EU CONSUMER STAPLES: Carlsberg; 1H results
(CARLB: Baa1/NR/BBB+ Neg)
Alcohol free beers grew 12% in Western Europe helped by double digit growth in Tuborg, 1664 Blanc and Somersby Zero's. Carlsberg likes to brag about the shift away from alcohol given it doubled its exposure to soft drinks (to 30%) on the £4b Britvic acquisition late last year - but soft drink growth was flat and Britvic small negative. The revenue growth and bottom line performance are fine at the group level (Q2 volume growth of +3.6% in Western Europe including +1.8% in Beers notably impressive) - but deleveraging was limited this half on the FY dividend payment. We see 2H again limited on implied DKK4.5b in capex and it may test rating agencies patience on that pace. Excluding the 32s, we see levels as tad tight.
- 1H organic revenue -0.3% (Q2 +0.6%) while volumes fell -1.7% (Q2-1.1%). It says ex. the loss of the San Miguel brand license in the UK organic revenue was +1.3% (Q2 +2.4%) and volumes -0.4% (Q2 +0.2%). > The San Miguel license was lost to AB InBev on renewal ending 2024 - Carlsberg had held for over 15yrs.
Ex. San Miguel over 1H:- Western Europe (55% of group) +2.6% (v +2.4%)
- Asia (25% of group) -1.9% (v -2.8%). EBIT still +7.3%
- CEE & India (20% of group) +3.1% (v flat) (India volume grew low double digit)
- Alcohol Free Brews +7%, Premium +5%, Soft Drinks flat
- Net including acquired Britvic, revenue was +18.2% at DKL45.9b (€6.2b)
- None to low inflation in expenses: gross margin fell 10bps to 46.0% on Britvic (margin dilutive), EBIT organically expanded +40bps but net of Britvic -40bps at 15.8%. That left it organic +2.3% y/y (net of Britvic +15% y/y).
- FCF of DKK 2.7b (vs. 3.6b LY), WC -0.6b worse, capex 0.3b higher.
- Net levered 3.5x (guided to 3.4x post acquisition), up from 1.7x last year (pre Britvic) and target 2.5x. Gross levered 4.0x, Moody's threshold is 3.0x and expected 3.5x by year end.
FY guidance is now:
- Organic EBIT growth of +3-5% (prev. +1-5%)
- Capex of DKK7b (prev. 7-8b)
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GERMAN AUCTION RESULTS: 1.90% Sep-27 Schatz
| 1.90% Sep-27 Schatz* | Previous | |
| ISIN | DE000BU22106 | DE000BU22098 |
| Total sold | E5bln | E4bln |
| Allotted | E3.899bln | E3.066bln |
| Avg yield | 1.87% | 1.85% |
| Bid-to-offer | 1.81x | 2.24x |
| Bid-to-cover | 2.33x | 2.92x |
| Avg Price | 100.064 | 99.712 |
| Low Price | 100.060 | 99.710 |
| Pre-auction mid | 99.705 | |
| Previous date | 24-Jun-25 |
EGBS: German Curve Bull Flattens; French Budget Eyed This Afternoon
Bund futures are up 45 ticks today at 129.63, but remain below initial resistance at 130.06 (20-day EMA). That keeps a bearish theme intact, with support to monitor at 129.08 (July 14 low). Market moving headline flow has been relatively light, with no obvious trigger for today’s strength in major EGB futures.
- The German curve has bear flattened, with 30-year yields down 4.5bps at 3.197%. A reminder that 30-year yields met resistance at the April 2023 high of 3.263% yesterday.
- Germany will sell E5bln of the new 1.90% Sep-27 Schatz at 1030BST today.
- At 1500BST/1600CET, French PM Bayrou is set to unveil the main proposals of the 2026 state budget, including spending cuts and tax hikes that risk collapsing his minority government. French political risks gradually been priced back into OATs in recent weeks, particularly when assessing French debt against semi-core/periphery peers.
- 10-year EGB spreads to Bunds are within 0.5bps of yesterday’s closing levels.
- Eurozone industrial production was much stronger-than-expected in May, with volatile Irish data once again a likely culprit. On a monthly SA basis, production rose 1.7% M/M, above the 1.0% consensus and April’s -2.2% (revised up from -2.4% initial).
- Meanwhile, the German July ZEW survey was also stronger-than-expected.
- Global macro focus remains on today’s US CPI report.
COMMODITIES: Gold Holds Well Above 50-dma
A bull cycle in Gold that started Jun 30, remains intact and the yellow metal is holding on to its recent gains. Note that medium-term trend conditions are bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend. WTI futures maintain a bearish tone following the reversal from the Jun 23 high, and recent gains still appear corrective. Support to watch is the 50-day EMA, at $65.46. The average has been pierced, a clear break of it would signal scope for a deeper retracement.
- WTI Crude down $0.21 or -0.31% at $66.73
- Natural Gas down $0.04 or -1.04% at $3.431
- Gold spot up $17.43 or +0.52% at $3361.14
- Copper up $0.05 or +0.01% at $555.2
- Silver up $0.12 or +0.32% at $38.2789
- Platinum up $7.89 or +0.58% at $1378.02
