BNPP Exane View
At first read the FY25 results look fairly re-assuring given that both Q4 LFL sales and FY EBIT are ahead of consensus expectation and the FY26 outlook is largely unchanged. However, we note that the profit beat appears to be driven by reduced AandP (15.3% of sales in FY25). Furthermore, while consensus had already expected an H2 weighted FY26, we suspect comments on the expected LFL sales decline in Q1 and distributor inventory adjustments throughout FY26 in the US will not be well-liked by the market. Overall, with the recent rebound in the shares in mind we don''t think this will be good enough and call the shares down c.-2%.
FY25 headline metrics
. Q4 LFL: -0.3% (co. cons: -0.8%; BBG cons. -0.8%)
. FY LFL EBIT: -0.8% (co. cons: -3.1%; BBG cons. -2.7%)
. FY EBIT: EUR2,951m (+2.6% vs. co. cons.; +1.5% vs. BBG cons.)
. FY EBIT margin (%): 26.9% (co. cons. 26.3%; BBG cons. 26.4%)
. FY LFL EBIT margin YOY (%): +64bp (co. cons. -12bp; BBG cons. +10bp)
. FY EPS: EUR7.26 (+4.7% vs. co. cons.; +1.9% vs. BBG cons.)
. FY DPS: EUR4.70 (flat YOY; in-line with BBG cons.)
Top-line drivers
Scanning the Q4 top-line drivers by region, we note that the modest Q4 beat (-0.3% vs. co. cons. -0.8%) was driven by a better-than-expected performance in Asia/RoW (+1.6% vs. co. cons. +0.2%) and in Europe (+1.5% vs. co. cons. +1.1%), which more than offset weaker trends in the Americas (-5.2% vs. co. cons. -4.3%).
Bottom-line drivers
Scanning the FY LFL EBIT development by segment, we note that the FY25 LFL EBIT beat (-0.8% vs. co. cons. -3.1%) was driven by beats across all regions, led by Asia/RoW (-1.2% vs. BBG cons. -4.0%), with Europe (-1.4% vs. BBG cons. -3.1%) and Americas (+0.3% vs. BBG cons. -0.2%) also ahead of consensus estimates.
Note: the +10bp group EBIT margin change (+64bp LFL) reflects gross margin: -70bp (-50bp LFL), AandP +80bp (+97bp LFL) and structure costs -10bp (+17bp LFL). We note that FY25 AandP was 15.3% of sales, down -97bps...
