Electrolux AB, the world’s second biggest maker of home appliances, dropped to its lowest price in almost a month in Stockholm trading as ABG Sundal Collier Holding ASA said steel prices are moving in the wrong direction.
The shares dropped as much as 1.9 percent to 179.5 kronor, the lowest intraday price since July 19. They fell 1.2 percent to 180.7 kronor as of 10:55 a.m. local time, valuing the Stockholm-based company at 55.9 billion kronor ($8.58 billion).
ABG today reduced its rating on Electrolux shares to sell from hold and cut its share-price estimate to 165 kronor from 170 kronor because of an increase in steel prices. Electrolux buys raw material for about 20 billion kronor a year, of which steel accounts for some 40 percent, according to ABG. Steel prices in North America have increased to $700 per ton from $600 per ton in the middle of May, according to ABG.
“Our more negative outlook is based on lower estimates, a strong share price lately resulting in an all-time-high valuation; and an increased risk to estimates in the second half due to higher steel prices,” Andreas Lundberg and Martin Arnell, analysts at ABG in Stockholm, said in a note to clients.
Data released last night by the Association of Home Appliance Manufacturers showed July shipments of major home appliances such as washers, dryers, dishwashers, refrigerators, freezers and ovens in the U.S. rose 10.8 percent from a year earlier. Nordea Bank AB today said that while the numbers were strong, they contained an unfavorable mix as the cooking segment, where Electrolux has the strongest position and best margin, was less impressive with a 2.9 percent gain.