation and improved product mix, innovation justifies higher selling prices and leads to better margins. This accrued profitability allows in turn to further investments in R&D, marketing and advertising, having a boosting effect on sales, thus creating a virtuous circle. Beyond innovation, Group’s competitiveness also relies on specific expertise in technology, industry, logistics and IT, as well as on the enthusiasm of its teams.

Manufacturing Overview

Keeping the control over the production is the idea of the management to preserve the quality and we believe that it is the right thing to do. SEB know that its brands are the key of its profit and its selling strength. In order to be competitive 50% of the production is manufactured in emerging countries with low wage costs (China, Brazil, and Vietnam) but 70% remains in-house though a total of 28 plants. This strategy allows SEB to preserve its margin through lower manufacturing costs and settle closer to these countries with high growth potential. The production is still diversified and well balanced between mature and emerging countries but we think that SEB will continue to relocate as necessary to increase its profitability and competitivity, as all worldwide companies..

Investing in emerging countries is not only a choice but a necessity. SEB couldn’t afford to miss these opportunities and let its competitors importing their awareness and market shares. Considering the lack of growth in mature countries, SEB started some years ago to invest in emerging countries, especially Chine with the strategic acquisition of Supor in 2007, to ensure its growth. There is a huge new market for SEB and it is only the beginning of its offensive strategy.

Markets Overview

Mature Markets: A way of innovation source of profitability

SEB is conducting two main different strategies for two different markets. On the first hand there are mature markets like Western Europe and North America. We already said that products with a poor value added are outsourced because low costs are the key to success, but for the main part of the products sold in mature countries, the competitivity is a way of innovation.

The main drivers of demand are the replacement of worn-out appliances, upgrading products with newer technologies but having a high sensitivity to customers purchase power. Changes in consumer behavior also affect the growing demand for replacements. For example, energy-efficient products are becoming more attractive by decreasing costs. Actually, consumer expectations are shifting towards new products using less energy and water

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Indeed SEB perfoms R&D to make growth, unisng its creativity to make new designs, to creat demand and fit customers new habits. Theses markets need a high reactivity and can be very unstable. SEB tries to anticipate its well-equipped customers needs and their behavior in order to fulfil them in the first place and make a higher profit. Mature markets need a lot of efforts but are far more profitable. The differentiation strategy lead by SEB is the best way to adapt and survive in a very selective environement.

The BRIC: Reliable source for growth

On the orhter hand there are emerging countries like China and Brazil. If innovation remains a key of success it is not critical considering that first-time equipments are mostly needed in the BRIC. It represents a huge free market offering significant growth. Lower costs are the way to conquer market share but SEB, as usual, is not in a simple cost domination strategy. SEB penetrate these markets by acquiring well established brands, using its financial stengh and its good reputation, and positioning itself as a main competitor with a better awerness and relationship with these countries. We believe that it will make a significant advantage in the near future.

Industry analysis for Group SEB: Porter's five forces (Exhibit 4)

Bargaining Power of buyers – Very High Buyers have an ultimate buying power, the main drivers of demand are the replacement of worn-out appliances, upgrading to products based on newer technologies and increase in the purchasing power of consumers. In fact, Changes in consumer behavior also affect the growing demand for replacements. For example, energy-efficient products are becoming more attractive by decreasing costs. Thus, consumer expectations are shifting towards new products using less energy and water.

Bargaining Power of Suppliers - Average The inputs to manufacturing are basic commodities (e.g. steel, copper) and are not specialized or technologically advanced. Given this understanding of the products being supplied we can assess that supplier power is low. Actualy the supplies are following the market price of raw materials, there is no real bargain but customers can buy futures to ensure the price.

Threat of Substitutes - High Demand for small appliances is connected to the growth in the economy and housing. The cookware industry has seen an increase in substitute products due to the increase in small appliances over the past five years. This threat of substitution for cookware manufacturers is currently high, however, we would expect a decrease in substitution threat as the recession lingers.

Intensity of Rivalry - Intense The competitive forces (downward pressure on prices, declining demand, increased imports) are causing increasing rivalry among competitors, including foreign competition.

Threat of New Entrants – Low Average The political and legal environment in the cookware market is characterized by lower barriers to enter in this area and there are no high technological issues for new entrants. Generally some states imposed the use of certain materials in the cookware manufacturing process. However, financial and technical constraints make it difficult for many new entrants to the further development, and be allowed to establish itself in China for a foreigner is not easy. We don’t expect new strong Entrants but some medium manufacturers may come on the market in the near future.

SWOT Analysis (Exhibit 5)

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Other Headings Relevant to company

Business Model and Strategy The group’s strategy focuses on long-term opportunities. The strategy aims to allocate risks across markets in order to not to be dependent on one market, but to take advantage of growth opportunities while maintaining the industrials strengths of SEB by the means of local productions. The group aims to become the world leader in the industry of household products. The difficulty SEB meeting is that markets match different issues. Brands are the centerpiece of this strategy and enable SEB to assume both a local and global approach

Portfolio of brands The group can support its ambition on a range of well-known brands which are able to adapt to customer needs. In this highly fragmented market, the strength of SEB is to provide well-differentiated brands, which are complementary.

A strategy tailored to its market In developed countries, the SEB’s strategy is to launch a lot of new innovative products and models each year to encourage sales and add fresh interest to product displays in retail stores. The group is running a distinction strategy, answering specific needs with quality features and reacting quickly to adapt its response to changes in consumer habits. This market shows a rise of 4% in sales in 2010. Conversely, in emerging economies, demand is driven mainly by a need for first-time equipments and These products are locally. This market is far more dynamic with a rise of 18% growth in sales in 2010.

The cost control Reducing costs and improving its manufacturing performances is a day to day priority for the group. The group puts a strict control over costs and a rigorous management of investments. In an environment where production has been largely outsourced to independent suppliers, SEB has chosen to pursue an unusual industrial policy, limiting outsourcing to just 30%. It is a key point of the strategy of SEB and allows it to adapt to the reversals in the trend of the markets, dynamically managing prices and production. Order to maintain its industrial competitiveness over the long term, the Group implements plans to improve productivity and constantly adapts its production facilities to take account of economic conditions of the market.

Innovation SEB put innovation at the heart of its strategy. Innovation allows the differentiation of products by customers and to set higher prices. More than 60% of revenue is generated by products which have been launched in the 3 past years. 2% of turnover is spent on R&d (73M€ in 2010). It is in Western Europe and particularly France that SEB achieves its higher margin. In these mature markets, innovation figures prominently and has driven its expansion. The group has released about 300 new products in 2011.Two recent examples are the minimal-oil Actifry and the Silence Force low-noise vacuum cleaner. Thanks to this intensive research, SEB is in 19th position of patent applicants ranked by INPI in France.

International presence The group’s growth is mostly organic (+8,4% in first-half 2011) but SEB conducts regular acquisitions with the intention of entering emerging markets. This policy is expressed through seven acquisitions or takeovers in 10 years : Imusa (Colombia), Asia Fan (Vietnam), Maharaja Whiteline (India) and many others. SEB's strength lies in this strategic positioning between mature markets (62% of sales) and emerging markets (38%) and can rely on a worldwide presence and its global expansion strategy. These acquisitions do not impede the group to present low debt ratios (20% debt to equity at 30 June 2011).

A diversified commercial approach SEB sustain its profitability with a diversified distribution through various balanced between mature and emerging markets. SEB owns an extensive distribution channel, which distributes the products of the brand through the traditional network but also from outlets adapted to local markets. They are called Tefal Shops in Turkey, Supor Lifestores in China or Tiendas de Hogar in Colombia etc. and are drivers for future growth. In In 2010, SEB operated in 45 countries, including 5 new ones: Portugal, Norway, Sweden, Peru and Syria

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Investment summary

Target price After considering the potential growth and profitability of the company carried by the promising performance of 2010 (51% growth in net profit over 2009), we determined a target price of 65,14€, which mean an estimated return of 12%. Since the beginning of the sovereign debt crisis, the stock price has started to drop dramatically from 81.67€ to 58,12€ as the stock market trend did, but we anticipate a recovery in 2012 to a more level in order to reach a more realistic return.

Risk factors • Sluggish economy and drop in consumption in Europe and North America • Rising cost of raw materials • Reduced GDP growth rate in emerging countries in near future. • Fierce competition in the sector

Key factors of SEB’s success  SEB has world-known brands that cement the group's identity but also possesses regional brands, which illustrates its broad presence in nearly 150 countries.  Innovation is at the heart of the SEB strategy: SEB reinforces its leading role by pursuing its strategy of innovation.  The Group is exposed increasingly to emerging markets: SEB strengthens its leadership consistently through acquisitions of foreign firms benefiting from well-established and strong brands. These emerging markets are promising : Estimates show that, currently there are 52 million middle-class families in China, which will close to double by 2015

 Leverage effect: Gearing ratio estimated of 40% in 2011 and Bond loan of 300 M€ for 5 years at 4,5%.

 Strong financial structure: Allows SEB to seize sudden acquisition’s opportunities.  Diversified distribution through various additional channels

Challenge to Overcome  SEB is faced with the requirement to diversify its sources of income. It must succeed both its establishment in emerging countries but also maintain and enhance its market shares in the mature economies to take advantage of the highest profit margins.  The debt crisis and the recession likely to happen in 2012 in some western countries will impact the group profitability and its organic growth.

Figure 1 : SEB Stock Price

Source : Reuters 6 CFA Institute Research Challenge January 1st, 2012

Valuation

Market Cap EV Current 2 871,74 3 180,14 Peer Average Price E 37,96 € 30,00% DFC Price E 76,79 € 70,00% Target Price 65,14 € Price 1 January 2011 58,12 € Expected Return 12,08% Recommendation BUY

We have decided to underweight the comparable value method target price. In our view, this process underestimates the value of Seb. We applied a higher weighing to our DCF, given they encapsulate our fundamental long term view on Seb and the high potential of the growth.

DCF ---- Valuation from Cash Flow

We made a DCF valuation of € 3 836 millions, taking the following factors into consideration in our free cash flow calculation, meaning a price of 76,79€. (Exhibit 16)

Growth rate: The average annual growth is of 9,2% between 2012 and 2016. The group will continue its expansion in emerging countries in Colombia, India and China, ensuring an average annual growth around 10%. See our Sales forecasts in Exhibit 7. Emerging countries will sustain the organic growth of Seb as developed countries stagnate.

External growth: -Imusa: After opening negotiations with Imusa’s shareholders in July 2010, in December the Group finalized the acquisition of the Colombian company on 28 February 2011. Imusa manufactures and markets aluminium, stainless steel and cast aluminium cookware (frying pans, saucepans, stockpots, local cooking pots known as ‘calderos’, pressure cookers, etc.) and plastic products for food and domestic use (storage boxes, kitchen utensils, thermos flasks, etc.). -Asia Fan: On 12 May 2011, the Group took over the Vietnamese company Asia Fan, the national leader on the fan market. Specialising in the production and marketing of fans, the largest category of small domestic appliances in South-East Asia, Asia Fan is represented by its ASIAvina brand, which has a strong national reputation. -Supor : SEB owning 51.3% of the company, Groupe SEB took the option to purchase the additional 20%.This additional acquisition is intended to consolidate the strategic investment made by the Group in Supor in 2007 and to ensure the company’s mid-to long-term development based on solid, stable share ownership. -The extension of Supor site in wuhan: Which specialises in the production of cookware for the Chinese domestic market, began in May 2010. It should allow the company to keep up with demand more effectively and double production capacity with ultra-modern processes and production lines. Wuhan will thus become the largest cookware manufacturing site in Asia. - Maharaja Whiteline: SEB has signed the purchase of the Indian manufacturer of home appliances Maharaja Whiteline. The French group took 55% of the capital of this small family business, whose sales reached 22 million last year. Maharaja Whiteline is known for its mixer-grinders that can grind and mix food, such as spices and pasta. The company has built its flagship product expansion in the kitchen appliances in India.

Organic growth: The innovation policy continued to energise the Group’s product range, with some 90 new products and models having been introduced in their various markets every year. We believe that SEB won’t be able to register a similar organic growth as in 2010 because of the slowdown of growth all around the world.

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Operating margin: The improvement in the operating margin value will be achieved through organic growth, which is the primary driver, and through the appropriate management of selling prices taking into account purchase prices, the level of absorption of industrial costs and changes in currencies rates. The Group will, as usual, keep a tight rein on all costs and will press ahead with the initiatives undertaken in relation to indirect purchases.

Amortization & depreciation: Amortization and depreciation increases in volume but remain stable compared to sales at 3,30%

Taxes: Tax rate will be stable around 25% of the EBIT in the next years.

Stability of intern investments: Investment will continue to grow at 3% of sales. Historically, a growth in sales has always been accompanied by a growth in investment.

Slight decrease in working capital requirement: SEB has continuously reduced its WCR from sales and shows a good control of it. We foresee that SEB will maintain its WCR at an average 19,5% of sales in a long term. (Exhibit 13)

WACC at 8.96%: The cost of equity is 9,02%, estimated. The beta of Seb is 0,9. The cost of debt after tax is estimated to be 4,7 %, considering a risk free rate of 2%. (Exhibit 15)

Peers ---- Valuation from multiples

Considering that our peers have an average 50% similarity with SEB, according infinancials, this evaluation is far less significant than the DCF. Furthermore we believe that SEB will outperform its peers in the future and that’s why this spread will increase. However this evaluation is helpful because of the correlation between SEB and its peers behavior (exhibit 20) and multiples (exhibit 21). Actually, this valuation will slightly increase ou decrease the DCF depending on the average trends of estimated peers multiples to obtain a price that integrate the global investors anticipations and the market behavior in this sector.

Considering the gap between SEB and its peers average multiples, we made an adjusted price by calculating the accuracy of the valuation with the historical 2010 multiples. The evaluation is made with an average multiple of the panel calculated on the next 3 years after 2010. We used 4 multiples and a panel of 8 peers. Multiples are PER, EV/ Net Sales, EV/EBITDA and EV/EBIT and all the details can be found in exhibit 23 to 26. We found a dramatic drop in all multiples after 2010 and a significant decrease of the estimated stock price of SEB.

Valuable synthesis:

The target price is obtained by means of a weighted average of the projected share prices given by the two methods. The given weights reflect anticipations that the multiple based models are downwardly biased because of the current market conditions. The DCF-Method reflects the positive market outlook more accurately but cannot stand alone because of its high sensitivity to parameter inputs. The respective weights for the DCF model and peers group multiples method are 70% and 30% which results in a projected share price of 65,14€ that we believe realistic. An upward price potential of 12.80% is found for Seb’s share.

Financial analysis

Seb has shown a solid financial structure, driven by an impressive sales growth and a good cost control. Its ability to generate high free cash flow enables Seb to auto finance its acquisitions. Indeed it’s gearing remains relatively low. Despite the economic slowdown, we foresee a more relatively strong growth of its sales and adjusted operating margin for the next few years.

Earnings (Exhibit 6 – 8)

A strong growth of sales nurtured by the setting up on growing markets of emerging countries, the launch of up market products and the deployment of the sale force.

-During 2007 to 2011, overall the average annual growth is of 8,8%. Indeed the group succeeded in effectively expands into new countries. 2010 was an exceptional very good year in contrast with 2009. The global crisis that affected since the fourth quarter of 2008 the world markets has had a major impact on economies: recession,

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rising in some countries reduced industrial activity, unemployment ... The Group has faced in the first half of 2009 to difficulties which penalized its activity such as narrowing of credit and the slowdown in consumption, more or less marked depending on the country. These phenomena have led to large disturbances in the distribution, including encouraging a policy of destocking.

 Internal growth: The group has an organic growth ratio around of 8%.

 External growth: The group has taken possession of different company to develop her strategy (Lagostina/ Panex, Mirro Wearever, Supor in China, Imusa in Colombia and Maharaja Whiteline in India).

 Over the last 4 years the operating margin increased regularly to reach 12% of net sales in 2010. The operating margin amounted to €155 million during the first six month 2011 representing 9% of sales versus 10,8% at June 2010. Indeed the strategy volume increases the operating margin of 38 million. SEB managed to balance the increase of commodities and other direct manufacturing costs with a decrease in personnel expenseswith regard to Sales. Much effort in innovation, advertising and marketing has been made in 2011.

 The average annual growth of EBIT over the last 4 years is 10% and reach €349,4 millions in 2010.

 The financial income decrease between 2008 to 2010 to reach €-15 million in 2010 following the reduction of the debt after Supor acquisition.

 The net profit after tax increases between 2007 and 2010. It represents €93 million in 30 June 2010 versus €89 million at 30 June 2010.

 The ROCE is in perpetual improvement to reach 17,91% in 2010 versus 14,22% in 2009.

 The ROE is stable over the last 4 years around 17% which mean a good profitability.

 We anticipate a declite of these ratios following the investments made in less profitable markets. SEB will sustain a high growth rate but will suffer a slight decrease of its returns over the capital employed. (Exhibit 11)

Cash flow (Exhibit 10)

• Self financing has grown thanks to a strong ability to generate higher cash flow. • Strong operating cash flows over the last 4 years (exceptional in 2009 with destocking). • The cash from operating activities allow financing investment. • Financing and investing cash flows are volatile. This is caused by the various acquisitions Seb has made in the previous years. • Seb benefited from Working Capital in decrease thanks to a better command of accounts receivable and account payable. • The net change in cash is stable and positive over the last 4 years except in 2010.

Balance sheets & financing (Exhibit 9)

• The group’s financial structure will remain healthy and solid with a diversified financing structure. • To ensure the liquidity of its subsidiaries, SEB is keeping a pool of cash around 250 M€. • The group possesses a significant financial leeway which allows acquiring Maharaja Whiteline. • Gross long-term financial debts have fellen since 2010 to €135,3 million against €240 million. The Group’s gearing ratio fell to 0,086 in 2010 (vs. 0,2 in 2009). • Fixed assets are essentially composed of intangible assets (30%), goodwill (31%) and property plant and equipment (33%) due to acquisitions and subcontracting. • Furthermore Seb maintain a low Net Debt/EBITDA ratio around 0,3 in 2010. • Seb sold a plant in Brazil for a €14,2 million profit.

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Investment Risks An overview of the risks that could negatively affect the group in 2012 and the next few years.

Market risks:

 Currencies risk (Exhibit 28) SEB has a significant exposure to currencies variations by financing and investing in its subsidiaries in EUR. Group is buying USD and conduct a central hedging with SWAPS and FUTURES. On the other hand the main part of sales are made in foreign currencies. The depreciation of the EUR has a positive impact on SEB profit except for the EUR/YEN. Considering the high volatility of currencies, the risk is increased tand will have more significant impact in the next years, that may be negative by the end of the European crisis.

 Higher commodity prices (Exhibit 27) The Group uses to manufacture its products, raw materials (primarily aluminium, copper and nickel used in the composition of stainless steel) whose price fluctuations are covered by derivatives. The Group anticipates its needs for the coming year and makes a prudent hedging of these requirements (70% of volumes forecast the next twelve months). The commodity prices are subject to an increase (impact on operating margin of -25 M€ in raw materials for the first semester 2011). Copper has risen sharply between the first half of 2000 and 2001 (+32%) and other raw materials have followed the trend: plastic and aluminium (+20%), nickel (+21%). The additional cost for the first half of 2011 was 25M€. The margin of SEB will be reduced if commodity prices continue to rise.

Operational risks:

 Threat from Competitors The industry is highly competitive and SEB is exposed to the cyclical phenomenon of falling prices. The competition in the sector is fierce as the sector is highly attractive. The protection lies in the customer loyalty, the innovation and on the technological barriers (centre of expertise) developed by SEB.

 Economic slowdown In 2011, austerity plans of European governments following the crisis lead to household consumption. This situation is already apparent: in the first nine months of 2011, sales increased in all countries except France (- 1,9%) and North America (-1,6%). This recession is however not uniform: in Western Europe except France (growth of sales +6,5%). In 2012, the recession already affecting the countries of southern Europe (Spain, Greece) could spread within the Europe, resulting in additional storage costs. The purpose of SEB to reach an operating margin of € 463 million for 2011 probably will not be achieved. However, sales growth in emerging countries preserves the ability of SEB to maintain its turnover during the crisis of Western economies.

Other risks:

 Regulatory Risks Social Movements in China Social claims begin to appear in emerging countries and they could rise exponentially in the coming years. Labor costs could increase significantly. Nowadays the situation seems stable in China with the application of the 12th Plan established to promoting social harmony and reduces socio-economic inequalities

 Environmental Risk SEB has already recognized the importance of environmental issues and developed environmental risk protection. However, these expenses should keep rising and taxes could appear with the development of new environmental laws and regulation.

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Business Overviwe

Exhibit 1: Market Segmentation p12 Exhibit 2: Net Sales Geographic Repartition p12 Exhibit 3: Stockholders structure p12

Strategy Analysis p13 Exhibit 4: Porter p13 Exhibit 5: SWOT p13

Fundamentals – Financial Statements

Exhibit 6: Income Statement p14 Exhibit 7: Overview of Sales Growth p14 Exhibit 8: Income Statement in percentage of Sales p15 Exhibit 9: Balance Sheet p15-16 Exhibit 10: Statement of Cash Flows p16 Exhibit 11: Ratios for Analysis p17 Exhibit 12: Margin Graph p17 Exhibit 13: WCR Graph p17 Exhibit 14: Change in Operating Margin Graph p18

DCF valuation

Exhibit 15: WACC p18 Exhibit 16: DCF p19

Peers Valuation

Exhibit 17: SEB stock overview p19 Exhibit 18: Consensus EPS Graph p20 Exhibit 19: Peers overview p20 Exhibit 20: Peers Graphs p21 Exhibit 21: Multiples Graphs p21 Exhibit 23: PER p22 Exhibit 24: EV/Net Sales p22 Exhibit 25: EV/Ebitda p22 Exhibit 26: EV/Ebit p22

Risks

Exhibit 27: Raw Materials Graph p23 Exhibit 28: EUR/USD Graph p23

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Market Segmentation

Cookware Kitchen Electrics Domestic Care Products

Frying pans, Electrical Preparation: Linen care : Personal Home saucepans, cooking: deep food processors, care: hairstyli care: vacuum irons and steam ng appliances stewpots, fryers, table-top beaters, mixers, cleaners generators, (hair dryers, (upright or pressure cookers, ovens, rice , semi-automatic hair clippers, canister, with low pressure cookers, induction centrifugal juice washing rotating and without cookers, hobs, electric extractors, small machines, brushes, dust bag, garment straighteners, compact and bakeware, pressure cookers, food steamers, etc etc.), epilators, cordless), fans, kitchen utensils barbecues, etc preparation electronic heaters etc. equipment, scales

Net Sales Geographic Repartition Stockholders France 1000 Self Control 4% Employees 800 Individuals FFP 3% 600 Stockholders 5% Other West Fédéractive Europe Europe 6% (Founder) 400 24% French 200 2011e Institutionals 2010 Inverstors 0 Foreign 18% Venelle 2009 investors Investissement 2008 21% (Founder) 19% North Asia America

South America

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Strengths - Clear strategic direction : fostering growth/maintaining competitiveness and profitability Weaknesses - Conducting dynamic acquisition strategy thanks to a strong - Weak advertising policy financial condition. - Low hedging - Pursuing an innovative, brand differentiation product policy - Portfolio brand intended for a specific customers (families) - Relying on specific expertise in technology, industry, - Management is cautious to pursue bolder price promotion logistics and IT - Weak operating margin in the last six months - Strong relationships with retailers - Operational and compliance risks increase with its global - Skilled, initiative and committed team expansion - Good reactivity and capacity to adapt. - An unrivalled portfolio of strong, differentiated and complementary brands. Brands diversification help to reduce reputation risk.

Opportunities - Geographic expansion Threats - Multiple repeat purchases of product for other outlets - Highly Competitive market operated by initial purchasers - Fluctuating material costs - Strong knowledge of demand in emerging markets - Currency effect on sales - Emergence of new consumer trends worldwide - Short product lifecycle - Group SEB complies with the AFEP-MEDEF Corporate - Imitation of brand name and technology from China Governance Code for listed companies - Inflation in emerging countries escpecialy China and - A good consumption level maintained throughout Western slowdown in organic growth. European countries after the 2009 crisis - Investing in a markets wich suffered a marked downturn - Small household equipment market growing around 4% per (Spain, Portugal, Greece). Global weakness of Europeen year growth due to crisis. - Stronger dealer relationships than key rivals.

13 CFA Institute Research Challenge January 1st, 2012

Income Statement (Millions €) 2016e 2015e 2014e 2013e 2012e 2011e 2010 2009 2008 2007 2006 Net Sales 6219,75 5759,03 5283,51 4847,26 4406,6 4006 3651,8 3176,3 3230,2 2869,6 2651,7 France 746,4 748,7 739,7 727,1 705,1 699,1 711,7 685,3 668,1 640,3 595 West Europe 1119,6 1065,4 1003,9 945,2 881,3 834,5 786,9 728,3 734,6 717,9 691,6 North America 373,2 374,3 369,8 387,8 396,6 397,1 404,4 348,9 393,7 401,1 389,7 South America 777,5 719,9 660,4 581,7 506,8 441,2 345,7 261,5 269,1 274,4 246,6 Asia 2176,9 1871,7 1585,1 1333,0 1123,7 916,0 764 599,9 498,8 835,9 728,8 Other Europe 1026,3 979,0 924,6 872,5 793,2 706,5 639,1 552,4 665,9 Cost of Raw and Goods -2892,2 -2706,7 -2483,3 -2254 -2040,3 -1842 -1632,7 -1414,1 -1423,2 -1226,4 -1136,4 Gross Margin 3327,6 3052,3 2800,3 2593,3 2366,3 2164 2019,1 1762,2 1807 1643,2 1515,3 Growth 9,0% 9,0% 8,0% 9,6% 9,4% 7,2% 14,6% -2,5% 10,0% 8,4% R&D -99,5 -92,1 -84,5 -77,6 -70,5 -66 -60 -50 -49,8 -40,4 -35,8 Other Operating Expenses -1586,0 -1451,3 -1320,9 -1221,5 -1123,7 -1025 -932 -827,7 -885,8 -800,2 -722,5 Personnel Expenses -970,3 -898,4 -808,4 -751,3 -700,6 -643 -589,2 -529,1 -529,5 -501,5 -494,6 Operating Margin 671,7 610,5 586,5 542,9 471,5 430 437,9 355,4 341,9 301,1 262,4 Growth 10,0% 4,1% 8,0% 15,1% 9,7% -1,8% 23,2% 3,9% 13,6% 14,7% Extraordinary Income -62,2 -57,6 -52,8 -48,5 -22,0 -9,2 -38,5 -73,8 -24,3 -30,4 -83,6 Employee Profit-Sharing -74,6 -69,1 -63,4 -58,2 -52,9 -52 -50 -33 -38 -33 -26 EBIT 534,90 483,76 470,23 436,25 396,59 368,8 349,4 248,6 279,6 237,7 152,8 Growth 10,6% 2,9% 7,8% 10,0% 7,5% 5,6% 40,5% -11,1% 17,6% 55,6% Financial Income -31,1 -28,8 -26,4 -24,2 -22,0 -16 -15,9 -27,2 -49,9 -32 -31,5 Earnings Before Tax 503,8 455,0 443,8 412,0 374,6 352,8 333,5 221,4 229,7 205,7 121,3 Income Tax -136,8 -126,7 -121,5 -111,5 -96,9 -92 -89,5 -58,1 -66,5 -60,9 -34,4 Minorities -49,8 -46,1 -42,3 -33,9 -30,8 -26 -23,2 -16,8 -11,2 0 0 Group Net Income 317,2 282,2 280,0 266,6 246,8 234,8 220,8 146,5 152 144,8 86,9 Growth 12,4% 0,8% 5,0% 8,0% 5,1% 6,3% 50,7% -3,6% 5,0% 66,6% Amortization & Depreciation -205,3 -190,0 -174,4 -160,0 -145,4 -132,198 -117,6 -123,6 -110,3 -88 -97

Net Sales Growth Ratio 2016e 2015e 2014e 2013e 2012e 2011e 2010 2009 2008 2007 Net Sales 8,0% 9,0% 9,0% 10,0% 10,0% 9,7% 15,0% -1,7% 12,6% 8,2% France -0,3% 1,2% 1,7% 3,1% 0,9% -1,8% 3,9% 2,6% 4,3% 7,6% West Europe 5,1% 6,1% 6,2% 7,3% 5,6% 6,0% 8,0% -0,9% 2,3% 3,8% North America -0,3% 1,2% -4,6% -2,2% -0,1% -1,8% 15,9% -11,4% -1,8% 2,9% South America 8,0% 9,0% 13,5% 14,8% 14,9% 27,6% 32,2% -2,8% -1,9% 11,3% Asia 16,3% 18,1% 18,9% 18,6% 22,7% 19,9% 27,4% 20,3% -40,3% 14,7% Other Europe 4,8% 5,9% 6,0% 10,0% 12,3% 10,6% 15,7% -17,0%

2012 - 2016 2007 - 2011 Average Annual Growth: 9,2% Average Annual Growth: 8,8% Annual Average Growth: 7,6% Annual Average Growth: 7,1%

14 CFA Institute Research Challenge January 1st, 2012

Margin Ratio/ Net Sales 2016e 2015e 2014e 2013e 2012e 2011e 2010 2009 2008 2007 2006 Net Sales 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% France 12,0% 13,0% 14,0% 15,0% 16,0% 17,5% 19,5% 21,6% 20,7% 22,3% 22,4% West Europe 18,0% 18,5% 19,0% 19,5% 20,0% 20,8% 21,5% 22,9% 22,7% 25,0% 26,1% North America 6,0% 6,5% 7,0% 8,0% 9,0% 9,9% 11,1% 11,0% 12,2% 14,0% 14,7% South America 12,5% 12,5% 12,5% 12,0% 11,5% 11,0% 9,5% 8,2% 8,3% 9,6% 9,3% 27,5% Asia 35,0% 32,5% 30,0% 27,5% 25,5% 22,9% 20,9% 18,9% 15,4% 29,1% Other Europe 16,5% 17,0% 17,5% 18,0% 18,0% 17,6% 17,5% 17,4% 20,6% Cost of Raw and Goods -46,5% -47,0% -47,0% -46,5% -46,3% -46,0% -44,7% -44,5% -44,1% -42,7% -42,9% Gross Margin 53,5% 53,0% 53,0% 53,5% 53,7% 54,0% 55,3% 55,5% 55,9% 57,3% 57,1% Growth R&D -1,60% -1,60% -1,60% -1,60% -1,60% -1,6% -1,6% -1,6% -1,5% -1,4% -1,4% Other Operating Expenses -25,5% -25,2% -25,0% -25,2% -25,5% -25,6% -25,5% -26,1% -27,4% -27,9% -27,2% Personnel Expenses -15,6% -15,6% -15,3% -15,5% -15,9% -16,1% -16,1% -16,7% -16,4% -17,5% -18,7% Operating Margin 10,8% 10,6% 11,1% 11,2% 10,7% 10,7% 12,0% 11,2% 10,6% 10,5% 9,9% Growth Extraordinary Income -1% -1% -1% -1% -1% -0,2% -1,1% -2,3% -0,8% -1,1% -3,2% Employee Profit-Sharing -1,2% -1,2% -1,2% -1,2% -1,2% -1,3% -1,4% -1,0% -1,2% -1,1% -1,0% EBIT 8,6% 8,4% 8,9% 9,0% 9,0% 9,2% 9,6% 7,8% 8,7% 8,3% 5,8% Growth Financial Income -0,5% -0,5% -0,5% -0,5% -0,5% -0,4% -0,4% -0,9% -1,5% -1,1% -1,2% Earnings Before Tax 8,1% 7,9% 8,4% 8,5% 8,5% 8,8% 9,1% 7,0% 7,1% 7,2% 4,6% Income Tax -2,2% -2,2% -2,3% -2,3% -2,2% -2,3% -2,5% -1,8% -2,1% -2,1% -1,3% Minorities -0,8% -0,8% -0,8% -0,7% -0,7% -0,6% -0,6% -0,5% -0,3% 0,0% 0,0% Group Net Income 5,1% 4,9% 5,3% 5,5% 5,6% 5,9% 6,0% 4,6% 4,7% 5,0% 3,3% Growth Amortization & Depreciation -3,3% -3,3% -3,3% -3,3% -3,3% -3,3% -3,2% -3,9% -3,4% -3,1% -3,7%

Balance Sheet (Millions €) 2012e 2011e 2010 2009 2008 2007 2006 Assets Inventories 778 764,5 635,5 466,3 614,6 528,2 517,1 Accounts Receivable 883 860 793,3 675,2 700,5 680,9 713,3 Cash & Short Term Investment 265 250 236,6 307,8 224,6 134 54,1 Other Current Assets 30 40 40,9 20,3 50,5 15,5 30,5 Total Current Assets 1956 1914,5 1706,3 1469,6 1590,2 1358,6 1315 Goodwill 700 692 409,1 386,6 419,8 111,1 118,9 Intangibles 633 629 398,7 372,2 368,9 261,1 275,4 Net porperty Plant & Equipment 533 528 426,5 391,4 381,2 328,9 332,3 Other Long Term Assets 55 54,5 55,4 50,8 62,1 384,1 82,1 Total Non Current Assets 1921 1903,5 1289,7 1201 1232 1085,2 808,7 Total Assets 3877 3818 2996 2670,6 2822,2 2443,8 2123,7

15 CFA Institute Research Challenge January 1st, 2012

Liabilities & Equity Accounts Payable 790 760 745,2 593,7 543,6 510,1 508,2 Accrued Current Expenses 80 85 78,3 86,9 77,2 85,8 101,3 Current Tax Payable 29 26 24,6 18 25,6 16,7 33,6 Short-Term Borrowings 285 360 170,1 246,7 661,5 729,3 396,7 Other Current Liabilities 10 10 5,8 11,1 29,7 10,4 0,9 Total Current Liabilities 1194 1241 1024 956,4 1337,6 1352,3 1040,7 Deferred Tax 58 56 54,9 55,3 91,8 37,1 59,2 Accrued Non Current Expenses 130 120 120 111,3 102,3 109,2 118,4 Long-Term Debt 478 596 201,8 301,1 213,5 65,9 80,2 Other Non-Current Liabilities 25 25 24 26,4 39,4 15,3 9,5 Total Non Current Liabilities 691 797 400,7 494,1 447 227,5 267,3 Book Equity 50 50 50 50 50,9 50,9 50,9 Consolidated Retained Earnings 1892 1645 1409,9 1140,1 1005,7 921,7 838,7 Repurchase Stocks -140 -100 -61,7 -108,8 -150,7 -108,6 -73,9 Minorities 190 185 173,1 138,8 131,6 0 0 Total Equity 1992 1780 1571,3 1220,1 1037,5 864 815,7 Total Liabilities & Equity 3877 3818 2996 2670,6 2822,1 2443,8 2123,7

Statement of Cash Flows (Millions €) 2012e 2011e 2010 2009 2008 2007 2006 Net Income 246,8 234,8 220,8 146,5 152,0 144,8 86,9 Amortization & Depreciation 145,4 132,2 117,6 123,6 110,3 88,0 97,0 Change in Accrued Expenses -5,0 -2,8 -4,2 17,6 -22,5 -24,5 43,0 Gain or Loss from Sales of Assets 0,0 14,2 1,8 0,4 0,7 2,1 0,8 Minorities 29,0 26,0 23,2 16,8 11,2 0,1 Differed Tax 96,9 92,0 89,4 58,1 66,5 60,9 34,4 Other 61,0 38,6 9,8 35,8 49,8 28,8 27,9 Change in inventories -13,5 -129,0 -138,6 155,9 -66,8 -22,2 -71,3 Change in Account Receivable -23,0 -66,7 -67,4 31,3 -24,3 16,9 -20,7 Change in Account Payable 30,0 14,8 82,1 28,1 0,6 -6,8 41,6 Change in other Working Capital 42,0 51,0 35,0 24,8 -0,3 34,1 -23,8 Tax Payed -117,0 -115,0 -112,9 -80,8 -112,3 -94,6 -61,9 Cash From Operating Activities 492,6 290,1 256,6 558,1 164,9 227,5 154,0 Sales of Assets 13,0 30,0 20,9 6,5 8,6 4,8 4,4 Plant & Equipment Investment -145,0 -129,0 -120,6 -92,2 -96,0 -76,3 -67,3 Intangible Investment -4,0 -25,0 -20,2 -17,0 -20,3 -15,5 -17,9 Other Financial Investment 0,3 0,4 -2,8 -4,3 -0,4 Cash from acquisitions -26,9 -622,0 26,4 -319,7 -54,2 Perimeter Variation 0,1 -0,8 0,7 0,4 Cash From Investing Activities -162,9 -746,0 -119,6 -102,2 -84,9 -410,3 -135,0 Change in Long-Term Debt -118,0 394,2 -99,3 87,6 146,7 -14,3 -24,1 Change in Short-Term Debt -75,0 189,9 -80,1 -419,4 -65,2 330,0 32,4 Capital Increase 0,7 4,9 1,9 2,2 Stock Repurchase -30,0 -36,4 33,4 8,8 -43,5 -40,3 -8,6 Dividends -91,0 -74,0 -55,9 -50,2 -46,3 -43,0 -40,4 Cash From Financing Activities -314,0 473,7 -201,9 -372,5 -3,4 234,3 -38,5 Exchange Rate variation -1,0 -4,4 -5,8 0,3 14,4 28,6 23,9 Net Change In Cash 14,7 13,4 -70,7 83,7 91,0 80,1 4,4 16 CFA Institute Research Challenge January 1st, 2012

2012e 2011e 2010 2009 2008 2007 2006 EBIT 396,59 368,80 349,4 248,6 279,6 237,7 152,8 D&A 145,42 132,20 117,6 123,6 110,3 88 97 EBITDA 542,01 501,00 467 372,2 389,9 325,7 249,8 EBITDA/Sales 12,30% 12,51% 12,79% 11,72% 12,07% 11,35% 9,42% WCR 871 864,5 683,6 547,8 771,5 699 722,2 WCR /Sales 19,77% 21,58% 18,72% 17,25% 23,88% 24,36% 27,24% Capital Employed 2792 2768 1973,3 1748,8 2003,5 1784,2 1530,9 Net Debt 498 706 135,3 240 650,4 661,2 422,8 Net Debt/EBITDA 0,919 1,409 0,290 0,645 1,668 2,030 1,693 Gearing Ratio 0,250 0,397 0,086 0,197 0,627 0,765 0,518 ROCE 14,20% 13,32% 17,71% 14,22% 13,96% 13,32% 9,98% ROI 14,40% 13,48% 17,98% 14,06% 14,62% 14,33% 11,82% ROE 14,53% 15,69% 17,81% 14,74% 17,18% 17,24% 21,31% ROA 6,41% 6,89% 7,79% 5,33% 5,77% 6,34% 8,18%

2006 2007 2008 2009 2010 2011e 2012e Group Net Income 3,3% 5,0% 4,7% 4,6% 6,0% 5,9% 5,6% Operating Margin 9,9% 10,5% 10,6% 11,2% 12,0% 10,7% 10,7% EBITDA 9,42% 11,35% 12,07% 11,72% 12,79% 12,51% 12,30%

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Change in Operating Margin

200

150

100 Volume Effet 50 Price & Mix effect Purchase Price Effect 0 Expenses Titre de l'axe 2008 2009 2010 Currency Effect -50

-100

-150 Titre de l'axe

WACC Estimation

Standardize Unstandardized d Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant) ,002 ,002 1,272 ,204 Rm ,895 ,062 ,576 14,325 ,000 Bêta estimated over a 8 years periode (2004-2011) from a Sharp model regression between SEB and S&P 500 returns. T-note 10 Years 2011 2% Market Return 2010 9,84% Not 2011 due to Debt Crisis CAPM 9,02% % Net Debt 2011 28,21% % Equity 71,79% Debt Cost after Tax Estimated 4,7% WACC 7,80%

18 CFA Institute Research Challenge January 1st, 2012

Discounted Cash Flow 1 2 3 4 5 6 2011 2012 2013 2014 2015 2016 Net Sales 4 006 4 407 4 847 5 284 5 759 6 220 Net Sales Growth 9,70% 10,00% 10,00% 9,00% 9,00% 8,00% Amortization & Depreciation 3,30% 3,30% 3,30% 3,30% 3,30% 3,30% Investments 3,20% 3,00% 3,00% 3,00% 3,00% 3,00% W CR / Net Sales 21,58% 19,77% 19,80% 19,60% 19,60% 19,50% Taxes 24,95% 24,44% 25,56% 25,84% 26,19% 25,58%

EBIT 368,8 396,6 436,3 470,2 743,8 534,9 Amortization & Depreciation 132 145 160 174 190 205 Taxes - 92 - 97 - 112 - 122 - 195 - 137 Investments - 128 - 132 - 145 - 159 - 173 - 187 Change in W orking Capital - 181 - 7 - 89 - 76 - 93 - 84 FCF 100 306 251 289 473 333 DCF 93 263 200 214 325 212

Total DCF 1 307 W ACC 7,80% Discounted Final Value 3 420 G rowth to infinity 2,00% Global Value 4 727 - Net Deb ts - 706 - Minorities - 185 = Equity Value 3 836

Outstanding Shares 49,952 Stock Price 76,79

SEB Stock Overview

2011e 2010 2009 2008 2007 2006 Stocks (k) 49952 49952 49952 50912 50881 51057 EPS ajusted 4,7 4,42 2,93 2,99 2,85 1,7 Price 58,12 77,73 39,7 21,46 41,33 35,87 Market Cap (k) 2903210 3882769 1983094 1092572 2102912 1831415 PER (End Y) 12,37 17,59 13,55 7,18 14,50 21,10 Dividendes 74 55,9 50,2 46,3 43 40,3 Div/Net Income n-1 33,51% 38,16% 33,03% 31,98% 49,48%

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Provided by Infinancials source FactSet

Peers Overview

FYE 2010 % Company ROA ROE EBITDA/ SALES EBIT/ SALES Net Income/ SALES SEB SA 7,79 17,81 12,79 9,6 6 AB Electrolux 5,47 20,26 8,26 5,11 3,76 4,19 18,91 10,25 6,39 3,12 Qingdao Co Ltd 8,7 27,61 5,75 4,93 3,36 Rinnai Corp 6,99 11,23 13,86 9,73 6,48 Hefei Rongshida 11,74 32,78 11,68 10,65 9,9 De Longhi SpA 5,07 10,36 12,07 9,23 4,68 Whirlpool Corp 4,04 15,69 8,66 4,42 3,37 Haier Electronics Group 12,9 48,3 4,36 4,14 2,69

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Graphs below are provided by infinancials

21 CFA Institute Research Challenge January 1st, 2012

PER EV/Net Sales Company 2010 2011e 2012e 2013e Company 2010 2011e 2012e 2013e SEB SA 16,9 10,8 10,6 9,6 SEB SA 1,11 0,8 0,77 0,73 AB Electrolux 13,2 11,4 9,1 7,7 AB Electrolux 0,49 0,33 0,31 0,3 Indesit Company 7,9 6,7 5,8 5,5 Indesit Company 0,35 0,24 0,24 0,23 Qingdao Haier Co Ltd 18,6 8,3 6,9 6,2 Qingdao Haier Co Ltd 0,59 0,28 0,23 0,21 Rinnai Corp 17,5 15,2 14,1 13,2 Rinnai Corp 0,95 0,89 0,86 0,82 Hefei Rongshida Sanyo 21,8 10,4 7,9 6,3 Hefei Rongshida Sanyo 2,3 1,06 0,77 0,68 De Longhi SpA 11,7 9,9 8,5 7,5 De Longhi SpA 0,55 0,59 0,57 0,53 Whirlpool Corp 10,9 5,5 9 7,7 Whirlpool Corp 0,43 0,27 0,27 0,27 Haier Electronics Group 17,65 10,1 7,9 6,5 Haier Electronics Group 0,42 0,21 0,17 0,15

Peers Average 14,91 9,69 8,65 7,58 Peers Average 0,76 0,48 0,43 0,40 Average over Period 8,64 Average Period 0,44 SEB EPS 4,42 4,70 4,5 5,3 SEB Net Sales 3651,8 4006,00 4406,6 4847,26 Average over Period 4,83 Average over Period 4419,95 Theoric Price 65,89 41,75 EV 2775,37 1930,05 Price with SEB ratio 74,70 EV with SEB ratio 4053,50 Accuracy 0,88 Accuracy 0,68 Ajusted Estimated Price 47,33 Ajusted EV 2818,88 - Net Deb ts - 706 - Minorities - 185 Estimated Price 38,56

EV/EBITDA EV/EBIT Company 2010 2011e 2012e 2013e Company 2010 2011e 2012e 2013e SEB SA 8,65 5,92 5,7 5,35 SEB SA 11,57 7,66 7,37 6,9 AB Electrolux 5,93 4,66 3,94 3,61 AB Electrolux 9,59 8,46 6,52 5,72 Indesit Company 3,38 2,72 2,59 2,46 Indesit Company 5,41 5,03 4,7 4,43 Qingdao Haier Co Ltd 10,19 3,91 3,37 3,06 Qingdao Haier Co Ltd 11,88 4,37 3,6 3,16 Rinnai Corp 6,83 6,2 5,67 5,28 Rinnai Corp 9,73 8,03 7,31 6,7 Hefei Rongshida Sanyo 19,74 9,6 7,04 5,72 Hefei Rongshida Sanyo 21,65 10,46 7,86 6,08 De Longhi SpA 4,59 4,55 4,16 3,81 De Longhi SpA 6 5,67 5,06 4,64 Whirlpool Corp 5,02 4,13 3,56 4,15 Whirlpool Corp 9,85 7,48 5,9 5,03 Haier Electronics Group 9,6 5,4 4,27 3,6 Haier Electronics Group 10,11 6,15 4,43 3,79

Peers Average 8,16 5,15 4,33 3,96 Peers Average 10,53 6,96 5,67 4,94 Average Period 4,48 Average Period 5,86 SEB EBITDA 467 501,00 513 596,2 SEB EBIT 349,4 368,80 374,56 436,25 Average over Period 536,73 Average over Period 393,20 EV 3810,72 2403,22 EV 3678,31 2303,19 EV with SEB ratio 4039,55 EV with SEB ratio 4042,56 Accuracy 0,94 Accuracy 0,91 Ajusted EV 2547,53 Ajusted EV 2531,26 - Net Deb ts - 706 - Net Deb ts - 706 - Minorities - 185 - Minorities - 185 Estimated Price 33,13 Estimated Price 32,81

22 CFA Institute Research Challenge January 1st, 2012

Commodities et Currency Risks with global operating margin effect overview

23 CFA Institute Research Challenge January 1st, 2012

Disclosures: Ownership and material conflicts of interest: The author(s), or a member of their household, of this report [holds/does not hold] a financial interest in the securities of this company. The author(s), or a member of their household, of this report [knows/does not know] of the existence of any conflicts of interest that might bias the content or publication of this report. [The conflict of interest is…] Receipt of compensation: Compensation of the author(s) of this report is not based on investment banking revenue. Position as a officer or director: The author(s), or a member of their household, does [not] serves as an officer, director or advisory board member of the subject company. Market making: The author(s) does [not] act as a market maker in the subject company’s securities. Ratings guide: Banks rate companies as either a BUY, HOLD or SELL. A BUY rating is given when the security is expected to deliver absolute returns of 15% or greater over the next twelve month period, and recommends that investors take a position above the security’s weight in the S&P 500, or any other relevant index. A SELL rating is given when the security is expected to deliver negative returns over the next twelve months, while a HOLD rating implies flat returns over the next twelve months. Disclaimer: The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with [Society Name], CFA Institute or the CFA Institute Research Challenge with regard to this company’s stock.

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