Firms not exposed to overseas earnings boosts likely to see negative impact of higher input costs
Companies: BVIC, CWK, FEVR, GNC, NICL, STCK
Whitman Howard released a report this morning, exploring the impact that the UKs now confirmed Hung Parliament will have on the UK small and mid-cap consumer goods sector.
Analyst Chris Wickham said the focus in the aftermath of yesterday's vote should be on forex, with some immediate winners and losers from potential currency weakness.
According to Mr Wickham, the Forex implications for smid-cap companies are mixed, with companies not exposed to overseas earnings boosts likely to see the negative impact of higher input costs for packaging and key ingredients.
Britvic, Fever Tree, and Nichols all have significant foreign profit exposures, with Nichols, in particular, earning significantly higher margins internationally than here in the UK.
Greencore has become a significant overseas earner since its Peacock acquisition, while Carr's Group is a big overseas earner in its engineering and feedblock businesses.
Other stocks highlighted by Whitman are Cranswick and Dairy Crest, which have international exposure but have limited export businesses regarding size.
Lastly, Mr Wickham adds that Stock Spirits is the most unusual given it earns all of its profits outside of the UK and reports in Euros.