Tuesday, 21 July 2015

A few European earnings numbers and comments: Akzo Nobel, Remy Cointreau, SAP

Lots of numbers out today...but after having a look at some US numbers of interest (see the United Technologies and Citizens Financial write-ups earlier) time to track back to Europe...

What struck me about the numbers from the Dutch paints/coatings company Akzo Nobel was the big positive influence of FX on the numbers (as the euro weakened benefiting revenue level translation from their large operations in the rest of the world)...

...and the lack of pricing power too.
The shares responded positively as shown below and with the company trading a little over a double EV/ebit with a 4%+ free cash flow yield (including a 2%+ dividend yield) and ongoing cost cutting initiatives too.  Somewhere in the Euro60-65 area looks interesting to me...

Turning to Remy Cointreau, the spirits company looked as if it had published pretty shabby numbers with the worst organic growth metrics for over a year...

 ...but I got the impression from the more detailed commentary that the key China market was plateauing (and just as other companies such as Burberry have observed) Hong Kong is currently more difficult.
I like Remy Cointreau with its strong branded approach, family ownership and ultimately leverage to China. To buy/add (just like Akzo Nobel) choose a spot in that Euro60-65 range

And then we get to SAP.  I noted on Twitter earlier that I felt this was the most important chart highlighting the negative margin aspect of the cloud shift.  I did listen to the company's conference call later on and two factors struck me as interesting: (1) they named checked peers such as Workday and even Oracle which previously they had been a little more coy about and; (2) they blamed the broader economy/economic momentum for some of the non-cloud lack of momentum.  

x14s EV/ebit but a good c. 5% free cash flow yield are not terrible metrics but I am still sensing not a bolted down business here.  I liked the stock back in January but today I would need to see something closer to Euro60 to buy it. 

So interestingly three European names that you probably would buy at Euro60 without thinking too much about it but for Akzo Nobel and Remy Cointreau a sub Euro65 print may well induce action.  

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