Spirits producer Pernod Ricard SA аnd brewer Heineken NV will bе аt thе mercy оf faltering consumer confidence in Europe in reports this week.
Growth аt both companies hinges оn thе strength оf thе Asian market аnd thе popularity оf their higher-priced premium brands, said Bloomberg Intelligence’s Duncan Fox. Heineken mау fare better than its French peer, thanks tо its lower exposure tо аn uncertain Chinese market, according tо Citi, which favors beer stocks over liquor.
After setting а sales record in 2023, Airbus SE’s fourth-quarter update will probably show commercial deliveries increasing further.
Reports from Dutch retail giant Ahold Delhaize NV, carmakers Renault SA аnd Stellantis NV, German steelmaker Thyssenkrupp AG аnd British bank NatWest Group Plс аrе also awaited.
Highlights tо look оut for:
Monday: Michelin (ML FP) is expected to meet its full-year operating income target of more than €3.4 billion ($3.67 billion), after a rebound in replacement tire demand in Europe helped combat cost inflation and weaker tire volume, according to BI’s Gillian Davis. But a darkening economic outlook may temper guidance for 2024. A European Union price-fixing probe has also cast a cloud over the industry. Michelin is contesting the existence of anti-competitive practices.
Tuesday: No major earnings of note
Wednesday: Volume declines in Heineken’s (HEIA NA) premium brands in the fourth quarter would be a sign that consumers are finally feeling the effects of inflation, and may stunt growth this year, BI’s Fox said. While a recovery in the Americas helped preserve profitability when brutal weather in Europe knocked premium sales last summer, the brewer also needs to see a rebound in key Asian markets like Vietnam and Cambodia, which account for almost 30% of operating profit, he said. Danish peer Carlsberg A/S has forecast moderate growth this year and is boosting marketing spending to drive more sales.
- Ahold Delhaize’s (AD NA) fourth-quarter report will show how much declines in the US are eclipsing its recovery in Europe. Revenue growth is slowing despite the Dutch retailer’s efforts to build market share by refurbishing stores and offering more products online, according to BI. It may need more acquisitions to turn things around.
- Lower steel prices and muted demand likely dragged on Thyssenkrupp’s (TKA GY) first-quarter results, but prospects for a price recovery may keep its full-year forecast intact, BI said. Consensus for adjusted Ebit of €861 million jives with the company’s guidance of a high three-digit million euro amount. Watch for updates on its downsizing efforts, as the German government is reportedly close to taking a stake in its marine systems unit, while negotiations with EPH on a European steel joint venture may be faltering.
Thursday: Pernod Ricard’s (RI FP) first-half revenue is expected to be lower across all regions, as the French drinks maker battled excess inventory and consumers kept a lid on spending. Disappointing results from peer Diageo and wider industry weakness have knocked investors’ confidence in the sector, although Pernod Ricard could recover in the second half if Chinese New Year trading is solid, Citi analysts said. Consumption patterns in Asia are key for full-year EPS guidance, BI said.
- A wavering electric-car market and the advance of Chinese rivals is making life difficult for Stellantis (STLA US) and Renault (RNO FP), scheduled to report before the market. While Stellantis’s adjusted operating margin probably slipped to 12.8% last year, and Renault’s operating margin may have climbed to 7.8% — toward the top of its forecast range — all eyes will be on 2024 guidance, BI said. Renault recently canceled IPO plans for its Ampere EV unit, highlighting the challenges on that front. Merger talk has also resurfaced, although Stellantis has tamped down speculation of a tie-up with another manufacturer, including Renault. Pricing will be a risk for Stellantis this year as production normalizes after strikes in the US, BI said.
- Supply chain issues and inflation likely weighed on Airbus’ (AIR FP) fourth-quarter margin, even as commercial deliveries increased, according to BI’s Melissa Balzano. Adjusted Ebit likely inched up to €2.26 billion all the same. Boeing’s headaches with the 737 Max jet probably won’t open up market share for Airbus just yet, as years-long delivery backlogs are set to keep orders split between the two, analysts say.
Friday: NatWest’s (NWG LN) net interest income probably dropped 8% last quarter, and expectations for 2024 aren’t much better as central banks shift to rate-cutting mode. Weakening revenue means cost savings will be imperative to protect profitability, BI said. Watch also for any guidance on asset quality, as analysts project a 75% spike in loan-loss provisions in 2024, almost double last year’s levels.
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