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As expected, the COVID-19 pandemic caused significant declines in out-of-home consumption, which were partly offset by gains in at-home consumption and market share. Full year revenue declined 6.8% on a constant currency basis, while adjusted EBIT was down 21.9% at constant currency, and adjusted EPS was down 27.8%. A full year dividend of 21.6p was confirmed, following the decision in H1 to prudently suspend the dividend. Management focused on cash and cost efficiency to mitigate the impact of the pandemic as much as possible. During the period, the company extended its carbonates relationship with Pepsi to 2040. The outlook is understandably cautious, given the uncertainty in terms of further restrictions in Britvic’s main markets. Nevertheless, management has carefully planned its approach, and the agility demonstrated so far should continue to help Britvic navigate the uncertain environment.
Companies: Britvic plc
There is a popular misconception that Palm Oil is ‘bad’. We would contend that Sustainable Palm Oil (SPO) is actually ‘a very good thing’. SPO is the world’s most efficient and useful vegetable oil, requiring one fifth of the land to produce versus soybean oil. MPE, a leading proponent of SPO, operates in an environmentally sustainable manner, taking great care of natural resources, while its social outreach policies are second to none. Scoring highly on the finnCap ESG scorecard, we can recommend MPE as a financial investment and as an ethically sound investment.
Companies: M.P. Evans Group PLC
Zambeef has reported FY2020 full year results for year ended September 2020. In what has been a tumultuous period for the Zambian economy (low growth, high inflation, very weak currency and drought), Zambeef has delivered a very good set of results demonstrating operational robustness, an ability to implement inflationary price increases and improve working capital management. Despite further expectations of FX weakness and an ongoing tricky macro situation, we have only made minor adjustments to our FY2021 expectations.
Companies: Zambeef Products PLC
An in line AGM trading update from Nichols this morning which is good news. We should, however, stress that this covers the quietest quarter of the year with all the anticipated growth for FY16 dependent on good momentum coming from last years bolt-on deals, a reasonable summer and further international progress. Owing to the diversified nature of the portfolio and a significant international business, the risk around the proposed UK sugar levy is expected to be minimal we feel. To this end, we note the shares have re-rated by 1 P/E point to 20x FY16 since the March finals. We make no forecast changes at this early stage of the year and see ST fair value at 1430p.
Companies: Nichols plc
Animal Health is a vast market with multiple long-term growth characteristics and opportunities. In this report we have outlined valuations, M&A activity and the key growth drivers in two animal health subsectors: companion animal health and livestock health. Although the commercial positioning of the eight companies covered in this report (Animalcare, Anpario, Benchmark Holdings, CVS Group, Dechra, ECO Animal Health, Genus and Pets at Home) differ significantly, all have exposure to positive market trends.
Companies: GNS ANCR CVSG DPH BMK EAH ANP PETS
Diageo reported H1 results just ahead of peers. However, the lowered FY20 sales guidance and the shy volume growth (+0.2%) have slightly darkened the picture. The strong metrics, still ahead of peers, and the still growing return to shareholders still make it a quality stock for us.
Companies: Diageo plc
Interims highlight a resilient top-line performance and further good news on Vimto market outperformance. Investors should also welcome the reinstating of the dividend and a pleasing Middle East update. The other main news is the planned departure of CEO, Marnie Millard, with Andrew Milne the COO stepping up to fill the role. Marnie leaves Nichols in a strong shape and a smooth handover is anticipated. Ongoing OoH, consumer and Africa CV19 uncertainties mean forecast guidance remains withdrawn and thus we are not reintroducing forecasts at this stage. Overall, a positive set of interims today, reinforcing Nichols attractions of brand strength/robust balance-sheet/geographic diversity. The shares trade on an undemanding historical P/E of 16x, EV/EBITDA 11x and 6% FCF yield vs a LR P/E and EV/EBITDA of 20x/14x.
FY20 top and bottom line missed expectations and Diageo didn’t provide guidance for next year. Improvements expected in the coming months thanks to lockdown restrictions easing, though the margin should still be under pressure for the next six months.
Finsbury's AGM statement confirms that trading has remained resilient in FY21E, with the group expecting to deliver improved revenue and profitability this year. As such, with visibility improving, we are reinstating forecasts (FY21E Adj EBITDA of £26.0m). We also update our rating to Buy (from Under Review), which is driven by the group's low valuation (c7.7x FY21E P/E), planned reinstatement of the dividend (3.8% yield), and the increasing levels of FCF available to shareholders (11% FCF yield) now that the group has reached the end of a period of heavy investment.
Companies: Finsbury Food Group plc
Nichols has issued a 9m trading update to the end of Sept and a full year outlook. Following on from H1, it is pleasing to see further positive momentum across the dominant activities of UK Vimto Packaged and International (c70% FY19 sales), whilst the cash position remains very healthy. Unsurprisingly OoH has remained significantly challenged (Q3 sales -45%), but we welcome the positive actions signalled this morning to align costs to a period of softer revenue whilst its main end market of hospitality navigates a pre/post Covid-19 landscape. Full year PBT guidance is for £11-13m - down c60% y/y, reflecting high operational gearing at OoH from a >£25m loss of sales. With FY21 a year of partial profit recovery, FY22 is of greater relevance from a valuation perspective and whilst guidance remains suspended, we see a pathway to get to 80-85% of our previous FY20 PBT of £29m. This would imply EPS of c53p, set against a 10 year P/E average of 20.4x. Overall, we feel OoH uncertainty is priced in and should not overshadow the ongoing resilience of core activities, as well as the fundamentals around longevity/growth prospects of the Vimto brand, geographical diversity and a strong c£44m of net-cash to capitalise on future opportunities.
As expected, the COVID-19 pandemic caused significant declines in out-of-home consumption, which were partly offset by gains in at-home consumption and market share gains. Full year revenue declined 6.8% on a constant currency basis, while adjusted EBIT was down 21.9% at constant currency, and adjusted EPS was down 27.8%. A full year dividend of 21.6p was confirmed, following the decision in H1 to prudently suspend the dividend. Management focused on cash and cost efficiency to mitigate the impact of the pandemic as much as possible. During the period, the company extended its carbonates relationship with Pepsi to 2040. The outlook is understandably cautious, given the uncertainty in terms of further restrictions in Britvic’s main markets. Nevertheless, management has carefully planned its approach, and the agility demonstrated so far should continue to help Britvic navigate the uncertain environment.