EU CONSUMER CYCLICALS: Campari; FY24 results (x2)
(CPRIM: unrated)
Equities are bouncing out from lows today (+7%) and are likely reading more into the Q4 beat, including a strong showing from Aperitifs (40% of group, 4Q +12%) - within that Aperol (1/4 of group, 4Q +14%) and Campari (1/10 of group, 4Q +13%) both firm. As we said FY guidance is tad lacklustre on margins - some of that is a purposeful increase in advertising spend. The 1Q sales guidance is weak but it is blaming Easter timing (March to April this year) for most of that. The A&P spend bump will also be front loaded to Q1/2 so EBIT also expected to be weaker then. The tariff impact is manageable €35m/-110bps (or -6% of this years EBIT) for the remaining 10-months. Needless to say extension of US tariffs to Europe becomes more painful.
€27s are another -4 today reversing some of recent widening. It is an example that even in this market value can be found (in its case outsized and unnecessary unrated discount). We see it fair here (~80 over swaps). Interesting remarks from earnings call;
(see below graph for per-capita consumption by country)
- "One in two US consumers have never heard of Aperol...Just to put it in context, if the US was to get from the 4% that it is today to 20% of Italy's Aperol per capita consumption, the additional volume generated would mean net sales of Aperol globally would be between 45% to 50% higher just on achieving this in the US alone"
- Re. if current moderation the industry is facing is cyclical or structural: "I've been in it for 30 years. We've seen these challenges come before. We've heard that cognac is dead. We've heard that vodka has had its day...This is the first time we've had China, Russia, US, LatAm, all of the markets down at the same time...I do think consumer behaviour will come back...I'm positive that it is cyclical and not structural."
- No stated leverage target but co has good history on BS (as we have mentioned before) and comments today echo that; "I think longer term we'll continue to have a look at opportunities in M&A, but for now, we need to focus on deleveraging."
Numbers from before; https://mni.marketnews.com/43nFPDv
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US: Netanyahu Extends US Trip Amid Concerns Over Phase 2 Of Ceasefire Deal
Barack Ravid at Axios reporting on X that Israeli Prime Minister Benjamin Netanyahu is expected to extend his US trip this week due to "many requests by U.S. officials who want to meet him".
- Netanyahu is expected to be in Washington until Saturday, with a White House meeting with US President Donald Trump slated for Thursday - delayed from Tuesday. He is also expected to meet House Speaker Mike Johnson (R-LA), a group of Senators, and members of the House Foreign Relations Committee.
- Axios reported earlier today that the second stage of the Gaza ceasefire deal could hinge on the outcome of the Trump-Netanyahu meeting.
- The Times of Israel reports: "As per the terms of the ceasefire and hostage deal, negotiations for the second phase of the agreement must begin no later than the 16th day of the first phase, [today]... Despite this, the Walla news site reported Saturday that Netanyahu will not send a team of negotiators to Qatar until after his meeting with Trump."
- Israeli officials told Axios that Netanyahu, "is waiting to see where Trump stands on the second phase of the deal — which is supposed to lead to a permanent ceasefire, and a full withdrawal of Israeli forces from Gaza — before he makes any decisions."
- A senior Israeli official said: "The real serious negotiations over phase two will only begin after Bibi meets Trump. Nothing meaningful will happen before that."
US 10YR FUTURE TECHS: (H5) Holding On To The Bulk Of Its Recent Gains
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg.
- RES 2: 109-31 High Dec 18
- RES 1: 109-10+/13 50-day EMA / High Jan 30
- PRICE: 109-03 @ 16:55 GMT Feb 3
- SUP 1: 108-23+/21+ 20-day EMA / Low Feb 3
- SUP 2: 108-06/107-06 Low Jan 23 / 13 and the bear trigger
- SUP 3: 107-04 Low Apr 25 ‘24 and a key support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
Treasury futures gave up a sharp mid-session rally to fade into the London close, and test the 20-day EMA support in the process. A bullish corrective cycle is intact and the contract is holding on to its recent gains. 109-10+, the 50-day EMA, remains exposed. It has been pierced, a clear break of it would strengthen a bullish theme and open 109-31, the Dec 18 high. The medium-term trend condition is bearish. The bear trigger is 107-06, the Jan 13 low. Initial firm support has been defined at 108-06, the Jan 23 low.
PIPELINE: Corporate Bond Issuance Update: $1.25B Romania 12Y Guidance
- Date $MM Issuer (Priced *, Launch #)
- 02/03 $1.25B Romania 12Y +300
- 02/03 $800M Hess Midstream 3NC1
- 02/03 $500M Air Transport 7NC3
- 02/03 $Benchmark L-Bank 2Y SOFR, 5Y
- Expected Tuesday:
- 02/04 $3B EIB WNG 10Y +60a
- 02/04 $Benchmark BNG Bank 3Y SOFR+38a
