What happened?
RHM is hosting its CMD in Rome; after the dinner with mgmt. yesterday, and a plant tour earlier today, the slides of the CEO have just been released suggesting c. 20% upside to Cons.'' adj. EBITA 2027e; yet FCF is rather in line.
BNPP Exane View:
The new mid-term targets for now FY27 (rolled forward by 1Y) materially beat Cons. with implied group adj. EBITA of EUR3.6bn - based on a ~18% adj. EBITA margin target (was: 15%) applied to sales of c. EUR20bn (VA Cons.: EUR17.3bn) - sitting 14% above VA''s EUR3.15bn (margin: 18.2%). Yet, based on the respective targets, we reconcile implied group adj. EBITA of c. EUR3.3-4.3bn (6-37% above VA | margin: c. 18-20%) with the positive deviation led by VS and ES, while WA is widely in line. Yet, the implied target for FCF 27 is EUR1.3-1.7bn (VA: EUR1.5bn) as RHM has lowered the cash conversion target from op. profit to 40% (was: 50% / VA: 48%) implying a 6-8% yield 27e though.
Running the numbers by core KPIs and comparison with consensus
. Segment targets imply group sales of c. EUR18.5-21.5bn (sales CAGR 24-27e: 23.29% | based on guided sales 2024e of c. EUR 10bn), 16% above VA Cons.'' EUR 17.3bn with the segment targets implying a 7-24% range; key growth drivers: VS and ES are the key deviators to the upside with the EUR8-9bn / 4-5bn sales targets c. 30%/40% above VA; the framework for WA / PS is widely in line with market expectations at first glance (see tables below). No detail provided on whether the sales target includes MandA related contributions, yet, slide 32 puts expected U.S. sales at c. EUR2bn (24e: c. EUR0.5bn) suggesting Loc Performance - closing until YE24e - is baked in.
. As per the new op. margin target of c. 18% vs Cons.'' 18.2% (the prior target had looked at 15%, yet, that did not include the new artillery ammunition plant in UnterluB), implied adj. EBITA is seen at EUR c.3.6bn based on the official c. EUR20bn sales target, yet, the bottom-up based op. profit is rather EUR3....
