Company news and results
A few Capital Markets Days this week: Rentokil, ASML, Demant, Novozymes - these investor events are usually great opportunities to know more about companies.
Rentokil, the largest pest control company in the world, hosted a Capital Markets Day. There was no update on current trading, but medium-term growth targets were revised upward:
The pest control industry has been growing at a 4.7% CAGR over the last 5 years and remains supported by global warming (sadly), urbanisation and better living standards. You can find a (huge) presentation on Rentokil here - warning: there are a few pictures of mice, although they look cute 🐭.
The mighty ASML had an Investor Day too. They raised the 2025 sales forecast:
Based on different market scenarios, we have an opportunity to reach annual revenue in 2025 between approximately €24 billion and €30 billion, with a gross margin in 2025 between approximately 54% and 56%.
We see significant growth opportunities beyond 2025. We expect our systems (lithography, metrology and inspection) and Installed Base Management (service and field upgrades sales) to provide an annual revenue growth rate of around 11% for the period 2020-2030, based on third party research and our assumptions.
Demant, the hearing health care company, reiterated its 2021 outlook (“organic growth of 26-30% and an EBIT of DKK 3,150-3,450”) and provided new financial targets at their Capital Markets Day:
In line with historical levels, we aim to generate revenue growth for the Group of 7-10% p.a. in local currencies in the medium to long term. This comprises organic growth of 6-8% p.a. supplemented by acquisitive growth from bolt-on acquisitions of 1-2% p.a. We thus aim for both Hearing Healthcare and Communications to deliver organic growth above the estimated structural market growth rates of approx. 4% (unchanged) and approx. 12% (previously 8-10%) p.a., respectively.
Demant is happy we are getting older 👴👵:
Finally, these are the financial targets that the enzymes company Novozymes discussed in its Capital Markets Day:
Novozymes expects 5% or higher organic sales growth CAGR during the five-year strategy period to 2025 coupled with significant investments in high-growth areas and customer co-creation centers while still enabling an EBIT margin of 26% or above by 2025. The company expects ROIC including goodwill of 20% or above by 2025.
Novozymes expects to double sales by 2030 (from 2020 base) mainly through organic growth supported by acquisitions. The company will maintain a well-defined cash return profile including ~50% dividend pay-out ratio and a full return of free cash to shareholders, complemented by share buybacks.
In other non-CMD news, we had a few results in the retail sector:
Next upgraded its guidance for the year (Jan 2022):
We are increasing our full price sales guidance for the rest of the year to be up +10% versus 2019
Forecast profit before tax (post-IFRS 16) now £800m, up +6.9% versus 2019 and +£36m ahead of our previous guidance of £764m
Year end net debt2 forecast at £610m, a reduction of £502m against two years ago.
Earnings Per Share forecast to be 516.9p, up +9% versus two years ago.
Boohoo reported weaker than expected results and issued a profit warning:
Our expectation is for full year sales growth of 20% to 25% (note: down from around 25%), implying sales growth of 20% to 30% in the second half of the financial year
Elevated short-term cost headwinds experienced in the first half are expected to continue in H2 alongside recent freight inflation in our supply chain and wage inflation within our distribution centres. Consequently, adjusted EBITDA margins are now expected to be 9% to 9.5%, compared to 9.5% to 10% as previously guided.
H&M reported its 9m sales (to Aug 2021): net sales in local currencies increased by 13%.
Moving to other sectors, Diageo issued a trading commentary:
We have made a strong start to fiscal 22, with organic net sales momentum across all regions. This reflects excellent execution, as we benefit from resilience in the off-trade and continued recovery in the on-trade. However, we expect near-term volatility to remain, including the potential impact of any future waves of Covid-19
Exor, Ferrari and (Jony Ive’s) LoveFrom announced a creative partnership.
Deals and IPO
SoftBank-backed robot warehouse group AutoStore plans Oslo IPO ($link)
Oxford Nanopore surges 45% in rare London biotech listing (link)
Swedish private equity trumps initial takeover offer in Zooplus bidding war (link)