Small Household Equipment

CFA Institute Research Challenge 31/12/2011

Recommendation: HO Groupe SEB LD

Ticker: SK FP Recommendation: HOLD F Price: €58.12 Price Target: €70 December 31, 2011

EPS Jun. Dec. Year Trailing Performance 1m 12m P/E SEB -2.9% -25.2% 2008A €1.10 €2.10 €3.20 6.7x Sector 5.1% -15.8% 2009A 0.59 2.55 3.14 12.6 CAC Mid & Small -0.3% -21.4% 2010A 1.89 2.76 4.65 16.7 2011A 1.94 3.03* 4.97 11.7 CAC 40 -0.2% -17.0%

2012E ** ** 5.13 13.6x Source: Bloomberg

* Estimated EPS ** Annual estimates only

Highlights

12 month target price of €70 – Recommend HOLD: SEB stock price has corrected 29% from its life-time high of €82.15 in January 2011. We expect investors to remain cautious on the small household equipment sector in the short-term. Nonetheless, we believe SEB will be one of the most resilient companies in the sector that can maintain positive revenue and EBITDA growth in 2012. A pure player and leader in the industry: SEB is the only global pure player in the sector focusing on small electrical appliance and cookware. It commands leading market shares in multiple product categories and enjoys strong brand recognition. SEB has also delivered superior top-line growth versus its peers over the past years with better and more stable EBITDA margins. Exposure to mature markets dent growth expectations: SEB’s sales in mature markets are seeing strains in the first 9 months of 2011. Sales in France and North America dropped 1.9% and 1.7% respectively y-o-y. In our base case estimates, organic growth will slow down from 9.6% in 2010 to 6.3%, 4.3% and 5.5% in 2011-13 while total revenue growth will slow down from 15% in 2010 to 10.9%, 7.2% and 5.8% in 2011-13. 2011 and 2012 consensus estimate on gross and EBITDA margins are slightly optimistic: We see room for 4-7% downward revisions on 2011 and 2012 EBITDA and EPS due to increasingly expensive raw materials, slight negative pressure on average selling price and a stronger dollar against the euro. Valuation support at €50: Our bear case price target is €50.3. SEB is currently trading at 6.9x EV/ 2012e EBITDA on our base case estimates, and at a price of €50 the multiple is 6.1x. We think the likelihood of SEB trading to previous trough valuations (below 5x) is low given drastically different market expectations about SEB’s growth today and the fact that SEB has proven its resilience in 2009. Market Profile SEB stock performance vs. the market (Jan 06=100) 52 Week Price Range €52 - 82.15

300 Average Daily Volume (6m) €7.9M SEB Beta 0.878 Dividend Yield (Estimated) 2.09% 250 CAC Mid & Small Shares Outstanding 49.95 m CAC 40 200 Market Capitalization € 2,903m

150 Institutional Holdings 14.93% Insider Holdings 42.73% 100 Book Value per Share* 28.93 50 Debt to Total Capital* 23.0% Return on Equity* 16.8% 0 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 * as of June 30 2011 Source: Bloomberg

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Business Description A world leader of the small household equipment sector SEB, based in Lyon and founded in 1857, is one of the largest global players within the small household equipment sector. The company’s key product categories are small electrical appliances and cookware, where it commands 12% and 18% global market share respectively. In 2010, SEB sold 200 million products worldwide:  Small electrical appliances (70% of 2010 sales): . Kitchen electrics: electric cookware (e.g. toasters, deep fryers, electric woks) and food and beverage preparation equipment (e.g. coffee makers, electric kettles, blenders)

. Home and personal care: linen care (e.g. steam irons, spin dryers), home care (e.g. vacuum cleaners, fans), personal care (e.g. baby-care equipment, hair care equipment) Key Milestones:  Cookware (30% of 2010 revenue): frying pans, saucepans, stewpots, pressure cookers etc. 1857: Specialized in tin-ware A strong tradition of product innovation 1953: Pressure cooker launched SEB’s R&D expenses and ratio to sales 1960/70’s: Market leader in France The company has been a pioneer of new products in the industry since 1975: IPO on Paris Bourse its founding. The pressure cooker, irons, coffee grinders and most € 80 2.5% 1988: Acquired Rowenta - Germany recently the oil-free fryer (Actifry) are examples of SEB’s innovations. € 70 1992: Open Eastern EU distribution 2.0% This innovative culture at SEB translates today into strong research € 60 1997: Enter Brazil market (Arno) and development, and creative marketing. Each year, SEB brings to 2005: Takeover of Moulinex € 50 1.5% 2007: 53% stake in Supor (China) the market 250 to 300 products. € 40 2008: Subsidiaries Southeast Asia A successful external growth strategy € 30 1.0% 2009: Open new plant in China SEB has over 40 years of experience in growing through acquisitions, € 20 2010: Acquired Imusa - Colombia 0.5% 2011: 65% stake Asia Fan - Vietnam; beginning with Tefal and Calor in the early 70’s. In the last decade, it € 10 71% stake in Supor (M€ 406) acquired Moulinex-Krups in 2001-02, All-Clad in 2004, Panex and € - 0.0% 2006 2007 2008 2009 2010 1H2011e 55% stake in Maharaja Whiteline Lagostina in 2005, and Mirro WearEver in 2006. More recently, SEB R&D Spend R&D Ratio made its biggest acquisition in Asia to date of Chinese company Supor Source: Company documents in 2007. SEB went on to acquire smaller companies including Imusa in Colombia in 2010, Asia Fan in Vietnam and Maharaja Whiteline in India in 2011. SEB’s external growth strategy has radically changed the profile of the company in recent years into that of a global player with significant exposure to emerging markets. A portfolio of strong and complementary brands Through its external growth history, SEB has acquired and developed a portfolio of more than 20 brands:  6 international brands

Key Points :

 Sector Growth: 4% more than 15 local brands Brands: Krups, Moulinex, Rowenta, Tefal, All-Clad, Lagostina Market Share: 12% in small electric appliances and 18% in cookware

Distribution: independent retailers (33% ↑), hyper/supermarkets (28%↓), Geographically diverse in both sales and production specialty retailers (24%↑), department SEB offers one of the most geographically diversified profiles among small household equipment makers. In store (5%↓), alternative (10%) Growth: Innovation of 250 new 2011, emerging markets is expected to contribute around half of SEB’s sales, while more than 50% of products / year production (sourced and in-house) will originate from low-cost countries primarily in Asia. For legacy R&D spend: 15% yoy growth reasons, 40% of SEB’s production capacity is still located in high-cost countries in Europe including France (average) and Germany.

Location of 2010 sales Location of 2010 production Central US Europe, SA 2% CIS and France 8% other 19% 18% Europe China 40% 20% Asia/Pacif ic 21% Rest of Western Europe 22%

South North Sourced America America 30% 9% 11% Source: Company documents

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CFA Institute Research Challenge 31/12/2011

Industry Overview and Competitive Positioning

The small appliances industry has expanded at an annual rate of 6.4% between 2005 and 2010 (+4.6% volume growth, +1.8% price changes). Growth is mainly driven by demand from emerging markets such as Asia Pacific, Latin America, Central Europe, Middle East and Africa. Emerging markets made up more than half of the global market in 2010 and contributed c.85% of the industry’s growth in the last 5 years.

Industry dynamics are very different between mature markets and emerging markets although the common features are that both are becoming increasingly competitive.

 Mature markets (North America and Western Europe - 45% of global volumes in 2010) are driven more by supply than demand given the market is already well-equipped (13 appliances/household). Consumer spending is stimulated and sustained by new products upgrades and shorter product life, and to a lesser extent replacement demand. The market is divided into 3 clear segments: entry-level, mid-range (largest size) and premium. Competition is fierce in all 3 segments as there are numerous brands – national, regional or international- and also low-cost no-brand products and distributor brands. Retail distributors are raising the level of competition among brands and no-brand products.

 Emerging countries are primary equipment markets (only 3 appliances/household). Urbanization and the rising middle-class translate into double-digit growth in demand for household equipment. Entry- level products are dominant with a significant mid-range section and a niche high-end segment. Brand image is highly important in this market as consumers sought status through products.

Source: Euormonitor Source: Euormonitor A fragmented and The small household equipment sector is still fragmented and highly localized: the ten biggest players competitive landscape accounted for less than 40% of the total market in 2010, with no single player having more than 6% of total market volume. The industry is however steadily consolidating: the market share of the ten biggest players increased by 8% between 2005 and 2010.

Branding and product The industry is highly competitive with low barriers to entry. The past couple of years have seen low cost differentiation are manufacturers from Asia flooding the entry-level markets. Branding and product innovation have been keys essential to avoiding price competition which erodes margins.

Cost and price pressures Appliances manufacturers are exposed to volatility in raw material prices and foreign currencies. In abound addition, they often sell to large retailers who have stronger bargaining power due to their large distribution network. However, the development of alternative distribution channels (online, independent retailers…) give appliances manufacturers somewhat more pricing power.

SEB’s market segments A market leader in In the small electrical appliances market, SEB multiple product commands 12-12.5% market share followed by Philips Cookware Home categories and De’Longhi. Philips is losing market share due to 19% care 23% weaker product pipeline. In the cookware market, SEB has a 17-18% market share followed by Meyer which has 8-9% market share. Linen care  #1 in cookware, pressure cookers, steam cookers Electric 5% Cooking steam irons and systems, kettles, toasters, fryers, 15% Food bread makers, meal appliances, bathroom and preparatio kitchen scales; n 7%  #2 in espresso coffee machines, table top ovens, Home Beverage comfort waffle and sandwiches makers; preparatio  #3 in food preparation appliances and electric 12% Personal care 10% n 9% epilators. Source: Company documents

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A pure player delivering SEB’s revenue has increased 38% between 2006 and 2010 against a 23% decrease for Philips (comparable superior growth within the scope) and +19% for De’Longhi. sector SEB is more focused on small electrical appliances and cookware compared to its competitors. Its competitors like Electrolux, Bosch Siemens, Whirlpool, De’Longhi and Midea generate the bulk of their revenues from major appliances which are more sensitive to consumer confidence and the housing market performance (Exhibit 3). Some competitors have diversified into various consumer products:

 small appliances represent approximately 13% of Philips’ 2010 revenue (alongside healthcare, audio and video, lighting…) and 6% of Panasonic’s 2010 revenue

 US manufacturers are mainly conglomerates with various business lines. For example, Procter & Gamble generated 90% of its 2010 revenue from FCMG goods while Jarden Corp generated 42% from outdoor solutions, 22% from branded consumables and 5% from process solutions. A large share of Spectrum Brands’ 2010 revenues came from consumer batteries (34%), pet supplies (22%), home and garden products (13%) and portable lighting (4%).

Mapping of competitors - growth & market share 70% GD Midea 60% Holding +234% Jarden Corp 50%

40% SEB

30%

20% De'Longhi SpA Bosch Siemens

10% (group) 2006/2010 2006/2010 growth Spectrum Brands AB Electrolux (CS) P&G (CS) 0% Panasonic (CS) Whirlpool 0% 2% 4% 6% 8% 10% 12% 2010 market share -10%

-20% Philips (CS) Whirlpool, AB electrolux, Bosch Siemens: CS: comparable scope major appliances market share source: companies annual reports, Monitor -30%

A group well-positioned SEB’s competitive advantages are: to consolidate and  SEB adopts a multi-brand strategy covering most product segments, including entry-level, mid-range outperform the industry as well as premium products.  Its scale gives it bargaining power with retailers and distributors.  It is the most geographically diversified player in the sector with the strongest foothold in emerging markets among its US and European peers.  A strong track record of integrating newly acquired companies and selecting brands/companies with high potential for acquisition.  SEB has a long history of product innovation. It brings a strong pipeline of products to the market every year despite a rather low R&D expenses to revenue ratio within the sector.

SEB aims at fostering growth and improving operational efficiency through:  an aggressive innovation, product development and promotion strategy, with a coherent management of its brand portfolio  international expansion, with a dual approach of organic and external growth focused on the most attractive areas and market segments in the small appliances sector  a dynamic management of distribution systems aimed at diversifying distribution channels and expanding distribution coverage in less developed markets  optimization of production capacities, by leveraging synergies arising from SEB’s acquisitions (global supply-chain management; scales in purchasing, general and administration expenses…).

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Investment Summary

We initiate coverage on SEB with a HOLD rating and a 12-month price target of €70, implying 20% upside from current share price.

We believe this is a fair valuation of SEB (8x EV/ 2012e EBITDA and 13.6x 2012e P/E) for the following reasons: SEB is a leading company in the the small household appliances/cookware sector that is characterized by strong competition, sensitivity to consumer confidence and structural growth in emerging markets. In our view, SEB is a well-managed company with good market positioning in all product segments from entry-level to high-end. Its brands are well-recognized by customers and command strong customer loyalty. It deserves a premium multiple over its peers given its superior profitability, more consistent track record and greater exposure to growth markets such as China and South America. Even though we expect SEB to outperform its global peers, SEB still derives around 50% of its revenues from mature markets such as Western Europe and North America. The slowdown of growth in those markets will inevitably drag down SEB’s growth. The slowdown of SEB’s top-line growth and pressures on EBITDA margin in 2011-13 will put a ceiling on SEB’s valuation, in our view. Our base case estimate of SEB’s top-line growth is 10.9%, 7.2% and 5.8% in 2011 to 2013 vs. 15% in 2010, and our estimate of EBITDA growth is 1.8%, 5.5% and 12.9% in 2011 to 2013 vs. 17.4% in 2010 (See Exhibit 11.1). We believe consensus estimates of SEB’s gross and EBITDA margins for 2011 and 2012 are too bullish and will likely be revised downwards.

Market consensus Our estimates Our estimates vs Consensus (%) in M€ 2011 2012 2013 2011 2012 2013 2011 2012 2013 Revenue 3,950 4,160 4,417 4,051 4,342 4,596 2.6% 4.4% 4.1% Gross margin 43.3% 43.3% 40.0% 39.4% 40.0% 40.7% -3.8% -3.3% 0.7% EBITDA 524 546 581 496 523 591 -5.4% -4.1% 1.7% EBIT 412 415 443 382 393 446 -7.4% -5.2% 0.6% EPS (€) 5 5 6 5 5 6 -7.0% -4.7% -0.8% Nevertheless, we see valuation support for SEB at around €50 where the stock will be trading at 5.3x EV/ 2012e EBITDA on our base case estimate, which is at a discount to the peer group average and 17% below its mid-cycle multiple. Our bear case price target is €53.3 (€43by multiples-based valuation and €57.6 by DCF valuation). We do not think SEB will trade to its previous trough valuation of c.4.5x as of early 2009 given SEB’s different market profile today. It is less dependent on mature markets, and it has proven the resilience of its brands in the difficult operating environment in 2009.

3. December 21 2010 SEB Stock Price and Major Events Announced acquisition of Imusa, a Columbian 90 cookware and plastic food container

80 2. December 21 2007 manufacturer. 3. Completed acquisition of 52.74%

of Supor 4. February 17 2011 70 1. August 15 2006 Deal; size: €287M Announced acquisition of 5. 100% cash Announced offer for 20% additional stake in 4. 60 51% to 59% stake in Supor. . Zhejiang Supor Deal size: €406M Cookware, a 100% cash 50 5. December 16 2011 Chinese cookware Acquired 55% of Maharaja manufacturer 40 Whiteline, a privately owned

Indian home appliance and

cookware manufacturer 30 2.

1. 20

10

0 07-2005 01-2006 07-2006 01-2007 07-2007 01-2008 07-2008 01-2009 07-2009 01-2010 07-2010 01-2011 07-2011

Source: Bloomberg

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Valuation Our 12-month price target of €70 is a probability-weighted average of our target prices under three different scenarios (base, bull and bear). Our price target in each scenario is the weighted average of our DCF and multiples-based valuation. We assigned a higher weight to DCF valuation than multiples-based valuation because of imperfect comparability of the peer group against SEB, which is a unique pure player in the sector with a different growth and profitability profile.

Bear Base Bull Weights Target Price (30% probability) (55% probability) (15% probability) DCF 70% 57.6 77.7 94.9 Multiples 30% 43.0 66.4 77.8 70 Target Price 53.3 74.3 89.7 Our target price implies 8x EV/2012e EBITDA and 13.6x 2012 P/E on our base case estimates. This is 25% above SEB’s mid-cycle 12-month forward EV/EBITDA of 6.4x and 16% above SEB’s mid-cycle 12-month forward P/E of 11.7x. Compared to SEB’s peer group average, this represents a 48% premium on 2012 EV/EBITDA and 45% on 2012 P/E.

DCF Valuation (Exhibit 11) We arrive at a DCF target price range of €57.6 (bear case) to €94.9 (bull case), with €77.7 being our base case price target.

Bear Base Bull Probability of occurrence 30% 55% 15% 2010/2020 CAGR revenue growth 5.4% 6.4% 7.3% 2012 11.3% 12.1% 12.4% EBITDA margin 2015 12.0% 13.7% 14.8% 2020 12.5% 14.2% 15.3% Target price (€) 57.6 77.7 94.9

The basis of our base case scenario is that the European sovereign debt crisis will have a direct impact on economic growth in France and other Western European countries, and cause a spill-over effect on other mature markets as well as emerging markets. However, the impact of the economic crisis on consumer spending and on SEB in particular will be less pronounced than in 2009. After the consolidation of Imusa in 2011 and Maharaja Whiteline starting 2012, we forecast a deceleration in revenue growth from 10.9% in 2011 to 6.5% in 2015 and 4.7% in 2020, with our key assumptions below (based on revenue forecast for each region – Exhibit 6.2).

2011F 2012F 2013F 2014F 2015F 2015/2020E Organic growth 6.3% 4.3% 5.5% 6.2% 6.5% 5.5% Quantity growth 7.0% 4.5% 4.3% 4.7% 4.8% 3.6% Change in price / product mix -0.6% -0.3% 1.1% 1.5% 1.6% 1.8% Currency impact 0.4% 0.4% 0% 0% 0% 0% Acquisitions impact 2.3% 0.8% 0% 0% 0% 0%

Revenue growth will be mainly driven by emerging markets where revenues are forecasted to grow at CAGR of 9.7% between 2010 and 2020. Whereas, revenue from mature markets is forecasted to grow at 2.3% per annum in the same period. Changes in price and product mix will have a negative impact in 2011 and 2012 due to price pressures from retailers and more intense price competition. On profitability, we expect a declining EBITDA margin in 2011 and 2012 followed by a rebound and then a moderate rise of 0.1% per annum from 2015 to 2020. The rationale behind our forecast of a lower EBITDA margin in 2011 and 2012 is three-fold: pricing pressure in 2011 and 2012, raw material price inflation in 2011 (Exhibit 7) and the strengthening of the dollar against the euro. Gross margin is expected to fall to 40% in 2012, and then recover and stabilize at 41.5% by 2020. We assume the company will keep its operating expenses at around 27.8-27.9% of sales in 2011-13 (Exhibit 6.3). We factored in a deterioration of cash conversion cycle until 2013 mainly due to longer “days inventory” (Exhibit 6.4). For CapEx, we adopted the company’s guidance of €140M in 2011 and 2012 and assumed a 3.1% ratio of CapEx to revenue thereafter. We estimate a net debt of €581M at year-end 2011 after taking into account SEB’s payment for the 20% additional stake in Supor. Base case DCF valuation Our base case DCF valuation employs a 9.3% WACC, calculated via an iterative process (between WACC, employs a 9.3% WACC Enterprise Value, Equity Value) with the following key assumptions:  Risk-free rate: 3.5%  Equity market risk premium: 7.5%  Beta (Bloomberg): 0.88 (un-leveraged: 0.85, re-leveraged: 0.93)  Pre-tax cost of debt: 4.5%  Effective tax-rate: 27.0%  Terminal growth rate: 2% (ROIC in 2020 is 14% and is assumed to remain flat thereafter)

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DCF Sensitivity Table IMPLIED SHARE PRICE WACC 8.3% 8.8% 9.3% 9.8% 10.3% 1.0% 83.8 76.6 70.4 64.9 60.0 TERMINAL 1.5% 88.6 80.7 73.8 67.8 62.5 GROWTH 2.0% 94.1 85.3 77.7 71.1 65.4 RATE 2.5% 100.7 90.7 82.1 74.9 68.5 3.0% 108.4 97.0 87.3 79.2 72.2

Multiples-based Valuation We derived a target price range from €43.0 (bear case) to €77.8 (bull case), with €66.4 being our base case price target under the multiples-based valuation method. Our target EV/2012 EBITDA multiples in the three cases (bear, base, bull) are 6x, 7x and 8x respectively.

The 2012 EV/EBITDA and P/E multiples of listed peers most comparable to SEB are as follows:

EV/EBITDA P/E Mkt Cap 2010 Revenue in M€ 2,011 2,012 2,013 2,011 2,012 2,013 Philips 16,144 25,419 7 6 5 23 13 10 Whirlpool 2,790 14,008 4 3 N/A 5 8 7 Electrolux 3,756 11,850 5 5 4 11 9 7 Procter & Gamble 142,140 62,969 11 10 10 16 15 14 De'Longhi 925 1,335 4 4 4 10 9 7 Indesit Co 415 3,249 4 4 3 6 6 6 Nacco Inds 583 2,050 4 4 N/A 7 7 N/A Newell Rubermaid 3,667 4,393 8 7 7 10 10 9 Spectrum Brands 1,102 1,980 6 6 6 14 11 9 Jarden Corp 2,101 4,646 7 6 6 9 8 7 GD Midea Holding 5,008 8,950 8 6 5 11 9 7 Panasonic Corp 15,703 76,922 5 4 4 N/A 12 8 Joyoung Co 714 641 N/A N/A N/A 9 8 8

Breville Group 279 309 5 5 5 9 9 8

Mean 6.0 5.4 5.3 10.8 9.4 8.2 Median 5.4 5.0 5.3 10.2 8.8 7.6

SEB’s peer group is currently trading at approximately 5.4x 2012 EV/EBITDA and 9.4 2012 P/E, with Procter & Gamble trading at a much richer multiple due to its superior profitability and larger market capitalization (liquidity). On our base case estimates, SEB is currently trading at 6.9x 2012 EV/EBITDA and 11.3x 2012 P/E, which is equivalent to a 28% premium (on EV/EBITDA) to its peer group (Figure 1). Figure 1 As seen in the Figure 1, SEB’s average 12m forward EV/EBITDA over the past 6 years was 6.4x with a

range of 4.5x to 8x. The market re-rated SEB from 4.5x 12m forward EV/EBITDA in early 2009 to around

8x in early 2011. In our view, SEB will not trade to its previous trough valuation barring an extreme market

downturn since the last time it traded there, the market expected a more than 10% drop in 2009 EBITDA (it

turned out that 2009 EBITDA rose 5%). In fact, we expect SEB’s EBITDA to grow 5.5% in 2012.

We believe a target multiple of 7x 2012 EV/EBITDA is appropriate in our base case scenario. This is 9% above SEB’s mid-cycle multiple of 6.4x which we feel SEB deserves given its enhanced growth profile today and its external growth ambitions. Our bull case target multiple is 8x 2012 EV/EBITDA and our bear case target multiple is 6x 2012 EV/EBITDA.

Moreover, SEB has for the most time during the past 6 years traded at a premium to its major competitors like Whirlpool, Electrolux, De’Longhi and Philips (Exhibit 12). In our view, SEB’s valuation premium will widen going forward given the following reasons:  SEB is more focused on small home appliances than its peers like Electrolux, Whirlpool, Panasonic and Philips. This is an advantage because demand for small appliances is less sensitive to consumer confidence compared to demand for major appliances, which account for a sizeable proportion of revenues of its peers.  The market expects 2012 EBITDA of Electrolux and Philips to be lower than their 2010 EBITDA by Source: Bloomberg 16% and 20% respectively, while the market expects Whirlpool’s 2012 EBITDA to be a mere 1% above its 2010 EBITDA. Whereas, we expect SEB’s EBITDA to be 7% higher in 2012 than in 2010.  #1 market share in both electrical appliances and cookware ahead of Philips and Meyer  Highest exposure to fast-growing and high potential countries. Recent acquisition of Maharaja Whiteline in India will helps SEB narrow the gap against its competitors in the Indian market.  Sensible and pro-active acquisition strategy, especially in emerging markets.

Transaction Multiples-based Valuation Acquisitions in the small electrical appliance/household equipment sector have been paid 6.9x their trailing 12-month EV/EBITDA over the last 10 years on average, in line with our 7x base case target multiple. The most recent deal, involving the acquisition of CTI Cia Tecno Industrial, a Chile-based manufacturer and distributor, by Electrolux, was done at 7.4x. Among the targets, the most comparable to SEB in terms of size was Maytag Corp, which Whirlpool acquired for 8.8x. The acquisition of Saeco by Philips, realized at a low level in the aftermath of the Lehman crisis, is considered an outlier case (Exhibit 13).

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Financial Analysis SEB’s revenue has grown 38% over the past five years, from €2.65bn in 2006 to €3.65bn in 2010, at a compounded annual growth rate of 8.3%. During the same period, the industry posted 6.4% revenue growth per annum on average. SEB’s revenue declined in 2009 as a result of a global slowdown after the sub-prime mortgage crisis, but quickly rebounded 15.0% in 2010. During the period of 2006-2010, SEB managed to improve both its EBITDA and EBIT margins fairly consistently year-on-year, and as a result boosted its net profit margin 3.4 percentage points from 3.3% to 6.7%.

Strong organic growth In 2010, SEB saw strong organic growth of 10% on average across its geographical markets. Mature markets such as France, Western Europe and North America grew by 4-8% while emerging markets such as China enjoyed 30% organic growth. Growth in 2010 revenue is attributable to quantity, as the price- product-mix effect was slightly negative. Revenue momentum continued to 9M 2011 thanks to strong growth in emerging markets that helped to offset a 1.9% sales decline in France. After currency effects and including revenue contributions from Imusa, SEB’s revenues grew 15% in 2010. For the period 9m 2011, SEB’s revenue increased 9.7% year-on-year to €2.7bln, mainly due to growth in South America (27.5%) and Asia Pacific (19.9%) (Exhibit 15.2.1). From 2006 to 2010, SEB’s revenue grew at compound annual growth rate (CAGR) of 8.3%. It posted 3.2% revenue growth in mature markets (against a peers’ negative growth of -0.7%), and 15.7% on emerging markets (15.4% for the peers). Only Jarden Corp and GD Midea Holding Co Ltd outperformed SEB during the period. They posted 10% and 22% average annual growth on mature markets and 23.3% and 35.7% in emerging countries respectively. Higher profitability than Over the period 2006-10, SEB managed to raise its average selling price (ASP) year-on-year, by increasing industry peers price on existing products and selling more expensive products except in 2010. SEB’s gross margin fluctuated within a narrow range of 41.2% to 43.4% but was significantly higher than its peers’ average of 28%, highlighting the pricing power of the company and the effectiveness of its hedging policy. However, gross margin declined from 43.3% in 2009 to 41.2% in 2010 and 39.4% in 1H 2011 due to a moderate decrease in average selling price and sharper rise in raw material costs.

Operationally, SEB cut back on labour costs to 3.5% of revenue in 2010 vs. 4.8% in 2006 and during difficult years such as 2009, SEB cut back on advertising from 3.7% of revenue in the prior year to 3%. Only R&D expense has been increasing every year as a percentage of revenue during this period. SEB improved its EBITDA margin at the same time as increasing revenue. In 2010, SEB’s EBITDA margin stood at 13.3% vs. 12.2% in 2006, in line with industry peers’ 9-15% (excluding Procter &Gamble’s 24%). In addition, SEB’s EBITDA margin appears less volatile than that of its peers (4.7% coefficient of variation of SEB’s EBITDA margin, vs. 14% for the peer group). In 1H 2011, SEB’s EBITDA was 6.1% lower than in 1H 2010. EBITDA margin declined to 10.7% from 12.6% in 1H 2010. One of the key reasons is that gross margins have come under pressure in 1H 2011 as a result of lowering of ASP by approximately 1.7% and increase in raw material costs (copper +30%, aluminium +20%, nickel +22% over the same period in 2010 based on 1H 2011 SEB annual reports). However, SEB reached slightly higher EBITDA margins than its peer group.

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The net profit margin of SEB was more volatile compared to its EBITDA margin, as a consequence of fluctuations in restructuring costs, impairment losses and gains/losses from disposals. Thanks to SEB’s debt reduction efforts in 2009 and 2010, net interest expense fell from a peak of 1.2% of revenues in 2008 to 0.3% in 2010. In 1H 2011, SEB’s net profit margin decreased from 6.4% to 6.2% compared to the same period last year, which is significantly higher than the industry average of 3% in 2010 (excluding Procter and Gamble) Between 2006 and 2010, SEB’s net profit grew at a CAGR of 29.3%. Improving operating cash- SEB’s operating cash flow to revenue ratio climbed from 5.8% in 2006 to 7.0% in 2010. In 2009, this ratio flow generation reached 17.6% as a result of very tight control of working capital. Cash conversion cycle of the company trended down from 151 days in 2006 to 91 days in 2010, primarily due to improvement in inventory management and faster of collection of receivables. SEB’s cash generation measured by this ratio is in line with industry average of 7.7% in 2010.

SEB’s average cash flow yield (operating cash flow/net income) between 2006 and 2010 is 1.8, a low level versus its peers mainly because of lower depreciation to net income than the industry. SEB has consistently generated positive operating cash flows during the past five years in excess of capital expenditures (excluding acquisitions). Financing cash flows have been negative four years out of five during 2006 to 2010, except in 2007 when the company raised €200 million from a bridge loan to finance its acquisition of Supor. In 1H 2011, SEB generated €81 million of operating cash flow, or 4.7% of revenues (2010: 7%), and achieved 76% cash flow yield (2010: 105%).

Effective debt reduction SEB managed to reduce its debt level by more than 50% from €795 million in 2007 to €372 million in between 2007 and 2010 2010. This lowered its debt to equity ratio from a peak of 92% in December 2007 to 24% in December created room for 2010. During the period 2006-2010, SEB markedly improved its financial structure by reducing its company’s first bond dependence on short-term financing. To finance its working capital needs, the company managed to shift issuance in May 2011 from short-term loans and commercial papers to long-term capital sources. Net debt to EBITDA significantly dropped from 1.89x in 2007 to 0.28x in 2010 The company tapped the bond market for the first time in May 2011 by issuing a 5-year, un-rated, €300 million 4.5% coupon bond in May 2011. The bond was issued at a yield close to that of a BBB+ rated bond issued by Electrolux AB at around the same time. As of June 2011, SEB’s net debt is €257 million, or 16.6% net debt to equity ratio compared to the peer group range of 1% to 43% (excluding Spectrum Brands and Jarden Corp which are more than 100% leveraged). By year-end 2011, we project SEB’s net debt to be €581 million (net debt to equity of 43%) after paying for 20% additional stake in Supor, and falling to €228 million by 2014. EBITDA interest coverage is expected to decrease from 41x in 2010 to a still very comfortable range of 23x in 2011 (19x in average 2006-2010) and 16x in 2012, mainly due to the extra interest expense from the bond issuance. This coverage ratio is projected to increase in 2013 onwards.

9 CFA Institute Research Challenge 31/12/2011

SEB’s latest acquisition and raise in stake in Supor SEB acquired 55% stake in Maharaja Whiteline, a privately held electrical appliance maker based in Delhi, on December 16 2011. The deal is worth an estimated €66 million. This is an important milestone for SEB because this acquisition is the first step for SEB to catch up with its major rivals like Philips in the Indian market. Maharaja Whiteline was founded in 1976 by Harish Kumar, who will continue to serve as Chairman and CEO of the company. It is a major player in India’s home appliance market with a network of 330 distributors and 26,000 sales outlets. Its production plant is based in Baddi in Himachi Pradesh and it has around 350 employees. It sells more than 60 products across 18 categories including food processors, electric kettles and toasters and is planning to enter new product categories such as water heaters, coolers and some large appliances. The Indian company posted €22 million in revenue in 2010 and its revenue growth is expected to be in the high-teens in 2012 and 2013 on our base case estimates.

SEB completed its purchase of an additional 20% stake in Supor in December 2011 for a total consideration of €406 M, raising its total stake to 71.31%.

Investment Risks Commodity risk SEB is exposed to volatility in raw material prices since 70% of its goods are manufactured in-house as of 2010. The key raw materials used in SEB’s products are aluminium, steel, copper and plastics. SEB adopts a 12-month rolling hedging strategy and hedges 70% of its estimated raw material needs for the coming year. Currency risk More than 60% of SEB’s sales are denominated in currencies other than the Euro and it pays for most of its purchases of raw materials and finished goods in US dollar. Thus, SEB is highly exposed to the exchange rate between the Euro and the US dollar for its purchasing costs and Euro vs. other operating currencies for its revenues outside the Eurozone. Political risk SEB has a sizeable exposure to emerging markets where political risks may be higher, especially in Asia, the Middle East and South America. In addition, certain countries have under-developed legal systems that provide little protection to intellectual property. Supplier concentration risk SEB outsources 30% of its production to low-cost countries such as China. In 2010, SEB had 330 suppliers of components and parts who accounted for approximately 90% of all European plant manufacturing and 85% of worldwide needs. SEB also had 52 suppliers of finished products in 2010 who accounted for 73% of total purchases. These suppliers are likely to pass on higher prices to SEB during times of inflation. Client concentration risk The majority of SEB’s direct clients are retailers. Top 10 retailers accounted for 29% of SEB’s revenue in 2010 (33% in 2009) with Metro being SEB’s largest client (5.5% of revenue in 2010, 6% in 2009) followed by Carrefour (close to 5% in 2010, 6% in 2009). Client concentration is a risk for SEB. Seasonality risk The small household equipment sector is seasonal. In 2010, 1H accounted for 57% of annual sales and 61% of EBIT. The last quarter of the year is most important, with 33.6% of sales generated in Q4 of 2010. Product safety and quality risk SEB’s subsidiaries such as Supor and Asia Fan have their own production lines and the quality of products produced locally may not reach SEB’s group standards. In October 2011, stainless steel pots manufactured by Supor did not meet Chinese authority standards in Harbin, China. According to company, no products were removed from the shelves and the products concerned accounted for a small fraction of Supor sales. Disclosures: Ownership and material conflicts of interest: The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company. The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might bias the content or publication of this report. 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 serve 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. 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 CFA France, CFA Institute or the CFA Institute Research Challenge with regard to this company’s stock.

10 CFA Institute Research Challenge 31/12/2011

Table of Exhibits

Exhibits 1-5: Industry overview and SEB’s market positioning Exhibit 1: Small household equipment Sector - breakdown of volumes sold by location Exhibit 2: Small household equipment sector - evolution of retail prices by location Exhibit 3: Recent developments and prospects of the small household equipment sector by geography Exhibit 4: Breakdown of competitors’ revenue sources Exhibit 5: Profitability and revenue growth in the appliances industry

Exhibits 6 – Base case DCF assumptions and forecasts Exhibit 6.1: Revenue growth forecast 2011-2020 Exhibit 6.2: Organic growth forecast by geography 2011-2020 Exhibit 6.3: Gross margins, cost of sales and operating expenses as % of revenue Exhibit 6.4: Working capital management and cash conversion cycle

Exhibit 7 – Raw material price assumptions

Exhibits 8 – Bear case DCF assumptions and forecasts Exhibit 8.1: Revenue growth forecast 2011-2020 Exhibit 8.2: Organic growth forecast by geography 2011-2020 Exhibit 8.3: Gross margins, cost of sales and operating expenses as % of revenue

Exhibits 9 – Bull case DCF assumptions and forecasts Exhibit 9.1: Revenue growth forecast 2011-2020 Exhibit 9.2: Organic growth forecast by geography 2011-2020 Exhibit 9.3: Gross margins, cost of sales and operating expenses as % of revenue

Exhibits 10 – SEB financial statements (base case) Exhibit 10.1: Income statement Exhibit 10.2: Balance sheet Exhibit 10.3: Cash flow statement Exhibit 11 – DCF valuation model (base case)

Exhibit 11.1: Free cash flow projections

Exhibit 11.2: DCF valuation sensitivity analysis

Exhibit 12: SEB valuation premium versus peers

Exhibit 13: M&A transactions in household equipment sector

Exhibit 14: SEB 1H 2011 revenue analysis

Exhibit 15: SEB financial analysis 2006-1H 2011

Exhibit 15.1: Sales of SEB and its peers (€m)

Exhibit 15.2: SEB’s revenue by geography and historical growth rates (€m)

Exhibit 15.2.1: SEB’s share of revenue by geography (%)

Exhibit 15.3.1: SEB’s earnings

Exhibit 15.3.2: SEB’s gross profit margin versus its peers

11 CFA Institute Research Challenge 31/12/2011

Exhibit 15.3.3: SEB’s EBITDA margin versus its peers

Exhibit 15.3.4: SEB’s EBIT margin versus its peers

Exhibit 15.3.5: SEB’s net profit margin versus its peers

Exhibit 15.4: SEB’s cash flows

Exhibit 15.5: SEB cash conversion efficiency

Exhibit 15.6: SEB’s liquidity

Exhibit 15.7: SEB’s solvency

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Exhibit 1: Small household equipment sector - breakdown of volumes sold by location

Source: Euromonitor

Exhibit 2: Small household equipment sector - evolution of retail prices by location

Source: Euromonitor

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Exhibit 3: Recent developments and prospects of the small household equipment sector by geography

North America Small appliances and cookware sales are projected to remain flat in the mature US New Housing Starts US Consumer Index market with 1% CAGR in volume. Housing 120 starts and the rate of housing turnover has 2500 100

stabilized post the latest recession and is 2000 80 projected to inch north of 550,000 while 1500 60 consumer confidence has continued to be 1000 40

weak in the U.S., Mexico and Canada ('000) Units 20

500 Index CONSSENT

0

economies. Overall mass market is expected

0

to remain soft given stubborn unemployment

2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 rates and cautious consumer discretionary 2001 spending. Source : US Federal Reserve Bank Economic Source : Bloomberg Research Data

Europe, Middle-East, Africa European Consumer Index The ongoing European sovereign debt crisis has put strong pressures on consumers to 10

delay purchases of new small household appliances. CAGR by volume is expected to remain low, driven primarily by replacement of old appliances in Western European 0 countries. However, emerging European, Middle Eastern and African countries have -10 significantly more upside of 4%, 7% and 8% projected CAGR by volume respectively. -20

The growth will be led by the increased sales of basic need appliances such as rice cookers -30 in Turkey and Egypt. Index EUCCEMU

-40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000

Source : Bloomberg APAC Asia Pacific, the second fastest growing region by volume in small appliances, is projected to grow at CAGR 7%. Growth will be underpinned by China where sales are projected to China Consumer Index grow 8% per annum on average. China has a very large consumer base, especially in the 120

rural areas, where the market is still underpenetrated. Furthermore, the Chinese 115 government has been incentivizing consumer demand with subsidies to drive retail sales of 110 consumer appliances. However, the market is highly fragmented with strong domestic 105 producers such as Midea and Joyoung. Furthermore, consumer confidence has stagnated 100 95

in recent years with an average rate of -1.7% over the last 3 years. 90

CHCSCONF INDEX CHCSCONF

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Along with China, Thailand, India, Vietnam, and the Philippines are projected to grow at 8 2000 to 10% during the forecasted period.

Source : Bloomberg Latin America Latin America, the third fastest growing region by volume in small appliances, is projected to grow at a compounded annual growth rate (CAGR) of 5% with leading Brazil Consumer Index

product segments in personal care, small cooking appliances and vacuum cleaners. 140

Growth will be underpinned by Argentina with a projected volume growth of CAGR 9% 120 and a rising consumer confidence over the last 3 years at an average rate 14%. 100 80 60 40

20 BZFGCCSA INDEX BZFGCCSA

0

2006 2006 2007 2008 2008 2009 2009 2010 2010 2011 2005

Source : Bloomberg

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Exhibit 4: Breakdown of competitors’ revenue sources

Small Major Other activities appliances appliances SEB 100% AB Electrolux 10% 80% Other activities 10% Bosch Siemens 10% 90% Whirlpool 10% 90% Midea Holding 14% 86% Indesit 100% De’Longhi 70% 30%* *included professionnel products Healthcare (34%), consumer lifestyle (audio, video… – Philips 13% 22%), lighting (30%) Electronic products (audio/video products - 49%, Panasonic 6% 5% equipment 17%, components and devices 9%, other 24%)

Procter&Gamble 10% 0% 90% - Consumer goods (beauty, health, household care)

Outdoor solutions (42%), branded consumables (22%), Jarden Corp 22% 0% process solutions (5%) Consumer batteries (34%), pet supplies (22%), home Spectrum brands 27% and garden control products (13%), portable lighting (4%) source: companies documents and student group estimates Exhibit 5: Profitability and revenue growth in the appliances industry

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Exhibit 6.1: Base case DCF assumptions and forecasts – Revenue growth forecast 2011-2020

2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E Organic growth 6.3% 4.3% 5.5% 6.2% 6.5% 6.2% 5.9% 5.6% 5.2% 4.7% Quantity growth 7.0% 4.5% 4.3% 4.7% 4.8% 4.5% 4.1% 3.7% 3.2% 2.7% Change in price / product mix -0.6% -0.3% 1.1% 1.5% 1.6% 1.7% 1.8% 1.8% 1.9% 2.0% Currency impact 0.4% 0.4% 0% 0% 0% 0% 0% 0% 0% 0% Acquisitions impact 2.3% 0.6% 0% 0% 0% 0% 0% 0% 0% 0%

Exhibit 6.2: Base case DCF assumptions and forecasts – Organic growth forecast by geography 2011-2020

2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E France -2.0% -1.0% 1.5% 2.0% 2.5% 2.4% 2.3% 2.2% 2.1% 2.0% Western Europe 5.0% 1.0% 2.5% 3.0% 3.5% 3.2% 2.9% 2.6% 2.3% 2.0% North America -2.0% -1.5% 2.0% 3.5% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% South America 9.0% 5.0% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Imusa 11.0% 7.0% 5.5% 6.0% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% CIS 9.0% 2.0% 2.5% 4.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% China (Supor) 23.0% 21.0% 19.5% 18.0% 16.0% 14.4% 12.8% 11.2% 9.6% 8.0% Maharaja Whiteline 20.0% 18.0% 16.0% 14.0% 12.0% 11.2% 10.4% 9.6% 8.8% 8.0% Rest of Asia 9.0% 7.5% 6.0% 5.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Exhibit 6.3: Base case DCF assumptions and forecasts – Gross margins, cost of sales and operating expenses as % of revenue

2011F 2012F 2013F 2014F 2015F 2020E Gross Margin 40.1% 40.0% 40.7% 41.1% 41.5% 42.0% Cost of sales 59.9% 60.0% 59.3% 58.9% 58.5% 58.0% Purchased raw materials and goods 45.8% 46.0% 45.6% 45.4% 45.1% Labour costs 3.5% 3.5% 3.5% 3.5% 3.5% Freight costs 1.8% 1.7% 1.6% 1.5% 1.4% Other production costs 8.8% 8.8% 8.7% 8.6% 8.5% Operating costs 27.9% 27.9% 27.8% 27.8% 27.8% 27.8% Research and development costs 1.6% 1.6% 1.6% 1.6% 1.6% Advertising expense 3.9% 3.9% 3.8% 3.8% 3.8% Distribution and administrative expenses 20.9% 21.0% 21.0% 21.0% 21.0% Profit sharing 1.4% 1.4% 1.4% 1.4% 1.4%

Exhibit 6.4: Base case DCF assumptions and forecasts – Working capital management and cash conversion cycle 2011F 2012F 2013F 2014F 2015F 2020E Days Inventory 108 120 115 110 110 110

Days of Receivable 75 75 75 75 75 75

Days Payable 81 81 81 81 81 81

Cash Conversion Cycle 102 114 109 104 104 104

Exhibit 7: Raw material price assumptions

($/ton) 2011F 2012F 2013F 2014F 2015F Hedge ratio 70.0% 70.0% 70.0% 70.0% 70.0%

Aluminium 2,300 2,350 2,475 2,600 2,600 Nickel 21,200 21,227 21,000 22,250 24,700 Copper 8,250 7,222 7,221 7,184 7,135 Polyethlene 1186 1253 1441 1441 1441

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Exhibit 8.1: Bear case revenue growth forecast 2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E Organic growth 5.0% 1.9% 3.8% 4.7% 5.4% 5.6% 5.4% 5.2% 4.9% 4.7% Quantity growth 5.9% 3.1% 3.6% 3.9% 4.0% 4.0% 3.7% 3.4% 3.0% 2.6% Change in price / product mix -0.8% -1.1% 0.2% 0.8% 1.4% 1.5% 1.6% 1.7% 1.9% 2.0% Currency impact 0.4% 0.4% 0% 0% 0% 0% 0% 0% 0% 0% Acquisitions impact 2.3% 0.6% 0% 0% 0% 0% 0% 0% 0% 0%

Exhibit 8.2: Bear case organic growth forecast by geography 2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E France -2.5% -3.0% 0.5% 1.5% 2.5% 2.4% 2.3% 2.2% 2.1% 2.0% Western Europe 4.0% -1.0% 1.0% 2.0% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% North America -2.5% -4.0% 1.0% 2.0% 2.5% 2.4% 2.3% 2.2% 2.1% 2.0% South America 8.0% 3.0% 3.5% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Imusa 9.5% 5.0% 4.5% 5.0% 5.5% 5.4% 5.3% 5.2% 5.1% 5.0% CIS 6.0% -0.5% 0.5% 2.0% 3.0% 5.0% 5.0% 5.0% 5.0% 5.0% China (Supor) 21.0% 18.0% 16.5% 15.0% 14.0% 12.8% 11.6% 10.4% 9.2% 8.0% Maharaja Whiteline 17.0% 14.0% 12.5% 11.0% 10.0% 9.6% 9.2% 8.8% 8.4% 8.0% Rest of Asia 8.0% 5.0% 3.5% 4.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Exhibit 8.3: Bear case gross margins, cost of sales and operating expenses as % of revenue 2011F 2012F 2013F 2014F 2015F 2020E Cost of sales 60.1% 60.7% 60.6% 60.5% 60.1% 59.6% Purchased raw materials and goods 45.9% 46.5% 46.5% 46.6% 46.4% Labour costs 3.6% 3.6% 3.6% 3.6% 3.6% Freight costs 1.8% 1.8% 1.8% 1.7% 1.6% Other production costs 8.8% 8.8% 8.7% 8.6% 8.5% Operating costs 27.9% 28.0% 27.9% 27.8% 27.8% 27.8% Research and development costs 1.6% 1.6% 1.6% 1.6% 1.6% Advertising expense 3.9% 4.0% 3.9% 3.8% 3.8% Distribution and administrative expenses 21.0% 21.0% 21.0% 21.0% 21.0% Profit sharing 1.4% 1.4% 1.4% 1.4% 1.4%

Exhibit 9.1: Bull case assumptions - Revenue growth forecast 2011-2020 2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E Organic growth 7.5% 6.5% 7.0% 7.4% 7.5% 6.9% 6.4% 5.9% 5.3% 4.7% Quantity growth 7.8% 5.8% 5.8% 5.9% 5.8% 5.1% 4.6% 4.0% 3.3% 2.6% Change in price / product mix -0.2% 0.6% 1.2% 1.4% 1.6% 1.7% 1.7% 1.8% 1.9% 2.0% Currency impact 0.4% 0.4% 0% 0% 0% 0% 0% 0% 0% 0% Acquisitions impact 2.3% 0.6% 0% 0% 0% 0% 0% 0% 0% 0%

Exhibit 9.2: Bull case assumptions - Organic growth forecast by geography 2011-2020 2011F 2012F 2013F 2014F 2015F 2016E 2017E 2018E 2019E 2020E France -1.0% 1.0% 2.5% 3.0% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% Western Europe 7.0% 3.0% 4.5% 5.0% 5.0% 4.4% 3.8% 3.2% 2.6% 2.0% North America -1.0% 1.5% 3.5% 4.0% 5.0% 4.4% 3.8% 3.2% 2.6% 2.0% South America 10.0% 6.0% 5.5% 6.0% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% Imusa 11.0% 9.0% 6.5% 7.0% 7.0% 6.6% 6.2% 5.8% 5.4% 5.0% CIS 9.0% 5.0% 5.0% 6.0% 6.0% 5.0% 5.0% 5.0% 5.0% 5.0% China (Supor) 26.0% 24.0% 20.0% 18.0% 16.0% 14.4% 12.8% 11.2% 9.6% 8.0% Maharaja Whiteline 22.0% 20.0% 18.0% 16.0% 14.0% 12.8% 11.6% 10.4% 9.2% 8.0% Rest of Asia 10.0% 8.0% 7.5% 6.5% 8.0% 7.4% 6.8% 6.2% 5.6% 5.0%

Exhibit 9.3: Bull case assumptions - Gross margins, cost of sales and operating expenses as % of revenue 2011F 2012F 2013F 2014F 2015F 2020E Cost of sales 59.7% 59.3% 58.4% 57.9% 57.4% 56.9% Purchased raw materials and goods 45.6% 45.5% 45.0% 44.8% 44.6% Labour costs 3.5% 3.4% 3.4% 3.3% 3.3% Freight costs 1.8% 1.6% 1.4% 1.2% 1.0% Other production costs 8.8% 8.8% 8.7% 8.6% 8.5% Operating costs 27.9% 27.9% 27.8% 27.8% 27.8% 27.8% Research and development costs 1.6% 1.6% 1.6% 1.6% 1.6% Advertising expense 3.9% 3.9% 3.8% 3.8% 3.8% Distribution and administrative expenses 20.9% 21.0% 21.0% 21.0% 21.0% Profit sharing 1.4% 1.4% 1.4% 1.4% 1.4%

17 CFA Institute Research Challenge 31/12/2011

Exhibit 10.1: SEB income statement (base case)

(€ in millions, unless otherwise indicated) ACTUAL FORECAST FYE 31 DECEMBER 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Revenues 2,652 2,870 3,230 3,176 3,652 4,051 4,342 4,596 4,883 5,200

Cost of sales (1,539) (1,625) (1,848) (1,802) (2,147) (2,426) (2,606) (2,727) (2,878) (3,041)

Gross profits 1,113 1,245 1,382 1,374 1,505 1,626 1,736 1,869 2,005 2,159

Operating Costs (797) (885) (988) (959) (1,018) (1,129) (1,213) (1,278) (1,358) (1,446) EBITDA 316 360 394 415 487 496 523 591 647 713

Depreciation (67) (76) (74) (77) (80) (94) (108) (122) (137) (153) Amortisation (12) (15) (16) (17) (19) (20) (22) (23) (24) (26) EBIT 237 269 304 321 388 382 393 446 485 533

Net Interest (Expense)/Income (26) (32) (38) (23) (12) (22) (33) (29) (20) (11) Associates (1) 3 (1) 0 0 0 0 0 0 0 Exceptionals (84) (33) (35) (79) (43) 0 0 0 0 0 EBT 126 206 230 220 333 360 361 416 465 522

Taxes (34) (61) (67) (58) (90) (97) (97) (112) (126) (141) Minority Interests 0 0 (11) (17) (23) (23) (16) (19) (23) (26) Net Income 92 145 152 145 220 240 247 284 317 355

Adj. Net Income 176 178 187 224 263 240 247 284 317 355

EPS (EUR) 1.97 2.97 3.20 3.14 4.65 4.97 5.13 5.91 6.58 7.36 Adj. EPS (EUR) 3.62 3.77 4.01 4.82 5.55 4.97 5.13 5.91 6.58 7.36

ACTUAL FORECAST FYE 31 DECEMBER 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GROWTH Revenues 8.2% 12.5% (1.7%) 15.0% 10.9% 7.2% 5.8% 6.2% 6.5% EBITDA 14.0% 9.5% 5.4% 17.4% 1.8% 5.5% 12.9% 9.5% 10.2% EBIT 13.4% 13.0% 5.9% 20.8% (1.6%) 3.0% 13.2% 8.9% 9.9% Net Income 57.7% 4.4% (4.2%) 51.7% 8.8% 3.2% 15.1% 11.4% 11.9% Adj. Net Income 1.2% 4.7% 19.9% 17.6% (8.9%) 3.2% 15.1% 11.4% 11.9%

MARGINS Gross 42.0% 43.4% 42.8% 43.3% 41.2% 39.4% 40.0% 40.7% 41.1% 41.5% EBITDA 11.9% 12.5% 12.2% 13.1% 13.3% 12.2% 12.1% 12.9% 13.2% 13.7% EBIT 8.9% 9.4% 9.4% 10.1% 10.6% 9.4% 9.1% 9.7% 9.9% 10.3% EBT 4.8% 7.2% 7.1% 6.9% 9.1% 8.9% 8.3% 9.1% 9.5% 10.0% Net Income 3.5% 5.1% 4.7% 4.6% 6.0% 5.9% 5.7% 6.2% 6.5% 6.8% Adj. Net Income 6.6% 6.2% 5.8% 7.0% 7.2% 5.91% 5.69% 6.19% 6.49% 6.82%

P&L Tax Rate 27.0% 29.6% 29.2% 26.3% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0%

18 CFA Institute Research Challenge 31/12/2011

Exhibit 10.2: SEB balance sheet (base case)

(€ in millions, unless otherwise indicated) ACTUAL FORECAST FYE 31 DECEMBER 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Goodwill 119 111 420 387 409 409 426 426 426 426 Other Intangibles 275 261 372 372 399 403 407 412 417 422 PP&E (adjusted for operating leases) 388 388 449 481 542 641 690 708 722 730 Other non-current assets 81 384 62 51 55 55 55 55 55 55 Total Fixed Assets 863 1,144 1,303 1,291 1,405 1,508 1,579 1,601 1,620 1,633

Inventory 517 528 615 466 636 718 857 859 867 917 Accounts Receivable 646 627 646 627 734 832 892 944 1,003 1,069 Other Current Assets 98 69 105 68 100 100 100 100 100 100 Cash & Equivalents 54 134 225 308 237 126 136 138 166 272 Total Current Assets 1,315 1,358 1,590 1,469 1,707 1,776 1,985 2,041 2,137 2,357

Total Assets 2,179 2,503 2,893 2,760 3,112 3,284 3,564 3,643 3,757 3,991

Share Capital 51 51 51 50 50 50 50 50 50 50 Retained Earnings and Reserves 839 922 1,006 1,140 1,410 1,248 1,431 1,642 1,877 2,139 Treasury stock (74) (109) (151) (109) (61) (56) (56) (56) (56) (56) Minority interests 0 0 132 139 173 109 119 131 147 165 Shareholders' Equity 816 864 1,038 1,220 1,572 1,352 1,545 1,768 2,018 2,299

Provisions & Other Long-Term Liabilities (adj for operating leases) 326 285 359 345 357 357 357 357 357 357 Financial Debt 477 795 875 548 372 707 752 571 394 300 Accounts Payable 343 333 366 398 494 538 578 605 639 675 Other Current Liabilities (adj for operating leases) 217 226 255 249 317 330 332 341 350 360 Total Liabilities 1,362 1,639 1,855 1,540 1,540 1,933 2,019 1,875 1,739 1,692

Total Equity and Liabilities 2,179 2,503 2,893 2,760 3,112 3,284 3,564 3,643 3,757 3,991

Exhibit 10.3: SEB cash flow statement (base case)

(€ in millions, unless otherwise indicated) ACTUAL FORECAST FYE 31 DECEMBER 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA 316 360 394 415 487 496 523 591 647 713 Cash Taxes (37) (62) (77) (58) (101) (97) (97) (112) (126) (141) Net Interest (Expense)/Income (25) (33) (36) (23) (12) (22) (33) (29) (20) (11) Intangibles Capex (18) (16) (20) (17) (20) (24) (26) (28) (29) (31) PP&E Capex (67) (92) (116) (92) (121) (140) (140) (140) (151) (161) D in WCR (45) (2) (73) 200 (181) (136) (159) (28) (34) (78) Dividends from Associates / (to Minorities) 0 0 0 0 0 (9) (6) (7) (8) (8) Capital Increase 2 2 5 10 33 0 0 0 0 0 Debt Drawdown/(Repayment) 6 318 80 (327) (176) 0 0 0 0 0 Dividends (40) (43) (46) (50) (56) 335 45 (181) (177) (94) Share Buybacks (9) (40) (44) 9 33 (55) (62) (64) (74) (82) (Acquisitions) / Divestitures (50) (320) 9 7 21 0 0 0 0 0 Other Cash Flow Items (29) 8 15 10 21 (459) (35) 0 0 0 Change in Cash 5 80 91 83 (71) (111) 10 2 28 106

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Exhibit 11.1: Base case - Free cash flow projections

(€ in millions, unless otherwise indicated) Actual FORECAST EXTRAPOLATION FYE 31 DECEMBER 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Revenues 3,652 4,051 4,342 4,596 4,883 5,200 5,525 5,854 6,182 6,503 6,811 % growth 10.9% 7.2% 5.8% 6.2% 6.5% 6.3% 6.0% 5.6% 5.2% 4.7%

EBITDA 487 496 523 591 647 713 763 814 866 917 967 % margin 13.3% 12.2% 12.1% 12.9% 13.2% 13.7% 13.8% 13.9% 14.0% 14.1% 14.2% % growth 1.8% 5.5% 12.9% 9.5% 10.2% 7.0% 6.7% 6.4% 5.9% 5.5%

EBIT 382 393 446 485 533 565 596 708 739 768 % margin 9.4% 9.1% 9.7% 9.9% 10.3% 10.2% 10.2% 11.4% 11.4% 11.3%

Normalized unlevered tax 27% (103) (106) (120) (131) (144) (152) (161) (191) (199) (207) NOPAT 279 287 325 354 389 412 435 517 539 561 % margin 6.9% 6.6% 7.1% 7.3% 7.5% 7.5% 7.4% 8.4% 8.3% 8.2%

Add back: D&A 114 130 145 162 179 198 218 158 178 199 Less: capex (164) (201) (168) (181) (192) (204) (217) (223) (228) (232) % revenues 4.1% 4.6% 3.6% 3.7% 3.7% 3.7% 3.7% 3.6% 3.5% 3.4% Less: change in WCR (136) (159) (28) (34) (78) (81) (82) (82) (80) (77) Free Cash Flow to Firm 93 58 275 301 298 324 354 370 410 451 % revenues 2.3% 1.3% 6.0% 6.2% 5.7% 5.9% 6.0% 6.0% 6.3% 6.6% % growth (37.9%) 377.4% 9.6% (1.1%) 8.8% 9.2% 4.5% 10.8% 10.1% 13.9% 13.2% 14.0% 14.9% 15.5% 15.8% 15.7% 16.5% 15.3% 14.2%

Year 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Cash flow 0 58 275 301 298 324 354 370 410 451 Discount factor 1.00 0.91 0.84 0.77 0.70 0.64 0.59 0.54 0.49 0.45 Discounted cash flow 0 53 230 231 209 208 208 198 201 203 PV of projected CF (@ 9.3% WACC) 1,740 38.1% Terminal Value 6,302 PV of TV (@ 0.2% perp. growth) 2,830 61.9% WACC 9.3% Enterprise value 4,570 Termainl Growth 2.0% Latest Net Debt / (Cash) 581 Minority interest 109 Equity value 3,879 Latest Number of Shares Outstanding 50.0 Implied Price per Share 77.7

Exhibit 11.2: Base case - DCF valuation sensitivity analysis

ENTERPRISE VALUE WACC IMPLIED SHARE PRICE WACC 8.3% 8.8% 9.3% 9.8% 10.3% 8.3% 8.8% 9.3% 9.8% 10.3%

TERMINA 1.0% 4,874 4,519 4,205 3,932 3,688 1.0% 83.8 76.6 70.4 64.9 60.0 TERMINAL L 1.5% 5,114 4,720 4,375 4,079 3,814 1.5% 88.6 80.7 73.8 67.8 62.5 GROWTH GROWTH 2.0% 5,392 4,952 4,570 4,244 3,955 2.0% 94.1 85.3 77.7 71.1 65.4 RATE RATE 2.5% 5,719 5,220 4,793 4,431 4,114 2.5% 100.7 90.7 82.1 74.9 68.5 3.0% 6,106 5,535 5,051 4,646 4,295 3.0% 108.4 97.0 87.3 79.2 72.2

IMPLIED 2012 WACC IMPLIED 2012 WACC EV/EBITDA MULTIPLE 8.3% 8.8% 9.3% 9.8% 10.3% P/E MULTIPLE 8.3% 8.8% 9.3% 9.8% 10.3%

TERMINA 1.0% 9.3x 8.6x 8.0x 7.5x 7.0x 1.0% 16.9x 15.5x 14.2x 13.1x 12.1x TERMINAL L 1.5% 9.8x 9.0x 8.4x 7.8x 7.3x 1.5% 17.9x 16.3x 14.9x 13.7x 12.6x GROWTH GROWTH 2.0% 10.3x 9.5x 8.7x 8.1x 7.6x 2.0% 19.0x 17.2x 15.7x 14.4x 13.2x RATE RATE 2.5% 10.9x 10.0x 9.2x 8.5x 7.9x 2.5% 20.3x 18.3x 16.6x 15.1x 13.9x 3.0% 11.7x 10.6x 9.7x 8.9x 8.2x 3.0% 21.9x 19.6x 17.6x 16.0x 14.6x

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Exhibit 12: SEB valuation premium versus peers

Exhibit 13: M&A transactions in household equipment sector

Announced Announced Trailing 12m Trailing 12m Trailing 12m Target Name Acquirer Date Value (MUSD) EV/EBITDA EV/EBIT EV/Revenue 22/08/2011 CTI Cia Tecno Industrial SA Electrolux AB 557 7.4x 8.0x 1.2x 25/05/2009 Saeco International Group SpA Koninklijke Philips Electronics NV 238 2.3x 3.7x 0.4x 28/04/2007 Gree Electric Appliances Inc Hebei Jinghai Investment Guarantee Co Ltd 133 N/A 10.6x 0.4x WMF Wuerttembergische Metallwarenfabrik 07/06/2006 CapVis Equity Partners AG 118 AG 6.5x 22.5x 0.3x 17/07/2005 Maytag Corp Whirlpool Corp 2,447 8.8x 22.0x 0.5x 08/12/2003 Saeco International Group SpA PAI Partners SAS 735 8.4x 11.2x 2.1x 17/12/2002 Royal Appliance Manufacturing Co Techtronic Industries Co 137 5.0x 12.5x 0.3x 16/02/2001 Kenwood Appliances PLC De'Longhi SpA 70 5.8x 11.4x 0.5x

Completed deals median (excluding acquisition of Saeco by Philips) 6.9x 11.9x 0.5x Completed deals average (excluding acquisition of Saeco by Philips) 7.0x 14.6x 0.8x

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Exhibit 14: SEB 1H 2011 revenue analysis

Summary SEB’s revenue is split in 5 main segments. Each segment contributes significantly to SEB’s total revenue, however over the last 5 years each segment has had quite different influences on the company’s revenue growth. France and Western Europe segment represent over 40% of total revenue. The region is characterized by strong competition in terms of products and prices, with revenue growth of 3.9% in France and 8% in other Western Europe in 2010. North America makes up 11% of SEB’s revenue. Despite the revenue growth in this segment by 16% in 2010, 2011 nine-month revenue fell by 1.6% as a result of sharp slowdown in consumer spending in the US. South America accounted for 9% of 2010 revenue. The region saw a CAGR of 8.8% between 2006 and 2010, making it the second fastest growing region for SEB after Asia. Asia Pacific, SEB’s fastest growing market, grew at a very fast pace of 37.5% per annum on average between 2006 and 2010. Main reason for that was the acquisition of Supor in China which helped to double SEB’s revenues from Asia Pacific. Growth in other Asia Pacific countries, such as Japan, South Korea and Australia was relatively slower at 14.7% per annum during 2006-2010. Central Europe/CIS/Other countries segment accounted for 18% of SEB’s total revenue in 2010. The region is characterized by medium growth of 5.5% CAGR between 2006 and 2010.

France and Western Europe Revenue from France and the rest of Western Europe represents over 40% of SEB’s revenue during the past 5 years but that proportion has been steadily falling as SEB’s exposure to emerging markets grow with major acquisitions such as that of Supor in 2007 (fully consolidated in FY2008). As of 1H 2011, France and the rest of Western Europe accounted for 37% of the company’s revenue and we expect the ratio to fall to c.32% by 2015.

Revenue growth of 3.9% in France in 2010 was offset by a 2.2% decline in 1H 2011 (1.9% in 9M2011). SEB faced strong competition in terms of products and prices and was adversely affected by promotional offers as well as a loyalty-building initiative by one of its competitors in the cookware segment.

In other Western European countries, revenue growth in 2010 and 1H 2011 was 8% and 5.8% respectively. The slowdown in sales reflected weaker consumer spending, especially in Greece, Spain and Netherlands where sales fell in 1H 2011 vs. 1H 2010. The re- launch of Moulinex helped buoy sales in 1H 2011 from Scandinavian countries, Germany and Portugal.

North America Revenue from North America makes up 11% of SEB’s 2010 revenue with the USA being SEB’s fourth-largest market. The share of revenue from North America has steadily declined from over 14% to 10% in 1H 2011. By 2015, we expect this proportion to fall to 9%.

2011 nine-month revenue fell 1.6% like-for-like despite 1H 2011 revenue rising 2.0% like-for-like. This was a result of a sharp slowdown in consumer spending in the US during Q3. Cookware business was under pressure across all brands (Tefal, WearEver, Emeril and All-Clad), while the electrical appliance business fared better. In Canada, 2011 nine-month revenue and market share improved whereas in Mexico revenue declined due to non-renewal of a loyalty program implemented in 2010.

South America South America accounted for 9% and 11% of 2010 and 1H 2011 revenue respectively. Revenue from this region grew at a CAGR of 8.8% between 2006 and 2010, making it the second fastest growing region for SEB after Asia. In 1H 2011, revenue rose 9.6% like- for-like and at constant exchange rates, and after accounting for Imusa’s contributions, growth reached 27.9%. Brazil, SEB’s third- largest market, sales growth was 9.4% (12.4% at current exchange rates) during 1H 2011 and accelerated in 3Q 2011 with the recovery in fan sales. Revenue growth in Colombia was excellent in all product categories and was further boosted by the consolidation of Imusa.

Asia Pacific Asia Pacific is SEB’s fastest growing market. Revenue grew at a very fast pace of 37.5% per annum on average between 2006 and 2010, thanks in large part to the acquisition of Supor in China which helped to double SEB’s revenues from Asia Pacific. Growth in other Asia Pacific countries, such as Japan, South Korea and Australia was relatively slower at 14.7% per annum during 2006-2010. Revenue from the region grew 21.5% and 19.9% at current exchange rates in 1H 2011 and 9m 2011 respectively. Sales momentum in China continues to be strong at 25% in Q3 2011, although slower than the 30% growth in 1H 2011. In Japan, SEB experience flat sales in 1H 2011 due to the March earthquake. The situation was better in other Asian countries like South Korea, Hong Kong, Thailand and Singapore. In Australia, sales recovered in nine-month 2011 significantly thanks to SEB’s flagship products like Actifry and Airforce vacuum cleaner.

Central Europe/CIS/Other countries In 2010, this region accounted for 18% of SEB’s total revenue and within this region Russia is the largest market (fifth largest in the world). The region is characterized by medium growth of 5.5% CAGR between 2006 and 2010, with large volatility year-to-year (- 18% to + 22% per annum). In 1H 2011, revenues grew 11% at current exchange rates and 12.2% at constant exchange rates.

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Exhibit 15.1: Sales of SEB and its peers (€m)

2006 2010 Mature markets Emerging markets Total Mature Emerging Mature Emerging TOTAL TOTAL Change CAGR Change CAGR Change CAGR markets markets markets markets Turnover in mln. Euros Procter & Gamble (group) 4,072 1,506 5,578 3,912 2,107 6,019 -4% -1.0% 40% 8.8% 8% 1.9% Jarden Corp 2,529 355 2,885 3,695 822 4,517 46% 9.9% 131% 23.3% 57% 11.9% Whirlpool 10,848 2,712 13,560 9,642 4,132 13,775 -11% -2.9% 52% 11.1% 2% 0.4% Spectrum Brands 1,478 369 1,847 1,505 421 1,925 2% 0.5% 14% 3.3% 4% 1.0% Koninklijke Philips Electronics NV (consumer lifestyle division)2,820 1,442 4,262 1,960 1,335 3,295 -30% -8.7% -7% -1.9% -23% -6.2% De'Longhi SpA 1,120 243 1,363 1,163 463 1,626 4% 0.9% 91% 17.6% 19% 4.5% AB Electrolux (consumer durables) 3,220 657 3,877 3,039 1,075 4,114 -6% -1.4% 64% 13.1% 6% 1.5% Bosch Siemens (group) 6,430 1,878 8,308 5,979 3,094 9,073 -7% -1.8% 65% 13.3% 9% 2.2% GD Midea Holding Co Ltd 544 2,231 2,775 1,211 7,565 8,776 123% 22.2% 239% 35.7% 216% 33.4% Panasonic Corp (group) 3,974 1,384 5,358 3,838 1,644 5,482 -3% -0.9% 19% 4.4% 2% 0.6% Peer's average 3,704 1,278 4,981 3,594 2,266 5,860 -3% -0.7% 77% 15.4% 18% 4.1% SEB 1,676 975 2,652 1,904 1,747 3,652 14% 3.2% 79% 15.7% 38% 8.3%

Exhibit 15.2.1: SEB’s revenue by geography and historical growth rates (€m)

Change CAGR 2006 2007 2008 2009 2010 2010 vs 2006 2010 vs 2006 Revenue by country (€m) France 595 640 667 685 712 19.6% 4.6% Rest of Western Europe 692 718 729 728 787 13.8% 3.3% North America 390 401 393 349 404 3.8% 0.9% South America 247 274 265 262 346 40.2% 8.8% Asia/Pacific 214 210 500 600 764 257.3% 37.5% Central Europe, CIS and other 515 626 676 552 639 24.1% 5.5% Total 2,652 2,870 3,230 3,176 3,652 37.7% 8.3%

2007 2008 2009 2010 Change in Revenue by country France 7.6% 4.2% 2.7% 3.9% Rest of Western Europe 3.8% 1.5% -0.1% 8.0% North America 2.9% -2.0% -11.3% 15.9% South America 11.3% -3.5% -1.2% 32.2% Asia/Pacific -1.7% 138.0% 19.9% 27.4% Central Europe, CIS and other 21.5% 8.0% -18.3% 15.7% Total 8.2% 12.6% -1.7% 15.0%

% Change % Change % Change % Change 1H2010 1H2011 9m2010 9m2011 like-for- reported like-for-like reported like Revenue by country ( €m) France 297 291 -2.2% -2.2% 452 444 -1.9% -1.9% Rest of Western Europe 323 341 5.8% 5.8% 496 526 6.2% 6.5% North America 167 172 3.1% 2.0% 276 271 -1.7% -1.6% South America 149 190 27.9% 9.6% 239 305 27.5% 10.4% Asia/Pacific 357 433 21.5% 19.6% 543 651 19.9% 17.7% Central Europe, CIS and other 263 292 11.0% 12.2% 417 461 10.5% 12.9% Total 1,555 1,719 10.6% 8.4% 2,423 2,658 9.7% 8.0%

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Exhibit 15.2.2: SEB’s share of revenue by geography (%)

2006 2007 2008 2009 2010 1H2011 9m2011 Share of Revenue by country (%) France 22% 22% 21% 22% 19% 17% 17% Rest of Western Europe 26% 25% 23% 23% 22% 20% 20% North America 15% 14% 12% 11% 11% 10% 10% South America 9% 10% 8% 8% 9% 11% 11% Asia/Pacific 8% 7% 15% 19% 21% 25% 24% Central Europe, CIS and other 19% 22% 21% 17% 18% 17% 17% Total 100% 100% 100% 100% 100% 100% 100%

Exhibit 15.3.1: SEB’s earnings

CAGR 2006 2007 2008 2009 2010 1H2010 1H2011 Change % 2010 vs 2006 Earnings (€bln) Revenue 2.65 2.87 3.23 3.18 3.65 8.3% 1.56 1.72 11% Gross profit 1.11 1.24 1.38 1.37 1.51 7.9% 0.65 0.68 5% EBITDA 0.32 0.35 0.39 0.42 0.49 10.8% 0.20 0.18 -6% EBIT 0.24 0.27 0.30 0.32 0.39 13.1% 0.15 0.14 -9% Net Profit 0.09 0.14 0.14 0.16 0.24 29.3% 0.10 0.11 8% Margins Gross profit 42.0% 43.4% 42.8% 43.3% 41.2% 41.7% 39.4% -2.3% EBITDA 12.2% 12.2% 12.2% 13.1% 13.3% 12.6% 10.7% -1.9% EBIT 8.9% 9.3% 9.4% 10.1% 10.6% 9.6% 7.9% -1.7% Net Profit 3.3% 5.0% 4.5% 5.1% 6.7% 6.4% 6.2% -0.2% Change y-o-y Revenue 8.2% 12.6% -1.7% 15.0% Gross profit 11.9% 11.1% -0.6% 9.6% EBITDA 8.1% 12.4% 5.7% 17.2% EBIT 13.2% 13.3% 6.1% 20.4% Net Profit 65.9% -0.1% 12.7% 49.6%

Exhibit 15.3.2: SEB’s gross profit margin versus its peers

2006 2007 2008 2009 2010 9m2011 Gross Profit margin Procter & Gamble (CS) 51.4% 52.0% 51.6% 49.6% 52.0% 51% Jarden Corp 24.8% 27.1% 27.9% 27.7% 27.2% n/a Whirlpool 14.7% 14.9% 13.3% 14.0% 14.8% n/a Spectrum Brands n/a n/a n/a 37.2% 36.2% 36% Koninklijke Philips Electronics NV (group) 30.9% 34.3% 32.1% 34.8% 37.6% n/a De'Longhi SpA n/a n/a n/a n/a n/a n/a AB Electrolux (CS) 23.3% 18.4% 17.2% 20.3% 22.2% n/a Bosch Siemens (group) n/a n/a n/a n/a n/a n/a GD Midea Holding Co Ltd 17.7% 18.3% 19.1% 21.7% 16.6% n/a Panasonic Corp (group) 30.8% 29.8% 29.7% 27.0% 28.0% 26% Peers' average 27.7% 27.8% 27.3% 29.0% 29.3% 38% SEB 42.0% 43.4% 42.8% 43.3% 41.2% 39%

Exhibit 15.3.3: SEB’s EBITDA margin versus its peers

2006 2007 2008 2009 2010 9m2011 EBITDA margin Procter & Gamble (CS) 23.3% 24.3% 24.2% 24.1% 24.2% 23% Jarden Corp 10.8% 10.7% 11.3% 11.5% 9.5% n/a Whirlpool 7.9% 8.8% 6.8% 7.8% 8.9% n/a Spectrum Brands n/a n/a n/a 13.5% 12.9% 14% Koninklijke Philips Electronics NV (group) 7.5% 11.0% 6.0% 9.0% 13.7% n/a De'Longhi SpA 9.2% 10.7% 9.3% 9.4% 12.1% n/a AB Electrolux (CS) 6.9% 7.0% 4.2% 8.1% 9.2% n/a Bosch Siemens (group) n/a n/a n/a n/a 0.0% n/a GD Midea Holding Co Ltd 6.6% 7.0% 6.4% 7.5% 5.0% n/a Panasonic Corp (group) 8.1% 8.5% 9.3% 5.6% 6.6% 8% Peer's average 10.0% 11.0% 9.7% 10.7% 10.2% 15% SEB 12.2% 12.2% 12.2% 13.1% 13.3%

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Exhibit 15.3.4: SEB’s EBIT margin versus its peers

2006 2007 2008 2009 2010 9m2011 EBIT margin Procter & Gamble (CS) 19% 20% 20% 20% 20% 19% Jarden Corp 9% 9% 9% 9% 7% n/a Whirlpool 5% 6% 4% 5% 6% n/a Spectrum Brands n/a n/a n/a 11% 9% 10% Koninklijke Philips Electronics NV (group) 5% 7% 0% 3% 8% n/a De'Longhi SpA 6% 8% 6% 7% 9% n/a AB Electrolux (CS) 4% 4% 1% 5% 6% n/a Bosch Siemens (group) n/a n/a n/a n/a n/a n/a GD Midea Holding Co Ltd 5% 5% 5% 6% 4% n/a Panasonic Corp (group) 5% 5% 6% 1% 3% 4% Peer's average 7% 8% 6% 7% 8% 11% SEB 9% 9% 9% 10% 11% 10%

Exhibit 15.3.5: SEB’s net profit margin versus its peers

2006 2007 2008 2009 2010 Net Profit margin Procter & Gamble (CS) 19% 20% 18% 19% 20% Jarden Corp 3% 1% -1% 2% 2% Whirlpool 2% 3% 2% 2% 3% Spectrum Brands -18% -23% -35% 46% -7% Koninklijke Philips Electronics NV (group) 19% 18% 0% 2% 6% De'Longhi SpA 3% 2% 3% 2% 5% AB Electrolux (CS) 4% 3% 0% 2% 4% Bosch Siemens (group) 4% 5% 3% 4% 5% GD Midea Holding Co Ltd 5% 3% 5% 5% Panasonic Corp (group) 3% 3% -5% -2% 1% Peer's average 4% 4% -1% 8% 4% SEB 3% 5% 4% 5% 7%

Exhibit 15.4: SEB’s cash flows

Change 2006 2007 2008 2009 2010 2010 vs 1H2010 1H2011 Change % 2006 Cash flows (€m) Cash flows from operating activities 154 228 165 558 256 66.0% 142 81 -43% Cash flows from investing activities -135 -410 -85 -102 -120 -11.4% -53 -97 85% Cash flows from financing activities -39 234 -3 -373 -202 424.4% -157 244 -255% Effect of changes in foreign exchange rates 24 29 14 0 -6 -14 11 -176% Net change in cash and cash equivalents (€m) 5 80 91 83 -71 -82 238 -392% Cash and cash equivalents at beginning of period 49 54 134 225 308 523.1% 308 237 -23% Cash and cash equivalents at end of period 54 134 225 308 237 337.3% 226 475 110%

Operating Cash Flow to Revenue (%) 5.8% 7.9% 5.1% 17.6% 7.0% 1.2% 9.1% 4.7% -4% Operating Cash Yield 1.8 1.6 1.1 3.4 1.1 -40.7% 1.4 0.8 -47%

Exhibit 15.5: SEB cash conversion efficiency

Change 2006 2007 2008 2009 2010 2010 vs 2006 Days of Sales outstanding 89 81 72 73 68 -24% Days of inventory on hand 123 117 113 109 94 -24% Days of Payables 61 75 66 84 70 16% Cash Conversion Cycle 151 123 119 98 91 -39%

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Exhibit 15.6: SEB’s liquidity

Change 2006 2007 2008 2009 2010 2010 vs 2006 Current ratio 89 81 72 73 68 -24% Quick ratio 123 117 113 109 94 -24% Net cash (debt) 61 75 66 84 70 16% Cash Conversion Cycle 151 123 119 98 91 -39%

Exhibit 15.7: SEB’s solvency

2006 2007 2008 2009 2010 1H2010 Total liabilities to total equity 167% 190% 179% 126% 98% 105% Total debt to equity 58% 92% 84% 45% 24% 28% Long term debt to equity 10% 8% 21% 25% 13% 15% Net debt to EBITDA 131% 189% 165% 58% 28% -22% EBITDA interest coverage 12.6 10.8 10.4 18.4 40.6 28.8

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