Investing in Europe #60
Company news and results
Danone hosted a Capital Market Day. The new CEO Antoine de Saint-Affrique “has completed a holistic review of Danone with the objective to restore growth and drive value creation”. New plan:
Restoration of Danone’s competitiveness in core categories and geographies;
Selective expansion of Danone’s presence, in terms of segments, channels and geographies;
Active seeding of future growth avenues;
Active portfolio rotation.
Lindt & Sprüngli increased sales by +13.3% in 2021. Compared to 2019, sales were up +6.4%. Free cash flow was CHF 586 million, representing a margin of 12.8%.
Outlook:
For 2022, an organic sales growth at the upper end of the bandwidth of 6-8% and an operating profit margin of 15% are expected. In the mid- to long-term, the chocolate manufacturer expects 6-8% (previously 5-7%) organic sales growth with a continuous improvement of the operating profit margin of 20-40 basis points per year.
Ashtead reported an increase in rental revenue of +21% in the nine months ended 31 January 2022.
We expect capital expenditure for the full year to be slightly ahead of our previous guidance at c.$2.5bn. Looking forward to 2022/23, our initial plans are for gross capital expenditure of $3.2 - 3.4bn, as we look to take advantage of strong market conditions, particularly in the US. This should enable low to mid-teens rental revenue growth in the US.
Adidas reported revenues up +16% in 2021. EMEA was the fastest-growing region with revenues up +24%. Greater China was up +3% for the full year and -24% in Q4 “due to the supply shortages, covid-19-related restrictions and the challenging market environment”.
Currency-neutral sales to increase at a rate between 11% and 13%, already reflecting up to € 250 million of risk in Russia/CIS business related to the war in Ukraine
Gross margin to increase to a level of between 51.5% and 52.0%
Operating margin to increase to a level of between 10.5% and 11.0%
Net income from continuing operations to grow to between € 1.8 billion and € 1.9 billion
Carlsberg suspended its guidance for the year:
The future is highly unpredictable and we are reviewing a full range of strategic options for our Russian business. During the humanitarian crisis, we are committing that any profits generated by the business in Russia will be donated to relief organisations.
The development in Ukraine and Russia will negatively impact the Group’s financial results for 2022. The Group’s assets in both markets may also be subject to non-cash impairment and write-down. In 2021, Russia and Ukraine accounted for approximately 13% of Group revenue and approximately 9% of the operating profit from our three regions.
EssilorLuxottica reported comparable revenue growth of +7.4% versus 2019 and operating profit margin at 16.1%, including GrandVision.
Long-Term Outlook (at constant currency):
Annual revenue growth 2022-26 at mid-single digit
Adjusted operating profit as a percentage of revenue at 19-20% in 2026%
Deals and IPO
Spectris ends $2.4 billion pursuit of Oxford Instruments amid Ukraine crisis (link)
KKR tipped to continue Telecom Italia pursuit (link)
ORANGE and MASMOVIL enter into exclusive discussions to combine their operations in Spain (link)
Deutsche Telekom launches $20 bln auction of mobile towers (link)
Corporate transportation firm Gett abandons $1 billion SPAC deal (link)
Cinven buys Bayer’s pest control unit for $2.6bn (link)
Stagecoach opts for rival takeover in blow to National Express merger plan (link)
Other news
REPowerEU: Joint European action for more affordable, secure and sustainable energy (link)
Phasing out our dependence on fossil fuels from Russia can be done well before 2030. To do so, the Commission proposes to develop a REPowerEU plan that will increase the resilience of the EU-wide energy system based on two pillars: Diversifying gas supplies, via higher Liquefied Natural Gas (LNG) and pipeline imports from non-Russian suppliers, and larger volumes of biomethane and renewable hydrogen production and imports; and, reducing faster the use of fossil fuels in our homes, buildings, industry, and power system, by boosting energy efficiency, increasing renewables and electrification, and addressing infrastructure bottlenecks.
Austria’s OMV to exit Russia over Ukraine invasion (link)
Volkswagen Chooses Wolfsburg For $2.2 Billion EV Plant (link)
Germany's Uniper joins peers in writing down loan to Nord Stream 2 (link)
Unilever stops Russia exports but maintains “essential” food supply (link)
L’Oréal turns off operations in Russia (link)
Outflows in Europe. Throwing away the baby with the bathwater?