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Beiersdorf’s growth continued in the third quarter despite the headwinds in the luxury segment coming from China. While La Prairie suffered from lower travel retail, Derma and Eucerin clocked double-digit growth rates. tesa continued to see organic growth backed by good demand from auto and in the Consumer business. The sales statement was a beat versus our expectations.
Companies: Beiersdorf AG
AlphaValue
Beiersdorf reported a strong set of figures as some well-known Consumer brands benefited from the early hot weather in the Northern Hemisphere and the ability to serve customers demand. This was compounded by the re-listing at some retailers, especially in Germany. On the back of the better-than-expected figures, the management lifted its FY top-line guidance although the profitability guidance remained unchanged. Following the call our conclusion was that this implies some conservatism as the
After Beiersdorf’s strong start to the year, the higher FY sales guidance seems to have baked in some conservatism as the Q2 is likely to also be a strong quarter. The firm seems to have sloughed off some habits like old clothes. Innovation and digitalization are two sides of the same coin. The so-called brand equity has become strong at all four Consumer main brands, which should stabilise the future revenue streams.
Today’s Beiersdorf looks different to prior to the pandemic. The last management change seems to have given the company a positive impetus. This is also the case for shareholder returns, with the CEO seemingly working hard to make better use of the significant cash pile. Any change on this front could be a trigger for the Beiersdorf story, in our view, although Rome wasn’t built in a day.
Beiersdorf found it difficult to totally allay analysts’ concerns regarding profitability and potential recessionary developments in the coming quarters. However, the management tried the tackle this point by lifting the guidance against a backdrop of strong growth across all the brands. The positive point, in our view, is that profitability could be ‘managed’ as the company is managing to make some positive investments. The reported figures were above our estimates.
Beiersdorf delivered another strong quarter, reporting a moderate acceleration in organic growth momentum in Consumer. The Blue Elephant trumpeted on to attack, whereas China backed La Prairie pushed the gas pedal. The Chinese restrictions were also part of the explanation for tesa’s still good but subdued performance.
The Beiersdorf management made a big show of presenting the company and their belief in how the new Consumer growth and profitability targets will be reached. Interestingly, investors did not seem to see the blue sky scenario as a given. There was also some disbelieve about the success of recently acquired companies as well as about future ones. The management thus had to answer many critical questions, which it did underwhelmingly in our view.
The pandemic is far from over and developments in China will have a material impact on Beiersdorf’s performance. To make it a perfect storm, the situation on the raw material side also remains challenging, and not only in terms of prices. The up date situation has slightly watered down the strong Q1 start with management none too enthusiastic for the remainder of the year. We see Q2 developments potentially triggering some guidance revision.
The margin guidance looks odd at first sight, as it may be a challenge in the current business environment, which might become even worse against the background of the Ukraine war. Beiersdorf has been quite successful in passing on higher input costs, but we believe that pricing power will become more and more limited and internal cost cutting will also see its limits. We were beaten at the revenue line by +2.5% and on EBIT level by +5.0%.
Beiersdorf has returned to the not well-paved M&A path with a small and expensive acquisition. The US-based business might help the company to speed up its CARE ambitions, but it does not need any toe-holds in these regions. Chantecaille’s philosophy might be helpful to target a new customer group, but there are limited cross-fertilisation opportunities. However, it looks different when it comes to sustainability. Here Chantecaille makes a difference, which might be beneficial for La Prairie.
Today it was made crystal clear that Beiersdorf is a marketing machine with a skin care affiliate. The sluggish Q3 performance was covered by presenting 9M figures in the trading statement. Some additional Q3 figures were provided in the presentation, of which those representing growth rates of core product groups could not be correlated to other information provided. Beiersdorf’s figures came in weaker than anticipated and the potential future development was not well explained.
Basically, the Q2 growth was against quite a weak basis, but a good continuation of the already paved recovery. La Prairie especially saw strong demand, despite some travel restrictions still. Digitalisation seems also to be taking off, supporting Beiersdorf’s luxury brand, which was solely sustained by offline retail. tesa made a strong and lasting contribution due to its positioning in electronics and electrics. Our quite moderate expectations were beaten.
… we have to change our view on Beiersdorf. Until yesterday evening, we had the impression things were going well, but the unexpected dismissal of the CARE+ initiator, Mr De Loecker, has forced us to re-think our position despite the indication that the new CEO will follow the same path. Like all other CEOs, we believe, Mr Vincent Warnery will put his own mark on the position, but this might be difficult given the current time frame. Preliminary figures had been released earlier this month.
… thanks to smaller tesa. As a quite close competitor in this area already flagged (Adhesives Technologies – Henkel), adhesives in general had a strong start to the year but, due to tesa’s stronger focus on automotive and electronics, the direct comparison differs greatly. The second message was the re-bounce at the group level continued sequentially, and Consumer sending some vital signs was the third message. Nevertheless, the absolute figures fit into our broad picture as FX headwinds knock
The higher investments under the umbrella of the already expensive CARE programme have to seen and valued against the back of the current CEO’s predecessor and his targets. This meaningful investment needs to be better explained. Having already pre-released some adjusted figures, the full set of figures brought profitability much closer to our expectations.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Beiersdorf AG. We currently have 2 research reports from 6 professional analysts.
Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes
Companies: Watkin Jones Plc
Progressive Equity Research
Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol
Companies: Ceres Power Holdings plc
Edison
Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold
Companies: Sanderson Design Group PLC
Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on
Companies: Gooch & Housego PLC
Zeus Capital
SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e
Companies: Surface Transforms PLC
Cavendish
Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.
Companies: Solid State plc
Subsector price performance: In the fourth quarter to 29 December 2023 all but the AAA publishers and platform subsector saw share price declines. The UK PC and Console focused subsector was again the worst performing subsector (-26.2%) over the quarter and LTM (-70.1%).
Companies: TBLD FDEV DEVO
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.
Companies: IG Design Group plc
Canaccord Genuity
We are initiating coverage of a.k.a. Brands Holding Corp. ("a.k.a. Brands" or the "company"), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million. The company's brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destinatio
Companies: GPS URBN ITX AEO AEO GES GES ITX GPS ANF 0R32 URBN
Small Cap Consumer Research LLC
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
Hybridan
AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c
Companies: AFC Energy plc
Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit
Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi
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