Investing in Europe #38
Reckitt investor seminar, Traton sales warning. More deals than results this week.
Company news and results
Reckitt, the hygiene, health and nutrition company, hosted an investor seminar and issued a trading update.
A couple of slides on medium-term targets, from the 96 pages presentation:
Reckitt is targeting +4-5% medium-term net revenue growth, with basically stable margins compared to 2019.
After an exceptional 2020, this year there will not be much growth though:
We continue to be confident in delivering FY 2021 like-for-like net revenue growth of 0-2% and adjusted operating profit margins of between 22.7-23.2%. The disposal of IFCN China was completed on 9 September and, as previously stated, our guidance excludes the contribution of this business for the entirety of the year.
Traton, the manufacturer of Scania and MAN trucks, issued a sales warning due to a shortage of semiconductors and other supply constraints. Demand remains strong. The impact is expected to continue into the following year, according to the CEO:
We have ramped up existing measures in order to mitigate the supply bottlenecks as much as possible. There is a lot of demand for trucks from our customers right now, in the aftermath of the COVID-19 economic slump, and we believe they should get their vehicles as quickly as possible. Having said that, it is not just the semiconductor issues stretching global supply chainsat the moment — it is also the shortage of numerous other products. This is having a detrimental impact on our unit sales, especially the September figures. We expect this situation to continue throughout the remaining months of this year and into the following year. We are continuously optimizing our processes to counteract this development
Compass, the foodservice company, issued a trading update. They expect full-year sales to be approx 76% of 2019, whilst operating margin at approx 4.4%:
Looking ahead to the start of the new financial year, most of our sectors are expected to continue performing well; although we remain cautious about Business & Industry given continued uncertainty over the pace of office reopening in our major markets
Kingfisher, the home improvement company, reported its first half results. The DIY sector has been a beneficiary of Covid-19. H1 sales were still strong, up more than 20% in constant currency. Sales are expected to slow down in H2, although not as fast as guided before:
Increasing our H2 21/22 sales expectations – now planning for LFL scenarios of -7% to -3% (previously -15% to -5%), with corresponding 2-year LFLs of +9% to +13%
Anticipate full year adjusted pre-tax profit in the range of c.£910 million to £950 million
Deals and IPO
Universal Music Group shares soar in market debut (link)
National Express in talks to buy transport rival Stagecoach (link)
Deutsche Lufthansa AG decides on EUR 2.1 billion capital increase (link)
Entain shares hit all-time high after DraftKings takeover approach (link)
Pernod-Ricard Acquires Online Retail Giant The Whisky Exchange (link)
Delivery Hero Said to Invest in Gorillas at $3 Billion Value ($link)
French telecoms firm Iliad to buy UPC Poland in near $1.8 bln deal (link)