- STMicroelectronics (SGM TH) +2.9%
- STMicro Revenue Beats Estimate With Growth in All Product Groups
- Kingspan (KRX TH) +2.6%
- Wacker Chemie (WCH TH) +2%
- Wacker Chemie Boosts FY Ebitda Forecast
- Norsk Hydro (NOH1 TH) +2%
- Watch European Miners as Iron Ore, Base Metals Gain After Fed
- Vestas (VWSB TH) +1.7%
- Watch Solar, Green Stocks as US Senators Reach Energy Bill Deal
- Vodafone (VODI TH) +1.7%
- Equinor (DNQ TH) +1.6%
- Energy Is Stuck as Recession Fears Raise the Bar to Outperform
- Air Liquide (AIL TH) +1.6%
- Air Liquide 1H Recurring Operating Income Beats Estimates
- Rio Tinto (RIO1 TH) +1.6%
- Rio Tinto Inks Deal to Unlock Huge Simandou Iron Ore Project (2)
- Nemetschek (NEM TH) +1.5%
- Daimler Truck (DTG TH) -0.6%
- Commerzbank (CBK TH) -0.7%
- MTU Aero (MTX TH) -0.7%
- ProSieben (PSM TH) -0.9%
- HeidelbergCement (HEI TH) -1.5%
- HeidelbergCement 2Q Oper Ebitda Meets Estimates
- Knorr-Bremse (KBX TH) -2.5%
- Knorr-Bremse Narrows FY Revenue Forecast
- Kion (KGX TH) -2.5%
- Kion’s Lack of Guidance, Margin Miss Are Modest Negatives: Citi
- Airbus (AIR TH) -3.2%
- Airbus Cuts FY Deliveries Forecast, Pushes Back A320 Ramp-Up (1)
- Fresenius SE (FRE TH) -4%
- Fresenius SE Cuts FY Revenue, Net Income Forecasts (1)
- Fresenius Medical (FME TH) -8%
- Fresenius Medical Outlook Cut Shows Major Cost Pressures: Truist
DAX:
- Zalando (ZAL TH) +1.6%
- BASF (BAS TH) +1.3%
- BASF Said to Eye Selling Gas to Grid if Russia Halts Deliveries
- Infineon (IFX TH) +1.2%
- Watch Europe, US Chip Stocks as Samsung Profit Misses Estimates
- VW (VOW3 TH) +1.1%
- VW Sees Robust Second Half on Strong Demand, Easing Supply Pain
- Covestro (1COV TH) +1%
- Airbus (AIR TH) -2.9%
- Airbus Cuts FY Deliveries Forecast, Pushes Back A320 Ramp-Up (1)
- Fresenius SE (FRE TH) -4%
- Fresenius SE Cuts FY Revenue, Net Income Forecasts (1)
- Fresenius Medical (FME TH) -8.3%
- Fresenius Medical Outlook Cut Shows Major Cost Pressures: Truist
MDAX:
- Wacker Chemie (WCH TH) +2.1%
- Wacker Chemie Boosts FY Ebitda Forecast
- Befesa (BFSA TH) +2%
- Befesa 2Q Adjusted Ebitda Beats Estimates
- Nemetschek (NEM TH) +1.5%
- Uniper (UN01 TH) +1%
- Germany Energy Giant RWE Gets a Boost From Market Turmoil (2)
- Evonik (EVK TH) +0.9%
- Deutsche Wohnen (DWNI TH) -0.7%
- ProSieben (PSM TH) -0.7%
- ProSieben Cut to Hold at Deutsche Bank; PT 14 euros
- Kion (KGX TH) -0.9%
- Kion’s Lack of Guidance, Margin Miss Are Modest Negatives: Citi
- Aroundtown (AT1 TH) -0.9%
SDAX:
- Ceconomy (CEC TH) +1.4%
- Schaeffler (SHA TH) +1.4%
- Eckert & Ziegler (EUZ TH) +1.2%
- SAF-Holland SE (SFQ TH) +0.9%
- Deutsche PBB (PBB TH) +0.9%
- SMA Solar (S92 TH) +0.6%
- Watch Solar, Green Stocks as US Senators Reach Energy Bill Deal
- Deutz (DEZ TH) +0.4%
- MorphoSys (MOR TH) -1.1%
- Adler Group (ADJ TH) -1.9%
>>> Up
*Reckitt Raised to Market Perform at Bernstein; PT 6,400 pence
>>> Down
* Akzo Nobel Cut to Hold at HSBC; PT 72 euros
* Aramis Cut to Neutral at Exane; PT 4 euros
* Daimler Truck Cut to Hold at HSBC; PT 28 euros
* Enersense Cut to Sell at Inderes; PT 5 euros
* Konecranes Cut to Accumulate at Inderes; PT 30 euros
* Mitchells & Butlers Cut to Hold at Berenberg; PT 180 pence
* Traton Cut to Neutral at Citi
* Volvo Cut to Hold at HSBC; PT 190 kronor
>>> Initiation
>>> Call
* Acciona Energia Results Strong, Eyes on Windfall Tax Risk: RBC
* Aramis Cut to Neutral at Citi on Weakening Demand, Supply Issues
* Carrefour’s ‘Unexciting’ 1H Unlikely to Move Consensus Much: JPM
* Gucci 2Q May be Viewed ‘Cautiously’ Even as Kering Beats: RBC
* Moncler 1H Reassuring But All Eyes on Current Trading: Bernstein
* Teleperformance Delivers Strong Operational Growth, Citi Says
Stocks rose in Asia on Thursday and the dollarfell as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets. An Asian share gauge added just under 1%, but the gains were smaller than Wednesday’s 2.6% surge in the S&P 500 and 4.3% jump in the Nasdaq 100. A dip in futures suggested the US rally may cool. The Fed raised rates by 75 basis points for a second month, said such a move is possible again and reiterated its desire to fight inflation. Chair Jerome Powell added the pace of hikes will slow at some point and policy will be set meeting-by-meeting. That shift comes amid signs of an economic slowdown. Treasuries were little changed, with the 10-year yield at 2.78%. Swaps tied to the date of Fed policy meetings imply a 3.3% peak for the fed funds rate around year-end -- not much higher than the current range of 2.25% to 2.5%. The yen strengthened about 1% against the dollar in the fallout from the Fed decision. Oil advanced toward $99 a barrel. Goldand Bitcoin edged up. Traders are awaiting a phone call between President Joe Biden and China’s Xi Jinping, which could touch on US tariffs and other points of tension. US After Hours PI +11.3%, ETSY +8.1%, F +6.8%, NTGR +6.8% higher on earnings; solar stocks jump on Sen Mancin reaching energy deal; COUR -28%, TDOC -21.9%, COLM -9.2%, NOW -7.2%, META -4.4% QCOM -3% fall on earnings; BBY -2.7% falls on weak comp guidance
Nikkei +0,19% Hang Seng -0,56% CSI +0,59% Shanghai +0,57% Shenzen+0,79%
Eur$ 1,0206 CNY 6,7473 CNH 6,7466 JPY 135,46 GBP 1,2163 RUB 60,9271 TRY 17,8672 WTI$98,28 +1,10% Gold 1,736,27 +1,16% BTC 23,100 +1,5% ETH 1,638 +2%
S&P -0,20% Nasdaq -0,40% EuroStoxx +0,61% FTSE +0,21% Dax+0,41% SMI
Macro :
- Bitcoin Tops $23,000 in Bet on Post-Fed Thawing of Crypto Winter
- Fed Hikes by 75 Basis Points as Powell Sees No US Recession Now
- Gundlach Tells CNBC Fed Chair Powell Has Regained Credibility
Keep an eye on :
- ABI BB : AB InBev 2Q Adjusted Ebitda Beats Estimates
- ACAQ US : German Electric Carmaker e.Go Is Said to List Via Athena SPAC
- AED BB : Aedifica to Spend £12.5m on Care Home Project for Sandstone Care
- AIR FP : Airbus Delays A320 Increase as Supply Chains Take a Bite: React
- AIXA GY : Aixtron 2Q Ebit Beats Estimates
- ARCAD NA : Arcadis 2Q Organic Revenue +8.1% (1)
- MT NA : ArcelorMittal Makes Brazil Purchase After Posting Healthy Profit
- ARGX BB : Argenx 1H Operating Income $116.7M
- ATE FP : Alten 1H Revenue EU1.83B Vs. EU1.40B Y/y
- AMUN FP : Amundi Bolsters China Expansion With New Mutual Fund Plan
- BA/ LN : BAE Systems Gets $299M Contract From US Army
- BCP PL : BCP 1H Net Rises to EU74.5m Vs. EU12.3m on Portugal Unit
- BDT GY : Bertrandt Raises FY Total Rev. Forecast to ~EU990M-EU1.02B
- BOKA NA : HAL Receives All Clearances for Boskalis Offer
- BUCN SW : Bucher 1H Orders Beats Estimates
- CARM FP : Carmila 1H Net Rental Income EU172.2M Vs. EU127.9M Y/y
- CA FP : Carrefour 2Q Sales Beats Estimates
- CLNX SM : Cellnex 1H Adjusted Ebitda EU1.28B Vs. EU804M Y/y
- CO FP : Ardian Said to Win Sale Process for Casino Unit GreenYellow
- CO FP : Casino Has Signed EU4b Worth of Asset Sales: CFO
- CLN SW : Clariant 1H Adjusted Ebitda Meets Estimates
- COPN SW : Cosmo 1H Cash and Cash Equivalents EU218.0M
- COTN SW : Comet FY Sales Forecast Beats Estimates
- DRW3 GY : Draegerwerk 2Q Ebit Loss EU76.6M Vs. Profit EU80.3M Y/y
- ELIS FP : Elis Boosts FY Organic Revenue Forecast
- ELE SM : Endesa 1H Net Income Beats Estimates
- ENI IM : Italy Can Withstand Stop of Russian Gas Without Drastic Measures
- ERA FP : Eramet FY Ebitda Forecast Misses Estimates (1)
- FNAC FP : Fnac Darty 1H Revenue Meets Estimates
- GAM SW : Swiss Money Manager GAM Is Said to Again Revive Sale Plans
- HEI GY : HeidelbergCement 2Q Oper Ebitda Meets Estimates
- IFCN SW : Inficon Narrows FY Sales Forecast
- IPN FP : Ipsen Boosts FY Core Op. Margin Forecast
- IVG IM : Iveco 2Q Consolidated Revenue EU3.37B Vs. EU3.32B Y/y
- KARN SW : Kardex 1H Ebit Misses Estimates
- KER FP : Kering 2Q Gucci Revenue on a Comparable Basis Misses Estimates
- KGX GY : Kion 2Q Adjusted Ebit Misses Estimates
- KBX GY : Knorr-Bremse Narrows FY Revenue Forecast
- LEHN SW : Lem 1Q Ebit CHF19.5M Vs. CHF21.2M Y/y
- MERY FP : Mercialys Maintains FY FFO Growth Forecast
- MONC IM : Moncler 1H Revenue Beats Estimates
- MUV2 GY : Everest Re 2Q Operating EPS Beats Estimates
- NEM GY : Nemetschek 2Q Ebitda EU68.6M Vs. EU56.3M Y/y
- NESN SW : Nestle Sees FY Organic Revenue +7% to +8%, Saw About +5%
- NXI FP : Nexity 1H Revenue EU1.96B Vs. EU2.28B Y/y
- ORA FP : Orange 2Q Ebitda After Leases Misses Estimates
- PST IM : Poste Italiane 1H Revenue Meets Estimates
- RXL FP : Rexel Maintains FY Adjusted Ebita Margin Forecast
- CFR SW : Farfetch Jumps as Betaville Says Richemont May Be Interested
- SAF FP : Safran FY Free Cash Flow Forecast Beats Estimates
- SGO FP : Saint-Gobain Retools Factories to Operate Without Russian Gas
- SCHW US : *SCHWAB AUTHORIZES $15B STOCK BUYBACK; BOOST DIV 10%
- SCR FP : Scor 1H Net Loss EU239M Vs. Profit EU380M Y/y
- S30 FP : Solutions 30 1H Revenue EU444.4M Vs. EU441.2M Y/y
- SOLB BB : Solvay Sees FY Organic Adjusted Ebitda +14% to +18%
- STM FP : STMicroelectronics Boosts FY Net Revenue View, Beats Est. (1)
- TE FP : TechnipFMC 2Q Adj EPS Cont Ops Misses Estimates, TechnipFMC Announces $400m Share Buyback
- TEP FP : Teleperformance 1H Adjusted Ebita Beats Estimates
- TEF SM : *TELEFONICA 2Q OIBDA EU3.15B, EST. EU3.06B
- TFI FP : TF1 2Q Current Operating Income EU129.1M Vs. EU112.3M Y/y
- UCB BB : UCB 1H Core EPS Beats Estimates
- UMG NA : UMG 2Q Adjusted Ebitda EU507M Vs. EU429M Y/y
- VRLA FP : Verallia FY Adjusted Ebitda Forecast Beats Estimates
- VCT FP : Vicat 1H Sales EU1.76B Vs. EU1.56B Y/y
- VONN SW : Vontobel Assets Under Management CHF208.6B
- VOW GY : Ford 2Q Adjusted EPS Beats Estimates: Snapshot
- VOW GY : Apple Nabs Key Lamborghini Executive to Work on Its Electric Car
- WCH GY : Wacker Chemie Boosts FY Ebitda Forecast
West London faces new homes ban as electricity grid hits capacity
Greater London Authority warns developers that upgrade might take more than a decade
Developers in west London face a potential ban on new housing projects until 2035 because the electricity grid has run out of capacity to support new homes, jeopardising house building targets in the capital.
The Greater London Authority wrote to developers this week warning them that it might take more than a decade to bulk up grid capacity and get developments under way again in three west London boroughs — Hillingdon, Ealing and Hounslow.
In those boroughs, “major new applicants to the distribution network . . . including housing developments, commercial premises and industrial activities will have to wait several years to receive new electricity connections,” according to the GLA’s note, which has been seen by the Financial Times.
A recent applicant to the distribution network was told that there is not “sufficient electrical capacity for a new connection” until up to 2035, according to the note.
The three boroughs accounted for almost 5,000 homes in 2019-20, equivalent to 11 per cent of London’s housing supply. Stalling new projects would exacerbate a chronic housing shortage in a city which already routinely undershoots its delivery targets.
But new projects are being rejected because the electricity network in the area has hit capacity, according to the GLA.
In its note, the GLA said pressure on the grid in west London has been particularly acute because a number of data centres have been built nearby in recent years, taking advantage of fibre optic cables that run along the M4 corridor, before crossing the Atlantic.
According to the GLA, “data centres use large quantities of electricity, the equivalent of towns or small cities, to power servers and ensure resilience in service”.
SSEN and National Grid are working on upgrading their networks to cope with more electricity demand, but that work could take years.
Developers are “still getting their heads round this, but our basic understanding is that developments of 25 units or more will be affected. Our understanding is that you just can’t build them,” said David O’Leary, policy director at the Home Builders Federation, a trade body.
He said that the GLA’s note had already prompted one HBF member to reconsider the purchase of a plot of land for development in Ealing.
In London, the issue is particularly acute because high land values make adding power supply a challenge.
But the problem is likely to become more widespread, according to O’Leary, because of new rules which mean that new homes must support low-carbon technologies such as heat pumps and electric vehicles, which will place additional strain on the grid.
The GLA, SSEN and the National Grid are working on a solution to unblock development. Options include reviewing the needs of individual customers, incentivising electricity usage at low-demand times of day, revising regulations governing the number of possible connections and installing cables to connect to less-constrained grids nearby.
The GLA did not immediately respond to a request for comment.
China’s central bank seeks to mobilise $148bn bailout for developers
Heavily indebted sector to receive new loans to complete unfinished apartments owed to angry homebuyers
Beijing is seeking to mobilise up to Rmb1tn ($148bn) of loans for stalled property developments, in its most ambitious attempt to revive the debt-stricken sector and mollify home buyers who are boycotting mortgage repayments after lengthy construction delays.
China’s property sector accounts for about one-third of total output in the world’s second-largest economy. The industry’s prolonged downturn was a significant reason, alongside rolling Covid-19 lockdowns across the country, that growth slowed to just 0.4 per cent year on year in the second quarter.
The People’s Bank of China will initially issue about Rmb200bn of low-interest loans, charging about 1.75 per cent a year, to state commercial banks, according to people involved in the discussions.
Under the plan, recently approved by China’s State Council, or cabinet, the banks will use the PBoC loans along with their own funds, lent at market rates, to refinance stalled real estate projects.
The government hopes the banks will be able to leverage its initial fund by up to five times to raise a total of about Rmb1tn and partially fill the funding gap needed to complete unfinished projects, the people said. But bank executives and analysts have warned that the PBoC may struggle to raise its targeted amount given the difficulties banks will face in making a return on distressed real estate projects.
Overleveraged developers have had to suspend the construction of millions of apartments nationwide over the past year, raising concerns of financial and social turmoil if increasing numbers of home buyers withhold mortgage payments or take to the streets.
Multiple developers in China have defaulted on domestic and foreign debts after Beijing implemented tighter credit controls, undermining one of the most important engines of the country’s economy and leaving millions of home buyers in limbo.
Analysts, however, warned that the PBoC’s refinancing scheme would only work if the targeted developments could generate enough cash flow from sales or rentals of unsold apartments to repay the new loans.
“A lot of unfinished residential projects have already been sold out or are located in under-developed cities where home purchase and housing rentals are weak,” said Dan Wang, chief economist at Hang Seng Bank China. “That limits the number of developments the bailout fund can invest in without suffering a loss.”
Housing transactions in smaller “third-tier” cities, where most unfinished developments are located, fell more than a third this month from a year ago even after local authorities rolled out numerous support measures to boost buyer demand, ranging from interest rate cuts to subsidies on purchases.
Affected buyers are also sceptical about the central bank’s new fund.
“I can’t see any hope,” said James Lu, a sales clerk in the central city of Zhengzhou who borrowed Rmb650,000 to buy a Rmb910,000 flat. “The developer has run out of money and it doesn’t make economic sense to bail the project out.”
Lu is one of more than 4,900 home buyers at the development, Kangqiao Nayunxi, who stopped paying their mortgages nine months after construction stopped. Lu’s monthly mortgage payment of Rmb4,000 eats up two-thirds of his family’s household income.
According to estimates by Beijing-based Everbright Bank, Chinese developers have suspended construction work on as many as 8mn homes that will require an additional Rmb2tn to complete.
The delays have prompted impatient home buyers at more than 300 half-built developments — up from 200 two weeks earlier — to announce on social media that they will suspend their mortgage payments until construction resumes.
Government advisers said the scale and pace of backlash caught Beijing’s financial regulators off guard after they initially delegated responsibility for resolving the funding impasse to developers and local governments.
“Construction delay isn’t new,” one adviser said. “What is unexpected is the runaway spread of the problem.”
“It’s really a tricky situation for the central authorities to manage because they don’t want too many moral hazards — or local authorities taking many property debts,” said Rory Green, chief China economist at TS Lombard in London. “On the other hand, there are social stability issues.”
Another challenge for the bailout program is the high level of debt already incurred by stalled developments. Many distressed developers, led by China Evergrande Group, had already defaulted on payments to creditors and contractors before putting construction on hold. That could complicate the revival of construction work as existing creditors demand repayment, analysts said.
“Many unfinished projects have zero or negative value after taking into account their existing debts,” said an executive at a state lender that has been asked by the PBoC to join the bailout fund.
“We are not going to touch such projects even if it is politically correct to do so,” added the banker, who asked not to be identified because they were not authorised to speak to foreign media.
Contractors are also routinely demanding payment up front. “We have paid a steep price for extending credit in the real estate sector,” said an executive at Asia Cuanon, a building insulation materials maker based in Shanghai. “We will only start working with developers once we are fully paid.”
The PBoC did not reply to an emailed request for comment.
How LVMH Dominates the Luxury Business
Above all, the French group benefits from the sheer scale of its megabrand Louis Vuitton, setting in motion a virtuous cycle that powers profit generation, explains Luca Solca.
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LVMH, above all, benefits from the sheer scale of its core megabrand Louis Vuitton, setting in motion a virtuous cycle that powers profit generation, writes Luca Solca. (Getty Images)
LVMH kicked off a “super week” of luxury results with a strong second-quarter performance. Group sales grew by 19 percent to €18.73 billion, beating consensus expectations of €17.13 billion, despite soaring inflation and fresh Covid-19 lockdowns in the critical China market. EBIT also surpassed expectations by 8 percent, and the strong performance sets a high bar for luxury rivals set to report later this week.
LVMH is the world’s biggest and most diversified luxury goods conglomerate with leading positions in multiple businesses, including fashion and leather goods, jewellery and beauty distribution. Sheer scale, diversification and the exceptional resilience of its leather goods megabrand Louis Vuitton allow LVMH to consistently generate strong revenue and profit growth, giving the group a less cyclical profile, adding to its overall strength and valuation multiple.
Luxury conglomerates are only as strong as the megabrand at their core. Kering has Gucci, Richemont has Cartier. LVMH has Louis Vuitton, the king of the luxury jungle.
Vuitton has top consumer appeal rankings across geographies. It also has complete control over its distribution (100 percent retail), total price discipline (100 percent full-price), significant headroom for category diversification and a multi-pronged product innovation engine.
But above all, it has scale, setting in motion a virtuous cycle that is critical to profit generation.
Vuitton is the biggest luxury brand in the world with approximately €18 billion in 2021 sales, about 40 percent more than pre-pandemic levels. It’s also one of the most profitable players in the luxury sector, with an EBIT margin of over 45 percent.
The Megabrand Virtuous Cycle
Much of the growth in the luxury industry is driven by new wealth creation in China and other fast-growing markets, where new middle-class consumers are naturally attracted to megabrands like Vuitton and Dior, as these are the brands they know. This gives such megabrands stronger growth tailwinds and further expands their scale advantage.
In a largely fixed-cost industry like luxury, greater scale means higher margins or discretionary cost power. More discretionary cost power, for example in marketing spend, means the strongest brands get stronger, securing even more consumer awareness.
Scale provides megabrands with other advantages in branding and marketing, too. As megabrands are bigger, they can be first movers into new markets and therefore imprint themselves on new sets of customers. Scale also brings the opportunity to dwarf competitors on absolute marketing spend, while at the same time committing a smaller slice of sales to this spend.
What’s more, scale gives megabrands an edge in securing and retaining talent: a key advantage in an industry that’s getting faster and more complex every day. LVMH has notably been able to repeatedly attract top creative talent away from peers. This drives innovation — in products, in store design, in marketing strategies — which drives more traffic to stores.
More traffic to stores provides better retail economics, which largely hinge on productivity per square metre. Furthermore, shopping mall landlords are happy to offer better rental terms, higher capital contributions and better locations to megabrand traffic magnets.
Higher retail productivity, in turn, gives a brand the ability to achieve higher downstream retail integration, which allows higher price discipline and go-to-market grip. This helps to reduce brand trivialisation risk, and allows higher pricing stretch. Greater retail integration (both in stores and online) also provides better customer data, which offers advantages in customer relationship management.
Year after year, Vuitton has tapped this virtuous cycle to successfully defuse brand equity risks, while continuing to generate strong revenue and profit growth. A decade ago, Vuitton saw the risk of overwhelming the market with its popular canvas handbags and has since pushed its bag prices higher, curbing growth of handbag volumes, while offering entry-level consumers lower-priced products in small leather goods and newly introduced fragrances, with eyewear and beauty products no doubt to come.
Now, LVMH stablemate Dior is on its way to becoming a second fashion and leather goods powerhouse for the group. Our estimates suggest that, under chief executive Pietro Beccari and designer Maria Grazia Chiuri, the brand has grown revenues to almost €10 billion in 2021, while materially widening its profit margin.
A Future Jewellery Pillar
Meanwhile, LVMH’s Tiffany revamp is on the right track. After acquiring the jeweller in 2021, the group hit the ground running with a new heavyweight management team, who quickly deployed an effective “shock and awe” marketing strategy, reemphasised high-end products and pushed the brand online.
The branded jewellery category is structurally appealing, with plenty of blank space for expansion. Here, the risk of brand trivialisation is eminently manageable as jewellery is more discreet than handbags or shoes, and consumers attach higher intrinsic value to jewellery items, probably because of their connection to precious metals and gems and longer product lifespans. Jewellery has high average ticket value, doesn’t require large stores to be displayed and offers high gross margin. Plus, jewellery appeals to a broad consumer audience and has benefitted from market tailwinds through the pandemic.
LVMH’s Tiffany acquisition came on the back of the group’s successful integration of Bulgari. Between 2010 and 2019, Bulgari doubled sales while multiplying profit by five, according to LVMH chief Bernard Arnault. If Tiffany, starting from a much bigger base, follows the Bulgari blueprint, it could become one of LVMH’s top three brands, turning jewellery into another major pillar for the world’s largest luxury group.
Moncler Sees 46 Percent Bump in H1 Sales, Sets Plans for Stone Island
CEO Remo Ruffini said that despite myriad macro pressures Moncler Group exceeded expectations in the first half, thanks to double-digit gains at Moncler and Stone Island.
LONDON — Moncler Group barreled through the first half of the year, beating analysts’ expectations with a 46 percent surge in group revenues to 918.4 million euros at constant exchange, bolstered by a double-digit increases at Moncler and Stone Island and a “strong response” to the spring 2022 collections.
Revenue was around 3 percent ahead of consensus, while EBIT was 18 percent above market expectations, according to Bernstein, which described the results as “reassuring,” and Moncler Group as one of the top performers in this latest luxury earnings period. Barclays called the numbers “solid,” as did analysts at UBS.
Sales at the Moncler brand rose 27 percent to 724.3 million euros at constant exchange, with growth in the second quarter surging past pre-pandemic levels in all markets, with the exception of APAC.
The group’s Asia region, which includes APAC, Japan and South Korea, grew 16 percent in the first half driven by strong double-digit growth in the second quarter in South Korea and Japan. Revenues in South Korea more than doubled compared with pre-pandemic levels in the second quarter, while Japan followed with “solid and accelerating growth” compared with the previous quarter, the group said.
In APAC specifically, Moncler’s performance was negatively impacted by the lockdowns in mainland China. Around a third of stores were shut in April and May, although the group said June showed a “strong improvement” after those units reopened.
In EMEA, revenues increased by 42 percent, driven by “solid demand” from locals, and American tourists in particular. France, the Middle East and Germany contributed the most to Moncler’s growth of the second quarter.
Revenues in the Americas grew by 28 percent, with the U.S. leading the uptick.
First-half revenues at Stone Island reached 194.1 million euros, up 33 percent on a pro-forma basis. The business was consolidated onto the group’s balance sheet in April 2021.
Remo Ruffini, chairman and chief executive officer of Moncler, said the first half was marked by strong macroeconomic and geopolitical instability in Ukraine and Russia, the lockdowns in China and severe supply chain disruption.
Despite those macro pressures, he said the group exceeded expectations, driven by the contribution of Moncler and the newly acquired Stone Island.
“While the overall context remains uncertain and volatile, we head into our most important part of the year with confidence, underpinned by our strategy and the operational flexibility that has always made us stand out, together with a financial solidity and a clear vision oriented toward the continuous strengthening of the brands,” Ruffini said.
During the analyst call late Wednesday, Ruffini gave a special shoutout to South Korea, a market that he described as “best-in-class, and one of the most vibrant” regions for the group.
Looking ahead, he said Moncler needs to play a “long game” with regard to growth, and needs to stay nimble. “There can be no shortcuts,” he said.
In the second half, he also noted that the group will be marking two anniversaries — a 70th milestone for Moncler, and a 40th for Stone Island.
Roberto Eggs, chief business strategy and global markets officer, said he was “quite confident” that China’s rebound would continue into the second half, given that there are no more COVID-19-related lockdowns.
He noted that there was a positive response to the soft launch of Moncler’s brands on Tmall, and that neighboring markets such as Taiwan, Hong Kong and Macau were also coming back to life.
Like Ruffini, Eggs noted that Korea remains dynamic and was one of “the most resilient markets through the pandemic.”
Eggs added that Europe benefited from a flood of big-spending American tourists who accounted for some 10 percent of second-quarter sales in the EMEA region. “In Europe, the American tourists are back but the Japanese and Chinese are still missing,” he said.
The group’s EBIT in the period nearly doubled to 180.2 million euros, with a margin of 19.6 percent, while net income nearly quadrupled to 211.3 million. The increase in net income was due partly to an extraordinary tax benefit of 92.3 million euros related to Stone Island.
The group’s net financial position amounted to 356.3 million euros, compared to 729.6 million euros on Dec. 31, and 233.9 million euros on June 30, 2021. The company said dividend payments, a share buyback program and an upfront tax payment related to Stone Island contributed to the lower sum.
The company has big expansion plans for the second half, its golden sales period. Some 15 Moncler and Stone Island stores will open, with total capital expenditure for the year set to hit 160 million euros.
There are 238 Moncler stores and 54 Stone Island stores worldwide.
The group said it has also been taking control of the Stone Island distribution network. In the U.K., the brand’s most important market in Europe, Moncler is taking control of e-commerce and the Brewer Street store in London’s Soho. There are also plans to open concessions at Harrods and Selfridges within the next 18 months.
Moncler Group has inked a joint venture deal for Stone Island’s business in South Korea, while later this year a new concept Stone Island store will open in Chicago. According to Eggs, the interior design will encourage customers to “live and experience the brand” as they shop.
The group has also been putting a big focus on cultivating its year-round appeal.
While Moncler may have made its fortune selling shapely puffer jackets, it has been broadening its reach via the Moncler Genius brand and designer collaborations; the new focus on Grenoble ski clothing and tech-focused outerwear, and the acquisition last year of upscale street brand Stone Island.
Earlier this year, however, Ruffini’s decision to put a greater focus on the Moncler and Grenoble brands, and tweak the Moncler Genius strategy, was among the reasons the company’s shares fell by almost 6 percent in a single day in early May.
The shares fell after Ruffini announced during a Capital Markets Day that Moncler Genius could also be about “art, music, movies, sports,” in addition to fashion. His announcement coincided with a decision by the U.S. Federal Reserve to hike interest rates, which rattled markets worldwide, and dragged shares down.
A Moncler spokesperson said the strategy presented during Capital Markets Day in May had been “well received” by analysts and investors alike.
After Hours Summary: PI +11.3%, ETSY +8.1%, F +6.8%, NTGR +6.8% higher on earnings; solar stocks jump on Sen Mancin reaching energy deal; COUR -28%, TDOC -21.9%, COLM -9.2%, NOW -7.2%, META -4.4% QCOM -3% fall on earnings; BBY -2.7% falls on weak comp guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: WFRD +26.2%, PI +11.3%, NOVA +10.6%, ETSY +8.1%, F +6.8% (also increases dividend), NTGR +6.8%, MYOV +6.7%, LC +6.5% (also CFO to retire, names new CFO), MUSA +5.7%, AEM +5.6%, URI +5.2%, PLXS +5%, NOV +4.5%, PPC +3.6%, GFL +3.2%, AGI +3.1%, EEFT +2.6%, LXU +2.2%, FTI +2% (also authorizes new $400 mln share repurchase program; also reaffirms intent to initiate dividend in 2H23), RE +2%, ULCC +1.6%, OIS +1.5%, CSL +1.3%, MXL +0.9%, AWK +0.7%, NLY +0.6%, GGG +0.5%, CHE +0.4%, HOLX +0.4%, NCR +0.4% (also continues to pursue strategic review process), AR +0.3%, FTAI +0.3%, INVH +0.3%, AVB +0.2%, FBHS +0.2%, JBT +0.2% (also to acquire Bevcorp), MAA +0.2%, MSA +0.2%, KRC +0.1%, MC +0.1%, PDM +0.1%
Companies trading higher in after hours in reaction to news: RUN +7.6% (solar stocks higher as Sen. Manchin reaches deal on energy bill), FSLR +7.5% (solar stocks higher as Sen. Manchin reaches deal on energy bill), SPWR +6.7% (solar stocks higher as Sen. Manchin reaches deal on energy bill), CSIQ +4.9% (solar stocks higher as Sen. Manchin reaches deal on energy bill), JKS +3.5% (solar stocks higher as Sen. Manchin reaches deal on energy bill), SEDG +3.4% (solar stocks higher as Sen. Manchin reaches deal on energy bill), ENPH +2.4% (solar stocks higher as Sen. Manchin reaches deal on energy bill), DQ +2.1% (solar stocks higher as Sen. Manchin reaches deal on energy bill), SAVE +2% (SAVE terminates merger with ULCC; will continue discussions with JBLU), SCHW +2% (increases dividend and and authorizes $15 bln stock repurchase), PSTL +1.8% (increases dividend), ULCC +1.6% (SAVE terminates merger with ULCC; will continue discussions with JBLU), NMM +0.5% (to acquire a 36-vessel drybulk fleet for $835 mln), VSTO +0.4% (acquires Simms Fishing Products for $192.5 mln), LAZ +0.3% (increases dividend), RKLB +0.2% (Coverglass will power three Lockheed Martin OPIR GEO satellites), NOC +0.2% (awarded $533 mln US Army contract for M782), ABBV +0.2% (Allergan unit reaches deal to pay over $2 bln in opioid settlement, according to Bloomberg), LFG +0.1% (enters into RNG purchase and sale agreement with UGI Utilities), HUBB +0.1% (files mixed securities shelf offering)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: CYH -45.6%, COUR -28%, TDOC -21.9%, FORM -10.6%, NDLS -10.5%, COLM -9.2%, UPWK -8%, NOW -7.2%, MEOH -6.6%, PEGA -6.4%, SNBR -6.1%, EGHT -5.6%, META -4.4% (also names new CFO), CNMD -3.6%, ICLR -3.5%, ORLY -3.5%, QS -3.5%, CINF -3.2%, WFG -3.2%, CTSH -3%, QCOM -3%, BOOT -2.7%, BBY -2.7% (expects JulQ comps of -13%, lowers FY23 comp guidance to -11%), ALGN -2.5%, OMF -2.4%, TROX -2.1%, PTC -2%, EQT -1.9% (also increases dividend), KGC -1.9%, CG -1.5%, CAKE -1.3%, FLEX -1.3%, LRCX -1.2%, AM -1.1%, SIMO -1.1%, HP -1%, ACHC -0.6%, VICI -0.6%, GL -0.3%, MTH -0.3%, CLB -0.2%, STC -0.2%, ASGN -0.1% (also authorizes new $400 mln share repurchase program), CCS -0.1%, MOH -0.1%, OII -0.1%, RJF -0.1%
Companies trading lower in after hours in reaction to news: LXRX -20.5% (commences stock offering), FMS -8.8% (Fresenius SE & Co. KGaA sees worsening headwinds), DVA -5.2% (Fresenius SE & Co. KGaA sees worsening headwinds), REGN -4.7% (scientists uncover rare genetic loss-of-function mutations in the CIDEB gene), GWRS -2.8% (commences stock offering), JBLU -0.8% (SAVE terminates merger with ULCC; will continue discussions with JBLU), TPTX -0.4% (gets positive feedback from FDA at a pre-NDA meeting), AUY -0.4% (announces "positive" exploration results at both Odyssey and Wasamac)