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Q3: another solid quarter but the stock seems to be fairly valued
28 Oct 16
Swedish Match Q3 update: good quarter with an improvement in the snus & snuff margin. Sales are up +9% in local currencies and +10% on reported figures. The operating margin is up 100bp to 26.5% on the back of good performances in all divisions. By product, Snus & snuff sales were up 2% with the operating margin up 70bp yoy driven by the solid performance in both Scandinavia and US. Cigars and chewing tobacco performed strongly with revenue up +22% and the operating margin up 90bp partially supported by channel loading ahead of FDA regulations. Lights continues its recovery, recording a good +11% in sales and 240bp in the operating margin. Other operations (distribution & corporate overheads) increased by 8%. In September, SWMA reduced its ownership in STG to 18.1% (from 31.1%). Following this event, a special dividend of SEK9.5 will be proposed to the shareholders. No changes to the FY guidance.
Great Q2 driven by snus & cigars; regulatory pressure rises
22 Jul 16
SWMA released its Q2 update. Sales are up +10% in local currencies and +8% on reported figures. The operating margin stood at 25.5% (vs. 26.4% in Q1). By division, sales of snus & snuff were up +7% on constant FX (+5% on reported) with a good 41.6% operating margin. Underlying sales grew in both Scandinavia and the US, however, in Sweden and Norway, SWMA experienced some market share loss. Other tobacco products performed well (+8% on constant FX and +5% on reported figures) driven by cigars (very strong volumes +15%). The company announced that FDA user fees on cigars will be implemented starting from October 2016 (with a $2m impact in Q4). Chewing tobacco sales were down. A positive surprise comes from lights which saw flat sales and a significant improvement in profitability driven by higher volumes in Western Europe and Russia.
Q1: Good start to the year driven by better than expected snus results
04 May 16
SM reported its Q1 results. Sales were up +6% (+7% on an organic basis). The operating profit margin was up +70bp. Results by division: Snus & Snuff sales grew +5% (operating margin was up +260bp) being positively impacted by lower destocking effects (however, SM lost some 0.6% market share in Sweden and -3.8% in Norway). Other tobacco products’ performance was relatively stable (sales up +7%, but the margin was down by 90bp due to weak chewing tobacco and some more intensive competition in cigars). Lights continue to perform poorly (sales -9%, margin down -340bp) on tough comps and the weak Brazilian real. For the rest of the year, the group expects: Scandinavian snus as well as US moist snuff consumption to continue to grow as measured by the number of cans. In Scandinavia, the average net selling price per can is expected to decline slightly versus last year. For cigars, the market is expected to continue growing although competition will remain high.
19 Feb 16
Swedish Match released its FY & Q4 results. In Q4, sales grew organically 2% and +5% on reported figures. Operating profit was down organically by 4% (+1% on reported figures). For the FY, sales grew organically +2% and +9% on a reported basis. The operating profit was down 2% organically (+7% on reported figures). The operating margin contracted by 40bp. The full-year net profit was up +7%. The proposed dividend is SEK20.00 (SEK8.00 of ordinary dividend +SEK12.00 special dividend linked to the partial divestment in STG). Performance by division: - Snus & snuff organic sales were flat in Q4 and +2% for the FY. The operating margin was down 220bp in Q4 and down 340bp for the FY, affected by the weak Norwegian krone and a negative price/mix in Scandinavia. - Cigars and chewing tobacco performed strongly with revenue up +32% in Q4 and +35% for FY. The operating margin was down 150bp in Q4 (higher operating costs) and up 140bp for FY. The segment's performance was positively affected by the absence of tobacco buy-out programme fees, which have now expired. The results of division have been driven by strong cigars (+20% volumes in Q4), whereas chewing tobacco volumes and operating profit in local currencies declined. - Lights performed poorly in Q4 with a decline of 8% in sales and -240bp in the operating margin. On a FY basis, sales were flat and the operating margin contracted by 220bp. The weak performance was linked to the decline in the Brazilian real and lower matches volumes. - Other operations (distribution & corporate overheads) increased by 2.2% for FY. As a reminder, in February 2016, STG was listed on Nasdaq Copenhagen. Following this event, SM now owns 31.2% of STG. No profit was recognised in Q4 as SM is now reporting STG with a lag of one quarter.
Q3 shows some improvement in snus & snuff
04 Nov 15
Swedish Match reported its Q3 results. Sales grew by 10% on reported figures and by 4% in local currencies. The operating profit excluding JV & associates grew by 12% on reported figures and by 4% in local currencies. The operating margin was up 40bp to 26%. Profit for the period increased by 7% to SEK745m. By product, Snus & snuff sales were up 4.3% with the operating margin down by 230bp yoy due to lower margins in Scandinavia and higher costs for the expansion of snus (however, the margin progressed on a qoq basis: 42.4% vs. 40.4% in Q2 15). Cigars and chewing tobacco performed strongly with revenue up +32% whereas the operating margin progressed by 260bp, thanks to an outstanding performance by cigars which more than offset a weakness in chewing tobacco. Lights recorded -2% in sales and -90bp in the operating margin (however the operating margin improved on a qoq basis: 15.1% vs. 11.3% in Q2). Other operations (distribution & corporate overheads) increased by 5%. STG's share of the profit decreased to SEK87m (vs. SEK115m last year) due to the implemented restructuring costs in Q3.
Q2 driven by strong cigars coupled with a positive currency effect
17 Jul 15
Q2 figures: revenue was up by 9% driven by a positive FX effect of 8.6% (in local currencies sales were marginally higher than last year). The operating profit excluding JVs and associates increased by 8.6% whereas the operating margin was down by 10bp. By division, other tobacco products (including cigars and chewing tobacco) recorded an impressive +40.5% in sales (10% in local currency) and +220bp in the operating margin being driven by good local performance in the US, additionally supported by currency tailwinds. Snus and snuff revenue was flat, however the operating margin was down by 400bp yoy being impacted by the lower margin level in Scandinavia. The lights division was impacted by lower volumes to Russia and recorded -510bp in the operating margin. STG's profit contribution increased to SEK126m (vs. SEK92m last year including the asset reassessment).
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UK Housebuilding Sector: Q3 2016 - “I am Steve McQueen”
11 Oct 16
Steve was street savvy, but he was not the smartest knife in the drawer, which makes his Delphic comment to Robert Vaughn all the more surprising. What Steve was saying is that “it’s not over yet”; that there is still a lot more to come (sadly for McQueen, who died in 1980 aged 50, it was a future that was not his). The same is true of Brexit and the collateral undulations that it has riven in the UK Housebuilding Sector. Immediately post-the-Brexit-vote, the UK Housebuilding Sector tanked 36% in value in two trading days (24 and 27 June with a weekend in between); and at one stage was off almost 40%.
Safe as houses
17 Oct 16
Telford Homes is in as strong a position as it has ever been in the 15 years since flotation. The company has a strong balance sheet, with an expanded equity base and significant headroom on its banking facilities, a large development pipeline and impressive forward sales position, and good levels of demand for its product and geography from a diverse group of buyers.
“Encouraging”Q1: Positive transformation momentum continues
24 Oct 16
“Encouraging” AGM/Q1 (July-Sept 2016) FY17 trading update should reassure further as it builds on the strong momentum of the recent FY16 results. Management’s self-help initiatives appear increasingly sure-footed. Reflecting the balance of this encouraging Q1 outcome and the highly uncertain backdrop (e.g. raw material prices/input cost inflation, currency movements, and other macro pressures), we think it prudent to keep our FY17 forecasts unchanged for now, not least as there are another 3 financial quarters to navigate. That said, so far so good. We therefore retain our BUY.
Short term blip provides an attractive entry point
04 Aug 16
Portmeirion Group has reported their interim results this morning which are inline with our revised estimates. The company has had a mixed first half year but should be well positioned to rectify underlying issues in South Korea and India and hit our full-year numbers. The recent profit warning should be viewed as a blip and should not overshadow the company’s fantastic track record.
N+1 Singer - Morning Song 21-10-2016
21 Oct 16
Xaar has announced that its FD, Alex Bevis, will be leaving to pursue other opportunities after almost 6 years with the group. A search is underway for his replacement and Alex will remain with Xaar until 24th March 2017. While Alex’s departure is disappointing, Xaar’s strategy remains on track, with new product launches expected to drive near term organic sales growth and a target of £220m sales by 2020. This reflects stronger leverage of Xaar’s innovative technology into a broader spread of end products and markets, with the £220m expected to be composed of broadly equal contributions from ceramics, packaging & product printing, Thin film/P4, and partnerships/M&A. Prospects for the group are exciting, with positive news flow on product launches and end markets anticipated over the year ahead.