EU CONSUMER STAPLES: Danone; FY (to Dec) results
(BNFP; Baa1/BBB+)
Danone - one of the few F&B names clocking MSD volume growth as it sits well positioned to ride out a switch into healthy snacking. It shows no signs of slowing down investments into that - its recent obsession has been trying to buy-out US Kefir producer (high protein, high in probiotics), Lifeway. €2b due locally this year (including matured Jan line) - we hope to see it in primary.
- Q4 LFL +4.7%, volumes +4.2%, price +0.6%
- Growth broad-based across the segments (Dairy and Plant Based +4.7%, Nutrition +4.6%, Water +5.3%)
- Europe continues to be weaker (LFL +1.8% - dragged down on pricing)
- FY sales €27.4b (LFL +4.3%), adj. EBIT margin at 13% (+39bps)
- net sales were down -1% mainly on sale of businesses (-4.8%) - including Russia operations
- FCF of €3b (up +0.4b)
- Net debt at €8.6b, down from €10b
- n/g levered 1.8x/3.1x
FY25 Guidance
- LFL sales +3-5%, adj. EBIT faster than that
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MNI: GERMANY JAN IFO BUSINESS CLIMATE INDEX 85.1
- MNI: GERMANY JAN IFO BUSINESS CLIMATE INDEX 85.1
EQUITIES: Deepseek - Why is This App Undermining Markets?
- Deepseek is making a strong showing in Appstore download rankings this weekend - tracking over 1mln downloads on Google's Play store and over 3k reviews. No challenge (yet) for ChatGPT's market-leading position: >100mln downloads and 7mln reviews, but the momentum is clearly concerning markets.
- Why is Deepseek different? Deepseek is free, unlimited and open source - dragging in realtime information from the Internet to produce results. This contrasts with ChatGPT, which has a more restricted offering even in their premium paid-for service.
- Why does this matter? Deepseek's open-source, free-to-play approach twinned with highly regarded efficiency and accuracy undermines not only the revenue-generating capacity of models produced by OpenAI, Alphabet, Meta and others - but also the significant levels of investment in AI from US firms over the past five years. It also shows the ability of Chinese firms to skirt chip sanctions targeted at limiting their AI capacity.
- Pre-market US equity trade opens imminently - worth watching the likes of NVIDIA for the immediate impact. Similarly Microsoft and Meta shares will be a focus having invested capex of over $65bln to AI efforts in 2025.
SWEDEN: 12m Trade Surplus Ticks Higher, But Volume Trends Remain Sluggish
The Swedish goods trade balance was SEK6.2bln in December, down from SEK7.5bln in November. On a 12-month rolling basis, the trade balance was SEK67.5bln , up from SEK62.6bln in November and the YTD average of SEK63.6bln. However, the trend in the value of imports and exports since 2023 remains on a sluggish path, reflecting subdued demand conditions in both Sweden and its major trading partners (e.g. Germany and China).
- Higher imports and lower exports saw the Swedish 12-month trade surplus with the US narrow a little to SEK114.1bln (vs SE116.2bln prior). Like the Eurozone, Sweden’s trade surplus with the US makes it susceptible to US protectionist policies, particularly with in areas like Autos.
- The Swedish trade deficit narrowed a little with Germany (SEK113.1bln deficit vs SEK116.6bln prior), driven by lower imports.
- The trade deficit with China widened (SEK22.1bln vs SEK20.3bln prior) on account of higher imports and lower exports, a trend which has extended since the middle of 2024.
- As of November, the volume of Swedish imports fell 1% Y/Y while exports fell 2% Y/Y. Statistics Sweden notes that “Exports of passenger cars decreased in both value and volume compared with last month and last year”.
