CONSUMER CYCLICALS
€27s are another -4 today reversing some of recent widening. It is an example that even in this market value can be found (in its case outsized and unnecessary unrated discount). We see it fair here (~80 over swaps). Interesting remarks from earnings call;
(see below graph for per-capita consumption by country)
- "One in two US consumers have never heard of Aperol...Just to put it in context, if the US was to get from the 4% that it is today to 20% of Italy's Aperol per capita consumption, the additional volume generated would mean net sales of Aperol globally would be between 45% to 50% higher just on achieving this in the US alone"
- Re. if current moderation the industry is facing is cyclical or structural: "I've been in it for 30 years. We've seen these challenges come before. We've heard that cognac is dead. We've heard that vodka has had its day...This is the first time we've had China, Russia, US, LatAm, all of the markets down at the same time...I do think consumer behaviour will come back...I'm positive that it is cyclical and not structural."
- No stated leverage target but co has good history on BS (as we have mentioned before) and comments today echo that; "I think longer term we'll continue to have a look at opportunities in M&A, but for now, we need to focus on deleveraging."
Numbers from before; https://mni.marketnews.com/43nFPDv
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