Friday, 25 July 2014

The Friday European results frenzy...Danone, Statoil and LVMH

Many interesting numbers to think about...

First Danone which I bought a couple of times around the Euro50 level earlier this year as detailed here.  The corporate numbers today from the company were not flawless BUT the main positive attribute I noted of good/positive price-mix ('value') continued apace:


(note too the negative FX impact, a theme we discussed yesterday here)

The other aspect that was noteworthy concerned input costs which - for once - were not offset by the company's pricing.


So why was this?  Well the company highlighted strong/high milk prices and this combined with 'high bases for year-on-year comparisons linked to Fonterra's false safety alert' which impacted the baby nutrition division:


So what to do?  Well comparisons are easing, H2 - as shown below - is anticipated to be strong and my core valuation work still suggests a target of Euro60+.  Versus many other highly valued consumer names Danone still feels to me like a core hold.


Staying in Europe, Statoil shares - after a great run - are rolling over:


And the reasons?  Well results especially in Norway were sequentially poor

After a great run in energy shares over recent months I am worried about roll-over of this sector.  The Statoil numbers entrench that further.

Finally in Continental Europe there is LVMH where profits disappointed on destocking and 'prudent purchasing' by multi-branch retailers.


The Euro120s have been interesting buying points over the last couple of years and I don't expect this will change now.

As I noted back in January 'Valuation-wise, a 4.5% free cash flow yield and x11s EV/ebit ratio (using FY13 numbers) is exhibiting value.  The backdrop is not easy...but for a branded luxury business with LVMH's history...' these are interesting levels.

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