Obligation AB Electrolux 1.995% ( XS2152294679 ) en SEK

Société émettrice AB Electrolux
Prix sur le marché 99.29 %  ⇌ 
Pays  Suede
Code ISIN  XS2152294679 ( en SEK )
Coupon 1.995% par an ( paiement annuel )
Echéance 05/04/2023 - Obligation échue



Prospectus brochure de l'obligation AB Electrolux XS2152294679 en SEK 1.995%, échue


Montant Minimal 2 000 000 SEK
Montant de l'émission 1 700 000 000 SEK
Description détaillée L'Obligation émise par AB Electrolux ( Suede ) , en SEK, avec le code ISIN XS2152294679, paye un coupon de 1.995% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 05/04/2023







BASE PROSPECTUS
AB ELECTROLUX (publ)
(Incorporated as a public company with limited liability under the laws of Sweden with Swedish
registration number 556009-4178)
EUR 2,000,000,000
Euro Medium Term Note Programme
Under the EUR 2,000,000,000 Euro Medium Term Note Programme (the Programme), AB
Electrolux (publ) (reg. no. 556009-4178) (the Issuer) may from time to time issue notes (the Notes)
denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below).
The maximum aggregate nominal amount of all Notes from time to time outstanding under the
Programme wil not exceed EUR 2,000,000,000 (or its equivalent in other currencies calculated as
described in the Programme Agreement as defined herein), subject to increase as described herein.
The Notes may be issued on a continuing basis to one or more of the Dealers specified under
"General Description of the Programme" and any additional Dealer appointed under the Programme
from time to time by the Issuer (each a Dealer and together the Dealers), which appointment may be
for a specific issue or on an ongoing basis. References in this Base Prospectus to the relevant Dealer
shal , in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer,
be to all Dealers agreeing to subscribe such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of
these risks see "Risk Factors".
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF)
in its capacity as competent authority under the Luxembourg Act dated 10 July 2005 on prospectuses
for securities (the Prospectus Act 2005) to approve this document as a base prospectus. By
approving this Base Prospectus, the CSSF assumes no responsibility for the economic and financial
soundness of the transactions contemplated by this Base Prospectus or the quality or solvency of the
Issuer in accordance with Article 7(7) of the Prospectus Act 2005. Application has also been made to
the Luxembourg Stock Exchange for Notes issued under the Programme to be admitted to trading on
the Luxembourg Stock Exchange's regulated market and to be listed on the Official List of the
Luxembourg Stock Exchange.
References in this Base Prospectus to Notes being listed (and al related references) shal
mean that such Notes have been admitted to trading on the Luxembourg Stock Exchange's regulated
market and have been admitted to the Official List of the Luxembourg Stock Exchange. The
Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of Directive
2014/65/EU of the European Parliament and of the Council on markets in financial instruments (as
amended, MiFID II).
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes,
the issue price of Notes and certain other information which is applicable to each Tranche (as defined
under "Terms and Conditions of the Notes") will be set out in a final terms document (the Final Terms)
which, with respect to Notes to be listed on the Luxembourg Stock Exchange, wil be filed with the CSSF
on or before the date of issue of the Notes of such Tranche.
The Programme provides that Notes may be listed or admitted to trading, as the case may be, on
such other or further stock exchange(s) or market(s) as may be agreed between the Issuer and the relevant
Dealer. The Issuer may also issue unlisted Notes and/or Notes not admitted to trading on any market.
The Programme has been rated A- by S&P Global Ratings Europe Limited (S&P). S&P is
established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as
amended) (the CRA Regulation). As such, S&P is included in the list of credit rating agencies
published by the European Securities and Markets Authority on its website (at
https://www.esma.europa.eu/supervision/credit-rating-agencies/risk) in accordance with the CRA
Regulation. Notes issued under the Programme may be rated or unrated by the rating agency referred
to above. Where a Tranche of Notes is rated, such rating wil be disclosed in the Final Terms and will
not necessarily be the same as the rating assigned to the Programme by S&P. A security rating is not
a recommendation to buy, sell or hold securities and may be subject to suspension, revision or
withdrawal at any time by the assigning rating agency.
Amounts payable on Floating Rate Notes wil be calculated by reference to one of LIBOR,
EURIBOR, STIBOR, TIBOR or CHF LIBOR (the Programme Benchmarks), as specified in the
applicable Final Terms. As at the date of this Prospectus, the administrators of EURIBOR, STIBOR
and TIBOR are not included in ESMA's register of administrators under Article 36 of the Regulation
(EU) No. 2016/1011 (the Benchmarks Regulation); the administrator of LIBOR and CHF LIBOR is
included in ESMA's register. As far as the Issuer is aware, the transitional provisions in Article 51 of
the Benchmarks Regulation apply, such European Money Markets Institute (as administrator of
EURIBOR), the Financial Benchmarks Sweden AB (as administrator of STIBOR) and the Japanese
Bankers Association (as administrator of TIBOR) are not currently required to obtain
The date of this Base Prospectus is 3 June 2019.





authorisation/registration (or, if located outside the European Union, recognition, endorsement or
equivalence).

Arranger
DEUTSCHE BANK
Dealers
BNP PARIBAS
BRADESCO BBI
CITIGROUP
CRÉDIT AGRICOLE CIB
DANSKE BANK
DEUTSCHE BANK
HANDELSBANKEN CAPITAL MARKETS
HSBC
J.P. MORGAN
MORGAN STANLEY
MUFG
NATWEST MARKETS
SEB
SWEDBANK
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This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of the
Prospectus Directive. Prospective Directive means Directive 2003/71/EC (as amended or
superseded), and includes any relevant implementing measure in a relevant Member State of
the European Economic Area.
The Issuer accepts responsibility for the information contained in this Base Prospectus
and the Final Terms for each Tranche of Notes issued under the Programme. To the best of the
knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the
information contained in this Base Prospectus is in accordance with the facts and does not
omit anything likely to affect the import of such information.
Subject as provided in the applicable Final Terms, the only persons authorised to use
this Base Prospectus in connection with an offer of Notes are the persons named in the
applicable Final Terms as the relevant Dealer or the Managers, as the case may be.
Copies of Final Terms will be available from the registered office of the Issuer and the
specified office set out below of each of the Paying Agents (as defined below).
This Base Prospectus is to be read in conjunction with all documents which are deemed
to be incorporated herein by reference (see "Documents Incorporated by Reference"). This
Base Prospectus shall be read and construed on the basis that such documents are
incorporated and form part of this Base Prospectus.
Save for the Issuer, no other party has independently verified the information contained
herein. Accordingly, no representation, warranty or undertaking, express or implied, is made
and no responsibility or liability is accepted by the Dealers as to the accuracy or completeness
of the information contained or incorporated in this Base Prospectus or any other information
provided by the Issuer in connection with the Programme. No Dealer accepts any liability in
relation to the information contained or incorporated by reference in this Base Prospectus or
any other information provided by the Issuer in connection with the Programme.
No person is or has been authorised by the Issuer to give any information or to make any
representation not contained in or not consistent with this Base Prospectus or any other
information supplied in connection with the Programme or the Notes and, if given or made,
such information or representation must not be relied upon as having been authorised by the
Issuer or any of the Dealers.
Neither this Base Prospectus nor any other information supplied in connection with the
Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or
(ii) should be considered as a recommendation by the Issuer or any of the Dealers that any
recipient of this Base Prospectus or any other information supplied in connection with the
Programme or any Notes should purchase any Notes. Each investor contemplating purchasing
any Notes should make its own independent investigation of the financial condition and affairs,
and its own appraisal of the creditworthiness, of the Issuer and its subsidiaries (together, the
Group). Neither this Base Prospectus nor any other information supplied in connection with
the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of
the Issuer or any of the Dealers to any person to subscribe for or to purchase any Notes.
Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any
Notes shall in any circumstances imply that the information contained herein concerning the
Issuer or the Group is correct at any time subsequent to the date hereof or that any other
information supplied in connection with the Programme is correct as of any time subsequent to
the date indicated in the document containing the same. The Dealers expressly do not
undertake to review the financial condition or affairs of the Issuer or the Group during the life
of the Programme or to advise any investor in Notes issued under the Programme of any
information coming to their attention.
IMPORTANT ­ EEA RETAIL INVESTORS ­ If the Final Terms in respect of any Notes
includes a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes are not
intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the European Economic Area (EEA). For
these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of MiFID II; or (ii) a customer within the meaning of Directive 2002/92/EC
(as amended or superseded, the Insurance Mediation Directive), where that customer would
not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently no key information document required by Regulation (EU) No 1286/2014 (as
amended, the PRIIPs Regulation) for offering or selling the Notes or otherwise making them
- 3 -




available to retail investors in the EEA has been prepared and therefore offering or selling the
Notes or otherwise making them available to any retail investor in the EEA may be unlawful
under the PRIIPs Regulation.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET ­ The Final Terms in respect of
any Notes may include a legend entitled "MiFID II product governance" which will outline the
target market assessment in respect of the Notes and which channels for distribution of the
Notes are appropriate. Any person subsequently offering, selling or recommending the Notes
(a distributor) should take into consideration the target market assessment; however, a
distributor subject to MiFID II is responsible for undertaking its own target market assessment
in respect of the Notes (by either adopting or refining the target market assessment) and
determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of
the Product Governance rules under EU Delegated Directive 2017/593 (the MiFID Product
Governance Rules), any Dealer subscribing for any Notes is a manufacturer in respect of such
Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates
will be a manufacturer for the purpose of the MiFID Product Governance Rules.
Notification under Section 309B(1)(c) of the Securities and Futures Act (Chapter 289) of
Singapore, as modified or amended from time to time (the SFA) ­ Unless otherwise specified in
the relevant Final Terms, all Notes issued or to be issued under the Programme shall be
prescribed capital markets products (as defined in the Securities and Futures (Capital Markets
Products) Regulations 2018 of Singapore) and Excluded Investment Products (as defined in
MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16:
Notice on Recommendations on Investment Products).
The Notes have not been and will not be registered under the United States Securities
Act of 1933, as amended, (the Securities Act) or any U.S. State securities laws and may not be
offered or sold in the United States or to, or for the account or the benefit of, U.S. persons as
defined in Regulation S under the Securities Act unless an exemption from the registration
requirements of the Securities Act is available and in accordance with all applicable securities
laws of any state of the United States and any other jurisdiction (see "Subscription and Sale").
This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to
buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or
solicitation in such jurisdiction. The distribution of this Base Prospectus and the offer or sale
of Notes may be restricted by law in certain jurisdictions. The Issuer and the Dealers do not
represent that this Base Prospectus may be lawfully distributed, or that any Notes may be
lawfully offered, in compliance with any applicable registration or other requirements in any
such jurisdiction, or pursuant to an exemption available thereunder, or assume any
responsibility for facilitating any such distribution or offering. In particular, no action has been
taken by the Issuer or the Dealers which is intended to permit a public offering of any Notes or
distribution of this Base Prospectus in any jurisdiction where action for that purpose is
required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this
Base Prospectus nor any advertisement or other offering material may be distributed or
published in any jurisdiction, except under circumstances that will result in compliance with
any applicable laws and regulations. Persons into whose possession this Base Prospectus or
any Notes may come must inform themselves about, and observe, any such restrictions on the
distribution of this Base Prospectus and the offering and sale of Notes. In particular, there are
restrictions on the distribution of this Base Prospectus and the offer or sale of Notes in the
United States, the European Economic Area (including the United Kingdom, Belgium and
Sweden), Singapore and Japan (see "Subscription and Sale").
Neither this Prospectus nor any Final Terms nor any financial statements nor any other
information supplied in connection with the Programme or the Notes constitutes an offer by
the Issuer or the Dealers to any person to subscribe for or to purchase any Notes.
Capitalised terms which are used but not defined in any particular section of this Base
Prospectus will have the meaning attributed to them in "Terms and Conditions of the Notes" or
any other section of this Base Prospectus.
All references in this document to "U.S. dollars", "U.S.$" and "$" refer to the lawful
currency of the United States of America, all references to "SEK" refer to the lawful currency of
the Kingdom of Sweden, all reference to "£" and "Sterling" refer to the lawful currency of the
United Kingdom, all references to "¥" or "Yen" refer to the lawful currency of Japan and all
references to "CHF" refer to the lawful currency of the Swiss Confederation. In addition, all
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references to "euro", "EUR" and "" refer to the currency introduced at the start of the third
stage of European economic and monetary union pursuant to the Treaty on the functioning of
the European Union, as amended.
Certain figures and percentages included in this Base Prospectus have been subject to
rounding adjustments; accordingly, figures shown in the same category presented in different
tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures which precede them.
Each potential investor in the Notes must determine the suitability of that investment in
light of its own circumstances. In particular, each potential investor may wish to consider,
either on its own or with the help of its financial and other professional advisers, whether it:
(i)
has sufficient knowledge and experience to make a meaningful evaluation of the
Notes, the merits and risks of investing in the Notes and the information
contained or incorporated by reference in this Base Prospectus or any applicable
supplement;
(ii)
has access to, and knowledge of, appropriate analytical tools to evaluate, in the
context of its particular financial situation, an investment in the Notes and the
impact the Notes will have on its overall investment portfolio;
(iii) has sufficient financial resources and liquidity to bear all of the risks of an
investment in the Notes, including Notes where the currency for principal or
interest payments is different from the potential investor's currency;
(iv) understands thoroughly the terms of the Notes and is familiar with the behaviour
of financial markets; and
(v)
is able to evaluate possible scenarios for economic, interest rate and other
factors that may affect its investment and its ability to bear the applicable risks.
Some Notes are complex financial instruments. Sophisticated institutional investors
generally do not purchase complex financial instruments as stand-alone investments. They
purchase complex financial instruments as a way to reduce risk or enhance yield with an
understood, measured, appropriate addition of risk to their overall portfolios. A potential
investor should not invest in Notes which are complex financial instruments unless it has the
expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under
changing conditions, the resulting effects on the value of the Notes and the impact this
investment will have on the potential investor's overall investment portfolio.
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any)
named as the Stabilisation Manager(s) (or persons acting on behalf of any Stabilisation
Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a
view to supporting the market price of the Notes at a level higher than that which might
otherwise prevail. However stabilisation may not necessarily occur. Any stabilisation action
may begin on or after the date on which adequate public disclosure of the terms of the offer of
the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must end no
later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60
days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or
over-allotment must be conducted by the relevant Stabilisation Manager(s) (or persons acting
on behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules.

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TABLE OF CONTENTS
Page
Risk Factors .............................................................................................................................................. 7
Documents Incorporated by Reference .................................................................................................. 22
General Description of the Programme .................................................................................................. 25
Form of the Notes ................................................................................................................................... 29
Applicable Final Terms ........................................................................................................................... 31
Terms and Conditions of the Notes ........................................................................................................ 42
Use of Proceeds ..................................................................................................................................... 66
Description of AB Electrolux (publ) ......................................................................................................... 67
Taxation .................................................................................................................................................. 76
Subscription and Sale ............................................................................................................................. 78
General Information ................................................................................................................................ 81

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RISK FACTORS
The Issuer believes that the fol owing factors may affect its ability to fulfil its obligations under
Notes issued under the Programme. Most of these factors are contingencies which may or may not
occur and the Issuer is not in a position to express a view on the likelihood of any such contingency
occurring.
In addition, factors which are material for the purpose of assessing the market risks associated
with Notes issued under the Programme are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing
in Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other
amounts on or in connection with any Notes may occur for other reasons which may not be considered
significant risks by the Issuer based on information currently available to it or which it may not currently
be able to anticipate. Prospective investors should also read the detailed information set out or
incorporated by reference elsewhere in this Base Prospectus and reach their own views prior to
making any investment decision.
Factors that may affect the Issuer's ability to fulfil its obligations under Notes issued under the
Programme
Market competition and price pressure
Each of the Group's business areas operates in a highly competitive business environment
and faces intense competition from a number of competitors, many of which have strong consumer
brand equity. In recent years, manufacturers from Asia have increased their market share. Competition
in the global appliance market is based on a number of factors including sel ing price, product features
and design, performance, innovation, reputation, energy efficiency, quality, cost, distribution, and
financial incentives, such as cooperative advertising, co-marketing funds, sales person incentives,
volume rebates and terms. The Group's competitors have introduced new products to increase market
share and are increasingly expanding into new geographies. A number of the markets served by the
Group have been experiencing, and continue to experience, strong price competition. This is
particularly severe in the low-cost segments and in product categories with a great deal of
overcapacity. Downturns in market conditions can increase such price competition. However, US trade
tariffs and increased raw material costs have recently led to cost based price increases in the industry,
particularly in the North American and Latin American markets.
Some markets in which the Group operates are characterised by a high degree of
consolidation, which may result in stronger competitors and a change in the Group's relative market
position. In response to an increasingly competitive environment, the Group and other manufacturers
may be forced to increase efficiency by further reducing costs along the value chain, including at the
level of suppliers. The development of alternative distribution channels, such as online sales, could
also contribute to further price pressure within the Group's markets. There can be no assurances that
the Group will be able to adapt to these changes and increase or maintain its market share.
Global economic conditions
Economic and political conditions in many of the economies in which the Group operates and
the global economy as a whole remain very uncertain. The business environment in some of the
markets in which the Group operates may be adversely affected by political as wel as economic
instability. A lengthy recession or sustained unemployment and loss of consumer confidence in the
markets in which the Group operates could trigger a significant industry-wide decline in sales. Demand
in the US, Australia, Brazil and Argentina declined in 2018. A decline in demand could, besides a
decline in sales, also result in a shift in demand to lower priced products for which margins may be
lower. In the short term, an economic decline can affect the Group's utilisation of production capacity,
all of which could have an adverse impact on the operations of the Group.
Uncertainty about future economic and industry conditions also makes it chal enging for the
Group to forecast its operating results, make business decisions, and identify and prioritise the risks
that may affect its businesses, sources and uses of cash, financial condition and results of operations.
The Group may be required to implement additional cost reduction efforts, including restructuring
activities, which may adversely affect its ability to capitalise on opportunities in a market recovery.
On 23 June 2016, the UK held a referendum on its membership of the European Union (EU),
the result of which favoured an exit from the EU, commonly referred to as "Brexit". On 29 March 2017,
the Prime Minister of the UK notified the European Council, in accordance with Article 50 of the Treaty
on European Union, of the UK's intention to withdraw from the EU. This commenced the formal two-
- 7 -






year process (although this has subsequently been extended twice) of negotiations regarding the
terms of the withdrawal and the framework of the future relationship between the UK and the EU. As
part of those negotiations, a transitional period has been agreed in principle which would extend the
application of EU law, and provide for continuing access to the EU single market, until the end of 2020
and possibly longer.
The long-term effects of Brexit wil depend on any agreements the UK makes to retain access
to European markets either during a transitional period or permanently as well as on the agreements
the UK makes with other trading partners. Depending on the final terms of Brexit, in particular those
governing trade, financial and legal arrangements, economic conditions in the UK, the EU and global
markets may be adversely affected by reduced growth and increased volatility.
Due to a lack of precedent on withdrawals from the EU, Brexit could have unpredictable
consequences for credit markets, the EU single market and other important financial and trade
relationships, which could adversely affect the Group's business, results of operations and financial
performance, in particular in the Eurozone.
If the Group does not adapt in a timely and appropriate manner to changes resulting from the
uncertain macroeconomic environment and industry conditions, or to difficulties in the financial
markets, or if it is unable to continue to access the capital markets, the Issuer's ability to fulfil its
obligations under Notes issued under the Programme may be affected.
Risks relating to the relocation of manufacturing capacity
As part of its cost reduction strategy, the Group has in the past, and may in the future, relocate
some of its manufacturing capacity. The Group has conducted major programmes related to relocating
production from high cost to low cost countries since 2004 up until recently. Although these
manufacturing footprint programmes have come to an end, the Group is continuously conducting other
relocation projects to optimise production. The transfer of production from one facility to another is a
costly and complex process, and presents a risk of additional disruptions and delays during the
transition period. In addition, during relocation the Group will be dependent on cost-efficient deliveries
of components and half-finished goods from suppliers. Furthermore, the Group may continue to incur
additional costs after the relocation process during the time that the new facility is in ramp-up stage.
The Group might not be able to successfully transition production to different facilities. Any prolonged
disruption in the operations of any of its manufacturing facilities or any unforeseen delay in shifting
manufacturing operations to new facilities, whether due to technical or labour difficulties or delays in
regulatory approvals, could result in delays in shipments of products to the Group's customers,
increased costs and reduced revenues.
Exposure to retail chains and dependence on large customers
In the markets in which the Group operates, the Group sells to a sophisticated customer base
of large trade customers that have significant leverage as buyers over their suppliers. The customers
have many choices and demand competitive products, services and prices. Most of the Group's
products are not sold through long-term contracts, which allow for flexibility in pricing and volume
terms and facilitates the trade customers' ability to change volume among suppliers. As the Group's
trade customers continue to become larger, they may seek to use their position to improve their
profitability by various means, including improved efficiency, lower pricing, and increased promotional
programmes. In addition, the loss of market share by any of the Group's key retail customers, major
buying groups or any other trade customers to which the Group sells a significant volume of products
or the loss of any one or more of such trade customers, could result in a substantial decline in the
Group's sales volumes and adversely affect its financial performance. Moreover, in the event of a loss
of a key trade customer, end consumers may choose to purchase products from alternative companies
who are not customers of the Group. If the Group were to experience a material reduction in orders by
volume or revenues, it would adversely impact its net sales and results of operations.
Exposure to credit risk from its customers
The Group sells products to a substantial number of customers in the form of large retailers,
buying groups, independent stores and professional users. The Group has a concentration of credit
exposures to a number of major customers, particularly in the United States, Latin America and
Europe. The uncertain market conditions and intense competition in some of the Group's major
markets in recent years has impacted the Group's customers, some of which are facing difficult
business conditions. Financial difficulties, including bankruptcy, of any of the Group's key trade
customers could have a material adverse effect on the Group's business. If the Group were to become
- 8 -






unable to fully collect its accounts receivable from any major trade customer, its net sales and results
of operations could be adversely affected. Any changes in circumstances such as higher than
expected defaults or changes in the financial situation of a significant customer could lead to
significantly different valuations and could affect the Issuer's ability to fulfil its obligations under Notes
issued under the Programme.
Development of new products
The Group competes in a highly competitive industry characterised by rapidly changing
technologies, evolving industry standards and continual improvements in performance characteristics
and product features. Due to the highly volatile nature of the industries in which the Group operates,
product innovation and development are critical factors in improving margins and enabling net sales
growth in al of the Group's product lines. To meet the customers' needs in these businesses, the
Group must continuously design new products, and update existing products and services and invest
in and develop new technologies. Product development is also driven by customer demand for better
environmental performance and lower cost of use. Introducing new products requires significant
management time and a high level of financial and other commitments to research and development,
which may not result in success. The Group's sales and the Issuer's net income may suffer if it fails to
successfully anticipate and appropriately react to changes in customer preferences or if investments
are made in technologies that do not function as expected or are not accepted in the marketplace.
Acquisitions, partnership and disposals
The Group has in the past, and may in the future, increase significant market positions in its
product areas and/or may enter into new geographic and/or product areas through acquisitions
partnership and by improving operational efficiencies.
Transactions that the Group has entered into or which it may enter into in the future, can also
involve significant challenges and risks, including difficulties of integrating employees, operations,
technologies and products. The Group may incur significant acquisition, administrative and other costs
in connection with any such transactions, including costs related to the integration of acquired or
restructured businesses. These costs may include unanticipated costs or expenses, including post-
closing asset impairment charges, legal, regulatory and contractual costs, and expenses associated
with eliminating duplicate facilities. In addition, the Group may incur unanticipated costs, expenses or
other liabilities as a result of an acquisition target's violation of applicable laws and regulations, such
as anti-bribery and anti-corruption regulations. There can be no assurances that the Group wil be able
to successfully integrate any businesses it acquires into existing operations or that any acquired
business or partnership wil perform according to expectations. Similarly, disposals of certain non-core
assets may prove more costly than anticipated, and may affect the Group's net sales and results of
operations.
Risks relating to integrating and achieving expected benefits from past and future acquisitions
The Group may not realise the degree, or timing, of benefits it anticipated when it first entered
into a transaction. Anticipated synergies may not materialise, revenue improvements and cost savings
may be less than expected and sales of products may not meet expectations. The Group cannot
guarantee that recently acquired businesses or the integration of any future acquisitions wil generate
benefits for the Group that are sufficient to justify the expenses it incurred or wil incur in completing
such acquisitions.
Part of the Group's strategy depends on accelerating growth through profitable acquisitions.
Execution of this strategy will require the continued pursuit of acquisitions and investments and will
depend on the Group's ability to identify suitable acquisition candidates and investment opportunities.
The Group cannot be certain that it will be able to identify and acquire, on reasonable terms, if at all,
suitable acquisition candidates or investment opportunities. With continuing consolidation being a likely
industry trend, the Group could be faced with increasing competition for attractive acquisition
candidates. Compliance with antitrust or any other regulations may delay proposed acquisitions, or
prevent the Group from closing such acquisitions or investments in the manner proposed, if at all.
Such delay or failure to close proposed acquisitions could impair the Group's ability to achieve its
strategic objectives. Also failure to identify and/or acquire or the acquisition of unsuitable candidates or
the making of unsuitable investments could impair the Group's ability to achieve its strategic
objectives.
Dependency on third-party suppliers
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The Group's manufacturing process depends on the availability and timely supply of
components and raw materials, primarily from third-party suppliers. While supply problems can affect
the performance of most of the Group's business areas, it is particularly sensitive to supply problems
related to electronic components, compressors, steel, plastics, aluminium and copper. The Group
works closely with its suppliers to avoid supply-related problems and is increasing its supply of
sourced finished products, but there can be no assurances that it wil not experience problems in the
future.
The Group's operations and operations at suppliers' facilities are also subject to disruption for
a variety of reasons, including, but not limited to, work stoppages, labour relations, breakdown in
machinery, industrial accidents, intellectual property claims against suppliers, information technology
failures, and hazards such as fire, earthquakes, flooding, or other natural disasters, insurance for any
of which may not be available, affordable or adequate. Such disruption could interrupt the Group's
ability to manufacture certain products. Any significant disruption could negatively impact the Group's
revenue and earnings performance.
Inventory and other asset risk
The Group writes down product and component inventories that have become obsolete or do
not meet anticipated demand or net realisable value. The Group also reviews its non-current assets,
including goodwill, for impairment whenever events or changed circumstances indicate the carrying
amount of an asset may not be recoverable. If the Group determines that impairment has occurred, it
records a write-down to adjust carrying value to fair value. If no market data is available to determine
the fair value, the Group estimates fair value by using the discounted cash-flow method based on
expected future results. Differences in the estimation of expected future results and the discount rates
used could have resulted, or result in the future, in different asset valuations. Such differences and any
inventory or asset related write-downs could affect the Issuer's ability to fulfil its obligations under
Notes issued under the Programme.
Risks related to changes in commodity prices
The Group is subject to risks related to changes in commodity prices as the ability to recover
increased costs through higher pricing may be limited by the competitive environment in which the
Group operates. Raw materials account for a substantial share of the Group's costs. The raw materials
to which the Group is mainly exposed are carbon steel, stainless steel, plastics, copper and
aluminium. On a global as wel as a regional basis, the sources and prices of those materials and
components containing those materials are susceptible to significant price fluctuations due to
supply/demand trends, transportation costs, government regulations and tariffs, changes in currency
exchange rates, price controls, the economic climate and other unforeseen circumstances. The
Group's commodity risk is, to a large extent, managed through bilateral contracts with suppliers but
there can be no assurances that this activity wil be sufficient or effective in reducing the costs
associated with increased commodity prices.
Risks in currency exchange and interest rates
The Group operates in more than 150 countries around the world and as a result is subject to
the risks associated with cross-border transactions. In particular, the Group is exposed to currency
exchange rate risks and risks relating to delayed payments from customers in certain countries or
difficulties in the col ection of receivables general y. The Group is subject to currency exchange rate
risks arising from export of products and sales outside the country of manufacture, i.e., transaction
exposure as well as through translation of balance sheets and income statements of foreign
subsidiaries to Swedish Krona. Changes in exchange rates also affect Group equity. The difference
between assets and liabilities in foreign countries is subject to these changes and comprises a net
foreign investment.
While the Group's geographical y widespread production, its hedging transactions and its
ability to increase prices reduce the effects of changes in exchange rates, there can be no assurances
that these measures will be sufficient to protect the Group from currency exchange movements.
In addition, the Group holds assets and liabilities to manage the liquidity and cash needs of its
day-to-day operations. These interest rate-sensitive assets and liabilities are subject to interest rate
risk. While these interest rate exposures are minimised to some extent by the use of derivative
financial instruments, there can be no assurances that these hedging activities will be effective or
sufficient.
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