Investing in Europe #1
Hello. This is the first edition of Investing in Europe, a weekly newsletter on what’s happening in European companies and markets, filtered for what matters.
I have been investing in Europe for over a decade and here I share some of my thoughts. You can find me on Twitter
This newsletter is for informational purposes only does not represent investment advice. Always do your own research before investing.
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This is a light edition, and I am still learning how to use Substack. Sorry…and Happy New Year!
A few things that happened:
Next, the UK clothing retailer, reported full price sales in the 9 weeks to 26/12 down -1.1%. This was better than their October guidance of -8% and as consequence, profits guidance was increased. Online is growing at +38% while Offline continues to shrink, at -43%. Best products? Childrenswear, Home, Loungewear and Sportswear - we are still in a pandemic. Returns rates decreased to 21% compared to 36% last year. Link
Airlines and Brexit: European airlines need to be majority owned and controlled by EU nationals to operate intra-EU. Following Brexit, some of those EU shareholders became non-EU. Some airlines, including the largest operator Ryanair, became majority owned by non-EU shareholders. How are they solving this? In the short term, they are implementing measures to comply with current rules, including a partial (Easyjet) or full (Ryanair, Wizz Air) suspension of voting rights. Long term rules might change and it is fair to say that with traffic at -80% in December due to Covid-19 and now new lockdowns, they have bigger fishes to fry. Schedules continue to be cut. Waiting for the post pandemic travel boom and market consolidation?
Informa, the market leader in the trade fair industry, expects physical events to come back gradually: 90% of planned events ex-China are scheduled from June. Link
Delivery Hero: the Berlin based multinational food delivery company will finalise the acquisition of Woowa Brothers, the n1 food delivery group in South Korea, conditional on divesting its stake in the n2, Yogiyo. Link South Korea is big in food delivery, the third largest market after China and the US. Separately, Delivery Hero announced a €1.2bn capital increase Link
Unilever: or big, boring (?) companies doing something interesting at the margin:
Unilever is expanding their partnership with Burger King to supply non-meat meat in Latam, the Caribbean and China (link) - this is part of their goal to reach $1bn sales from plant-based food by 2025. That is a relatively small number for Unilever, as their Food & Refreshment division made more than $20bn sales in 2019. Given the higher growth rate and the expected disposal of the tea business (at least in part), it should get bigger as a percentage of sales
They launched a biotech JV to market a technology which should prevent the formation of bacteria and mould on surfaces. Very small investment, but apparently they have been working on this for more than 10 years. Link