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1、Buy,Buy,Buy,Buy,Buy,Buy,Please,the,Deutsche BankMarkets Research,EuropeUnited KingdomConsumer Staples,IndustryEuropean ConsumerStaples,Date4 January 2013Special ReportJonathan Fell,Many Happy Returns 3European Staples stocks remain very attractive mid to long-term investmentsOur base case is that Eu
2、ropean Staples stocks deliver a low double-digit TSR in2013,continuing the sectors record of producing consistent and attractive realreturns.At a time when yields on other safe haven assets have been drivenever lower,we believe that the Staples companies offer an excellentcombination of yield and st
3、eady growth,underpinned by diversified exposureto both emerging and mature economies,and supported by brands andfranchises that have been nurtured for decades.HPC and Tobacco are ourfavourite sub-sectors for 2013.Improving sales and margins should continue to drive the HPC stocksOur top picks in thi
4、s sub-sector are Beiersdorf and Reckitt Benckiser.Webelieve Beiersdorf,under the stewardship of a new,external CEO,is in theearly stages of a 3-5 year journey which ought to see returns improve verysignificantly.At Reckitt,core category sales growth should accelerate and weexpect margin expansion to
5、 resume,following a one-year pause caused by amajor increase in brand equity investment.After a poor year,Tobacco valuations are looking attractive againThough BAT and Imperial made good underlying progress during 2012,thestocks came under pressure from an increased investor focus on regulatorymatte
6、rs.Now that plain packaging is a fact in Australia,and the main elementsof proposed EU changes are known,we think important overhangs shouldclear.Imperial Tobacco,where we see signs that an increased focus onorganic growth is starting to work,remains our top pick.We also upgrade our,Research Analyst
7、(+44)20 754-Jamie Isenwater,CFAResearch Analyst(+44)20 754-Harold ThompsonResearch Analyst(+44)20 754-Catherine Farrant,CFAResearch Analyst(+44)20 754-Companies FeaturedBAT(BATS.L),GBP3,124.00Beiersdorf(BEIG.DE),EUR62.01Heineken(HEIN.AS),EUR51.73Imperial Tobacco(IMT.L),GBP2,412.00Reckitt Benckiser(R
8、B.L),GBP3,939.00Tate&Lyle(TATE.L),GBP782.00,recommendation on BAT to Buy(PT 3300p)as we consider the current price ansolid entry point to a high-quality stock.More selective in Beverages and FoodWe see less scope for rating expansion in Beverages after a very strong 2012.This report changesOur two t
9、op picks,Diageo and Heineken,should both benefit from their broad,recommendation for BATS.diversified exposure to emerging markets.In Food,we believe the stories of refer to p.19 for further details.Unilever and Nestl seem excellent for the long term but have no majorcatalysts right now.In this sub-
10、sector we see more value in the Ingredientsstocks,particularly in Tate&Lyle,which is continuing its transformation intoan ingredients producer and innovator yet trades on a lowly valuation versuspeers.Many Happy Returns 3 is a guide to investing in European and Global StaplesWe revisit the long hist
11、ory of attractive and consistent real returns from thesestocks,look at how these companies have managed to generate those returns,and examine potential threats and pitfalls.Valuation&RisksWe value our companies using DCF models.Key risks(both upside anddownside)include consumer sentiment,FX and poli
12、tical volatility in emergingmarkets,and competitor activity on pricing and marketing._Deutsche Bank AG/LondonDeutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors shouldbe aware that the firm may have a conflict of interest that could affect the ob
13、jectivity of this report.Investors shouldconsider this report as only a single factor in making their investment decision.DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,4 January 2013Consumer StaplesEuropean Consumer Staples,Deutsche Bank AG/London,Page 3,4 Janua
14、ry 2013Consumer StaplesEuropean Consumer StaplesTable Of ContentsConsumer Staples in 2013.6Organic Growth.20Margins&ROCE.28Pricing.36A&P Investment.42Commodities.47Earnings.49Dividends.52M&A.55Valuation.60Sector Returns.64European v US Consumer Staples.76Stock Returns.79,Page 4,Deutsche Bank AG/Lond
15、on,4 January 2013Consumer StaplesEuropean Consumer StaplesFigure 1:European Consumer Staples ValuationsNet Debt,Mkt Cap,P/E,EV/EBITDA,Dividend Yield,FCF Yield/EBITDA,CompanyAB InBev*BritvicCampari GroupCarlsberg,Price66.544055.915558,Target4256560,ReccHoldHoldHold,US$m139,2371,5884,48714,940,Float48
16、%95%49%70%,2013E17.012.718.213.5,2014E15.411.716.011.9,2013E10.97.711.18.2,2014E10.17.29.97.3,2013E2.6%4.4%1.4%1.2%,2014E3.0%4.7%1.5%1.3%,2013E0.0%6.0%3.2%6.7%,2014E0.0%5.5%6.0%7.7%,2013E2.12.82.11.8,C&C Group,4.67,4.25,Hold,2,009 100%,15.0,13.9,10.7,9.6,2.1%,2.3%,6.0%,6.5%,1.0,Coca-Cola Hellenic,17
17、.99,18,Hold,8,557,54%,18.9,16.1,8.2,7.3,2.1%,2.4%,5.1%,5.4%,1.6,Diageo,1818,2000,Buy,73,294 100%,16.9,15.4,12.6,11.3,2.7%,3.0%,5.3%,6.1%,2.0,HeinekenPernod-RicardRemy CointreauSABMiller,51.7387.9185.322892,5577832800,BuyHoldHoldHold,39,02030,6205,56774,191,50%84%44%59%,16.316.622.118.0,14.614.618.81
18、6.1,9.512.513.811.3,8.611.312.010.1,1.9%2.1%2.7%2.4%,2.1%2.4%2.7%2.7%,5.4%4.3%3.5%4.7%,6.1%5.2%4.8%5.4%,2.73.60.52.9,European Beverages,393,509,0%,17.0,15.3,11.2,10.1,2.4%,2.7%,5.0%,5.8%,2.4,BATImperial TobaccoSwedish MatchTobacco,31242412220.8,33003000230,BuyBuyHold,95,778 100%38,012 100%6,564 100%
19、140,3550%,14.011.015.213.3,12.710.114.012.1,9.89.511.69.8,9.08.810.89.1,4.6%5.0%3.4%4.7%,5.1%5.5%3.8%5.2%,6.5%8.4%6.2%7.0%,6.9%9.5%6.7%7.6%,1.32.42.41.7,A B FoodsCloetta,157313.85,107016,HoldHold,20,054613,42%21%,16.111.6,14.99.3,8.710.4,8.27.1,2.0%0.0%,2.2%0.0%,3.9%7.8%,4.4%11.0%,0.54.2,DanoneDEMB
20、1753,50.128.9,4710,HoldBuy,38,639 100%6,935 100%,15.516.6,13.915.0,9.510.6,8.09.1,3.2%1.6%,3.5%2.0%,5.6%4.9%,7.0%5.9%,1.80.0,Lindt&SpruengliNestle,308660.65,320060,HoldHold,7,690209,075,87%99%,23.817.0,21.815.7,13.411.1,12.110.1,1.9%3.4%,2.1%3.6%,3.6%3.6%,4.2%4.1%,-0.71.6,UnileverFood,29.2,29,Hold,1
21、11,715 100%394,7200%,17.517.1,16.515.8,10.410.7,9.59.7,3.4%3.2%,3.6%3.4%,5.1%4.3%,5.9%5.0%,1.01.3,BeiersdorfHenkelLOreal,62.0161.6105.4,757595,BuyBuyHold,18,41950,69864,189,40%63%46%,26.514.920.7,23.213.619.4,12.29.411.5,10.68.310.5,1.4%1.6%2.3%,1.6%1.8%2.5%,3.8%6.3%4.6%,4.2%6.9%4.9%,-1.60.0-0.6,Rec
22、kitt BenckiserHPC,3939,4100,Buy,46,387 100%179,6930%,15.318.3,14.616.9,10.910.8,9.99.7,3.3%2.3%,3.4%2.5%,6.4%5.5%,6.9%5.9%,0.2-0.3,Barry CallebautChristian Hansen,895184,1000190,HoldBuy,5,0114,272,32%72%,16.121.6,14.219.0,10.612.8,9.611.2,2.0%1.6%,2.4%1.9%,4.8%4.8%,3.8%5.6%,1.51.0,CSM,16.65,14,Hold,
23、1,473 100%,12.3,11.6,6.2,5.6,4.7%,5.0%,9.5%,9.8%,1.9,GivaudanKerry GroupNBPONovozymesSuedzuckerSymrise,971.540.22508163.331.227.52,850377001703126,SellHoldBuyHoldHoldHold,9,5679,2621,2318,7787,8864,259,89%83%24%89%38%94%,16.515.615.623.812.215.1,14.813.39.221.513.3NA,10.511.27.813.77.910.8,9.59.65.4
24、12.37.8NA,2.9%1.0%1.4%1.5%2.4%2.5%,3.2%1.1%2.4%1.7%2.4%NA,4.7%5.0%4.1%4.2%9.3%6.0%,5.2%6.4%8.6%4.6%9.6%NA,1.21.31.00.20.81.4,Tate&LyleIngredientsConsumer Staples,782,900,Buy,5,872 100%57,6100%1,165,8870%,12.616.616.8,12.014.115.3,7.710.510.7,7.18.79.7,3.5%2.2%2.9%,3.6%2.2%3.2%,7.6%5.8%5.8%,8.3%5.9%6
25、.5%,0.71.01.5,*Restricted uses consensus forecastsDeutsche Bank AG/London,Source:Deutsche Bank,Page 5,4 January 2013Consumer StaplesEuropean Consumer StaplesConsumer Staples in 20132012 another strong year for European StaplesUnusually for a year in which overall equity market returns were strong,th
26、e EuropeanConsumer Staples sector outperformed the market by around 420bp.The companiesproduced their customary steady and attractive rate of earnings growth,but alsobenefited from a powerful re-rating effect(though the latter was even greater for themarket as a whole).Real returns were in the top q
27、uartile of outcomes in our 40-yearhistory of Staples returns(Figure 4).After a fairly typical poor relative start to the year,Staples outperformed the marketstrongly for much of the rest of H1 as Eurozone fears weighed on sentiment.In Q3 themarket came back strongly,driven by financials,and Q4 relat
28、ive performance wasessentially flat.,Figure 2:2012 total returns for European Staples,$40%35%30%25%20%15%10%5%0%-5%-10%,Figure 3:European Staples returns v DJ Stoxx,20121151101051009590,HPC,Beverages European DJ Stoxx,Food,US Staples Tobacco,CPI,Staples,Earnings,Dividends,P/E,Total Return,European S
29、taples returns relative to DJ Stoxx,Source:Deutsche Bank,Datastream,Measured in US$,Source:Deutsche Bank,DatastreamBy Staples sub-sector,HPC and Beverages(particularly brewers)were the clear stars.Foods returns broadly matched those of the market,as the rolling-over of price-ledsales growth held bac
30、k rating expansion.Tobacco was the European Staplesunderperformer,and was the only sub-sector to suffer a de-rating.As for the average of the 2000-2012 period,in the last year earnings upgrades werelinked to outsized P/E expansion in the top quartile of Staples stocks,and the reverse isthe case for
31、the bottom quartile.But,as Figure 5 shows,the overall contribution ofrating expansion was higher than average.,Page 6,Deutsche Bank AG/London,C&CGroup,ChristianHansen,ABFoods,Heineken,Beiersdorf,KerryGroup,CSM,ABInBev,Henkel,Carlsberg,Coca-ColaHellenic,Britvic,RemyCointreau,Diageo,LOreal,SABMiller,R
32、eckittBenckiser,Sdzucker,PernodRicard,DJStoxx,Tate&Lyle,Nestl,CampariGroup,Unilever,Lindt,BAT,Danone,ImperialTobacco,BarryCallebaut,SwedishMatch,Novozymes,4 January 2013Consumer StaplesEuropean Consumer Staples,Figure 4:History of total returns from European Staples,$80%60%40%20%0%-20%,Figure 5:Comp
33、onents of European Staples returns$60%50%40%30%20%10%0%-10%-20%-30%,-40%,Top Quartile,OverallStaples,BottomQuartile,Top Quartile,OverallStaples,BottomQuartile,2000-12 Average,2012,Real,CPI,Nominal,P/E,Upgrade,Current Year Growth,Dividend,Total Return,Source:Deutsche Bank,Datastream,Source:Deutsche B
34、ank,Datastream,The total returns for individual Staples stocks are shown in Figure 6.The bestperformers tended to be those companies with a more operationally-geared businessmodel(brewers,AB Foods,CSM,Henkel),beneficiaries of M&A(AB InBev,Heineken,Britvic)or a strong top-line story(Chr.Hansen,Remy C
35、ointreau,Beiersdorf).Outside Tobacco,the underperformers were big Food companies(high starting ratings,slowing sales growth)or previously high-flying stocks that hit sales bumps(Campari,Novozymes).Figure 6:2012 total returns by individual European Staples stocks,$70%60%50%40%30%20%10%0%-10%-20%,Earn
36、ings,Dividends,P/E,Total Return,Source:Deutsche Bank,DatastreamLessons from Swedish Match and DanoneNear the bottom of the 2012 performance table are two stocks which we think areclassic illustrations of what can go wrong with Staples companies.,Deutsche Bank AG/London,Page 7,Jan-06,Jan-08,Jan-09,Ja
37、n-05,Jan-07,Jan-10,Jan-11,Jan-12,Sep-08,Apr-12,May-04,May-08,May-06,May-09,May-05,May-07,May-10,May-11,Aug-12,Sep-04,Sep-06,Sep-09,Sep-11,Dec-12,Sep-05,Sep-07,Sep-10,t,4 January 2013Consumer StaplesEuropean Consumer StaplesSwedish Match losing share in a major marketWe cut our recommendation on Swed
38、ish Match from Hold to Sell on 19 April 2011,because of our concerns on the stocks valuation and the potential for earningsmomentum to slow.One of our worries was over the Swedish snus category,the majorcontributor to group earnings,where the company was starting to come under moreaggressive attack
39、from competition.We regard that competition as somewhatinevitable given the very high margins that Swedish Match makes in this category,butthe addition of capacity by one of the companys main rivals coincided with a periodwhen,if anything,Swedish Match upped its rate of manufacturer price increases.
40、,Figure 7:SWMAs key recent issue:share loss in Sweden100%95%90%85%80%75%70%,Figure 8:SWMA&Tobacco returns($)from 19 Apr 2011140135130125120115110105100959085,Bi-Monthly dataShows Swedish Matchs volume share in snus categorySource:Deutsche Bank,company data,Monthly Data,Swedish MatchTotal returns in$
41、,indexed to 19 Apr 2011,up to 31 Dec 2012Source:Deutsche Bank,Datastream,European Tobacco Index,That has encouraged the creation of new,lower price points in Sweden,and thegroups volume share loss has accelerated(Figure 7),culminating in the companymissing Q3 2012 earnings estimates and signalling a
42、 considerably tougher pricingenvironment in 2013.The Q3 news caused a significant negative reaction in the stockprice,such that Swedish Match has underperformed its European Tobacco rivals verysharply in the last quarter.Danone weak momentum in dairyDanone has suffered a very material deceleration i
43、n its Dairy volume growth over thelast three years(Figure 9),coinciding with what we believe to be a significant reductionin A&P spend as a proportion of sales one of the classic Staples warning signs(seepages 42 to 46).In June this year,the day before the companys appearance at ourParis Global Stap
44、les conference,Danone was pushed into a profit warning,basedaround having to reset margins in Southern Europe.,Figure 9:Danones key issue:slowing dairy momentum14%12%10%8%6%4%2%0%-2%,Figure 10:Danone&Food index total returns from Jan 101501401301201101009080,Q1 10,Q2 10,Q3 10,Q4 10,Q1 11,Q2 11,Q3 11
45、,Q4 11,Q1 12,Q2 12,Q3 12,Danone dairy volume growth ex-UnimilkSource:Deutsche Bank,company dataPage 8,DanoneTotal returns in$,indexed to Jan 2010,up to 31 Dec 2012Source:Deutsche Bank,Datastream,European Food IndexDeutsche Bank AG/London,4 January 2013Consumer StaplesEuropean Consumer StaplesThe com
46、pany has since responded by putting in place a restructuring plan,aimed atreducing SG throughout most of the period of slowing dairy volumegrowth shown in Figure 9 the shares were solid performers,matching the broaderEuropean Food index right up to the moment of the June 2012 profit warning.We conti
47、nue to be wary of stocks which are producing good headline financial resultsbut where key indicators such as volume share in important markets,or A&P spendas a%of sales are moving in the wrong direction.That doesnt mean that thosestocks will necessarily underperform over any given period(not least b
48、ecause pushingprice increases through,or cutting discretionary spend,can be highly profitable for awhile).But the examples of Swedish Match and Danone in 2012 illustrate the dangers ofignoring these warning signals:eventually fundamentals reassert themselves and quitelong periods of outperformance c
49、an rapidly,and painfully,be reversed.Investing inthose companies which are showing such warning signals is analagous to picking uppennies in front of the proverbial steamroller.There are usually plenty of sound Staplescompanies in which to invest,offering attractive returns,for investors not to have
50、 to runthese risks.A final point is a more general one regarding the attractions of Staples companies:inwhat would be regarded as a poor year for each of these companies,neither producedheavily-negative returns.Flat is typically a bad year in Staples.The cost of capital is getting lowerIt was not ve
