Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Danone. We currently have 12 research reports from 2 professional analysts.
At its investor seminar, Danone decided to adjust its 2020 guidance. The company now expects: • 4-5% LFL sales growth (at least 5% previously) : - At least +5% LFL sales growth for Essential Dairy & Plant-based (EDP) NORAM (which includes North American Fresh dairy business and Whitewave’s former North American business) - At least + 5% LFL sales growth for Specialized Nutrition (Early Life Nutrition: 7-10% previously & Medical Nutrition: 6-8% previously) - At least +5% LFL sales growth for Waters (7-10% previously) - 3%-4% LFL sales growth for Essential Dairy & Plant-based (EDP) International (which includes Fresh dairy products in the rest of the world and WhiteWave’s former business in Europe, Latin America and China) •a recurring operating margin of over 16% in 2020 (13.77% in FY16) driven by: - Protein program (cost efficiency) aiming for €1 billion savings by 2020, with at least €300 million net of reinvestment translating into margin expansion by 2020 (15% of cost efficiencies coming from professional services (warehousing), 25% from logistics, 30% from sales & marketing and 30% from manufacturing). - $300 million of synergies from the WhiteWave acquisition (50% coming from SG&A, 30% from procurement and 20% from the supply chain) - more discipline and stricter resource allocation
Danone Q1 update: sales are up +0.7% lfl (in line with consensus) with volume down 2.5% and pricing +3.3%. On reported figures, sales are up +3% (FX: 2.8%, net M&A: -0.5%). Lfl performance by division: Fresh Dairy -2.3% (cons. -1.9%), Waters +1.7% (cons. 1.5%), ELN +4.1% (cons. +3%) and Medical Nutrition +8.8% (cons. 7%). OG by region: Europe -1.9%, CIS & North America -0.1%, ALMA +3.7%. Following the WhiteWave acquisition, the company has upgraded its FY17 guidance to a double-digit recurring EPS growth at constant exchange rates (5% previously). The group will change its reporting structure: - DanoneWave will include Danone Fresh Dairy Products’ and WhiteWave’s current North American businesses; - Fresh Dairy Products will include Danone’s Fresh Dairy Products in Europe, CIS and ALMA as well as WhiteWave’s business in Europe, Latin America and China; - Early Life Nutrition and Medical Nutrition will report as a single category; - Waters will be reported as previously. Performance will be reported based on two different regions: - Europe and North America will report as a single region; - The Rest of the World’s (RoW) perimeter will cover current ALMA and CIS regions.
FY and Q4 update: Q4 sales grew +2.1% (in line with consensus). OG by division: FD +0.7%, Waters +6.3%, Baby Food +0.6%, Medical Nutrition +6.1%. On a FY basis, sales grew organically +2.9% (in line with consensus), and were down 2.1% on reported figures (FX: -5.5%). The operating margin is up 87bp (+70bp lfl). FY OG by division: FD +2%, Waters +2.9%, Baby Food +3.5%, Medical Nutrition +7.4%. OG by region: Europe -1.4%, CIS & North America +4.6%, ALMA +6.7%. The company announced a new cost-savings programme with a target of €1bn by 2020. The efficiency savings will target professional spending, media and logistics. They are part of the implementation of the group’s mid-term guidance of an operating margin progression of 250bp by 2020. For the FY17, Danone sees a volatile and uncertain environment. Costs of raw materials should increase by mid single-digits (milk costs to rise in Europe and North America). The group said that the weak environment in China might also last into FY17 and that it is expecting a slower start to the year. FY17 guidance is to deliver at least +5% EPS growth lfl (excluding the WhiteWave integration). Once this is completed, the group will review its annual targets. The proposed dividend is €1.7 (+6.3%).
Danone has adjusted its FY16 guidance on the back of a weaker than expected Q4 in Spain and Activia’s performance. Consequently, the company expects the FY16 top-line to be slightly below the guidance of 3-5%, whereas the operating margin should be above the 50-60bp guidance (with a possible positive impact of 5-10bp).
Q3 update: sales grew lfl +2.1% (cons. +2.4%) with -0.7% volume growth and +2.8% pricing. On reported figures, sales were down 1.8% (FX: -4.1%, scope of consolidation +0.2%). OG by division: Fresh Dairy +2.2% (cons. +2.5%), Waters -0.1% (cons. +1%), Early Life Nutrition +1.7% (cons. +2.5%), Medical Nutrition +9.7% (cons. +7%). Fresh dairy saw stronger pricing +4.2% on the back of negative volumes in the CIS and LatAm regions. Waters were impacted by the transition phase and floods in China (excluding China, the Waters performance is up mid single-digit). The Early Life Nutrition performance was impacted by tough comparables and the transition from an indirect to a direct sales model in China (excluding indirect sales, ELN was up mid single-digit in China). Medical Nutrition’s excellent performance was driven across all geographies. The company maintains its FY guidance: 3-5% organic top-line growth and 50-60bp lfl improvement in the operating margin, although the top-line is likely to be in the lower range of this.
Danone released its Q2 and H1 update. In Q2, sales grew organically 4.1% (cons. +3.7%) with volumes up +1% and pricing +3.1%. On reported figures sales were down 3% (FX:-7.7% and net acquisitions: +0.6%). OG by division: Fresh Dairy +3% (cons +2.7%), Waters 2.7% (cons. +2.7%), Early Life Nutrition +7.2% (cons. +6.2%) Medical Nutrition 7.1% (cons. +6.5%). OG by geography: Europe -0.2%, CIS&North America +4.8%, ALMA +8%. Overall, in H1 sales grew organically by +3.8%, whereas the operating margin was up +93bp lfl and +125bp on reported figures. Waters was the only division where the margin lfl was down (due to inventory adjustments in China). The company confirmed its FY guidance: 3-5% organic top-line growth and 50-60bp lfl improvement in the operating margin.
Danone has announced the acquisition of WhiteWave Foods (the US-based, natural and health-focused food group) for $12.5bn in cash (including $2.1bn debt). The proposed price per share of $56.25 offers a premium of around 24% to WhiteWave’s average close price over the past month and represents a c. 21.2x EBITDA multiple. The deal is expected to close by the end of the year. It is subject to WhiteWave shareholders and regulatory approval.
Danone released its Q1 trading statement. The OG stood at 3.5% (cons. 3.2%) driven by pricing of +2.7% and volumes of +0.8%. The FX impact was -7.2%. Net acquisitions showed an impact of +0.7%. OG by division: Fresh Dairy +2.3% (cons. 2%), Waters +3.9% (cons. 2.1%), Baby Food +4.8% (cons. +5.5%) and Medical Nutrition +6.6% (cons. 6.7%). OG by region: Europe +0%, CIS & North America +5.1%, ALMA +6.3%. The group maintains its FY guidance: 3-5% OG in sales and a solid improvement in the organic operating margin.
Danone released its Q4 and FY results. In Q4, sales grew organically +3.6% (cons +3.2%) with 1.3% in volume and +2.3% in value. Q4 OG by division: Fresh dairy +2.6% (cons +2%), Waters +1.9% (cons +3.9%), Baby Nutrition +6% (cons +3.4%), Medical Nutrition +6.8% (cons +7.7%). For the FY, the revenue grew organically +4.4% (0.9% in volumes, 3.5% in value) and +6% on reported figures. The operating margin increased +17bp organically (FD +24bp, Waters margin -192bp, Baby Food +142bp, Medical Nutrition +1bp) and +32bp on reported figures. Net income was up +5%. The proposed dividend stood at €1.6 per share. In FY16, Danone expects 3-5% OG in sales (on rising raw material prices, a sluggish economic environment and volatile currencies) and a solid improvement in the organic operating margin.
Danone released its Q3 trading update. Q3 sales were up +4.6% LFL (consensus at 4.3% vs. 4.5% in Q2) with volume up 0.8% (consensus at 1.8%) and pricing up +3.8%. FX stood at -0.2% whereas net acquisitions were -0.2%. On reported figures, Q3 sales grew by +4.2% to €5.6bn.
The consumer staples sector continues to trade on well above average historic and market average multiples despite a lack of earnings growth over 2014-15. This has been due to being perceived as ‘low risk' and cash generative with the ability to continue to pay and grow dividends. However cashflow cover of dividends has declined, and a further round of emerging market currency devaluations could have a severe impact on the ability to grow dividends unless they can grow earnings in the developed world. In the short term the performance of the sector is likely to be overshadowed by the potential interest rate increase in the US. We would have an in-line weighting in the UK consumer staples sector. Within that we remain positive on the tobacco subsector and Hilton Foods Group and retain the Sell rating on Associated British Foods. We move PZ Cussons from Sell to Hold
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Q2 sales grew by 4.5% LFL (consensus at 4.3%) with volumes at 1.5% and pricing at 3%. The performance was driven by a strong Waters (10.2%, equally price- and volume-driven), Infant Nutrition (11.1%, with 7.3% volume growth) and Medical Nutrition (7.1% with 5% volume growth). Fresh dairy sales decreased by 1.1% LFL (-3.1% in volume and 2% in pricing).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Danone. We currently have 12 research reports from 2 professional analysts.
Greencore's (GNC LN, BUY, T/P 310p) presence as a solution provider to large US branded CPG operators is to date young relative to its presence in US and UK Food to Go. However, there was clear evidence from its Chicago based capital markets day that the "young cub" knows how to roar. Moreover, the investor knowledge asymmetry between the UK and US operations should diminish.
Companies: Greencore Group
A G Barr’s (BAG LN, HOLD, T/P 600p) share price since their FY2017 results on the 28th March has increased 18.6%. Their prelim results were in line with expectations and highlighted the company’s strategy to tackle the incoming sugar tax levy in the UK. We take this opportunity to adjust our FY2018 and FY2019 forecasts.
Companies: A.G. Barr
GYG—Intention to float by the superyacht painting, supply and maintenance company. Due 5 July. Raising £6.9m new plus vendor sale of £21.5m at 100p. Mkt Cap c. £47m. Revenue of €54.6m in FY16 and adjusted EBITDA of €6.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | FFI Holdings— Specialist in the provision of completion contracts to the entertainment industry for films, television, miniseries and streaming product. Offer TBA. Expected 30 June. | QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA | Ethernity Networks—Schedule 1 from Israeli based specialist in data processing technology used in high end carrier ethernet applications across the telecom, mobile, security and data centre markets. Expected late June. Offer TBA. | Jangada Mines—Sch 1 advanced stage PGM exploration project containing what the Directors understand to be the largest PGM resource, and only pre-development PGM project, in South America. Offer TBA. Expected late June. | Phoenix Global Mining— US Brown field copper play. Expected late June. Offer TBA | Touchstone Exploration— Oil E&P company active in the Republic of Trinidad and Tobago. Interests of approximately 90k gross acres. Production c. 1.3k boepd. Raising £1.5m. Expected mkt cap £7.5m - 26 June. | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets | DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia,Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. | AIB—Intention to float from AIB, Ireland's leading retail and commercial bank. The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Valuation range €10.6-€13.3bn. Admission end June. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
Companies: ECHO ORCP WYN LEK HRN HAL FCR EZH MERC WGB
Fever Tree (FEVR LN, HOLD, T/P 1700p) announced in its AGM statement that this year’s financial performance should be comfortably ahead of current market expectations. We adjust our numbers accordingly to raise our 2017 revenue number from £118m to £128m and fully diluted EPS from 25.2p to 28.0p. We raise our price target from 1250p to 1700p, which is roughly where the shares currently trade.
Companies: Fevertree Drinks
The domestic market remains subdued, and raw material costs have been increasing. Centrale del Latte d’Italia (CLI) implemented some price increases on 1 April in order to offset some cost inflation, with full effect from 1 June. However, spot milk prices are starting to fall, both domestically and across Europe, so we expect a more benign cost environment during H217. We leave our forecasts unchanged and our fair value moves to €2.82 per share (from €2.85).
Companies: CENTRALE DEL LATTE DI TORINO
African forestry and agriculture business Obtala Limited (OBT LN)# has conditionally acquired (subject to due diligence) the forestry business WoodBois International ApS (WBI) for US$14.8m.
Companies: CARR WYN OBT PETS
Enterprise-focused niche applications of tech illustrate how, while trends appear to be fluctuating away from the current poster children of fintech and the Internet of Things, in fact these developments are refining appropriate application of existing technologies.
Companies: 7DIG AMO ARTA BVC BOTB CTP CFHL ISL DTC DOTD ELCO ESV FDSA FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP ZOO
Zambeef has reported FY2017 interim results which we can characterise as follows: a strong operational performance (especially in retail, cold food chain volumes and crop yields) has been offset by weaker than expected agri-commodity prices (especially soya) and a tricky economic environment in Zambia as the economy adjusts following the currency collapse late in 2015. Coupled with a few operational issues in Milk and Eggs, we are materially reducing our FY2017 expectations but our target price of 20p is unchanged as we do not believe that the longer-term outlook or investment case has fundamentally changed.
Companies: Zambeef Products
Motif Bio (MTFB): Remain positive on REVIVE-2 readout (BUY) | LiDCO* (LID): US FDA approves latest monitor (CORP) | Zambeef* (ZAM): Still not firing on all cylinders (CORP) | Cambridge Cognition* (COG): Speech recognition clinical trial software (CORP) | Water Intelligence* (WATR): locking in growth potential (CORP) | Shoe Zone (SHOE): Disappointing H1 (HOLD) | Minds + Machines* (MMX): Valuing renewals (CORP) | Intercede* (IGP): Prelims on track (CORP)
Companies: MTFB LID ZAM COG WATR SHOE MMX IGP
After much heralding, MIFID II is finally beginning to have an impact on the business of investment research, though its true ramifications might take years to be seen. The role of analyst research is widely misunderstood. It is not all about the conclusion: the rating and price target. The real content of research is about what is discounted in the current share price and what assumptions would produce different outcomes.
Companies: ABZA AVO AGY APH ARBB AVCT BUR COG CLIG COS DNL EVG MCL MUR NSF ODX OXB PPH NIPT PHP RE/ RGD REDX SCLP SPH TRX
Impact healthcare REIT— Intends to float on the main market. Seeks to raise £160m to acquire a portfolio of up to 58 care homes. Expected Admission 7 March. Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January 2017.
Companies: KIN COG OMIP SOG WYN IMM BXP CLIN BOOM MMX
First Sentinel—Investment company expecting NEX admission/introduction on 24 March. £636k raised pre-IPO. BioPharma Credit—Expected Gross Initial Acquisition Proceeds now c.$338m. Gross Cash Proceeds capped at $423m with placing and open offer. Results expected 23 March with admission now due 30 march. Tufton Oceanic Assets- The Company intends to invest in a diversified portfolio of second hand commercial sea-going vessels where the Investment Manager believes that an attractive opportunity exists in shipping. $150m raise. Admission 3 April.
Companies: GOOD BKY JDG XLM FEVR KRS FLOW MPM HUNT PIER
I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late May. | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | Flying Brands (FBDU.L)—Prospectus approved by FCA. RTO of Stone Checker Software, supplier of technology solutions in the field of kidney stone analysis and prevention. Has raised £550k at 3p. Subject to GM on 15 Jun. | AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. | Tufton Oceanic Assets– Extended to 9 May on specialist funds segment of Main Market to enable further due diligence. | PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
Companies: PVG IDHC ADL IPO BSE MED EZH EPWN TILS VLG
First Derivatives (FDP LN) Major new contract win | IndigoVision Group (IND LN) Strong H2 performance | Nichols (NICL LN) Strength & tenor of FY16 results supportive of premium rating | Sanderson Group (SND LN) AGM statement signals solid start to the year | Spirent Communications (SPT LN) Narrowing focus around key themes
Companies: GNS SPT NICL IND ANCR CVSG DPH FDP BMK SND EAH ANP PETS
We have completed another refresh of the value style screen, first established as of 12 May 2015. As usual the screen selected the 25 stocks exhibiting the most extreme value characteristics from our universe, and we have chosen 9 stocks to focus on. Since the last refresh as of 8 November 2016, the day before the US presidential election result was known, the screen has performed strongly (outperforming the small-cap index by 12.9pp on a weighted basis) with our focus stocks doing even better. The indication is that smaller value stocks perform well in a steady “risk on” environment. The new basket contains many UK consumer demand and emerging market plays. We find the latter exposure interesting at this juncture.
Companies: RUS GOAL VTU BILN INL AEP MAYA IPF OPM