Euro Consumer Bonds Earnings - Headline Takes

Coty (Ba2 Pos, BB+ Pos, BB+ Pos); €26/28's 11-12bps (moved tighter this arvo)

*Beats on 2Q & affirms FY24 EBITDA & CY24/25 leverage targets. Coty €26/28's reversed wider earlier this year, the 5.75% 28's at G+209 still offers value in a uplift into IG which seems on track. For yield investors the 26's may look more attractive (€ rates 2s4s is -33bps) at 4.1%/€99.5.

Kellanova (Baa2 S, BBB Neg, BBB S); Strong beat on 4Q & FY24 guidance affirmed; €25's/29's unch don't see much value; WOW28's look attractive in the space

*Net debt was down from $6.3b to $5.6b over the year, net debt to trailing EBTIDA below target of 3* (management on earnings call). Woolworths Single Nov 28’s (Baa2 Stable, BBB Stable) – 1 of 2 Main Australian Grocery (& clothing) retailer (B&M eqv) - i.e. a defensive – gives +30bps above Kellanova’s May 29’s – WOW's have traded tighter (mid-last yr) with vol between the two driven by the latter despite no rating changes. Leverage for WOW in FY23 was 2.6* (down from 3.2* in '22) & only has $400m in maturities this yr. BVAL b/a is only 8bps wide, see value in it at G+153/4.8$/€85.3.

Spectrum Brands (B2 Neg, B, BB Neg); 1Q results strong beat; 26's have moved tighter

*Rating agencies may still focus on gross debt/leverage metrics. Still net debt that's fallen from $3.1b (leverage 6.2*) last year to now mere $20m are attractive metrics for a B rated name - some of this is priced (trades in line with BB consumer names) & not much for pull-to-par at €99. FY Guidance on net sales (decline in low single digits), EBITDA (high single digit growth), capex ($75-$85m) all unch.

Ontex (B3 Stable, B Neg); strong beat; 26's mids move 40bps tighter though the day, hard to see value here

*Leverage fell from 6.4* to 3.3* this yr (consensus was looking for 3.1*) helped by net debt reduction of ~€200m to €665m from the divestment of the Mexican business. Note company leverage at 3.3* excludes Mexican business activities to adj. EBITDA (TTM). Its guiding to leverage below 3* by year-end - consensus had 2.4*. Its (again) tighter than Picard Surgeles 26's (the frozen food distributor) rated B3/B stable - might be some discount for Picard's curve as private equity issuer. Still trades at the tight end of B rated consumer names at 4.9%./G+234.

Philip Morris (A2 S, A- S, A Neg) cash lines 1-2bps wider

*4Q looks flat & missed on EPS, FY24 guidance for organic revenue at +6.5-+8% but EPS looks below consensus. Leverage (Net debt to Adj EBITDA) was 3*, targeting -0.3*-0.5* in deleveraging for FY24 & long-term target unch at 2* by '26. reported earlier today.

***Edit on Tapestry from headline earlier/on the open (mix-up in para's)

Tapestry (Baa2 Neg, BBB Neg), € lines 3-10bps tighter

*2Q beat on headline sales at $2.08b (c$2.06b), gross margin beat at 71.6% (c70.6%), small lift in FY guidance (FCF ex. deal costs slight beat on consensus) & expects $325m in dividends this FY. Maintains long-term leverage target (gross debt to EBITDA <2.5x) which it still expects to achieve within two years of the Capri transaction close (remains confident it will complete transaction this year). Equity analyst takes; NSN S8JJSHDWRGG0 <GO>

British American Tobacco (Baa2 Pos, BBB+, BBB); € lines 1-3bps wider

*FY23 slight miss - organic adjusted net debt / adjusted EBITDA down to 2.6x (target is middle of 2-3* target) - will invest in innovation pipeine this yr weighting on performance, but will see 3-5% organic revenue growth & mid single digit adj. operating profit after that/by 2026.

Unilever (A1, A+; S); cash lines unch

*Slight beat driven by Beauty & Wellbeing & Personal care (see Coty above too) guiding to sales of +3-5% vs. c3.82%.

Kering (NR, A Stable) - slight beat - cash lines unch to 1bp wider

*Guides to lower operating income, particularly in 1H - consensus has -7.5% fall in FY24 operating income. L'Oreal comes after income.