EU CONSUMER CYCLICALS: Coty | 3Q Results (x7)
May-08 12:47
(COTY; Ba1/BBB-/BBB-; Stable)
Equities closed -12%, below a $4b market cap (it hit $12b early last year).
Two caveats to make to below table we shared;
- Issues in Coty can be larger than peers given leverage and scale (L'Oréal does $50b in sales vs. Coty's $6b). Countering this, it does report a #2/15% market share in the global prestige fragrances market (which is 56% of group sales and likely 60%+ of group EBITDA).
- Coty has ~50% exposure to licensed brands that it does not own. I.e. contract renewal risk needs to be considered - but exposure to near term renewals (avg. ~3.5yr duration) is only 14%. and it has played down impact of any non-renewals by pointing out no brand makes up more than 10% of sales. Analysts are worried about the Gucci contract (likely out to 2028) with some speculating it may be a tad higher than 10% on EBITDA. It is seen as at risk of non-renewal given in 2023 Kering built out its own internal beauty & fragrance division (Kering Beauté) - it has since used it to launch fragrances that were previously licensed.
Again buffering these risks — particularly 2) — is €-debt is short-end (even considering '28s to maturity). On why equities are sour, co has cut its guidance too many times recently to take anything beyond the near immediate (which is for high-single digit revenue falls) too seriously.
We continue to see curve as fair (no longer skewed to tighten), and see some carry extension on delayed deleveraging.
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US: MNI POLITICAL RISK - Crunch Week For Budget Reconcilliation
Apr-08 12:34
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- At 13:00 ET 18:00 BST, White House Press Secretary Karoline Leavitt will deliver her first press conference since Trump’s 'Liberation Day' tariff announcement. President Donald Trump will sign an Executive Order to boost the US coal industry before delivering remarks at the NRCC Dinner at 18:45 ET 23:45 BST.
- The pragmatic wing of the Trump administration - led by Treasury Secretary Scott Bessent - appears to have gained the upper hand over the trade hawks - led by advisor Peter Navarro and Commerce Secretary Howard Lutnick. The White House appeared to delete a social media post backing a Navarro op-ed claiming tariffs are "not a negotiation." Shortly after, Bessent confirmed he will lead trade negotiations with Japan.
- Bessent said yesterday that tariffs are going to ‘re-lever’ the private sector, pay for Trump’s tax agenda, and bolster national security.
- Trump threatened an additional 50% tariff on China that could hike duties on Chinese imports to 104% (20% Fentanyl, 34% reciprocal, 50% counter-retaliatory).
- USTR Jamieson Greer's testimony to the Senate on Trump's trade agenda will be the most watched event on Capitol Hill today.
- House Speaker Mike Johnson (R-LA) is facing a rebellion from deficit hawks and his Budget Committee chair over the Senate's reconciliation budget blueprint.
- The US will hold indirect talks with Iran on its nuclear programme on Saturday.
- Poll of the Day: Consumer sentiment registered an 8-point swing from April 5.
Full Article: US DAILY BRIEF
EQUITIES: EU Bank put spread
Apr-08 12:32
SX7E (17th Apr) 144/135ps, bought 0.55 in 20k.
JPY: FX Exchange traded Option
Apr-08 12:26
FX Exchange traded Option, looking for Yen Weakness.
- JPYUSD (8th Aug) 73c, sold at 0.79 in 1.5k.
