>>> Mosaic misses by $0.06, misses on revs; updates F716 guidance

Mosaic misses by $0.06, misses on revs; updates F716 guidance
  • Reports Q2 (Jun) earnings of $0.06 per share, excluding $0.09 non-recurring items, $0.06 worse than the Capital IQ Consensus of $0.12; revenues fell 32.7% year/year to $1.67 bln vs the $1.75 bln Capital IQ Consensus.
For calendar year 2016, Mosaic updated its guidance as follows:
  • SG&A expense to range from $330-350 mln, down from the initialguidance of $350-370 mln.
  • Brine management costs to range from $150-170 mln, down from $160-180 mln.
  • Capital expenditures to range from $750-850 mln, down from the Company's most recent guidance of $800-900 mln. E
  • CRT to range from $95-110 mln; the Company will no longer provide CRT rate guidance.
  • The effective tax rate to be approximately 10%, down from priorguidance of upper teens.
All other full year 2016 guidance remains unchanged
  • Phosphates sales volumes to range from 9-9.75 mln tonnes.
  • Potash sales volumes to range from 7.5-8 mln tonnes.
  • International Distribution sales volumes to range from 6-7 mln tonnes.

>>> Pfizer beats by $0.02, beats on revs; reaffirms FY16 guidance

Pfizer beats by $0.02, beats on revs; reaffirms FY16 guidance
  • Reports Q2 (Jun) earnings of $0.64 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.62; revenues rose 10.9% year/year to $13.15 bln vs the $13.01 bln Capital IQ Consensus, which reflects operational growth of $1.6 billion, or 13%, partially offset by the unfavorable impact of foreign exchange of $302 million, or 3%. Ex-the contribution of legacy Hospira operations of $1.1 billion and FX, Pfizer-standalone revenues increased by $458 million operationally, or 4%.
    • Revenues in developed markets grew $1.5 billion, or 17%, operationally, driven primarily by the inclusion of $1.1 billion of revenues from legacy Hospira operations and continued strong performance of several key products, notably Ibrance in the U.S., Eliquis, as well as Xeljanz and Lyrica, both primarily in the U.S. Operational revenue growth in developed markets was partially offset primarily by lower revenues for Prevnar 13 in the U.S., the loss of exclusivity and associated generic competition for Zyvox, primarily in the U.S. and certain developed Europe markets, and Lyrica in certain developed Europe markets, as well as the December 31, 2015 expiration of the collaboration agreement to co-promote Rebif in the U.S.
    • In emerging markets, revenues increased $116 million, or 4%, operationally, reflecting the favorable impact of the addition of legacy Hospira operations, which contributed $78 million and the performance of certain Essential Health products primarily in China partially offset primarily by lower revenues for Prevenar 13.
  • Co reaffirms guidance for FY16, sees EPS of $2.38-2.48, excluding non-recurring items, vs. $2.45 Capital IQ Consensus Estimate; sees FY16 revs of $51-53 bln vs. $52.6 bln Capital IQ Consensus Estimate.

>>> Avon Products misses by $0.05, beats on revs

Avon Products misses by $0.05, beats on revs
  • Reports Q2 (Jun) loss of $0.02 per share, excluding non-recurring items, $0.05 worse than the Capital IQ Consensus of $0.03; revenues fell 8.3% year/year to $1.43 bln vs the $1.4 bln Capital IQ Consensus.
    • Gross margin was 60.6%, down 40 basis points while Adjusted gross margin was 60.6%, down 70 basis points. These year-over-year comparisons were negatively impacted by an approximate 290 basis point impact from foreign exchange, partially offset by pricing actions, favorable mix and lower supply chain costs.
    • Operating margin was 6.6% in the quarter, up 90 basis points while Adjusted operating margin was 7.3%, up 100 basis points. These year-over-year comparisons benefited from the favorable net impact of price/mix, as well as continued benefits from cost savings initiatives, partially offset by approximately 350 basis points of unfavorable impact of foreign exchange.

>>> Molson Coors [SABMiller (SBMRY), Molson Coors (TAP): JV] reports Q2 results

Molson Coors [SABMiller (SBMRY), Molson Coors (TAP): JV] reports Q2 results
  • Underlying net income, a non-GAAP measure, decreased 3.8 percent to $468.8 million. U.S. GAAP net income was $429.5 million, down 11.8 percent, driven by special items related to the closure of the Eden Brewery, as well as the timing of shipments due to year-over-year calendar shifts.
    • IFRS EBITA decreased 3.3 percent to $492.9 million.
  • Total net sales decreased 3.5 percent to $2.127 billion. Domestic net revenue per barrel grew 0.7 percent for the quarter as a result of favorable net pricing and positive sales mix. Total company net revenue per barrel, including contract brewing and company-owned distributor sales, increased 0.6 percent for the quarter.
    • Third-party contract brewing volumes were down 1.3 percent for the quarter. Domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 0.7 percent. Domestic sales-to-retail volume (STRs) decreased 1.7 percent. Domestic sales-to-wholesalers volume (STWs) decreased 4.4 percent.

(HSBC) Europe Super Ten : Adding Danone & Total, Removing Orange & RDSA

Adding Danone and Total, removing Orange and Royal Dutch Shell

* Adding Danone (BN FP; EUR68.88; Buy)
We are attracted to Danone because if offers non-EU exposure and earnings
visibility, two key attributes at a time of heightened economic and political uncertainty
in Europe (see European Radar: The eye of the storm, 29 July 2016). The Q2 results
beat expectations and we see strong underlying fundamentals supporting continued
top-line growth, which we expect to average c5% over the forecast period to 2020e.
This underpins our forecast that Danone will generate c8% EPS CAGR (2014-20e).

* Removing Orange (ORA FP; EUR13.69, Buy)
We still have a Buy rating on Orange, but remove it from the portfolio because we
believe that Danone offers a more attractive investment opportunity.

* Removing Royal Dutch Shell A (RDSA LN; GBp1944, Buy)
We retain a Buy rating on Shell as we believe its long-term free cash outlook
supports the dividend outlook. However, we now see fewer catalysts following the
closure of the BG deal in February and the 7 June strategy update.

(UBS) European Equity Strat. : Value gaps within Europe – biggest in World

Value gaps within Europe – biggest in World

We also show some cheap and expensive stocks within European sectors

Investors dislike Value: pushing European Value Gap back to Tech Bubble High
It may not feel like a great time for value, but we wanted to highlight that the pay-back for buying European value is back to its 16-year high. Widening value gaps suggests lack of trust. These gaps open up within sectors when investors desperately crowd around the BEST stocks per sector and drop the rest. We’ve been asked if Europe's Gap is unique? While the Developed World Gap is almost as big, it is driven by firstly Europe, then Japan and finally EM. Why do we care? If there is any unexpected 'good news', history suggests that the Value pay-back from here is +20% over the next 6, 9 and 12m

Europe's gap biggest in World - US & UK fall to half of their 2000 peaks
The US: it was a haven away from Europe's woes. Since May 2007, US beat European equities by 60% pushing its value gap to half its 2000 peak (Figure 2). Plus, on Price to Book Europe vs the US has not been this cheap at any point in the euro crisis. The UK: even after a Leave Vote, the UK's valuation dispersion fell and PE rose to 16x (a post 2000 high). Plus, the valuation discount between the Estoxx 50 and FTSE100 is also
bigger today than at any point in the crisis.

Are we naïve to be looking at European Value now? Tactical swings happen
We are not saying European equities are without risk (profit & political risk spring to mind). But we are saying that today style gaps look priced for things to be as bad or worse than the darkest days of the crisis. Could crowding around Safety also be a risk?

We look for value: for tactical swings and/or long run investing
We suggest taking some profits and nibbling on Europe relative to the US, Estoxx 50 relative to FTSE100 and to look for left-behind value stocks within European sectors. If hesitant, perhaps start with left-behind stocks within the more defensive sectors. See sectors with widest dispersion gaps – 15 are wider than in March 2009 (page 3). See
also cheap vs expensive stocks within European sectors