(Not surprisingly) it outperforms other F&B players
Strong start to the year driven by stockpiling in the Americas and Europe. Weak AOA with sales in China down by a double- digit percentage, which we believe sets the tone for the next quarter. These results follow the previously expected trend and we see no major change to our estimates. Nestlé continues to be in our top-pick list in the current environment.
24 Apr 20
LIBERUM: Morning Comment
Consumer Disc. Sector Piece, Strategy: Liberum Dividend Radar, EC
NESN AZN HAS STEM BOWL TEG GYM SRC ABF ASC BME BOO CBOX CARD DC/ HFD HOTC JOUL MKS MCLS NXT PETS SIS SDRY TED TPT ZAL ABB BOY TFW KNEBV LUCE OSR RCDO SAND SU ATCOA G1A IMI LR SCHP SIE SKFB SMIN WEIR LHA SXS BAB RTN
06 Apr 20
NESTLE: No acceleration expected this year | NEUTRAL | CHF103(-4%)
NESTLE - NEUTRAL | CHF103(-4%) No acceleration expected this year More time required to reach the 4-6% top-line guidance Waters, Infant Nutrition and Coffee showing signs of weakness Neutral maintained – lack of visibility due to China
14 Feb 20
Mixed feelings after the FY19 results
FY19 and Q4 slightly missed expectations, while reaching the mid-term guidance for sales was finally postponed by 1-2 years. This, however, doesn’t stop us from continuing to believe that the food giant is still very robust, delivering lasting progress, while this should continue thanks to its successful transformation projects.
14 Feb 20
NESTLE: The 4-6% objective for 2020 organic sales growth has been postponed | NEUTRAL | CHF103(-4%)
NESTLE - NEUTRAL | CHF103(-4%) The 4-6% objective for 2020 organic sales growth has been postponed Q4 sales missing estimates 2019 EBIT margin up 60bp 2020 top line guidance revised downwards
13 Feb 20
LIBERUM: Strategy & Stock Selection - The coronavirus effect
Investor sentiment has continued to wane as markets try to quantify the economic implications of the coronavirus. Global equities and commodities have faced continued downward pressure, while haven assets have ticked higher (Figs 1 & 2 ).
NESN GNS CWK HWDN TYMN FAN LUCE KNEBV OR ULVR DGE BOO ASC TED SDRY JOUL BME PETS CARD HFD DC/ WTB OTB SHB CAPC UMI IAG AF LHA FOUR ABDP ECM RWA HAS PAGE SSPG
12 Feb 20
NESTLÉ: Sale of US ice cream business to Froneri | NEUTRAL | CHF103(0%)
NESTLÉ - NEUTRAL | CHF103(0%) Sale of US ice cream business to Froneri Creation of a stronger challenger to Unilever More disposals than acquisitions to accelerate growth) Rumours about a sale of Hsu Fu Chi and Yinlu Neutral maintained
12 Dec 19
LIBERUM: Morning Comment
Thoughts ahead of the vote, Podcast - AB Dynamics, Video: Housebuilders - What to talk about after the election, Ashtead, Balfour Beatty, SThree, CareTech, Costain, Nestle, Just Eat, Serco, Fuller, Smith & Turner, Superdry, The...
NESN ABDP AHT BBY STEM CTH COST BWY CRST GLE PSN RDW BDEV VTY TW/ BKG JE/ SRP FSTA SDRY AA/ GFRD
12 Dec 19
NESTLÉ: A satisfying quarter | NEUTRAL | CHF103 vs. CHF93 (-1%)
NESTLÉ - NEUTRAL | CHF103 vs. CHF93 (-1%) A satisfying quarter OSG driven by RIG, with pricing in negative territory More shareholder returns, acquisitions still the question mark Deceleration expected in Q4 Neutral on valuation grounds
18 Oct 19
USA and Petcare drive up Q3 growth
Nestle reported 9m results in line with the consensus estimates. Growth was strongly supported by the significant performance in the USA and Purina Petcare globally. Good cash inflows, from cash development and disposals, strongly contributed to the group’s decision to distribute up to CHF20bn in buy-backs over 2020-22. Nothing stops Nestlé anymore.
17 Oct 19
LIBERUM: Consumer Staples Weekly - Nestle-Before Brands; CBD Bill; E-cig ads
Last week, we cut our TP for Imperial Brands (BUY, TP 2900p) after its profit warning. Nestlé Health Science invests in Before Brands U.S. House of Representatives passes CBD banking bill U.S. House panel asks e-cigarette companies to stop advertising
Nestle Imperial Brands
30 Sep 19
LIBERUM: Consumer Staples Weekly Nestlé-Persona; ABI-Craft Brew; E-cigs
Nestlé-Persona; ABI-Craft Brew; E-cigs. Nestlé acquires Persona; expands plant-based portfolio. AB InBev passes on opportunity to acquire Craft Brew Alliance. U.S. CDC investigating cases of lung diseases linked to e-cigs
27 Aug 19
NESTLÉ: H1 improving, despite helped from some one-offs | NEUTRAL | CHF93 vs. CHF88 (-11%)
NESTLÉ - NEUTRAL | CHF93 vs. CHF88 (-11%) H1 improving, despite helped from some one-offs H1 sales helped by a number of one-offs Details by division Coffee: regained momentum in Q2 H2 to be softer than H1
29 Jul 19
NESTLÉ: Expectation for the full year have been clarified | NEUTRAL | CHF88(-14%)
NESTLÉ - NEUTRAL | CHF88(-14%) Expectation for the full year have been clarified Q2 organic sales showing an acceleration… …due to all divisions except Waters and Asia/Oceania No change to our forecasts before the call at 2pm CET
26 Jul 19
LIBERUM: Nestlé - 2Q’19 solid beat across the board
Group organic sales growth accelerated to 3.9% in 2Q’19 (1Q’19 3.4%) beating consensus by 10bps with strength in the U.S. and Brazil. Emerging markets grew 5.3% while Developed markets rose 2.4%. Zone Americas organic sales rose 4.4% with mid-single digit growth in LatAm while Zone EMENA grew 2.7% despite deflation in W. Europe. .
26 Jul 19
LIBERUM: Morning Comment
Leisure In Depth, Consumer Staples Weekly, Essity, GetBusy, SThree CEO Video, Sirius Minerals, Joules, Motorpoint, Market Highlights
NESN CPG EIG FSTA GNK GYM BOWL JDW LGRS MARS MERL MAB OTB RTN TEG WTB YNGA CPR STEM SXX JOUL MOTR AMS OSR UTG IGG SUMO MCLS SSPG GETB
23 Jul 19
LIBERUM: Consumer Staples Weekly - Nestlé; 22nd Century; Philip Morris; Campari
Last week, we published a note discussing ABI’s sale of its Australian business to Asahi. Nestlé invents chocolate made entirely from cocoa fruit 22nd Century files applications for “very low nicotine" cigs Philip Morris International reports strong 1H’19 results Campari in negotiations to acquire French rums
Nestle Davide Campari-Milano
22 Jul 19
LIBERUM: Morning Comment
Strategy Monthly, Real Estate Credit Investments, Auto Trader, Consumer Staples Weekly, Mining update, Scout24, Robert Walters, GoCompare, Premier Asset Management, Science in Sport, Elegant Hotels, Market Highlights
NESN HWDN WEIR TED IMB SAN OTB MONY SXX SAFE UMI STM BBA GFTU SKFB MKS RCO GSK PSON PDL INTU SY1 NOKIA RMG RECI AUTO OR BAYN GLEN AAL G24 RWA GOCO PMI SIS EHG ABB OGN VTY YNGA HWG BHP CLI
09 Jul 19
LIBERUM: Consumer Staples Weekly - Mugler and Azzaro; ABI Asia IPO; Nestlé
We highlight key news items from the past week and our views below. L’Oréal enters into negotiations to acquire Mugler and Azzaro AB InBev Asia IPO pricing values business at up to $63.7bn Nestlé sells Israeli ice cream business to its Froneri JV
NESN OR BAYN
08 Jul 19
LIBERUM: Consumer Staples Weekly - Tobacco sued; plant-based pulp; Nestlé
We highlight key news items from the past week and our views below:Brazil’s Attorney General sues tobacco for healthcare costsEssity divests Turkey baby care; invests in plant based pulpNestlé and Fonterra to sell dairy joint venture in Brazil
Nestle British American Tobacco
28 May 19
LIBERUM: Morning Comment
Consumer Staples Weekly, Technology Update, WPP, First Derivatives, HomeServe, Shaftesbury, Big Yellow, The AA, AB Dynamics, Topps Tiles, Market Highlights
NESN BEI STM AMS MELE ASML AIXA ERICB NOKIA SPT IFX WPP FDP HSV SHB BYG AA/ ABDP TPT ECM UDG CWK AGR HFD GFRD
21 May 19
LIBERUM: Nestlé - Solid start to 2019, FY guidance confirmed
Group organic sales rose 3.4% in 1Q’19 (2.2% RIG), beating consensus expectations of 2.8% driven by a solid performance across all divisions. Zone EMENA organic sales grew 2.1% with mid-single digit growth in Middle East & North Africa and Central & Eastern Europe while Western Europe continued to experience deflationary trends.
18 Apr 19
In good health
Nestle reported Q1 19 results, beating analysts’ expectations. The growth momentum in the US, China and Brazil have pushed up the figures, while Purina pet care, dairy and infant nutrition have driven the growth. We are still confident in the stock. No major change in our target price is expected as we have already pushed up our numbers following the FY18 results and these seem in line with perspectives.
18 Apr 19
LIBERUM: Consumer Staples Weekly - Nestlé; Seizures from e-cigs; Diageo-SJF
We highlight key news items from the past week and our views below.Nestlé invests in Amazentis; launches plant-based burgerFDA issues public notification about seizures linked to e-cigsDiageo closes tender offer for SJF, lifts stake by 3.14%
09 Apr 19
LIBERUM: Morning Comment
Real Estate Update, Consumer Staples Weekly, Equiniti, Halfords Group, CEO Video: Origin Enterprises, UK Capital Goods Update, Financial Services Update, Staffline Group, PureCircle, Market Highlights
NESN EQN HFD OGN WEIR IMI BOY IGG CMCX PLUS STAF PURE CARLB SXX PDG
12 Mar 19
LIBERUM: Consumer Staples Weekly - China VAT cuts, FDA chief; ABI, Nestlé
China cuts VAT for manufacturing and transport sectors. FDA chief Scott Gottlieb’s resignation boosts tobacco sentiment. AB InBev chairman Oliver Goudet to step down at AGM. Nestlé Skin Health sales attracts significant PE interest.
Nestle British American Tobacco
11 Mar 19
LIBERUM: Consumer Staples Weekly - Juul’s $3.4bn sales; e-cig ban; Nestlé; ABI
Last week we published a note increasing our TP for Nestlé (HOLD, CHF 95) reflecting 10% EPS upgrades due to a stronger top-line, lower tax and acceleration of the share buyback. Juul Labs forecasts $3.4bn sales in 2019. Hong Kong proposes ban on next generation smoking products. Nestlé expands Purina facility; launches KitKat Green Tea Matcha. AB InBev acquires canned cocktail maker Cutwater Spirits.
25 Feb 19
LIBERUM: Best of the Week: Financial Services In-Depth, Strategy Monthly:All-Cap and SMID, Melexis, Shield Therapeutics
The week's most insightful research and ideas. Liberum's most insightful and high-value research and commentary published this past week.
NESN PMI AFHP BRW AQX IGG PLUS CTR CPP SNN XPS BUR GLIF NSF RFX MELE STX BDEV BWY BKG VTY CRST GLE PSN TW/ UMI AZN RB/ RDW GFRD
22 Feb 19
LIBERUM: Nestle - Upgrade EPS 10%, returns inflecting
Maintain HOLD on lifted CHF 95 target price reflecting 10% EPS upgrades in 2019-2021E due to a stronger top-line, lower tax expenses and acceleration of the share buyback. Nestlé’s 2020 targets strike a sensible balance between top and bottom-line growth and are bearing fruit as evidenced by the pick-up in growth in 2H’18.
22 Feb 19
LIBERUM: Consumer Staples Weekly - JAB IPOs; Nestlé-Starbucks; EU sugar
We highlight key news items from the past week and our views below. JAB plans to list coffee and beverages business in 2-3 years. Nestlé launches new product range under the Starbucks brand. Südzucker announces further sugar plant closures.
Nestle Associated British Foods
19 Feb 19
LIBERUM: Nestlé - 4Q’18 EPS beats by 3% on lower tax, 2019 outlook in-line
Group organic sales growth accelerated to 3.7% in 4Q’18 (9M’18 2.8%), in-line with consensus with strength in the group’s two largest markets (U.S., China). Emerging markets grew 6.1% while Developed markets rose 2.2%.
14 Feb 19
LIBERUM: Consumer Staples Weekly - graze; Slave labour; US alcohol tax cuts
Last week, we reinstated coverage on Henkel with a BUY rating and €98 TP as we support the group’s renewed strategy and see the current share price as an attractive entry point. We also published videos highlighting our best consumer staples ideas for 2019 - ABI, IMB and RB.
NESN IMB RB/ ULVR BN
11 Feb 19
LIBERUM: Consumer Staples Weekly - Nestlé Skin Health; Reckitt-Diversey; KMB
On 22nd January, we published our 2019 outlook for the European Consumer Staples sector and on 23rd January we published our note Tobacco - Menthol migration maths highlighting the potential impact of a U.S. menthol cigarettes ban on the tobacco sector.
Nestle Reckitt Benckiser Group Plc
28 Jan 19
LIBERUM: Consumer Staples: Our Best Ideas - We expect sector rotation into defensives: Buy ABI, Imperial, Reckitt
In 2019, we expect moderating global GDP growth, led by deceleration in the U.S. and further softening in China. We expect tariffs and trade disputes, political uncertainty and volatility in key markets (U.S., EU, UK) to lead to further systemic shocks which may adversely impact valuations.
NESN BN ABF KYGA TATE ULVR OR RB/ BEI ONTEX MCB CARLB DGE RI CPR RCO BATS IMB
22 Jan 19
LIBERUM: Consumer Staples Weekly - Essity; China National Tobacco; Maggi case
On 28th December, Essity announced that the Supreme Administrative Court of Sweden ruled in favour of the group in a dispute with the Swedish Tax Agency. The case pertained to interest expense on loans in a group company that arose in connection with the relocation of operations to Sweden in 2004. The agency and lower courts had ruled that the interest expense on the loans could not be deducted for the fiscal years 2008 to 2012. Essity had recognized and paid a provision of SEK1.1bn related to the case in 2Q’16. The judgement will reduce Essity’s tax expense by SEK 1.1bn in 4Q’18 and the paid taxes will be refunded. Liberum view: The cash inflow from the tax decision should help Essity slightly reduce the company’s leverage from the current 2.9x net debt/EBITDA level.
07 Jan 19
LIBERUM: Consumer Staples Weekly - Kerry, UK sugar tax, Nespresso, RB, beer
Kerry Co-op plans partial spin of €2.2bn stake | UK sugar tax raises £154m since April introduction | Nespresso to invest CHF43m in Romont, Switzerland site | Reckitt partners with SCI for D2C infant nutrition sales | Proposed change to VAT on beer in Colombia
NESN KYGA RB/ ABI
26 Nov 18
Q3: maintains momentum from H1
The numbers are broadly in line with the consensus. We see the company as being on track to achieve its FY guidance. The departure of Wan Ling Martello is a big loss for the company, in our opinion, and puts a shadow over the future performance of the AOA zone.
18 Oct 18
LIBERUM: Nestlé - In-line 3Q’18 organic sales, 2018 guidance reiterated
Group organic sales rose 2.9% in 3Q’18 (2.0% RIG) in-line with consensus. Zone EMENA organic sales fell 0.2% with mid-single digit growth in Middle East & North Africa and Central & Eastern Europe while Western Europe continued to experience deflationary trends. Zone Americas organic sales rose 2.1% with positive growth in the U.S. and LatAm, which showed sequential improvement. Zone AOA organic sales rose 4.3% with positive contributions from all regions. Waters organic sales rose 4.1% with positive growth across each region. Other businesses’ organic growth rose 6.5%. Nestlé confirmed 2018 full-year guidance. The group also announced that Want Ling Martello, CEO of Zone AOA, will leave on 31st December. Maintain Sell, TP CHF 77.
18 Oct 18
LIBERUM: Consumer Staples Weekly - Nestlé, Kerry, Mars, Walmart vending kiosk
Nestlé sells Gerber Life explores options for Skin Health | Kerry opens first Russian plant to supply Russia and the CIS | Mars to invest $1bn to behind sustainable cocoa supply chain | Walmart testing automated grocery kiosks
Nestle Kerry Group
25 Sep 18
LIBERUM: Consumer Staples Weekly - Carlsberg ; DIA; Nestlé; Arla Foods
Carlsberg to invest €100m in Kronenbourg brewery in France | Spanish discount supermarket DIA joins purchasing alliance | Nestlé finalizes re-organization of its Swiss IT operations | Dairy firm Arla offers entire 2018 net profit to drought-stricken
NESN CARLB ULVR BN
03 Sep 18
LIBERUM: Consumer Staples Weekly - GSK India; Reckitt Benckiser; Asaleo Care
On 22nd August, Bloomberg reported that GlaxoSmithKline Plc has requested bids for its $4.3bn listed Indian subsidiary GlaxoSmithKline Consumer Healthcare Ltd. by mid-September. The sale has attracted interest from Nestlé, PepsiCo and Reckitt, according to the report. The sale is part of GSK’s strategic review of its consumer health nutrition portfolio, including the Horlicks brand, announced in Mar’18 to provide funding for its $13bn acquisition of Novartis’ 36.5% stake in their consumer health JV. GSK Plc owns a 72.5% stake in the Indian subsidiary. Liberum view: GSK’s Indian subsidiary trades at a 36x 12m fwd PE multiple and 27x EV/EBITDA, well below the avg. multiples for its local listed peers of 50x and 36x, respectively. Nestlé has had little success with its own malt-based drink Milo in India and the acquisition of GSK could provide revenue synergies. The GSK business would also fit into Reckitt’s Consumer Health remit, but would increase leverage to over 3x net debt / EBITDA.
NESN RB/ GSK NOVN
28 Aug 18
LIBERUM: Nestle - 2H’18 pick-up already priced in
Maintain SELL on lifted CHF 77 TP, factoring modestly lower interest and tax expenses. While there is no denying Nestlé’s strong brands and category market positions, investors’ expectations for quick results appear more than fully priced in. We expect a slower sales growth trajectory as pricing remains, weak even as RIG improves. The margin targets do not appear overly conservative given the need to reinvest cost savings to drive growth. We expect Nestlé may ultimately need to pursue a policy of shrinking to grow.
31 Jul 18
LIBERUM: Consumer Staples Weekly - Altria; KitKat; Australian wine exports
On 26th July, Altria reported a -10.8% decline in cigarette shipment volumes in 2Q’18. Adjusted for trade inventory movements, cigarette shipments were down -5% in 2Q’18 versus an industry decline of -3.5%. Marlboro volumes fell -10% yoy in 2Q, leading to a -30bps market share loss to 43.2%. The company noted that it is still waiting for FDA authorization for the IQOS heat-not-burn product launch, but noted that it is prepared with launch plans for IQOS and could make the product available in the U.S. with 2-3 months of FDA approval. Liberum view: Altria’s share loss in cigarettes raises concerns about the future pace of volume declines in the U.S. especially in light of the aggressive expansion of JUUL vaping products. On the same day, BAT announced it has received SE clearance from U.S. FDA for its carbon tip THP product Eclipse, which raises concerns that IQOS may lose first mover advantage to Eclipse.
NESN ULVR BATS RI
30 Jul 18
LIBERUM: Nestlé - 1H LfL sales beats; EPS beats by 5.1% on lower tax
2Q organic sales growth of 2.6% beat consensus estimates of 2.2%, although pricing remains weak at 0.2%. Underlying trading operating profit margin rose 20bps to 16.1% supported by restructuring initiatives but missed consensus by 15bps. Underlying EPS rose 10.7% to CHF 1.86 beating consensus by 5.1% due to a lower than expected tax rate. Nestlé expects to report further improvement in 2H organic sales growth but narrowed full-year organic sales growth expectations to “around 3%” from +2-4% prior. Management expect underlying trading operating margin improvement to accelerate in 2H driven by efficiency programs and more favourable commodity pricing. Nestle shares trade on 20x cal'19E and offer a 3.1% dividend yield.
26 Jul 18
LIBERUM: Consumer Staples Weekly - Ontex; Diageo; Pulp Riot; Valentino; Nestlé
Ontex restructures production in Brazil to drive synergies | Diageo to sell US-focused spirits brands | L’Oréal acquires Pulp Riot; wins Valentino license | Nestlé to merge its two Swiss R&D units into one
NESN ONTEX DGE OR
29 May 18
LIBERUM: Consumer Staples Weekly - L’Oréal-Stylenanda; Nestlé-Starbucks; FDA
L’Oréal acquires South Korean cosmetics firm Stylenanda | Nestlé acquires majority stake in U.K. pet care firm Tails.com | Nestlé acquires Starbucks’ grocery coffee business | FDA warns Cosmic Fog against imitating children’s food items
08 May 18
Coffee wars: Nestlé and Starbucks form a global coffee alliance
Nestle will pay Starbucks $7.15bn to have perpetual rights to market Starbucks’ products around the world outside Starbucks’ coffee shops. The business has annual sales of $2bn. The agreement is subject to customary regulatory approvals and is expected to close by the end of 2018. About 500 Starbucks employees will join Nestle. This transaction will not affect Nestlé’s share buy-back programme.
07 May 18
LIBERUM: Consumer Staples Weekly - Beiersdorf CFO; JUUL; Nestlé; Moutai
Beiersdorf appoints Dessi Temperley as new CFO | Nestlé opens two new consumer health factories in China | U.S. FDA targets JUUL in crackdown on youth e-cigarettes usage | Chinese baiju maker Kweichow Moutai set to expand into the UK
NESN BEI ONTEX
30 Apr 18
Q1: slightly above expectations
Encouraging quarter after a disastrous Q4, although the company still has a long way to get back on track. As positives, we note the US has returned to growth, with also improvements in Pet care and Nestlé Skin Health. The softer pricing environment seems to be the new reality for packaged food companies. We see no major changes to our target price.
19 Apr 18
LIBERUM: Nestlé - 1Q’18 organic sales beat 20bps, 2018 guidance reiterated
Group organic sales rose 2.8% in 1Q’18 (2.6% RIG), 20bps above consensus. Zone EMENA organic sales rose 2.2% (RIG 2.6%) with highsingle digit growth in Middle East & North Africa, mid-single digits in Central and E. Europe and deflationary trends in W. Europe. Zone Americas organic sales rose 1.2% (RIG 1.6%) with positive growth in the U.S. while Brazil remained pressured. Zone AOA organic sales rose 4.7% (RIG 3.9%) with growth in all regions. Nutrition performed below expectations despite robust Chinese market growth pointing to share losses. Nestle Waters organic sales rose 0.5% (RIG -1.2%). Other businesses organic growth rose 6.4% (RIG 5.2%). Nestle confirmed 2018 full-year guidance. Maintain Sell, TP CHF 73.
19 Apr 18
LIBERUM: Consumer Staples Weekly - Russian beer ban; Remy; Pet food; Nestlé
Russia proposes ban on sale of beer in PET bottles over 0.5 litres | Remy Cointreau’s CEO of the House of Rémy Martin resigns | Another deal in U.S. pet foods as Smuckers buys Ainsworth | Nestlé dispute with European retail buying group escalates
NESN RCO CARLB
09 Apr 18
LIBERUM: Consumer Staples Weekly - Danone-Yakult; Horlicks; Nestlé; HB Fuller
Danone completes sale of Yakult stake; sells Saudi Arabian JV | GSK to sell Horlicks brand including stake in Indian subsidiary | Nestlé’s new structured sugar cuts usage by 30% | HB Fuller reports deceleration in organic sales growth in 1Q’18
NESN BN GSK
03 Apr 18
LIBERUM: Consumer Staples - Rising freight and pack costs set to pressure 1H margins
Headwinds are building for consumer staples companies’ margins in 2018. General Mills and Henkel have warned that higher U.S. freight costs will hurt sales and margins in 2018 whilst many others are calling out the risks from still rising freight rates. Packaging costs are also spiking with cardboard and plastic packaging prices rising double-digits in the past couple of quarters. We expect these pressures combined with still sluggish sales growth will hurt margins in 1Q/1H and will lead to a volatile reporting season and scope for negative earnings surprises. We expect more pressure on valuations - the consumer staples sector still trades on a cal'18E PE of 20x vs the 10-yr avg. of 17x.
NESN TATE DGE ABI BN
23 Mar 18
LIBERUM: Consumer Staples Weekly - CR Beer-Heineken; Tate; Mucinex; Nestlé
CR Beer in talks to buy Heineken’s China business | Tate completes expansion of Singapore application centre | Perrigo to launch generic version of another Mucinex variant | Nestlé to remove 40% sugar from San Pellegrino using Stevia
NESN HEIA TATE RB/
12 Mar 18
Q4 disappoints, sets gear for FY18
A very weak quarter, below market expectations. The company cited the challenging environment in North America (soft consumer demand in the US) and Brazil (negative pricing due to milk price decreases). We see management actively adressing the problems with initiatives to kick-in in FY18. We judge the FY18 guidance as already factored in by the market.
15 Feb 18
LIBERUM: Nestlé - 4Q LfL sales miss, FY17 margin beats, 2018 outlook in-line
4Q organic sales growth is weak at only 1.9% with slightly negative growth in the U.S. and deflation in Brazil. Nutrition remains sluggish with softness in China despite a strong underlying market and softness in the U.S. and Brazil. Underlying trading operating profit margin rose 40bps to 16.4% as savings more than offset higher commodity costs. Underlying EPS rose 4.4% to CHF 3.55 in-line with consensus while DPS of CHF 2.35 missed expectations. 2018 guidance is in-line at +2-4% organic sales growth, underlying trading operating margin improvement and growth in underlying EPS in constant FX. U.S. tax reform cuts the tax rate by 200bps to c.25% implying 2-3% upgrades to consensus EPS. Nestle will not renew the shareholder agreement with the Bettencourt family. Shares remain expensive on 20.9x cal'18E, a 7% premium to the Consumer Staples sector. Maintain SELL, TP CHF 73.
15 Feb 18
LIBERUM: Consumer Staples Weekly - Unilever; Danone; Nestlé; Aluminium probe
Unilever acquires Romanian ice-cream producer Betty | Danone’s venture capital unit invests in Harmless Harvest | Nestlé withdraws from Merck & Pfizer consumer units sales | Beer industry writes to Trump on probe on aluminium imports
NESN ULVR BN
07 Feb 18
LIBERUM: Consumer Staples - 4Q preview: Improving outlook for 2018 likely balanced by full sector valuation
On balance, we expect a solid, if unspectacular, set of results. Growth remains constrained - we forecast 3.7% LfL sales growth for Consumer Staples with headwinds from soft consumer demand, geopolitical turmoil and disinflation. Input prices remain benign but intense price competition, retailer pressures and online deflation impede margin growth, putting the onus on cost savings and M&A to drive EPS. Sector valuation remains elevated at 20.8x cal’18E, a 36% premium to STOXX600. We expect valuations to remain capped, particularly if bond yields continue to rise.
NESN ULVR CARLB OR TATE RI HEIA BN RB/ KYGA CPR ABF BEI ABI
31 Jan 18
LIBERUM: Consumer Staples Weekly - Nestlé-Third Point; Carlsberg; Patron; USDA
Dan Loeb demands further clarity and actions from Nestlé | Carlsberg establishes new brewery in Karnataka, India | Bacardi buys Patron Tequila for a valuation of $5.1bn | USDA exploring cuts to food stamps in upcoming Farm Bill
NESN CARLB DGE
29 Jan 18
LIBERUM: Consumer Staples: Our Best Ideas - Valuation capped in 2018: buy value, FCF yield and self-help – Reckitt, Danone, Heineken
In 2018, we expect interest rates and inflation will continue to rise on the back of reflationary policies and stronger global GDP growth. Emerging Market growth is picking up bolstering resilient Developed Markets and leading to a more synchronous, broader global economic picture. The risk to global trade remains elevated due to rising protectionism and the potential for trade wars. We expect continued market volatility as nationalistic politics heighten the risk of unintended geopolitical events.
NESN BN ABF KYGA TATE ULVR ULVR OR RB/ BEI ONTEX MCB ABI HEIA CARLB DGE RI CPR RCO
19 Jan 18
LIBERUM: Consumer Staples Weekly - Nestlé; Danone; US alcohol consumption
Nestlé takes lead in Merck KGaA’s consumer health auction | Danone to exit the dairy business in India | Nestlé sells Violet Crumble chocolate brand in Australia | US alcoholic beverage volumes decline in 2017
NESN BN MCB
15 Jan 18
LIBERUM: Consumer Staples Weekly - Reckitt; Chinese beer & IMF; Nestlé candy
Reckitt agrees license with Orbis Biosciences | New Chinese infant formula laws remove 1,400 products | Local Chinese beer companies raise prices | Hershey & Ferrero submit final bids for Nestlé’s U.S. candy
NESN TATE RB/ CARLB ABI RCO RI
08 Jan 18
Strengthening consumer health platform
Nestlé announced that it has agreed to acquire privately-held Atrium Innovations, a global leader in nutritional health products, from a group of investors led by Permira Funds for $2.3bn in cash. Atrium’s FY17 sales are expected to reach almost $700m.
06 Dec 17
Q3: restructuring speeds up
9M update: Sales grew organically +2.6% (cons. +2.5%, Q3: +3.2%) with real internal growth (RIG) up +1.8% and pricing +0.8%. On reported figures, sales were down 0.4% (FX: -0.4%, net acquisitions: -2.6%). OG by division: the Americas +1.3% (cons. +2%), EMENA +1.9% (cons. +1.3%), AOA 5.3% (cons. +4.8%), Waters +2.2% (cons. +4%), Nestle Nutrition +1.0% (cons. +1.2%), Other Businesses +5.1% (cons. +3.4%). Developed markets increased +0.8% organically, whereas emerging markets posted 5.1% OG. The group expects organic growth for the FY to be in line with 9M. The underlying trading operating profit margin is expected to improve +20bp, whereas the trading operating margin (including restructuring costs) should be down 40-60bp at constant FX. EPS at constant FX is expected to increase.
19 Oct 17
Investors seminar: a convincing roadmap outlined
At the investors seminar, Nestlé outlined its roadmap for the 2020 horizon. The main points are as follows: • An organic top-line growth target of mid single-digit by 2020. • An underlying trading operating margin target of 17.5% to 18.5% by 2020 vs. 16% in FY16 (the underlying trading operating margin excludes costs of restructuring). • Around CHF2.5bn estimated restructuring costs from 2016 to 2020 (CHF0.2bn incurred in FY16, CHF0.5bn is expected to be delivered in FY17) aiming mostly at manufacturing (CHF0.6-0.8bn), procurement (CHF0.5-0.6bn) and general & administrative costs(CHF0.9-1.1bn) • Share buy-backs are expected to be evenly spaced over three years (as a reminder the group made a CHF20bn envelope available to M&A and share buy-backs). • 10% of the portfolio is expected to be rotated (disposed of or invested).
09 Oct 17
“Assembled Here Together”
A debate about why major US food manufacturers’ margins appear consistently higher than those achieved in Europe is, in our view, worth having. In particular, should greater willingness to outsource production processes and focus more on marketing, new product development, finance and strategic M&A be the answer, there could be significant revenue growth opportunities for those who act as food industry solution providers.
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29 Sep 17
H1 update: Sales were up organically +2.3% (cons. +2.7%, Q2: +2.3% same as in Q1) with RIG +1.4% and pricing of 0.9%. On reported figures, sales were flat -0.3% (FX: -0.3%, net acquisitions: -2.3%). OG by division: the Americas +1.3% (cons. +1.2%), EMENA +1% (cons. +2%), AOA +4.8% (cons. +4.4%), Waters 4% (cons. 4.1%), Nestle Nutrition +0.9% (cons. +1.8%), Other Businesses +3.7% (cons. 5.2%). Developed markets increased +0.8% organically, whereas emerging markets posted 4.4% OG. The trading operating margin for period was down -30bp (cons. -10bp) on the back of increased restructuring costs. FY17 guidance confirmed: organic growth likely to be in the lower half of the 2-4% range; stable trading operating profit margin at constant currency as a result of a considerable increase in restructuring costs.
27 Jul 17
Nestlé launches CHF20bn share buy-back
Nestlé has announced CHF20bn share buy-back by 2020. If any sizeable acquisitions take place during this period, the share buy-back programme will be adapted accordingly. The volume of monthly share buy-backs will depend on market conditions but is likely to be backloaded in 2019 and 2020 to allow the pursuit of value-creating acquisition opportunities. The company expects a net debt/EBITDA ratio of c.1.5x in 2020.
29 Jun 17
Q1 backs FY guidance
Q1 update: sales were up 2.3% (cons. 2%) with RIG at 1.3% and pricing of 1%. On a reported basis, sales were up 0.4% (FX:-0.4%, net M&A -1.5%). OG by division: the Americas +0.4% (cons. +2.5%, negative RIG), EMENA +1.7% (cons. +0.5%, RIG driven), AOA 4.5% (cons. +2.5%, RIG and pricing driven), Waters +3.1% (cons. 3.5%, RIG driven), Nestle Nutrition +1.1% (cons. +0.9%, pricing driven), Other Businesses +5.8% (cons. 2.4%, RIG driven). The group confirmed its FY guidance.
20 Apr 17
New CEO resets targets: cost savings ahead, mid single-digit top-line target by 2020
Nestle’s FY and Q4 update: In Q4, sales grew organically +2.9% (weaker than 3.5% expected). In Q4, Zone Americas, EMENA and Others slowed down compared to the previous quarter. Zone AOA (+4.4%), Waters (+5.4%) and Nestle Nutrition performed better than in Q3. On a FY basis, organic sales are up +3.2% (cons. 3.4%) with RIG +2.4% and pricing of 0.8%. On reported figures, sales are up +0.8 (FX: -1.6%). The trading operating margin is up 30bp on constant FX and +20bp on reported figures (in line with consensus). FY17 outlook: top-line growth of 2-4%, stable operating margin as a result of a considerable increase in restructuring costs to drive future profitability. EPS is expected to rise at constant FX and capital efficiency is also expected to rise. For the mid-term, Nestlé targets mid single-digit top-line growth and 200bp in structural cost savings by 2020. The proposed dividend is CHF2.30 (vs. CHF2.25 last year).
16 Feb 17
Q3 disappoints, FY guidance adjusted downwards
Nestle’s 9M update: sales grew organically +3.3% (cons. +3.6%, Q3: +2.9% – a very weak quarter) with real internal growth (RIG) up 2.5% and pricing 0.8%. On reported figures, sales were up +1%. OG by division: the Americas +4.5% (cons. +4.7%, both price and RIG driven), EMENA +2.2% (cons. +2.5%, RIG driven, negative pricing), AOA 2.8% (cons. +2.9%, RIG driven), Waters +4.2% (cons. +3.9%, RIG driven, negative pricing), Nestle Nutrition +1.3% (cons. +1%, RIG driven), Other Businesses +4.6% (cons. 4.7%, RIG driven). In Q3, the Americas and EMENA performed more softly than in Q2; other divisions improved their performance. Emerging markets slowed to 5.1% OG; developed markets remain unchanged. For the FY, Nestle expects organic top-line growth of c. 3.5% (down from around 4%) with an in margins at constant FX and including restructuring charges.
20 Oct 16
Q2 with weak OG but better margins, expects acceleration in H2
Nestlé’s H1 update: organic revenue was up +3.5% (cons. +3.7%, Q2: 3.1%) with RIG +2.8% and pricing of +0.6%. Reported figures were up 0.7% (FX:-2%, net acquisitions: -0.8%). OG by division: the Americas +5.1% (cons. +4%, both price and RIG driven), EMENA +2.6% (cons. +2.9%, RIG driven, negative pricing), AOA 2.3% (cons. +2.1%, RIG driven, negative pricing), Waters +4.2% (cons. 5.4%, RIG driven, negative pricing), Nestle Nutrition +1.3% (cons. +2.8%, RIG driven), Other Businesses +4.2% (cons. 5.1%, RIG driven). Developed markets recorded OG of +1.9% whereas emerging markets grew +5.4%. The trading operating margin for period was up +30bp (cons. +20bp) on the back of an improvement in cost and portfolio management, premiumisation and input tailwinds. All divisions improved their margins with the exception of the Americas. The group maintains its FY guidance: organic growth in line with 2015 (4.2%) with improvements in margins and EPS at constant currencies.
18 Aug 16
A decent Q1
Nestlé released its Q1 trading update. The OG stood at 3.9% (cons. +3.6%) driven strongly by real internal growth (RIG) of 3% whereas pricing stood at 0.9%. The negative FX headwinds were 2.8%. Net acquisitions stood at -1%. OG by division: the Americas +5.5% (cons. +4.2%, price and RIG driven), EMENA +3% (cons. +1.8%, RIG driven), AOA 2.3% (cons. +2.4%, RIG driven), Waters +5.3% (cons. 5.2%, RIG driven), Nestle Nutrition +2.6% (cons. +3.4%, RIG driven), Other Businesses +5.2% (cons. 5%). The developed markets grew 2.5% organically (driven uniquely by +2.9% RIG with some negative pricing). Emerging markets grew +5.6% (both RIG and price driven). The group confirmed its FY outlook (organic growth in line with 2015 with improvements in margins and EPS at constant currencies).
14 Apr 16
Disappointing FY and bearish guidance
Nestle released its FY results. Revenue grew organically by 4.2% (in line with consensus, RIG: +2.2% and pricing: +2%). On reported figures, sales were down 3.1% (FX: -7.4%). Net acquisitions stood at 0.1%. Sales OG by zone: AMS +5.5%, EMENA +3.7%, AOA +0.5%, Nestle Waters: +6.7%, Nestle Nutrition +3.1% and Others +5.3%. The operating margin was up 10bp on organic basis and down 20bp (15.1%) on a reported basis due to the strong Swiss franc. Net profit was down to CHF9.1bn due to the lower income from JVs as well as other operating expenses linked to rebate adjustments in Nestlé Skin Health in the US. The proposed dividend is CHF2.25. In Q4, sales grew organically by 4.2% (with RIG: +2.8% and pricing: 1.4%). Q4 OG by zone: AMS +4.6%, EMENA +2.5%, AOA +3.5%, Nestle Waters: +6.4%, Nestle Nutrition +2.2% and Others +4.7%. For 2016, Nestle expects a similar trading environment to FY15's with even softer pricing. The group expects to deliver organic growth in line with 2015 with improvements in margins and EPS at constant currencies.
18 Feb 16
Nestlé publishes disappointing Q3 numbers and lowers and its FY guidance
Nestle released its 9M trading statement. Organic growth stood at 4.2% (cons. at 4.7%, 3.6% in Q3) with pricing at 2.2% and RIG at 2% (cons. at 2.1%). FX impacted by -6.7% whereas net acquisitions added 0.4% to sales. On a reported basis, sales were down -2.1% for 9M and -5.7% in Q3. Organic growth by operating segment in Q3: Zone AMS +7%, Zone EMENA +4.7%, Zone AOA -3.1%, Nestlé Waters +9.8%, Nestlé Nutrition +2.4% (tough comparable coupled with slightly lower growth on a global basis) and Other (Nestlé professional, Nespresso, Nestlé Skin Science & health) +0.3%. The weaker than expected results are linked to AOA's poor performance in Q3 (withdrawal of Maggie Noodles and slower pace of recovery in China) as well as a one-off charge linked to a more conservative approach to the Nestlé Skin Health prescription drug rebate policy in the US. The company revised downward its full-year guidance to 4.5% OG (around 5% previously vs. 4.5% in FY14).
16 Oct 15
Robust H1 in spite of Indian setback
Nestle reported its H1 results. The OG stood at 4.5% (consensus at 4.2%) with RIG at 1.7% (cons. at 2%) and pricing at 2.8% (cons. at 2.3%). The FX effect stood at -5.8%. Acquisitions and disposals contributed 1%. On a reported basis, sales were flat (CHF42.8bn). Trading operating profit stood at CHF6.43bn (in line with consensus). The trading operating margin stood at 15% (cons. at 15.1%), flat yoy and +20bp on a constant currency basis. By operating segment, the Americas and EMENA zones delivered strong OGs (5.2% and 3.8% respectively). The AOA zone reported OG at 0.8% with a negative RIG of -0.8% as the results have been impacted by Maggie noodles' recall in India as well as a challenging trading environment in China (although the company sees some signs of recovery). Nestlé Waters recorded 5.3% OG (5.6% RIG) coupled with a 110bp margin progression. Nestlé Nutrition delivered 3.9% OG (1.3% RIG) with a 140bp margin progression (a less dynamic OG due to the overall slowdown of the category but Baby Foods in China is performing well) whereas Other business delivered an 8.1% OG (4.9% RIG) with the margin down by 250bp mainly due to higher coffee prices coupled with FX and hedging position effects (impact from H2 last year) as well as the inclusion of Nestlé Skin Health in H1. The company confirmed its FY outlook: FY OG at c. 5% with an improvement in margins and underlying EPS at constant currencies.
13 Aug 15