JPM Consumer Staples 202 2022-12-01 4272275

J P M O R G A N Europe Equity Research
1 December 2022
Consumer Staples 2023 Outlook

Readying for the pivot: Stay defensive, lighten up on
growth
European Consumer Goods and

Our posture on the European Staples is more than ever one of balance: on Beverages
one side, backing defensive visibility amid high macroeconomic
Celine Pannuti, CFA AC
uncertainties. On the other side, preparing for a mid-term regime change (44-20) 7134-7123
which should result in further multiples contraction and convergence. Over celine.pannuti@jpmorgan.com
the next two years, we see a convergence of top-line and EPS delivery Bloomberg JPMA PANNUTI <GO>
J.P. Morgan Securities plc
amongst stocks and subsectors which make us believe that the multiples
Jared Dinges AC
convergence witnessed in 2022 (derating of growth stocks) has further legs. (44-20) 7134-3951
With the recent FX moves, we lower EPS23/24 by 2-3% and expect 7-9% jared.dinges@jpmorgan.com
earnings growth in FY23 across sub-sectors. On balance, we see risk tilting Bloomberg JPMA DINGES <GO>
to the upside from better pricing, China reopening, commodities and
Ankur Gupta
energy price declines though we are more cautious on FY24 as we see a (91-22) 6157-5999
gradual degradation of demand as consumers adjust to higher cost of living ankur.x.gupta@jpmorgan.com
and weakening macro KPIs (risk of global recession, rising unemployment, J.P. Morgan India Private Limited
lower savings rates). In terms of stock selection: 1) we believe a defensive Edward G Hockin
(44-20) 7742-6937
quality stance is the most appropriate to navigate the ST – we are OW
edward.hockin@jpmorgan.com
Nestle, Kerry, Diageo, Pernod Ricard, 2) we are downgrading quality J.P. Morgan Securities plc
expensive stocks L’Oreal, Campari (both from OW to N), Remy Philip Spain
Cointreau and Givaudan (both from Neutral to UW), and 3) (44-20) 7742-6370
increasingly warming up to value names; Danone (OW, AFL), Reckitt philip.spain@jpmorgan.com
(OW), ABI (OW, and we add to AFL), CCEP (OW). We also upgrade
Ines Lo Franco
Essity to N (from UW). Please refer to our industry outlook slide deck. (44-207) 1347-360
ines.lofranco@jpmorgan.com
● Earnings resilience and convergence towards ~7-9% in FY23E. We
adjust FY23E/24E EPS, lowering by 2-3% though this mainly reflects Specialist Sales contact details:
recent FX moves. We expect EPS growth to remain resilient in FY23E Olivia Barrios Petronilho - Sales and
at 9%/7%/9%/8%/3% in Bevs/Food/HPC/Ingredients/Tobacco Trading
(44-20) 3493-3709
respectively led by top-line. We see 1) top line slowing from high FY22 olivia.b.petronilho@jpmorgan.com
levels though pricing should remain a support and surprise positively
(roll-over from 2022 and new 2023 price increases), 2) pressures on
volumes and down-trading should worsen but absent a major economic
event, we see this as rather a progressive adjustment which makes us
more cautious on 2024 top line, 3) margin outlook is mixed with likely
pressures from high cost inflation (hedges raw materials, energy and
salaries) though we see scope for margin increase in H223/FY24 on
Food and HPC with a more cautious view on Beer, 4) increasing but
manageable impact from higher debt costs with relatively healthy
balance sheets.
● High Valuation at risk of further derating, especially on highly
valued stocks. Into an economic slowdown we expect the stock rating
to keep converging (please see our recent note, “EU Staples: Anatomy
of a Cycle”). The European Staples sector has derated by ~25% since
See page 131 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of min.wu@min-capital.com.
Celine Pannuti, CFA Europe Equity Research
(44-20) 7134-7123 1 December 2022 JPMORGAN
celine.pannuti@jpmorgan.com
the Dec-21 peak, from 26x to 20x NTM PE, concomitant with increasing bond
yields with US 10Y reaching close to 4%. Looking at history, we see the risk of
a valuation normalisation towards a historical level of mid- to high-teens P/E
driven by structurally higher yields. Besides, we believe a deceleration of top-
line growth could increasingly become a key reason to anchor valuation at these
levels with an increasing risk on multiple convergence hitting high-valued stocks
most. From a subsector perspective: we believe Tobacco and Food should be
most favoured while we are most cautious on Ingredients whose valuation
remains high. As the market pivot to a slower growth environment, we expect an
increased focus on PEG and FCF yield metrics.
● Beverages. Into 2023 we see de-rating risks for the highly rated names (Remy
Cointreau downgraded to Underweight, Campari downgraded to Neutral)
and are cautious on European Beer exposure. Stock Views: We remain OW
Diageo as a high-quality defensive play in spirits with a strong execution track
record. We also stay OW Pernod Ricard with strong momentum in key markets
(and the most attractive valuation within Spirits). We downgrade Remy
Cointreau to UW as we believe US demand headwinds could persist into FY24,
driving downside to estimates, while its valuation leaves little downside
protection during a slowdown. We downgrade Campari to N on worries about
further cost pressures in 2023, in addition to European demand concerns
(including potential on-trade weakness) and a relatively high valuation that could
converge towards peers. This week we double-upgraded ABI to OW (and today
add it to AFL) as we see upside to 2023 forecasts with reducing balance sheet risk
and an attractive valuation, while we downgraded Carlsberg to UW and
Heineken to N on European beer concerns amid substantial COGS inflation
(with CARLB also trading at a premium to Beer peers). In our note this week, we
placed Carlsberg on Negative Catalyst Watch into FY22 results on 7 February.
In Soft Drinks, we remain OW CCEP and OW Britvic as defensive names with
strong FCF support that should outperform during a downturn, while we are more
cautious on CCH (N) due to the potential significant demand headwinds in most
of its markets (C&E Europe, Nigeria), though valuation is attractive and a Russia
recovery could surprise to the upside. We see Fevertree (N) as likely to be
pressured from a valuation and earnings standpoint by a slowdown, though any
signs of relief in the ongoing cost pressures could drive margin estimates
materially higher.
● Food. We continue to prefer Nestle (OW) as Quality and Danone (OW) as
Value, while being cautious on Unilever and JDEP (both UW). Stock View:
Nestle (OW): We expect Nestle overall to post amongst the most resilient
volumes in 2023E, with RIG +0.5% and LFL +6.2%, with a path to margin
recovery leading to good visibility, superior earnings compounding and balance
sheet optionality as reiterated recently at the CMD. Danone (OW): The
turnaround potential remains underappreciated at current valuation. Despite
headwinds, we expect ex-Russia volumes to remain resilient (JPMe -0.7% 2023
and LFL +5.3%). with margin building up in FY23 . Unilever (UW): Unilever
will continue to see the worst volume/mix pressures in 2023E (JPMe -2.0%) with
margin recovery likely constrained by much needed reinvestments. While the
stock has benefited in FY22 from news of activism the path to unlocking value
remains unclear to us as we await the nomination of a new CEO. JDEP (UW):
The company is likely to face challenges from pricing rollover as coffee prices
2

decline while the scale of market share losses in CPG Europe is concerning. With
slowing top line, we expect the weakest EPS growth in FY23.
● HPC. Into 2023, as we expect sectors’ valuations to converge, we see further
derating risks for growth/ quality (L’Oreal downgraded to Neutral) vs Value
(raise Essity to Neutral). Stock View: We remain OW Reckitt with the stock
trading at valuation multiples near 10-year lows, though we also remove from
AFL given the uncertainty over the CEO succession. We downgrade L’Oreal to
N (from OW) even as we remain confident in its superior delivery in Beauty due
to narrowing of growth vs HPC peers and risk of derating. We upgrade Essity
to N (from UW) as we believe that Q422 will likely witness earnings and
operating margin trough with recovery in profitability over FY23.. We remain
Neutral on Beiersdorf: the stock remains expensive and we see limited upside
risks as we model FY23 in line with management’s long-term guide of +5% LFL
and >50bps margin rise. The potential of raising dividend payout may be a
support in the ST. Henkel (N): With increasing volume elasticities and signs of
cracks in industrial demand, we remain on the sidelines. We are cautious on
Haleon (UW): Into 2023 we expect overall volumes growth to be more subdued
(JPMe +0.4%) with modest margin leading to among the slowest EPS growth
while the stock now trades at a premium to peers.
● Ingredients. We are cautious on Ingredients sector into 2023E as the sector’s
valuation premium may come under pressure from weaker customer
demand amidst a macro slowdown and destocking risk. Stock Views: Kerry
(OW): Kerry, in our view, remains a relative defensive play in the sub-sector with
relative resilience in T&N volumes which we expect to be +3% in 2023E. We
downgrade Givaudan to UW (from N): We see Givaudan as less defensive
against this set-up than peers, yet still commanding the highest valuation
multiples in the sector. In 2023, we expect this more modest top-line development
to continue, at JPMe LFL +4.0%, with volumes broadly flat. Visibility on margin
is low, and we expect pedestrian earnings growth in 2023E vs broader European
Staples. Chr Hansen (N): Though the set-up into Q1 appears solid, the visibility
on the remainder of the year is low amidst slower end markets and ability to drive
up pricing (which lagged in FY22) without offsetting volume pressures. Symrise
(N): While not immune to headwinds facing Ingredients in 23e, we also see
underlying strengths in Symrise’s portfolio that may offset the weak underlying
backdrop – most notably continued strong growth in Pet Care.
● Tobacco. We find the sector attractive into 2023 given its defensive nature
and strong support from shareholder returns, with more limited valuation
downside in a downturn. Stock Views: We remain OW BAT as we continue to
see upside risk in US NGP from competitor exits, while downtrading in European
Heated Tobacco could benefit market share and ongoing buybacks should
provide support. We stay OW Imperial Brands driven by strong market share
momentum in its key markets, sizeable share buyback support, and increasingly
apparent upside in its NGP business with further market launches during 2023.
We see less upside for Philip Morris (N) as valuation remains near four-year highs
and we have concerns about the potential impact from downtrading on its Heated
Tobacco business, though the rollout of IQOS ILUMA in Europe in 2023 should
help to accelerate Heated Tobacco volume growth.

Equity Ratings and Price Targets

Mkt Cap Price Rating Price Target
Company Ticker ($ mn) CCY Price Cur Prev Cur End Date Prev End Date
Anheuser Busch InBev ABI BB 100,577.90 EUR 56.05 OW n/c 70.00 Dec-24 n/c n/c
Anheuser-Busch InBev (ADR) BUD US 102,303.10 USD 58.89 OW n/c 70.00 Dec-24 n/c n/c
Britvic BVIC LN 2,567.90 GBp 804 OW n/c 1,050 Dec-24 1,000 Dec-23
Davide Campari-Milano NV CPR IM 11,973.39 EUR 10.03 N OW 11.00 Dec-24 13.50 Dec-23
Carlsberg CARLB DC 17,607.16 DKK 893.40 UW n/c 800.00 Dec-24 n/c n/c
Coca-Cola Europacific Partners CCEP US 24,211.16 USD 53.09 OW n/c 66.50 Dec-24 60.00 Dec-23
Coca-Cola Europacific Partners (Euro) CCEP NA 23,600.45 EUR 50.10 OW n/c 66.50 Dec-24 60.00 Dec-23
Coca-Cola Hellenic Bottling Company CCH LN 8,812.41 GBp 2,015 N n/c 2,200 Dec-24 1,900 Dec-23
Diageo DGE LN 105,497.20 GBp 3,808 OW n/c 4,500 Dec-24 4,350 Dec-23
Fevertree Drinks FEVR LN 1,622.53 GBp 1,165 N n/c 1,200 Dec-24 1,100 Dec-23
Heineken HEIA NA 52,632.16 EUR 88.46 N n/c 100.00 Dec-24 n/c n/c
Pernod-Ricard SA RI FP 51,041.29 EUR 188.95 OW n/c 220.00 Dec-24 250.00 Dec-23
Remy Cointreau SA RCO FP 8,586.25 EUR 164.80 UW N 145.00 Dec-24 205.00 Dec-23
Royal Unibrew RBREW DC 3,265.33 DKK 486.10 N n/c 500.00 Dec-24 575.00 Dec-23
Chr. Hansen CHR DC 8,072.19 DKK 436.60 N n/c 460.00 Dec-24 415.00 Dec-23
Danone BN FP 33,425.76 EUR 50.08 OW n/c 65.00 Dec-24 70.00 Dec-23
Givaudan GIVN SW 30,172.02 CHF 3,161.00 UW N 2,840.00 Dec-24 2,700.00 Dec-23
JDE Peet's JDEP NA 15,271.56 EUR 29.50 UW n/c 28.00 Dec-24 29.00 Dec-23
Kerry Group KYGA ID 16,514.05 EUR 90.94 OW n/c 118.00 Dec-24 135.00 Dec-23
Nestle NESN SW 331,045.30 CHF 113.12 OW n/c 130.00 Dec-24 n/c Dec-23
Symrise SY1 GR 15,722.72 EUR 108.90 N n/c 110.00 Dec-24 107.00 Dec-23
Beiersdorf BEI GR 24,343.03 EUR 103.90 N n/c 105.00 Dec-24 n/c Dec-23
Essity ESSITYB SS 16,908.32 SEK 254.70 N UW 280.00 Dec-24 220.00 Dec-23
Haleon HLN LN 31,355.84 GBp 284 UW n/c 250 Dec-24 n/c Dec-23
Henkel HEN3 GR 28,475.67 EUR 68.22 N n/c 70.00 Dec-24 65.00 Dec-23
L'Oréal OR FP 206,547.80 EUR 354.80 N OW 350.00 Dec-24 400.00 Dec-23
Reckitt RKT LN 50,739.44 GBp 5,948 OW n/c 7,500 Dec-24 8,500 Dec-23
Unilever NV UNA NA 130,075.60 EUR 48.26 UW n/c 45.00 Dec-24 43.00 Dec-23
Unilever plc ULVR LN 129,248.10 GBp 4,144 UW n/c 3,900 Dec-24 3,600 Dec-23
British American Tobacco BATS LN 92,890.82 GBp 3,391 OW n/c 4,000 Dec-24 4,500 Dec-23
Imperial Brands PLC IMB LN 24,137.90 GBp 2,125 OW n/c 2,350 Sep-24 n/c n/c
Philip Morris International PM US 154,986.80 USD 99.67 N n/c 95.00 Dec-23 n/c n/c
Swedish Match SWMA SS 17,007.95 SEK 115.05 N n/c 116.00 Dec-23 n/c n/c
Source: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 30 Nov 22.

Table Of Contents
Beverages - Investment Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Anheuser Busch InBev . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Britvic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Campari. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Carlsberg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Coca-Cola Europacific Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Food & Ingredients Investment Case. . . . . . . . . . . . . . . . . . . . . . . 9
Chr Hansen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Danone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Givaudan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
JDE Peet’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Kerry Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Nestle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Symrise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
HPC Investment Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Beiersdorf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Essity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Haleon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Henkel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
L’Oreal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Reckitt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Unilever . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Tobacco Investment Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
British American Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Imperial Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Adj. EPS Estimate Changes

Company BBG Ticker CCY FY1E Prev Cur ∆ FY2E Prev Cur ∆
Anheuser Busch InBev ABI BB USD '22 2.88 2.88 - '23 3.35 3.35 -
Anheuser-Busch InBev (ADR) BUD US USD '22 2.88 2.88 - '23 3.35 3.35 -
Britvic BVIC LN GBP '22 57.26 57.26 - '23 57.73 57.73 -
Davide Campari-Milano NV CPR IM EUR '22 0.34 0.35 0.00 '23 0.39 0.37 (0.02)
Carlsberg CARLB DC DKK '22 55.42 55.42 - '23 52.78 52.78 -
Coca-Cola Europacific Partners CCEP US EUR '22 3.40 3.41 0.00 '23 3.63 3.63 (0.01)
Coca-Cola Europacific Partners (Euro) CCEP NA EUR '22 3.40 3.41 0.00 '23 3.63 3.63 (0.01)
Coca-Cola Hellenic Bottling Company CCH LN EUR '22 1.65 1.65 (0.00) '23 1.61 1.56 (0.04)
Diageo DGE LN GBP '23 182.25 179.70 (2.54) '24 201.73 192.22 (9.51)
Fevertree Drinks FEVR LN GBP '22 22.82 21.85 (0.96) '23 27.39 25.66 (1.73)
Heineken HEIA NA EUR '22 4.87 4.87 - '23 5.17 5.17 -
Pernod-Ricard SA RI FP EUR '23 9.89 9.79 (0.10) '24 10.85 10.57 (0.28)
Remy Cointreau SA RCO FP EUR '23 5.86 6.03 0.17 '24 6.56 6.13 (0.44)
Royal Unibrew RBREW DC DKK '22 25.45 25.45 - '23 26.14 25.30 (0.84)
Chr. Hansen CHR DC EUR '23 2.04 2.02 (0.02) '24 2.25 2.22 (0.03)
Danone BN FP EUR '22 3.47 3.47 0.00 '23 3.74 3.71 (0.03)
Givaudan GIVN SW CHF '22 99.70 99.70 (0.00) '23 112.23 103.43 (8.80)
JDE Peet's JDEP NA EUR '22 1.87 1.90 0.03 '23 1.99 1.92 (0.07)
Kerry Group KYGA ID EUR '22 4.39 4.39 - '23 4.95 4.85 (0.10)
Nestle NESN SW CHF '22 4.82 4.81 (0.01) '23 5.30 5.17 (0.14)
Symrise SY1 GR EUR '22 3.72 3.74 0.01 '23 3.84 3.94 0.10
Beiersdorf BEI GR EUR '22 3.58 3.55 (0.03) '23 3.93 3.75 (0.18)
Essity ESSITYB SS SEK '22 9.35 9.64 0.29 '23 14.19 14.54 0.35
Haleon HLN LN GBP '22 18.82 18.92 0.10 '23 19.34 19.61 0.26
Henkel HEN3 GR EUR '22 3.94 3.97 0.04 '23 4.42 4.19 (0.23)
L'Oréal OR FP EUR '22 11.15 11.08 (0.06) '23 12.18 11.84 (0.34)
Reckitt RKT LN GBP '22 354.04 350.81 (3.23) '23 370.73 340.67 (30.06)
Unilever NV UNA NA EUR '22 2.62 2.62 (0.00) '23 2.85 2.78 (0.07)
Unilever plc ULVR LN GBP '22 221.24 220.89 (0.35) '23 239.62 233.78 (5.83)
British American Tobacco BATS LN GBP '22 369.68 371.04 1.36 '23 408.12 403.07 (5.05)
Imperial Brands PLC IMB LN GBP '23 289.93 289.93 - '24 321.72 321.72 -
Philip Morris International PM US USD '22 5.87 5.87 - '23 5.41 5.41 -
Swedish Match SWMA SS SEK '22 4.49 4.49 - '23 5.61 5.61 -
Source: Bloomberg Finance L.P., J.P. Morgan estimates.

Beverages - Investment Cases

Anheuser Busch InBev
Investment Case & Valuation
Best known for extracting synergies and efficient operations, ABI’s transition to a
higher-quality top-line growth story is well underway; we model +8.8% organic sales in
FY23E (vs cons +6.7%) supported by sustainable LatAm momentum, and contrary to
investor concerns we see upside to the US and China. Alongside easing COGS inflation
from H223, we believe ABI can deliver EBITDA growth above its MT guide in FY23E
(JPMe +8.7% vs +4-8% MT guide) and at the top end of its guidance range over the MT
(JPMe +7.6%) with best-in-class teens EPS CAGR from FY23E onwards and an
attractive valuation, and therefore add it to the AFL. On our estimates, shares currently
trade on 14.9x 2024 P/E and 8.4x EV/EBITDA vs EU Beverages on 16.7x/10.8x.
Upside / Downside Risks

We see several sources of upside. Supported by the global commodities cycle, we
believe LatAm (50% of group EBITDA) can sustain positive volume momentum
through at least FY23E (albeit at a slower rate than FY22E). ABI’s US business (30%)
is benefitting from an underappreciated rebound of domestic light beer while recent
NielsenIQ data suggests price/mix could outperform expectations. Consensus also bakes
in limited recovery in China, with Asia Pacific (11%) EBITDA estimates still c50%
below pre-pandemic trend. On the downside, FX remains the key risk. Operationally
there is downside risk from deterioration in LatAm economic conditions, or another
spike in beer input costs (eg. aluminum and barley).
Key metrics
Figure 1: ABI: LFL by division, FY20-24e Figure 2: ABI: Summary P&L, FY20-24e
FY20 FY21 FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E
Sales 46,880 54,304 58,379 61,780 65,177 Sales 46,880 54,304 58,379 61,780 65,177
Sales Growth -10.4% 15.8% 7.5% 5.8% 5.5% GM 58.1% 57.5% 54.5% 53.7% 53.7%
FX -6.5% 0.7% -4.2% -2.9% -0.7% Distribution % sales 10.9% 10.8% 10.6% 10.4% 10.2%
M&A/ others -0.1% -0.4% -0.6% 0.0% 0.0% Sales & marketing % sales 14.6% 13.4% 13.1% 12.8% 12.5%
Admin % sales 7.3% 8.1% 6.5% 6.0% 6.0%
Organic sales growth EBIT 12,723 14,438 14,930 15,665 16,864

North America 0.7% 3.2% 2.6% 2.2% 0.4% % Margin 27.1% 26.6% 25.6% 25.4% 25.9%
Middle Americas -9.5% 24.8% 15.1% 10.7% 7.5% % Growth -22.5% 13.5% 3.4% 4.9% 7.7%
South America 7.7% 26.3% 29.9% 18.1% 12.3%
EMEA -10.6% 18.3% 13.6% 5.9% 6.2% Net Financials -7,697 -5,609 -4,008 -4,416 -4,011
Asia Pacific -12.7% 14.7% 3.9% 8.1% 5.4% Tax -1,932 -2,350 -2,806 -3,150 -3,599
Global Export & Holding -4.1% 17.9% 1.2% 6.1% 6.1%
Adj. Net Profit 805 4,832 7,771 8,099 9,254
Adj. EPS 2.51 2.88 2.88 3.35 3.88

% Growth -31% 14% 0% 16% 16%
Source: J.P. Morgan estimates, Company data. Source: J.P. Morgan estimates, Company data.

Figure 3: ABI: Summary Balance Sheet, FY20-24e Figure 4: ABI: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 15,648 12,471 14,518 14,376 14,183 Operating Profit 12,723 14,438 14,930 15,665 16,864
Current assets 26,519 23,948 25,285 24,519 23,703 Depreciation and Amortisation 4,598 4,771 4,999 5,240 5,492
Fixed assets 26,419 26,678 26,495 26,198 25,920 Cash Earnings 17,321 19,209 19,929 20,905 22,356
Total Assets 226,409 217,626 218,780 217,717 216,623 Change in Working Capital 592 2,459 1,065 935 934
Capital Expenditure -3,781 -5,640 -4,816 -4,942 -5,214
Short Term Debt 3,086 1,461 1,461 1,461 1,461 Free Cash Flow 7,120 9,302 7,812 8,779 9,926
Current Liabilities 32,352 32,723 33,078 33,390 33,701
Long Term Debt 95,478 87,369 80,369 73,369 65,369 Net increase/(decrease) from
-8,294 -8,511 -7,000 -7,000 -8,000
Shareholders Equity 68,024 68,669 75,100 79,967 85,911 borrowings
Total Liabilities and Equity 226,409 217,626 218,780 217,717 216,623 Dividends & buybacks -1,800 -2,364 -1,265 -1,921 -2,120
Total Change in Cash 7,994 -3,203 2,047 -142 -193

Britvic
Britvic is #2 in UK & Ireland soft drinks with leading niche positions in France and
Brazil juices and concentrates. Britvic delivered a strong finish to FY22 with +15.5%
FY22 organic sales (H2 +13.1%) and EPS 3.4% ahead despite input cost pressures,
driven by strong cost discipline. We expect 2023 to be another year of input cost
pressure amid a tougher consumer environment and forecast organic sales +7.4% driven
by price/mix, but mostly offset by cost pressures below the top line and therefore
forecast EPS +0.8%. Having reached 1.9x ND/EBITDA we continue to model £75m of
share buyback per annum with a combined 8% Dividend + SBB yield for FY23E that
we believe should provide support amid near-term uncertainty. While the EPS growth
outlook is not the fastest in our coverage and with a still volatile/inflationary raw
material environment, we see Britvic as a relatively defensive play within Beverages at
an attractive valuation. We raise our Dec-24 PT to 1,050p (vs Dec-23 1,000p prior) as
we move to a DCF-based valuation approach (to better capture interest rate changes)
with an 8.6% WACC and 2.0% LT growth rate. On our estimates, shares currently trade
on 12.5x 2024 P/E and 8.9x EV/EBITDA vs EU Beverages on 16.7x/10.8x.

Volumes could hold up better than expected (JPMe organic volumes +0.3%) despite
price increases given the defensive nature of the category, while on the cost-side
efficiencies from supply chain investments may provide more support than expected. On
the downside, while Britvic is 70% hedged for 2023, further inflation in could drive an
additional increase in cost pressures which may therefore again lag price increases
passed on to customers. Furthermore, after 8.6% price/mix increase in FY22, price
elasticity may increase in 2023 and Britvic may face some resistance from customers to
pricing above that planned, particularly should volumes begin to soften.
Key metrics
Figure 5: Britvic: LFL by division, FY21-25e Figure 6: Britvic: Summary P&L, FY21-25e
Sales 1,405 1,618 1,755 1,815 1,886 Sales 1,405 1,618 1,755 1,815 1,886
Sales Growth -0.5% 15.2% 8.4% 3.4% 3.9% GM 41.5% 41.1% 40.0% 40.2% 40.4%
Organic change 6.3% 15.5% 7.4% 3.4% 3.9% Fixed supply chain % sales 8.7% 7.8% 7.6% 7.5% 7.5%
FX impact -1.8% -0.3% 1.0% 0.0% 0.0% Selling costs % sales 5.3% 5.1% 5.0% 4.9% 4.9%
Other impact -5.0% 0.0% 0.0% 0.0% 0.0% Overheads and other % sales 9.0% 8.1% 7.9% 7.8% 7.6%
Reported sales growth EBIT 177 206 215 230 247

GB 8.0% 15.1% 7.1% 2.6% 3.3% % Margin 12.6% 12.7% 12.3% 12.7% 13.1%
Brazil 0.9% 25.3% 17.6% 10.3% 10.3% % Growth 6.5% 16.7% 4.4% 7.1% 7.4%
Rest of World -19.2% 11.9% 8.7% 3.0% 3.0%
Net Financials -18 -17 -23 -25 -26
Organic sales growth Tax -41 -36 -42 -49 -53
GB 8.0% 15.1% 7.1% 2.6% 3.3%
Brazil 21.0% 15.7% 12.5% 10.0% 10.0% Adj. Net Profit 110 144 142 148 160
Rest of World -1.3% 16.5% 6.3% 3.0% 3.0%
Adj. EPS 44.27 57.26 57.73 62.35 69.69
% Growth 2.5% 29.4% 0.8% 8.0% 11.8%

Figure 7: Britvic: Summary Balance Sheet, FY21-25e Figure 8: Britvic: Summary Cash Flow Statement, FY21-25e
Cash and cash equivalents 71 88 65 46 37 Operating Profit 177 206 215 230 247
Current assets 610 775 804 808 826 Depreciation and Amortisation 68 67 80 82 84
Intangible assets 407 416 411 405 400 Cash Earnings 245 273 295 312 332
PPE 544 583 599 612 623 Change in Working Capital 26 2 2 -6 -6
Total Assets 1,734 1,969 2,008 2,021 2,044 Capital Expenditure -67 -85 -90 -90 -90
Free Cash Flow 159 155 146 149 164
Short Term Debt 2 42 42 42 42
Current Liabilities 565 721 775 792 813 Net increase/(decrease) from
-65 -1 20 20 20
Long Term Debt 577 563 563 563 563 borrowings
Shareholders Equity 411 488 474 469 472 Dividends & buybacks -73 -113 -151 -152 -156
Total Liabilities and Equity 1,734 1,969 2,008 2,021 2,044 Total Change in Cash -35 15 -23 -19 -9
10

Campari
CPR is delivering market share gains across almost all available markets/channels and a
particular emphasis on the tequila and aperitivo brands/occasions like Aperol and
Campari, with the next leg of outperformance expected to come from US Whiskeys
(boosted by recent M&A) and potentially a LT growth story in China. However, after
guiding to flat EBIT margins in FY22 due to elevated COGS (from glass and logistics
supply constraints and inflation), we believe inflation headwinds are likely to be greater
than expected again in 2023, setting up for another disappointing margin guide to start
FY23 (JPMe flat EBIT margin). For 2023E, we model +6.6% organic sales and +6.7%
EBIT growth on some volume softness in Europe and the cost pressures. Given the
likely margin pressures and demand uncertainty for FY23, we downgrade share to
Neutral. We lower our DCF-derived Dec-24 PT to €11.00 (vs Dec-23 €13.50 prior)
driven by lowered estimates and higher risk-free rate and ERP – we use an 8.6% WACC
and 3.0% LT growth rate. On our estimates, shares currently trade on 24.5x 2024 P/E
and 15.8x EV/EBITDA vs EU Beverages on 16.7x/10.8x.

As the most European-exposed Spirits company in our coverage, we see risks to demand
and costs for Campari in 2023. Its business is more on-trade skewed than peers, and a
macroeconomic slowdown could impact on-trade demand and hamper brand building
efforts that have historically focused in that channel. On the positive side, pricing should
accelerate into 2023 and should demand hold up better than expected, there could be
MSD upside to forecasts.
Key metrics
Figure 9: Campari: LFL by division, FY20-24e Figure 10: Campari: Summary P&L, FY20-24e
Sales 1,772 2,173 2,678 2,923 3,102 Sales 1,772 2,173 2,678 2,923 3,102
Sales Growth -3.8% 22.6% 23.3% 9.1% 6.1% GM 57.9% 59.7% 59.4% 59.6% 60.4%
Acquis/divest 2.9% -1.9% 0.0% 2.6% 0.0% A&P % sales 17.5% 18.3% 17.7% 17.7% 17.9%
FX -2.7% -1.0% 7.4% -0.1% 0.0% SG&A % sales 22.3% 21.3% 20.5% 20.2% 20.4%
Reported sales by region EBIT 322 435 568 634 687

Americas -5.8% 19.9% 32.2% 12.3% 6.4% % Margin 18.2% 20.0% 21.2% 21.7% 22.1%
SEMEA -7.0% 37.8% 19.2% 7.0% 3.9% % Growth -21.1% 35.2% 30.5% 11.6% 8.3%
NCEE 2.5% 8.5% 15.4% 3.9% 5.5%
Asia Pacific 1.8% 28.3% 9.7% 11.2% 14.6% Net Financials -39 -17 -19 -35 -32
Tax -78 -109 -160 -169 -185
Organic sales by region
Americas -1.8% 23.0% 16.7% 7.1% 6.4% Adj. Net Profit 202 308 389 422 461
SEMEA -18.6% 36.7% 19.5% 5.7% 3.9%
NCEE 6.8% 18.6% 12.6% 4.2% 5.5% Adj. EPS 0.18 0.27 0.35 0.37 0.41
Asia Pacific 4.6% 22.9% 6.0% 14.3% 14.6% % Growth -24% 53% 27% 8% 9%
11

Figure 11: Campari: Summary Balance Sheet, FY20-24e Figure 12: Campari: Summary Cash Flow Statement, FY20-24e
Current assets 1,550 1,910 2,284 2,376 2,444 Depreciation and Amortisation 78 80 94 102 109
Goodwill 2,311 2,391 2,391 2,391 2,391 Cash Earnings 229 479 515 594 640
Intangible assets 45 54 54 54 54 Change in Working Capital 44 5 -286 -48 -36
PPE 563 646 739 798 844 Capital Expenditure -80 -136 -187 -161 -155
Financial assets 33 31 31 31 31 Free Cash Flow 168 332 22 350 417
Total Assets 4,555 5,093 5,561 5,711 5,826
Acquisitions & other -385 -5 -620 0 0
Short Term Debt 244 248 248 248 248 Dividends Paid -63 -62 -73 -84 -96
Current Liabilities 754 945 1,032 1,076 1,108 Total Change in Cash -327 273 -671 265 321
Long Term Debt 1,215 1,201 1,872 1,606 1,285
Shareholders Equity 1,997 2,372 2,081 2,452 2,856
Total Liabilities and Equity 4,555 5,093 5,561 5,711 5,826
12

Carlsberg
Our revamped COGS tracker concludes that Carlsberg is set to face +16% COGS
inflation in FY23E, with H123 likely to be peak COGS inflation (up high-teens) and
limited relief in H223 (up low-teens). We see several significant risks to its European
business (on volume, price, mix, and costs) and limited potential offset from a China
pandemic recovery (with even downside risk to China forecasts). Given the substantial
risks, in our view its 25% EV/EBITDA premium to ABI is not warranted, and we
believe Carlsberg could guide to organic EBIT decline in FY23 (vs consensus +3.6%).
As a result, we have Carlsberg on Negative Catalyst Watch into FY22 results on 7th
February 2023. On our estimates, shares currently trade on 15.2x 2024 P/E and 10.4x
EV/EBITDA vs EU Beverages on 16.7x/10.8x.

Europe (66% of FY22E sales) holds several significant downside risks into 2023, with
M-HSD downside to earnings from unfavorable developments in Europe, and further
downside should Carlsberg’s core Western China cities face extended lockdowns.
Further declines in commodity prices and a full re-opening in China could drive upside
to estimates.
Key metrics
Figure 13: Carlsberg: LFL by division, FY20-24e Figure 14: Carlsberg: Summary P&L, FY20-24e
Sales 58,541 60,097 70,577 74,546 78,202 Sales 58,541 60,097 70,577 74,546 78,202
Sales Growth -11.2% 13.8% 17.4% 5.6% 4.9% GM 48.4% 47.5% 46.5% 45.5% 45.7%
FX -3.2% -0.9% 2.5% -2.6% 0.0% Marketing Expenses 7.5% 7.4% 7.5% 8.1% 8.0%
M&A/ others 0.3% 4.5% -0.9% 0.0% 0.0% Sales Expenses 8.7% 7.6% 8.2% 7.5% 7.5%
Distribution Expenses 10.0% 9.7% 9.2% 9.2% 9.0%
Reported sales growth
Western Europe -13.0% 17.9% 14.5% 4.0% 2.7% EBIT 9,699 10,129 11,680 11,333 12,206
Central & Eastern Europe -11.3% 6.3% 14.2% 7.0% 5.1% % Margin 16.6% 16.9% 16.5% 15.2% 15.6%
Asia -7.9% 14.7% 23.7% 7.2% 7.9% % Growth -7.3% 4.4% 15.3% -3.0% 7.7%
Organic sales growth Net Financials -411 -385 -794 -552 -590
Western Europe -12.7% 6.4% 13.9% 5.0% 2.7% Tax -2,147 -1,638 -1,886 -2,372 -2,555
Central & Eastern Europe -4.3% 10.1% 14.2% 10.9% 5.1%

Asia -5.0% 15.6% 19.8% 11.7% 7.9% Adj. Net Profit 7,141 8,106 9,000 8,409 9,060
Adj. EPS 43.6 48.3 55.4 52.8 58.8

% Growth 6% 11% 15% -5% 11%
13

Figure 15: Carlsberg: Summary Balance Sheet, FY20-24e Figure 16: Carlsberg: Summary Cash Flow Statement, FY20-24e
FY20 FY21 FY22E FY23E FY24E
Intangible assets 66,061 68,475 58,975 58,975 58,975 Cash Earnings 14,085 14,367 16,160 15,985 16,966
PPE 26,299 26,648 17,932 18,462 18,941 Change in Working Capital 1,321 802 144 334 147
Total Assets 118,816 126,386 113,009 113,178 113,571 Capital Expenditure -3,596 -4,221 -4,764 -5,181 -5,240
Free Cash Flow 5,057 7,769 8,160 7,735 8,188
Short Term Debt 959 6,167 6,167 6,167 6,167
Current Liabilities 28,449 43,282 42,841 43,766 44,615 External financing 5,060 -1,611 0 0 0
Long Term Debt 29,291 22,755 22,755 22,755 22,755 Dividends & buybacks -6,870 -7,337 -9,236 -8,687 -8,976
Shareholders Equity 43,362 48,756 35,823 35,066 34,611 Total Change in Cash 3,247 -1,179 -1,076 -952 -788
14

Coca-Cola Europacific Partners

The acquisition of Coca-Cola Amatil has transformed Coca-Cola Europacific Partners
(CCEP), increasing the business by c20% and bringing opportunities to adapt its
European top-line value growth and cost savings playbook to Australia and New
Zealand as well as some LT emerging market optionality (Indonesia). At its recent
Capital Markets Day, CCEP outlined its confidence in achieving its raised medium-term
ambitions, although 2023 COGS inflation expectations increased further and uncertainty
remains highly elevated as we look into 2023. For FY23 we model +0.2% organic
volumes, +7.9% organic sales, and +7.0% organic EBIT growth. Overall, we see MT
top-line guidance as well underpinned by category growth and share gains in its core
business, with significant headroom in Indonesia and RTDs providing upside potential,
while there are further efficiency opportunities. We believe that CCEP’s valuation offers
significant opportunities to close the gap vs the sector as the market gets comfortable on
MT category and execution dynamics. We raise our Dec-24 PTs to €/$66.50 (vs Dec-23
€/$60.00 prior) as we move to a DCF-based valuation approach (to better capture
interest rate changes) with an 8.6% WACC and 2.0% LT growth rate. On our estimates,
shares currently trade on 12.9x 2024 P/E and 9.4x EV/EBITDA vs EU Beverages on
16.7x/10.8x.

Europe (78% of FY22E sales) holds several downside risks into 2023, with unfavorable
macro developments potentially weighing on volumes and ability to pass through
further price increases to offset COGS inflation. Uncertainty over COGS pressures also
remains (CCEP is now 60% hedged for 2023 and 35% hedged for 2024), in particular
with regard to aluminium (MSD% COGS) and glass (LSD% COGS) with a cold winter
in Europe potentially driving a further increase in energy costs. On the other hand,
further declines in commodity prices or sustained volume momentum, mostly notably in
Europe despite price increases, would offer some upside.
Key metrics
Figure 17: CCEP: LFL by division, FY20-24e Figure 18: CCEP: Summary P&L, FY20-24e
Sales 13,535 14,819 17,351 18,531 19,292 Sales 13,535 14,819 17,351 18,531 19,292
Sales Growth -11% 9% 17% 7% 4% GM 36.9% 37.8% 35.7% 35.6% 35.9%

Volume -9% 4% 10% 0% 2% Opex % sales 25.8% 25.0% 23.4% 23.4% 23.3%
Price/mix ex-FX 0% 3% 5% 8% 3%
EBIT 1,495 1,886 2,134 2,261 2,422
Comp ex-FX revenue growth by region % Margin 11.0% 12.7% 12.3% 12.2% 12.6%
Iberia -21.9% 14.8% 21.3% 9.2% 4.0% % Growth -26.6% 26.2% 13.2% 5.9% 7.1%
Germany -6.7% 2.9% 15.5% 7.9% 3.5%
GB -7.5% 14.4% 14.9% 7.7% 3.8% Net Financials -160 -146 -122 -108 -94
France -9.9% 6.1% 14.2% 6.5% 3.8% Tax -326 -367 -443 -482 -531
Northern Europe -8.0% 1.8% 14.2% 6.5% 3.5%
Europe -11.2% 8.0% 16.2% 7.7% 3.7% Adj. Net Profit 1004 1369 1570 1670 1797
Australia -3.8% 5.3% 11.7% 7.0% 4.5%
Pacific 1.0% 7.6% 15.3% 7.0% 3.5% Adj. EPS 2.20 2.98 3.41 3.63 3.90
Indonesia & PNG -14.9% 10.1% 17.7% 14.3% 9.5% % Growth -26% 35% 14% 6% 8%
API -5.6% 6.7% 13.5% 8.6% 5.4%
15

Figure 19: CCEP: Summary Balance Sheet, FY20-24e Figure 20: CCEP: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 378 1,407 1,407 1,407 1,407 Operating Profit 695 1,382 2,000 2,211 2,392
Goodwill 5,006 4,623 4,623 4,623 4,623 Cash Earnings 1,422 2,164 2,868 3,110 3,318
Intangible assets 12,835 12,639 12,558 12,659 12,762 Change in Working Capital 295 264 287 175 119
PPE 5,160 5,248 4,889 4,816 4,713 Capital Expenditure -299 -349 -508 -826 -823
Total Assets 28,668 29,090 29,092 29,292 29,363 Free Cash Flow 913 1,435 1,872 1,639 1,753
Short Term Debt 1,558 1,350 1,210 1,070 930 Net increase/(decrease) from borrowings 808 4,203 -1,285 -811 -862
Current Liabilities 5,854 6,093 6,682 6,890 6,940 Dividends & buybacks -515 -638 -767 -828 -891
Long Term Debt 12,414 11,790 10,505 9,694 8,832 Total Change in Cash 1,220 -197 0 0 0
16

Coca-Cola Hellenic
Despite a strong historical top-line and cost execution track record, increasing
uncertainty on its emerging market business keeps us Neutral on CCH for now, with the
situation in Ukraine adding a further layer of uncertainty. Looking ahead to FY23, while
the top-line momentum is solid and there is room for further price/mix growth, double-
digit COGS/case inflation will weigh on margins and we expect consumer pressure to
begin to impact volumes, with yoy decline expected in Russia. As a result, for FY23E
we model -2% organic EBIT to €852m on +4% organic sales and -5% organic volume
(+9% organic price/mix). We still believe in the LT execution strengths of the business
and the strong portfolio across Sparkling, Energy and increasingly interesting
adjacencies (eg Coffee). However, given the still active geopolitical risks, substantial
inflation, and uncertainty on consumer demand across most of its markets, we believe
risk/reward if fairly balanced for now. We raise our Dec-24 PT to 2,200p (vs Dec-23
1,900p prior) as we move to a DCF-based valuation approach (to better capture interest
rate changes) with a 12.3% WACC and 3.0% LT growth rate. On our estimates, shares
currently trade on 13.3x 2024 P/E and 7.6x EV/EBITDA vs EU Beverages on
16.7x/10.8x.

CCH is already seeing a slowdown in Africa, Egypt and Romania, but not in the other
markets. Top-line in these markets could weaken further than expected, particularly if
price elasticity starts to rise as more price increases are passed through in the early part
of 2023. COGS per case is expected to rise by double digits with strong pricing
expected and the volume impact less known, especially amid a potentially weakening
consumer disposable income. Russia remains a key unknown (and source of upside) - its
launch of own-branded cola could help replace lost Coca-Cola volumes to some extent.
An easing of geopolitical tensions in affected regions in Eastern Europe would provide
support to both the top-line and likely also to margins as it may help to ease cost
inflation pressures.
Key metrics
Figure 21: CCH: LFL by division, FY20-24e Figure 22: CCH: Summary P&L, FY20-24e
Sales 6,132 7,168 9,062 9,486 10,001 Sales 6,132 7,168 9,062 9,486 10,001
Sales Growth -12.7% 16.9% 26.4% 4.7% 5.4% GM 37.9% 36.2% 33.4% 33.5% 33.6%
Volume -4.5% 13.8% -2.1% -4.8% 3.6% Opex % sales 27.3% 25.1% 23.5% 24.5% 24.1%
Price/mix -7.5% 3.5% 11.7% 5.6% 1.8%
M&A -0.7% -0.4% 16.8% 3.8% 0.1% EBIT 672 831 894 851 946
% Margin 11.0% 11.6% 9.9% 9.0% 9.5%
Organic sales by region % Growth -11.4% 23.6% 7.6% -4.8% 11.1%
Established markets -14.2% 13.6% 17.4% 3.1% 2.5%
Developing markets -10.9% 6.7% 24.1% 6.0% 5.0% Net Financials 70 68 88 87 84
Emerging markets -3.4% 26.1% 2.5% 1.2% 7.5% Tax 174 188 207 196 221
Organic volume by region Adj. Net Profit 431 578 603 572 645
Established markets -14.0% 9.8% 10.1% -3.1% 0.9%
Developing markets -4.4% 0.8% 14.6% -0.9% 2.5% Adj. EPS 1.19 1.58 1.65 1.56 1.76
Emerging markets 0.3% 20.4% -12.2% -6.7% 5.0% % Growth -17% 34% 4% -5% 13%
17

Figure 23: CCH: Summary Balance Sheet, FY20-24e Figure 24: CCH: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 1,216 783 192 49 17 Operating Profit 661 799 694 836 936
PPE 2,617 2,831 3,017 3,221 3,446 Change in Working Capital 108 196 -127 -5 -2
Free Cash Flow 419 527 43 301 360
Short Term Debt 315 382 382 382 382
Current Liabilities 2,026 2,516 2,743 2,784 2,834 Net increase/(decrease) from
-444 -5 0 -100 -100
Long Term Debt 2,610 2,556 2,556 2,456 2,356 borrowings
Shareholders Equity 2,633 3,117 2,840 3,005 3,301 Dividends & buybacks -226 -234 -259 -344 -292
Total Liabilities and Equity 7,573 8,514 8,464 8,571 8,816 Total Change in Cash 414 -439 -590 -143 -32
18

Diageo
Having seen strong delivery from on-trade re-opening across Europe, robust emerging
markets and continued super-normal growth in the US (with strong contribution from
both tequila and RTDs), Diageo has delivered well above its FY23-25 MT targets for 5-
7% organic sales and +6-9% organic EBIT CAGR. We expect a normalization of growth
in FY23E (+6.5% organic sales, +7.4% organic EBIT) as we incorporate some volume
pressure in the US and Europe from H2 FY23. Within the current economic context, we
see its geographical exposure as attractive (50% of EBIT in US), with a smaller
footprint to China (lockdown risks) while offering a hedge vs cost inflation (premium
pricing, aged liquids, high gross margin).We roll forward our target price to December
2024, with a PT of £45.00 (vs £43.50 prior), valuing the stock at a 5% P/E premium to
international spirits peers on 21x 2024 P/E driven by Diageo’s strong execution track
record. On our estimates, shares currently trade on 18.9x 2024 P/E and 12.9x EV/
EBITDA vs EU Beverages on 16.7x/10.8x.

Having strongly outperformed the US spirits industry the last two years, another year of
outperformance could drive upside to forecasts. Better pricing than expected or more
resilient positive mix could be other sources of upside, as well as a trade deal between
the UK and India (lowered import tariffs) or a strong recovery in China. A strong
deceleration in the US or wavering mix benefits would drive downside to forecasts, on
both top-line and margin as we wouldn’t expect the company to meaningfully reduce
investments. We see more risks going into 2024 given forecasts of a macro slowdown
and less tailwinds from pricing. Overall, we see a MSD/LSD upside/downside scenario.
Key metrics
Figure 25: Diageo: LFL by division, FY21-25e Figure 26: Diageo: Summary P&L, FY21-25e
Sales 12,733 15,452 17,193 17,949 19,044 Sales 12,733 15,452 17,193 17,949 19,044
Sales Growth 8.3% 21.4% 11.3% 4.4% 6.1% GM 60.4% 61.3% 61.5% 62.0% 62.5%
Volume 11.0% 10.3% 2.0% 3.0% 3.4% Opex % sales -31.0% -30.3% -28.6% -28.7% -28.7%
Price/mix 4.8% 11.1% 4.5% 2.7% 2.7%
EBIT 3,746 4,797 5,653 5,976 6,430
Organic sales by region % Margin 29.4% 31.0% 32.9% 33.3% 33.8%
North America 20.1% 14.5% 5.4% 4.5% 4.9% % Growth 7.2% 28.1% 17.9% 5.7% 7.6%
Europe 4.2% 29.9% 1.3% 2.8% 3.6%
Africa 19.2% 21.8% 7.3% 7.8% 7.8% Net Financials -373 -422 -530 -507 -519
Latin America 30.3% 43.1% 12.7% 6.5% 6.5% Tax -823 -1,080 -1,274 -1,399 -1,515
Asia Pacific 13.6% 16.2% 10.9% 10.0% 10.0%
Adj. Net Profit 2,884 3,712 4,296 4,551 4,916
Organic volume by region
North America 10.5% 1.9% 0.6% 1.0% 2.0% Adj. EPS 117.50 151.86 179.70 192.22 209.85
Europe 7.2% 21.1% -4.2% 0.1% 1.3% % Growth 7% 29% 18% 7% 9%
Africa 16.7% 12.6% 2.7% 3.9% 3.9%
Latin America 21.6% 17.3% 4.4% 1.7% 1.7%
Asia Pacific 8.7% 8.0% 5.3% 5.8% 5.7%
19

Figure 27: Diageo: Summary Balance Sheet, FY21-25e Figure 28: Diageo: Summary Cash Flow Statement, FY21-25e
PPE 4,849 5,848 6,570 7,197 7,851 Change in Working Capital 331 -179 -274 -124 -200
Total Assets 31,953 36,516 37,687 39,021 40,609 Capital Expenditure -613 -1,080 -1,118 -1,140 -1,181
Free Cash Flow 3,037 2,783 2,991 3,408 3,649
Short Term Debt 1,862 -561 -561 -561 -561
Current Liabilities 7,142 -5,887 -6,447 -6,767 -7,218 Net increase/(decrease) from
-495 1,232 -398 375 309
Long Term Debt 12,865 -61 -61 -61 -61 borrowings
Shareholders Equity 6,897 -252 -252 -252 -252 Acquisitions -488 -271 -26 -26 -26
Total Liabilities and Equity 31,953 36,516 37,687 39,021 40,609 Dividends & buybacks -1,783 -4,065 -3,036 -3,757 -3,931
Total Change in Cash -574 -464 0 0 0
20

Fevertree Drinks
Fevertree (FEVR) has a unique position in premium mixers with significant LT growth
opportunities, particularly in the US, strongly leveraging on the wider trends for
international spirits premiumisation, new customer/distribution wins and innovations
(formats and flavours). Bar some weakness in the more profitable UK, FEVR’s top-line
momentum has been impressive, helped by new capacity expansion in the US. The
concern has been on margin delivery and profitability, though, with a series of profit
warnings due to margin pressures. FY23 is likely to offer little respite, as the premium
end of the market could see demand pressure from downtrading, and on-trade (a key
driver of growth and brand awareness) likely to see lower frequency, compounded by
cost inflation pressures. We forecast “just” +9% sales growth and +18% operating profit
driven by an easing of some logistics costs pressures in H2. While expectations/
communications in the market may now be fully bottomed, the market is likely to
remain skeptical on FEVR’s ability to grow profitably given the challenging recent
execution, there are external/commodity pressures and valuation remains full. We raise
our Dec-24 PT to 1,200p (vs Dec-23 1,100p prior) as we move to a DCF-based
valuation approach (to better capture interest rate changes) with a 9.4% WACC and
4.0% LT growth rate. On our estimates, shares currently trade on 33.0x 2024 P/E and
24.5x EV/EBITDA vs EU Beverages on 16.7x/10.8x.

A faster than expected easing of logistics costs pressures, US bottling ramping up faster
than expected (to soften logistics cost pressures) and more resilient on-trade demand
would all provide upside to our forecasts. However, FEVR may see more downtrading
than expected particularly as consumer wallets come under further pressure, and softer
on-trade as well as any further delays to US (28% FY22E sales) bottling ramp up may
dent top-line growth momentum more than expected. A re-acceleration of input cost
inflation would also drive downside to forecasts.
Key metrics
Figure 29: Fevertree: LFL by division, FY20-24e Figure 30: Fevertree: Summary P&L, FY20-24e
Sales 252 311 360 392 432 Sales 252 311 360 392 432
Sales Growth -3.2% 23.4% 15.6% 9.1% 10.0% GM 46.1% 42.1% 34.0% 34.5% 36.5%
FX/M&A impact: 2.7% -3.0% 3.2% 2.4% 0.0% Opex % sales 23.5% 21.8% 22.5% 22.3% 22.0%
Sales growth by region EBIT 53 58 35 41 56

UK -22.2% 14.5% 2.7% -2.0% 2.0% % Margin 21.1% 18.7% 9.8% 10.6% 13.0%
US 22.9% 33.2% 28.0% 19.5% 15.0% % Growth -28.2% 9.5% -39.7% 17.8% 34.9%
Europe 1.4% 35.1% 19.9% 10.0% 10.0%
RoW 58.2% 6.8% 21.8% 15.3% 20.0% Net Financials 0 0 0 1 2
Tax -10 -11 -6 -9 -13
LFL sales by region
UK -22.0% 14.5% 2.7% -2.0% 2.0% Adj. Net Profit 43 46 27 31 41
US 23.5% 41.0% 15.4% 13.0% 15.0%
Europe -10.3% 40.0% 21.4% 8.0% 10.0% Adj. EPS 36.65 39.30 22.94 26.73 35.26
RoW 57.5% 6.0% 16.9% 15.0% 20.0% % Growth -28% 7% -42% 17% 32%
21

Figure 31: Fevertree: Summary Balance Sheet, FY20-24e Figure 32: Fevertree: Summary Cash Flow Statement, FY20-24e
Current assets 240 276 249 269 299 Depreciation and Amortisation 4 5 6 6 7
Intangible assets 49 48 46 45 43 Change in Working Capital -2 -9 -1 -6 -4
PPE 8 10 9 10 11 Capital Expenditure -3 -4 -4 -5 -6
Total Assets 298 336 307 327 356 Free Cash Flow 36 43 31 29 41
Short Term Debt 0 0 0 0 0 Net increase/(decrease) from borrowings -1 0 0 0 0

Current Liabilities -43 -51 -66 -72 -77 Dividends -18 -18 -69 -19 -20
Long Term Debt -1 -2 -2 -2 -2 Total Change in Cash 15 23 -44 9 21
Shareholders Equity 253 282 237 251 275
Total Liabilities and Equity 298 336 307 327 356
22

Heineken
With more limited cost savings benefit expected in FY23 (€300m gross savings, albeit
may be increased), we believe Heineken margin expectations also need to move lower
(JPMe -40bps vs consensus +150bps). On the positive side we expect good momentum
in emerging markets as well as the tail end of the cost savings program to provide an
offset to European weakness, and we anticipate price/mix growth well ahead of
consensus (JPMe +7.4% vs cons +5.3%). On our estimates, shares currently trade on
15.3x 2024 P/E and 8.2x EV/EBITDA vs EU Beverages on 16.7x/10.8x.

Europe (39% of FY22E sales) holds several significant downside risks into 2023, with
L-MSD downside to earnings from unfavorable developments in Europe, and further
downside should growth in Vietnam or Mexico falter. Further declines in commodity
prices or sustained strong momentum in Mexico, Vietnam, or Brazil, as well as a
recovery in the US (after supply chain constraints in FY22E) could drive upside to
estimates.
Key metrics
Figure 33: Heineken: LFL by division, FY20-24e Figure 34: Heineken: Summary P&L, FY20-24e
Sales 19,723 21,901 28,592 30,955 33,488 Sales 19,723 21,901 28,592 30,955 33,488
Sales Growth -17.5% 11.0% 30.6% 8.3% 8.2% Operating Profit (BEIA) 2,421 3,414 4,436 4,732 5,216
FX -5.3% -2.6% 7.6% -1.1% 0.0% % Margin 12.3% 15.6% 15.5% 15.3% 15.6%
M&A/ others -0.2% 1.4% 2.1% 0.3% 2.3% % Growth -39.8% 41.0% 29.9% 6.7% 10.2%
Organic sales growth Net Financials -590 -399 -359 -429 -384
AMEEE -9.5% 25.9% 21.1% 8.5% 7.9% Tax -592 -872 -1,148 -1,205 -1,353
Americas -2.9% 17.9% 17.2% 12.2% 6.8%
Asia Pacific -11.5% -6.1% 34.1% 10.9% 7.9% Adj. Net Profit 1,155 2,042 2,807 2,976 3,320
Europe -18.8% 8.6% 17.4% 5.0% 3.1%
Adj. EPS 2.01 3.55 4.87 5.17 5.76
% Growth -54.2% 76.7% 37.4% 6.0% 11.6%
Figure 35: Heineken: Summary Balance Sheet, FY20-24e Figure 36: Heineken: Summary Cash Flow Statement, FY20-24e
Tangible assets 11,551 12,401 12,544 14,154 14,539 Depreciation and Amortisation 2,874 1,959 2,144 2,167 2,294
Total Assets 28,588 33,325 33,631 35,414 35,922 Change in Working Capital 347 263 -63 -73 -23
Capital Expenditure -1,640 -1,597 -2,287 -2,476 -2,679
Short Term Debt 3,580 3,233 3,233 3,233 3,233 Free Cash Flow 1,513 2,514 2,449 2,504 2,872
Long Term Debt 14,616 13,640 12,339 12,408 10,924
Shareholders Equity 14,392 19,700 21,307 23,021 25,013 Aquisitions & disposals 185 -610 0 -1,300 0
Total Liabilities and Equity 28,588 33,325 33,631 35,414 35,922 Dividends & buybacks -800 -784 -1,147 -1,273 -1,388
790 1,126 1,301 -69 1,485

Decrease/(increase) in net debt
Total Change in Cash 2,179 -752 0 0 0
23

Pernod Ricard
We see Pernod Ricard offering a combination of strong organic top-line and best-in-
class EPS growth amongst large-cap European Staples over the medium term returning
to 4-7% organic sales and +50-60bp pa margin expansion delivery FY23-25 (double-
digit EPS CAGR). Having delivered a substantial sales and EBIT recovery over
FY21/22 despite normalization of structure costs and increased A&P reinvestment as
well as rising input and logistics costs, we see HSD sales growth and further margin
expansion in FY23 driven by underlying business momentum. Strong FCF delivery and
ND/EBITDA at 2.5x should allow for ongoing share buyback support (including €500-
750m in FY23) along with further likely bolt-on M&A. Currently trading at over a 25%
discount vs International Spirits, we believe RI’s sales momentum and quality margin
delivery should see RI trading at least in line with International Spirits peers. We roll
forward our target price to December 2024, with a PT of €220 (vs Dec-23 €250 prior),
valuing shares at a 15% discount to International Spirits peers (21x) on calendar 2024E
P/E given the greater risk profile (more EM exposure) for similar MT growth. On our
estimates, shares currently trade on 16.9x 2024 P/E and 13.3x EV/EBITDA vs EU
Beverages on 16.7x/10.8x.

We see upside stemming from a faster than expected recovery in China and especially
Travel Retail, which have been impacted by lockdowns. We assume US growth will
slow from H2 FY23, leaving upside should momentum be maintained. Further
lockdown impacts in China or Travel Retail could move earnings lower, while we see
downside risks in the US from a slowing demand or slowing premiumization. We see
more risks going into 2024 given forecasts of a macro slowdown and less tailwinds from
pricing.
Key metrics
Figure 37: Pernod Ricard: LFL by division, FY21-25e Figure 38: Pernod Ricard: Summary P&L, FY21-25e
Sales 8,825 10,701 12,158 12,751 13,475 Sales 8,825 10,701 12,158 12,751 13,475
Sales Growth 4.5% 21.3% 13.6% 4.9% 5.7% GM 60.0% 60.5% 61.1% 61.4% 61.6%
Acquis/divest 0.7% 1.0% 2.6% 0.4% 0.0% A&P % sales 15.8% 15.9% 16.0% 15.9% 16.0%
FX -6.0% 3.6% 3.1% -0.9% 0.0% Structure costs % sales 16.7% 16.4% 15.6% 15.4% 15.2%
Reported sales by region EBIT 2,423 3,024 3,594 3,831 4,112

Americas 7.2% 19.2% 20.3% 4.4% 4.3% % Margin 27.5% 28.3% 29.6% 30.0% 30.5%
Asia/RoW 5.0% 22.0% 17.6% 6.9% 8.0% % Growth 7.2% 24.8% 18.9% 6.6% 7.3%
Europe 1.1% 22.4% 1.3% 2.1% 3.3%
Net Financials -262 -215 -226 -247 -262
Organic sales by region Tax -526 -651 -792 -842 -905
Americas 13.8% 12.1% 6.2% 4.2% 4.3%
Asia/RoW 10.7% 18.5% 14.5% 8.3% 8.0% Adj. Net Profit 1,635 2,158 2,577 2,742 2,945
Europe 4.0% 18.9% 0.3% 2.1% 3.3%
Adj. EPS 6.16 8.18 9.79 10.57 11.51
% Growth 13% 33% 20% 8% 9%
24

Figure 39: Pernod Ricard: Summary Balance Sheet, FY21-25e Figure 40: Pernod Ricard: Summary Cash Flow Statement, FY21-25e
PPE 3,177 3,591 4,027 4,377 4,699 Operating Profit 2,423 3,024 3,594 3,831 4,112
Intangible Assets 10,725 11,512 11,512 11,512 11,512 Depreciation and Amortisation 445 391 415 416 419
Goodwill 5,505 6,145 6,668 6,668 6,668 Change in Working Capital -54 -252 -452 -120 -167
Total Fixed Assets 21,816 24,100 25,059 25,408 25,730 Capital Expenditure -486 -1,204 -851 -765 -741
Free Cash Flow 1,511
Stocks 6,555 7,369 8,365 8,581 8,866
Total Net Assets 22,363 24,311 25,715 26,178 26,659 Acquisitions & other 0 0 -523 0 0
Dividends Paid -724 -1,639 -1,770 -2,003 -2,083
Cash and marketable securities -2,078 -2,527 -1,970 -2,286 -2,707 Total Change in Cash 143 449 557 -317 -420
Total Debt 9,365 10,587 10,587 10,587 10,587
Net Debt 7,790 8,568 9,125 8,809 8,388
25

Remy Cointreau
While cognac is a structurally appealing category vs other spirits segments (supply/
aging constraints and oligopolistic market structure), it is also highly cyclical and prone
to sometimes sharp contractions. Cognac demand in the US accelerated in 2020/21,
boosted by government payments, while China growth remained strong thanks to strong
off-trade and e-commerce demand. After seeing early signs of slowing demand in the
US (albeit with depletions still well ahead of 2019), we believe the US is unlikely to
recover in FY24 and model further volume declines due to consumer disposable income
pressures especially for lower-income consumers. RCO is ahead of schedule on its
ambitious LT FY30 targets of 72% gross margins and 33% EBIT margin (vs 66% and
21% in FY20), and we believe it will continue to step up A&P spend even in the face of
slowing demand, leaving downside to margin expectations. RCO has the highest
valuation in our spirits coverage and is most at risk of valuation pressure in periods of
macroeconomic slowdown, in addition to potential earnings downside risk (especially in
the US, as well as uncertainty in China). As a result, we downgrade to Underweight and
lower our Dec-24 price target to €145.00 (from Dec-23 €205), valuing the stock at a 5%
P/E premium to international spirits peers as we believe negative earnings momentum
and the current phase of the cycle will cause the current valuation premium to reduce.
On our estimates, shares currently trade on 27.4x 2024 P/E and 16.2x EV/EBITDA vs
EU Beverages on 16.7x/10.7x and International Spirits on 21.4x/15.0x.

The key risk to the upside would be a strong recovery/reopening in China with volume
and mix benefits. A return to HSD US growth in FY24 would also present upside risks
to our numbers. On the downside, further lockdowns in China may be unhelpful, or an
economic slowdown over the medium term. In the US, if depletion trends remain
double-digit negative this would also present downside risk to estimates given the US is
c50% of sales.
Key metrics
Figure 41: Remy: LFL by division, FY21-25e Figure 42: Remy: Summary P&L, FY21-25e
Sales 1,010 1,313 1,598 1,651 1,765 Sales 1,010 1,313 1,598 1,651 1,765
Sales Growth -1.4% 29.9% 21.7% 3.3% 6.9% GM 67.3% 68.6% 68.9% 69.3% 70.0%
Organic change 1.8% 27.3% 11.9% 5.1% 6.9% Sales & marketing % sales 33.8% 33.0% 31.2% 31.2% 31.7%
FX -3.7% 2.4% 9.8% -1.8% 0.0% Admin expenses % sales 10.1% 10.2% 9.8% 10.3% 10.2%
Net M&A 0.3% 0.2% 0.0% 0.0% 0.0%
EBIT 236 334 445 454 494
Reported sales growth % Margin 23.4% 25.5% 27.8% 27.5% 28.0%
Cognac -0.1% 29.0% 22.7% 2.3% 7.0% % Growth 9.8% 41.6% 33.0% 2.1% 8.8%
Liqueurs & Spirits -5.1% 34.2% 22.1% 6.4% 7.0%
Partner Brands -2.0% 15.9% -11.3% 0.0% 0.0% Net Financials -15 -13 -12 -11 -10
Tax -74 -94 -128 -133 -145
Organic sales growth
Cognac 3.7% 26.3% 11.9% 4.4% 7.0% Adj. Net Profit 148 228 306 311 340
Liqueurs & Spirits -3.2% 31.7% 14.1% 7.5% 7.0%
Partner Brands -1.5% 15.2% -11.6% 0.0% 0.0% Adj. EPS 2.96 4.52 6.03 6.13 6.69
% Growth 18.9% 52.8% 33.3% 1.6% 9.1%
26

Figure 43: Remy: Summary Balance Sheet, FY21-25e Figure 44: Remy: Summary Cash Flow Statement, FY21-25e
Intangible assets 508 512 512 512 512 Cash Earnings 270 374 494 505 548
Tangible assets 337 369 400 429 458 Change in Working Capital -13 -140 -30 -86 -76
Free Cash Flow 123 90 252 203 241
Short Term Debt 92 106 106 106 106
Current Liabilities 720 867 941 956 989 Net increase/(decrease) from
-239 94 -30 -30 -30
Long Term Debt 424 364 364 364 364 borrowings
Shareholders Equity 1,549 1,662 1,794 1,921 2,076 Dividends & buybacks -10 -94 -144 -155 -155
Total Liabilities and Equity 2,781 2,979 3,185 3,326 3,514 Total Change in Cash -68 -85 71 11 49
27

Royal Unibrew
Royal Unibrew (RBREW) is the #2 multi-beverage player in Denmark and Finland with
expanding niche soft-drink and beer positions in several markets including Italy, France,
Germany and the Baltics. RBREW’s premium-skew (especially energy drinks, RTD/
ciders, no-sugar soft drinks and no-alcohol beers amongst others), organic white-space
expansion opportunities and positive M&A track record are supportive of the business
over the medium to long term, but there are significant cost headwinds facing the
business (which are expected to continue into 2023) and limited visibility on potential
2023 volume elasticity as further pricing comes through amid deteriorating consumer
demand. For FY23 we forecast +4% organic sales (on -2.6% organic volumes) and -2%
organic EBIT to DKK1,642m. We lower our Dec-24 PT to DKK500 (vs Dec-23
DKK575 prior) as we move to a DCF-based valuation approach (to better capture
interest rate changes) with an 8.6% WACC and 2.0% LT growth rate. On our estimates,
shares currently trade on 17.7x 2024 P/E and 12.4x EV/EBITDA vs EU Beverages on
16.7x/10.8x.

RBREW issued a profit warning in October on a tougher consumer and competitive
environment in Europe, and its high degree of exposure to Europe (>90% of sales) is
unhelpful given the region is facing the most significant cost pressures globally. LDD%
price/mix benefit in FY22 is ahead of peers and it could become more difficult to pass
on pricing to consumers in 2023. Contribution from M&A slowed in Q322 and with
M&A forecast to support EBIT by MSD% over FY22 and FY23 there is downside risks
to forecasts from accelerated pressures in Norway (the acquired businesses). Upside to
estimates could from from more resilient demand than expected, especially in premium,
or easing cost pressures driving margin upside.
Key metrics
Figure 45: Royal Unibrew: LFL by division, FY20-24e Figure 46: Royal Unibrew: Summary P&L, FY20-24e
Sales 7,316 8,745 11,634 13,108 13,613 Sales 7,316 8,745 11,634 13,108 13,613
Sales Growth -1.8% 19.5% 33.0% 12.7% 3.9% GM 50.6% 48.7% 44.8% 44.0% 44.5%
Organic change -2.8% 11.8% 12.2% 4.3% 3.9% Selling & distribution % sales 25.2% 25.0% 24.6% 24.4% 24.4%
FX 0.0% 0.0% 0.0% 0.0% 0.0% Administrative % sales 4.7% 4.7% 4.4% 4.2% 4.3%
M&A/ others 1.0% 8.0% 20.4% 7.6% 0.0%
EBIT 1,515 1,652 1,605 1,642 1,748
Reported sales growth % Margin 20.7% 18.9% 13.8% 12.5% 12.8%
Northern Europe n.a. 17.2% 36.9% 12.6% 3.5% % Growth 2.5% 9.0% -2.9% 2.3% 6.5%
Western Europe n.a. 33.6% 22.7% 3.5% 4.3%
International n.a. 21.0% 19.1% 24.9% 5.7% Net Financials -43 -42 -59 -74 -72
Tax -307 -349 -312 -329 -352
Northern Europe n.a. 8.4% 10.9% 4.1% 3.5% Adj. Net Profit 1198 1282 1247 1239 1325
Western Europe n.a. 26.1% 16.6% 3.5% 4.3%
International n.a. 21.0% 15.7% 7.4% 5.7% Adj. EPS 24.08 26.53 25.45 25.30 27.48
% Growth 4% 10% -4% -1% 9%
28

Figure 47: Royal Unibrew: Summary Balance Sheet, FY20-24e Figure 48: Royal Unibrew: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 81 86 169 260 145 Operating Profit 1,515 1,652 1,605 1,642 1,748
PPE 2,455 2,734 4,672 4,751 4,825 Change in Working Capital 227 104 196 213 37
Free Cash Flow 1,460 1,315 1,368 1,380 1,293
Short Term Debt 150 624 1,424 1,374 1,299
Current Liabilities 2,244 3,801 4,924 5,367 5,412 Net increase/(decrease) from borrowings -430 1,161 800 -50 -75
Long Term Debt 2,124 2,998 2,998 2,998 2,998 Dividends & buybacks -962 -1,235 -1,235 -1,238 -1,332
Shareholders Equity 3,332 3,342 5,292 5,299 5,297 Total Change in Cash 17 -9 83 91 -115
29

Food & Ingredients Investment Cases

Chr Hansen
The company has set out targets for FY23 that were met positively by the market and
ahead of consensus expectations at the time, though we caution that risks to delivery
remain. End markets are seeing more pressured growth, with dairy markets impacted by
macro slowdown, whilst supplements are seeing softer growth in the US given difficult
comparators against the pandemic boost and potentially more discretionary nature of the
category. Delivery will therefore be contingent on pricing pass through and maintaining
volume despite market pressures. Whilst FY Q123 has been guided by the company to
be strong, we see lower visibility on the remainder of the year and ability to maintain
volume growth whilst raising pricing to drive +7-10% LFL. Meanwhile the positive FX
impact is set to be a meaningful driver of guided reported sales, margin, and earnings
improvement, hence with risk from a weakening in USD vs EUR. We remain Neutral
and set a Dec-2024 target price of Dkr 460 at a 5% premium to EU Ingredients PE24E.

On the downside, risks are that volume proves less resilient than expected in the face of
+MSD pricing and/or that a material pricing uptick proves elusive (as in FY22).
Furthermore, with positive FX contributing 5% to reported sales guidance and +150bps
to EBIT margin, there is a significant earnings risk from a reversal in USD strength. On
the upside, if Chr. Hansen succeeds to deliver pricing plus volume growth remains
robust, whilst energy costs are less of a headwind than feared at FY22 results, and the
company delivers at the top end of the guided margin range of 27-28% then we see
+MSD upside to our earnings expectations for 2023E.
Key metrics
Figure 49: Chr Hansen: LFL by division, FY20-24e Figure 50: Chr Hansen: Summary P&L, FY20-24e
FY20 FY21 FY22 FY23E FY24E FY20 FY21 FY22 FY23E FY24E
Food Cultures & Enzymes 693 701 763 850 897 Sales 970 1,077 1,218 1,355 1,435
Health & Nutrition 277 377 456 505 538
Total turnover 970 1,077 1,218 1,355 1,435 GM 60.2% 56.9% 55.5% 55.5% 56.1%
Research and development expenses -76 -90 -97 -109 -117
Food Cultures & Enzymes 5% 8% 7% 8% 6% Sales and marketing expenses -135 -155 -174 -195 -209
Health & Nutrition 9% 5% 14% 7% 7% Administrative expenses -53 -73 -82 -77 -76
Total LFL 6% 7% 9% 7% 6% Other operating income 8 3 7 5 6
Volume 5% 3% 7% 3% 5% Other operating expenses 0 0 -5 -5 -5
Pricing 1% 4% 2% 4% 1%
Adj. EBIT 327 298 326 372 404
% Margin 33.7% 27.7% 26.8% 27.4% 28.2%
Net Financials -17 -29 -28 -20 -16

Tax -64 -48 -68 -86 -95
Adj. Net Income 242 216 229 266 293
Adj. EPS 1.84 1.64 1.74 2.02 2.22

% growth 5.0% -10.8% 5.8% 16.1% 10.1%
30

Figure 51: Chr Hansen: Summary Balance Sheet, FY20-24e Figure 52: Chr Hansen: Summary Cash Flow Statement, FY20-24e
FY20 FY21 FY22 FY23E FY24E FY20 FY21 FY22 FY23E FY24E
Cash and cash equivalents 96 55 83 83 83 Operating profit 313 276 321 372 404
Current assets 405 429 498 536 563 Depreciation & Amortisation 84 101 107 120 126
Goodwill & intangible assets 1,571 1,869 1,875 1,842 1,808 Cash earnigns 314 333 341 386 418
Net PPE 655 782 877 972 1,030 Change in Working Capital 16 -5 -33 -5 -19
Free Cash Flow 211 175 167 199 250
Short Term Debt 685 163 110 110 110
Current Liabilities 917 464 387 420 427 Share buy-back 0 0 0 0 0
Long Term Debt 737 791 853 800 710 Dividends Paid -125 -116 -116 -145 -160
Shareholders Equity 893 1,626 1,824 1,945 2,078 Total Change in Cash -587 491 36 54 90
31

Danone
With sentiment on the stock largely negative, on the short-term pressures from macro
slowdown particularly on Europe Dairy, and continued inflation in milk prices, we see a
compelling valuation entry-point to the mid-term turnaround. 2023E should see further
volume pressures (JPMe -1.4%) though with pricing remaining key to drive topline LFL
+4.8% and mitigating COGS inflation of 9% (vs 16% in 2022E). We see these volume
declines driven to a large degree by Russia EDP weakness (business up for divestment).
Ex-Russia, we expect 2023E volumes of -0.7% and LFL +5.3%, and hence on an ex-
Russia basis see the performance set to be broadly defensive. Whilst Europe Dairy
should see volume pressure, we see continued strong performance in US Dairy, further
robust EM Waters growth and resilient Specialised Nutrition. Overall COGS inflation
should ease in 2023E versus 2022E, though remaining elevated due to increased fresh
milk prices but easing packaging inflation. Continued productivity savings plus
reinvestments of Local First savings should also drive the margin, which we expect to
be slightly up +20bps to 12.5%. Interest costs should see moderate increase over 2023-
25E, yet overall see EPS CAGR over 2023E and 24E at +8% (in reported and CC
terms). We roll forward our SOTP valuation for Danone to Dec-2024, with a target price
of €65.

The downside risks to Danone are two scenarios – 1/ COGS inflation is higher than the
10% we model, leading to greater margin erosion and greater pressure to price higher (at
a cost to volumes); 2/ recession hit to Europe and N. America is more severe and
leading to greater volume pressure and steeper slowdown in pricing as they need greater
promotion. In this scenario, we see a risk of LFL slowdown to +3.2% (volumes -2.6%)
with margins eroded to 12.0%, leading to ~7% downside EPS risk. On the upside, we
expect that ex-Russia, 2023E Group volumes would be -0.7% and LFL +5.3%, whilst
margin could be +30-70bps higher. Further upside risks include a shallower than
expected deterioration in Europe volumes, faster evidence of turnaround investments
showing in Group volumes and share, and China reopening driving a bigger uplift in
Mizone (altogether resulting in ex-Russia Group volumes broadly flat, with slight
margin upside).
Key metrics
32

Figure 53: Danone: LFL by division, FY20-24e Figure 54: Danone: Summary P&L, FY20-24e
Europe 8,156 8,341 8,791 8,976 9,245 Sales 23,620 24,281 27,924 29,281 30,571
Noram 5,392 5,564 6,793 7,235 7,524
China/N. Asia/Oceania 2,848 3,008 3,438 3,483 3,640 GM 48.1% 47.4% 45.3% 45.6% 46.0%
Rest of the World 7,225 7,369 8,902 9,587 10,162 Selling expense -5,366 -5,516 -6,379 -6,748 -7,076
Sales 23,621 24,282 27,924 29,281 30,571 General and administrative expense -2,285 -2,327 -2,453 -2,513 -2,590
Research and development expense -323 -338 -389 -408 -426
Europe x 1.7% 5.6% 2.5% 3.0%
Noram x 4.7% 9.3% 5.3% 4.0% Trading operating income 3,317 3,337 3,438 3,670 3,952
China/N. Asia/Oceania x 4.6% 6.6% 3.6% 4.5% % Margin 14.0% 13.7% 12.3% 12.5% 12.9%
Rest of the World x 4.0% 10.8% 7.0% 6.0%
LFL -1.5% 3.4% 8.1% 4.8% 4.4% Net financials -310 -267 -273 -289 -290
Volume/mix x 1.8% -0.7% -1.4% 2.3% Tax -828 -841 -867 -926 -1,003
Pricing x 1.6% 8.8% 6.2% 2.1% Associates 85 7 7 7 8
Minorities -75 -70 -74 -77 -81
EDP 12,823 13,090 14,917 15,528 16,149
Specialised Nutrition 7,192 7,230 8,329 8,670 9,061 Adj. Net income 2,189 2,166 2,232 2,385 2,586
Waters 3,605 3,961 4,678 5,057 5,335
Adj. EPS 3.34 3.31 3.47 3.71 4.02
EDP - LFL 3.4% 3.7% 5.6% 4.0% 4.0% % growth -13.2% -1.0% 4.7% 7.0% 8.5%
SN - LFL -0.9% 1.0% 10.3% 4.0% 4.5%
Waters - LFL -16.8% 7.2% 12.6% 8.0% 5.5%
Figure 55: Danone: Summary Balance Sheet, FY20-24e Figure 56: Danone: Summary Cash Flow Statement, FY20-24e
Cash and cash equiivalents 593 659 533 681 1,555 Net Income 2,189 2,166 2,232 2,385 2,586
Current assets 10,612 11,964 12,466 12,940 14,125 Depreciation & Amortisation 706 711 818 857 895
Goodwill & intangible assets 23,037 24,053 23,935 23,810 23,681 Operating CF before WC 3,199 3,123 2,444 2,847 3,695
Net PPE 6,572 6,843 7,225 7,625 8,043 Change in Working Capital -231 351 -73 -92 -103
Financial assets 855 899 899 899 899 Capital Expenditure -962 -1,043 -1,200 -1,258 -1,313
Total Assets 42,776 45,420 46,182 46,929 48,400 Free Cash Flow 2,052 2,489 1,172 1,497 2,279
Short Term Debt 3,762 3,767 3,767 3,767 3,767 Share buy-back 0 -801 0 0 0
Current Liabilities 10,338 11,078 11,883 12,118 12,325 Dividends Paid -1,363 -1,261 -1,234 -1,283 -1,335
Long Term Debt 12,272 12,442 12,442 12,442 12,442 Total Change in Cash -51 65 -125 148 874
33

Givaudan
We maintain our cautious stance on the Consumer Ingredients sub-sector overall as it
faces potential headwinds into 2023E on several fronts; easing consumer demand
backdrop, risk of customer destocking hitting volumes, margin pressures from energy
and labour costs set to become more forceful (even if raw materials inflation should
ease), and a valuation premium to European Staples that remains, albeit diminished
since the start of 2022. Against this backdrop, we see risks to Givaudan’s earnings and
valuation in the coming year, as the company has already started to see customer
destocking in Q322. We also forecast pedestrian topline growth than peers Symrise and
Kerry. In 2023E, we expect this more modest topline development to continue, at JPMe
LFL +4.0%, with volumes broadly flat. Givaudan remains the most highly valued of the
sub-sector on a PE24E and EV/EBITDA24E basis, at 28.5x PE24E and 20.5x EV/
EBITDA24E. While we acknowledge the long-term defensive and quality attributes of
the company, we believe the valuation will be harder to defend with earnings CAGR
over 2023E and 24E at a modest JPMe +5.5%, and elevated PEG ratio of 5x on
23E/24E average. We downgrade to Underweight and update our target price to CHF
2840 on a Dec-2024 basis, in line with EU Ingredients PE24E.

In a downside scenario, we see a more meaningful headwind from customer destocking,
if FMCG companies wind down excess inventories through 2023 faster than expected.
We would expect this could present a further LSD volume risk, which would further
impede already modest organic sales growth in 23E. Operational deleverage would add
to cost headwinds, and in aggregate present L-MSD % downside earnings risk. In an
upside scenario, cost headwinds prove to be lower than modelled, and volume more
resilient at +LSD if there is not a material slowdown in end-markets growth and
customer inventory wind down.
Key metrics
Figure 57: Givaudan: LFL by division, FY20-24e Figure 58: Givaudan: Summary P&L, FY20-24e
Taste & Wellbeing 3,398 3,593 3,893 3,947 4,105 Sales 6,322 6,684 7,169 7,273 7,547
Fragrance & Beauty 2,924 3,091 3,276 3,325 3,442
Group Sales 6,322 6,684 7,169 7,273 7,547 GM 42.1% 42.7% 40.3% 39.8% 40.2%
Marketing, development and distribution 1,384 1,483 1,478 1,479 1,516
Taste & Wellbeing 2.8% 7.6% 6.1% 4.0% 4.0% Administrative expenses 218 239 235 238 240
Fragrance & Beauty 5.4% 6.6% 6.1% 4.1% 3.5% Other Operating Income/expenses 61 44 41 41 43
LFL Sales Growth 4.0% 7.1% 6.1% 4.0% 3.8%
Adj. EBITDA 1,442 1,504 1,531 1,517 1,604
% Margin 22.8% 22.5% 21.4% 20.9% 21.3%
Adj. EBIT 1,041 1,111 1,149 1,148 1,236

% Margin 16.5% 16.6% 16.0% 15.8% 16.4%
Net financials -120 -124 -203 -144 -139

Tax -185 -194 -183 -190 -204
Net income (beia) 936 982 926 961 1,031
Adj. EPS 100.7 105.7 99.7 103.4 111.0

% growth 9.2% 4.9% -5.7% 3.7% 7.3%
34

Figure 59: Givaudan: Summary Balance Sheet, FY20-24e Figure 60: Givaudan: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 411 273 273 273 273 EBITDA 1,397 1,482 1,516 1,517 1,604
Current assets 3,299 3,406 3,753 3,663 3,761 Change in Working Capital -134 -96 -299 71 -65
Goodwill & intangible assets 4,543 4,853 4,690 4,543 4,405 Capital Expenditure -227 -256 -308 -298 -302
Net PPE 2,222 2,291 2,380 2,457 2,528 Free Cash Flow 856 918 728 1,106 1,043
Financial assets 180 297 297 297 297
Total Assets 10,658 11,420 11,693 11,533 11,564 Share buy-back 0 0 0 0 0
Dividends Paid -571 -589 -627 -645 -664
Short Term Debt 206 428 428 428 428 Total Change in Cash -32 -118 101 461 379
Long Term Debt 4,245 4,239 4,138 3,677 3,298
35

JDE Peet’s
For JDE Peet’s, we see 2023E as a year with substantial rollover of coffee prices,
leading to downside risks to the top line (potentially negative in H223), margin rise but
low EPS growth. Although an easing in COGS inflation should drive a Gross Margin
rebound in 2023E, top-line growth should be penalized as pricing eases – with the
market generally disciplined on pricing pass-through equally as input costs ease as when
they worsen. Moreover, the margin tailwind from abating coffee prices will likely be
moderated by some inflation in SG&A (i.e., labour costs) as well as the risk of greater
A&P reinvestments needed to recover volumes. Overall visibility on a quality top-line
turnaround is low, with EU Nielsen data evidencing the worst volumes performance in
Food/HPC. We also see a high dependence on Russia profits – elsewhere in Food/HPC
we find companies pledging to divest/dispose or to donate profits. For JDE Peet’s, we
expect Russia is 6-7% of 2022E revenues, and as much as low-teens percent of EBIT
(given high margin normally than R&G markets such as Brazil, plus pullback in A&P).
We roll forward our target price to Dec-2024, continuing to value JDE Peet’s at a 25%
discount to EU Food peers on an equal weight of PE and EV/EBITDA 2024E, with a TP
of €28.

The key risks to JDE Peet’s to the downside that we see are faster than modelled pricing
rollover as the company needs to cut prices and raise promotions to win back volumes
and market share in Europe particularly. In this instance, Group LFL could deteriorate
from JPMe +0.9% to around flat and would (coupled with A&P ramp up) erode the
margin uptick that we expect to see. A further downside risk is the JPMe more than 10%
of EBIT derived from Russia as peers dispose or pledge to make zero profits here –
altogether, we see 10-15% downside risks. On the upside, the key risks are a greater
margin tailwind from rollover of input cost pressures and that pricing actions should
prove stickier than we forecast (altogether faster margin ramp up and more resilient LFL
driving 8% EPS23E upside risk).
Key metrics
Figure 61: JDE Peet’s: LFL by division, FY20-24e Figure 62: JDE Peet’s: Summary P&L, FY20-24e
Peet's 838 903 1,121 1,178 1,248 Sales 6,651 7,001 8,333 8,442 8,616
OOH 666 723 922 957 966
CPG Europe 3,475 3,573 3,787 3,757 3,776 GM 42.6% 42.5% 36.0% 37.5% 38.2%
CPG LARMEA 985 1,091 1,668 1,678 1,728 SG&A -1,900 -1,865 -1,921 -2,031 -2,087
CPG APAC 659 684 808 845 870
Sales 6,651 7,001 8,333 8,442 8,616 Adj. EBIT 1,278 1,304 1,262 1,317 1,387
% Margin 19.2% 18.6% 15.1% 15.6% 16.1%
Peet's -1.4% 12.3% 11.5% 5.0% 6.0%
OOH -29.3% 12.8% 27.0% 4.5% 1.0% Net financials -246 -97 -8 -64 -61
CPG Europe 7.0% 2.6% 6.0% -0.5% 0.5% Tax -240 -302 -314 -314 -332
CPG LARMEA 5.3% 17.0% 33.0% -3.0% 3.0% NCI 5 6 8 9 10
CPG APAC -0.7% -5.1% 14.0% 6.0% 3.0%
Organic sales growth -0.2% 6.1% 13.8% 0.9% 2.1% Adj. Net income 787 898 931 930 984
Volume/mix -1.0% 3.5% -2.3% -0.8% 3.1%
Pricing 0.8% 2.5% 16.1% 1.7% -1.1% Adj. EPS 1.57 1.79 1.90 1.92 2.03
% growth -1.8% 13.6% 6.0% 1.5% 5.8%
36

Figure 63: JDE Peet’s: Summary Balance Sheet, FY20-24e Figure 64: JDE Peet’s: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 414 662 723 582 738 Reported Net Profit 367 762 864 799 854
Current assets 1,819 2,313 2,878 2,721 2,893 Depreciation & Amortisation 450 394 443 447 454
Goodwill & intangible assets 16,825 16,903 16,767 16,631 16,495 Change in Working Capital 61 339 332 -178 25
Net PPE 1,600 1,683 1,660 1,637 1,614 Capital Expenditure -252 -255 -284 -288 -294
Total Assets 20,736 21,623 22,029 21,714 21,726 Free Cash Flow 702 1,243 1,361 795 1,063
Short Term Debt 75 91 91 91 91 Share buy-back 0 0 -500 0 0

Current Liabilities 3,332 3,989 4,883 4,743 4,840 Dividends Paid -89 -176 -351 -475 -440
Long Term Debt 5,405 4,784 4,284 3,784 3,284 Total Change in Cash -398 248 561 359 656
Source: J.P. Morgan estimates, Company data. Source: J.P. Morgan estimates, Company data. For forecasts, change in net cash (after
assumption on debt paydown).
37

Kerry Group
For Ingredients overall, we see the risks from lower consumer demand combined with
customer destocking limiting visibility into 2023E, yet we see Kerry as a relative
defensive play in the sub-sector. We expect Taste & Nutrition volume growth should
moderate (as the tailwind from Food Services recovery eases and customer demand is
more moderate) yet expect that Kerry can drive T&N volume growth of +3.0% - a result
that is contrasted to volume deterioration in many Food/HPC names. Kerry T&N has
proven resilient during 2007-09, and it should have support from Private Label
exposure, and Food industry volumes (which Kerry has built a track record of
outperforming) broadly are maintained in US/EU Nielsen data and have been resilient
through past cycles. At 17x PE24E and 12x EV/EBITDA24E, Kerry remains at a ~30%
discount to overall Ingredients on 25x/16x respectively, a valuation gap that we expect
could narrow given Kerry’s more defensive position and on further squeeze to the
multiples of highly valued growth/quality peers. We set a Dec-24 PT of €118 where we
value the stock at a 10% discount to the EU Ingredients sector PE24E to reflect the
lower valuation of Dairy.

The downside scenario is one where there is a material headwind from destocking by
customers, weakening in consumer demand more than modelled (including greater drag
to food service) and if the margin deterioration impact from inflation in 2023E is greater
than we anticipate. In this scenario, we see T&N volumes flat, margin moderately down,
and a downside EPS risk of ~7%. The upside scenario we see is that Europe and
Americas T&N volumes are more resilient at +2-3% (akin to during 2009) and APMEA
growth improves on the back of China reopening tailwind and resilient growth
elsewhere. With better margins also from operating leverage, this drives a L-MSD %
upside to our 2023E EPS.
Key metrics
Figure 65: Kerry Group: LFL by division, FY20-24e Figure 66: Kerry Group: Summary P&L, FY20-24e
FY20 FY21PF FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E
Taste & Nutrition 5,753 5,716 7,314 7,901 8,197 Sales 6,953 7,351 8,721 9,468 9,902
Kerry Dairy Ireland / CF 1,279 1,121 1,594 1,769 1,805
Sales 6,953 6,696 8,721 9,468 9,902 Adj. EBITDA 998 1,077 1,224 1,332 1,461
% Margin 14.4% 14.7% 14.0% 14.1% 14.8%
Taste & Nutrition -3.0% 10.0% 15.4% 8.0% 4.0%
Kerry Dairy Ireland / CF -1.4% 6.0% 41.7% 11.0% 2.0% Adj. EBIT 769 841 965 1,056 1,177
Organic sales growth -2.7% 9.4% 19.5% 8.5% 3.6% % Margin 11.1% 11.4% 11.1% 11.2% 11.9%
Volume -2.9% 8.2% 6.4% 2.8% 3.6%
Pricing 0.3% 1.2% 12.9% 5.7% 0.0% Net interest -72 -70 -75 -73 -62
Tax -85 -96 -112 -124 -167
T&N Volumes -3.0% 8.3% 7.2% 3.0% 4.0%
Americas -2.5% 6.7% 8.0% 2.0% 2.0% Adj. Net income 611 675 778 859 948
Europe -5.0% 9.9% 5.0% 0.0% 2.0%
APMEA -1.9% 11.3% 8.0% 8.0% 9.0% Adj. EPS 345.4 380.8 439.1 484.9 535.0
% growth -12.3% 10.3% 15.3% 10.4% 10.3%
38

Figure 67: Kerry Group: Summary Balance Sheet, FY20-24e Figure 68: Kerry Group: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 563 1,039 1,039 1,039 1,039 EBIT 797 876 999 1,088 1,209
Current assets 2,595 3,458 3,903 4,145 4,286 Depreciation 201 202 225 244 252
Goodwill & intangible assets 4,687 5,581 5,500 5,421 5,342 Change in Working Capital -107 -184 -111 -60 -35
Total Assets 9,443 11,395 12,206 12,552 12,757 Free Cash Flow 404 358 465 574 732
Short Term Debt 3 6 6 6 6 Share buy-back 0 0 0 0 0

Current Liabilities 1,696 1,995 2,447 2,668 2,799 Dividends Paid -143 -158 -180 -192 -211
Long Term Debt 2,506 3,118 3,114 2,731 2,210 Total Change in Cash 37 445 4 382 521
39

Nestle
We expect Nestle overall to post amongst the most resilient volumes in 2023E, with RIG
+0.5% and LFL +6.2%, supported by N. America (especially Pet Care, with capacity
additions set to be a support), modest China recovery (notably turnaround in IMF) and
continued underlying momentum in EMs. Though RIG should see pressure in H1, SKU
rationalization will be a headwind (notably in AOA and L. America) and we expect
Europe volumes to be pressured. Outperformance in the high-growth segments of Pet
and Coffee, continued investment, as well as success in Premium and Affordable
product offerings, should set Nestle up for better growth than most peers. Pricing
annualisation (as price increases made in 2022 stick) combined with modest incremental
pricing actions in early 2023 and easing COGS inflation (we expect 3% in 2023E vs
17% in 2022E) should provide uplift to operating margins. On interest costs, we expect
only a small increase in rates by 2024, as debt is largely long term (post 2020/21
refinancing) and Nestle’s recent bond issuance was at a fairly modest ~3% yield. We
expect that Nestle should, over 2023-24E deliver one of the highest-quality top-line
growths, moderate margin recovery, and share buyback, which drives JPMe EPS CAGR
+7% (+9% CC). We roll forward our target price to Dec-2024, at CHF 130, using a 20%
premium to overall European Food/HPC PE24E given Nestle’s quality, defensive
earnings profile, and long-term strong top-line growth.

The downside scenario for Nestle is a greater hit from macro pressures in N. America
(including downtrading in Pet and Coffee), major destocking by retailers, failure to
sustain recovery in China, and pickup in promotional activity through 2023 which
impairs margin recovery. Whilst the upside risks include a greater RIG uplift from
recent high capex in coffee and pet, and faster recovery in operating margin as cost
headwinds ease (though with labour inflation capping the margin upside). All in all, we
estimate a +3%/-3% upside/downside risk to 2023E EPS.
Key metrics
Figure 69: Nestle: LFL by division, FY20-24e Figure 70: Nestle: Summary P&L, FY20-24e
Zone North America x 23,693 27,019 28,880 29,890 Sales 84,343 87,088 95,067 98,213 102,247
Zone Europe x 18,794 18,813 19,133 19,515
Zone AOA x 17,894 18,628 18,739 19,676 GM 49.5% 48.2% 46.1% 46.3% 46.7%
Zone LATAM x 10,086 11,881 12,428 13,174 Distribution expenses -7,861 -7,919 -8,651 -8,937 -9,304
Zone GC x 5,175 5,480 5,436 5,708 Marketing and administrative expense -17,370 -17,294 -17,385 -17,871 -18,762
Nespresso 5,885 6,418 6,469 6,650 6,917 Research and development costs -1,576 -1,670 -1,664 -1,719 -1,789
Nestle Health Science 3,326 4,822 6,516 6,675 7,075
Other 166 206 261 273 292 Underlying Trading Op. Profit 14,903 15,119 16,152 16,977 17,917
Total sales (CHFm) 84,343 87,088 95,067 98,213 102,247 % Margin 17.7% 17.4% 17.0% 17.3% 17.5%
Zone North America x 6.8% 12.0% 8.0% 3.5% Net financials -874 -873 -975 -1,078 -1,220
Zone Europe x 8.2% 7.1% 3.0% 2.0% Tax -2,965 -2,945 -3,138 -3,287 -3,452
Zone AOA x 4.6% 8.2% 6.5% 5.0% Associates 1,238 1,381 1,416 1,522 1,636
Zone LATAM x 12.5% 13.0% 9.0% 6.0% Minorities -319 -348 -367 -387 -409
Zone GC x 1.0% 5.0% 6.0% 5.0%
Nespresso 7.0% 8.8% 3.5% 5.5% 4.0% Adj. Net income 11,983 12,334 13,088 13,746 14,473
Nestle Health Science 12.2% 13.5% 4.0% 3.0% 6.0%
Other -26.3% 26.3% 28.0% 8.0% 7.0% Adj. EPS 4.21 4.42 4.81 5.17 5.52
Organic sales growth 3.6% 7.5% 8.8% 6.2% 4.1% % growth -4.5% 5.1% 8.8% 7.4% 6.8%
RIG 3.2% 5.5% 0.6% 0.5% 2.8%
Pricing 0.4% 2.0% 8.3% 5.7% 1.3%
40

Figure 71: Nestle: Summary Balance Sheet, FY20-24e Figure 72: Nestle: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 5,235 6,988 6,988 6,988 6,988 Operating profit 14,903 15,119 16,152 16,977 17,917
Goodwill & intangible assets 47,768 53,235 53,319 53,406 53,496 Change in Working Capital 314 -173 1,078 323 311
Net PPE 25,840 28,345 31,188 32,162 33,175 Capital Expenditure -4,076 -4,880 -6,179 -4,420 -4,601
Short Term Debt 12,019 10,092 17,388 17,954 17,917 Share buy-back -6,814 -6,548 -10,000 -5,000 -5,000
Current Liabilities 39,722 40,020 50,831 52,269 53,258 Dividends Paid -7,700 -7,681 -7,806 -7,762 -7,740
Long Term Debt 27,928 36,482 36,482 36,482 36,482 Total Change in Cash -2,234 1,757 -7,296 -566 37
Shareholder Equity 45,695 53,140 47,693 47,864 48,693
41

Symrise
As we caution on Ingredients risks into 2023E, on customer destocking, slower end
markets, and more material energy and labour inflation, Symrise is not immune to these
headwinds. Furthermore, its valuation remains expensive versus overall Staples despite
some discount to Givaudan, and de-rating through 2022. Yet we also see underlying
strengths in Symrise’s portfolio that may offset the weak underlying backdrop – most
notably continued strong growth in Pet Care (now ~20% of Group sales, with strong end
markets growth and further capacity additions). This, combined with incremental
pricing, should help the company to drive an organic sales growth of +6.7%. Yet
continued margin pressures through 2023E should limit margin, and we expect a slight
EBITDA margin deterioration to 20.6%, limiting EPS CAGR over 2023E and 24E to
+6.4%. As such, we do not see earnings prospects for the coming two years as
exceptional versus peers, and we remain Neutral. Symrise trades on PE24E 26x and EV/
EBITDA24E 15x (vs EU Ingredients 25x/16x). We roll forward our target price to
December 2024, with a TP of €110, valuing the stock in line with EU Ingredients peers
PE24E using EPS adjusted for M&A amortization.

On the downside, we expect that a volume risk of LSD percent from customer
destocking, combined with the operational deleverage impact and a worse than
modelled input cost inflation environment (driving EBITDA to the bottom of Symrise’s
20-23% range), could be ~6% downside earnings risk. The upside risks meanwhile are a
stronger than expected volume growth performance, supported not only by high growth
drivers of Pet and Cosmetic Ingredients but the broader portfolio with limited customer
destocking. If this is coupled with Symrise locking in 2023 energy costs at a more
favourable level, then this could result in a LSD top-line growth upside and MSD on
earnings.
Key metrics
Figure 73: Symrise: LFL by division, FY20-24e Figure 74: Symrise: Summary P&L, FY20-24e
Scent & Care 1,370 1,491 1,727 1,821 1,903 Sales 3,521 3,826 4,636 4,974 5,224
Taste, Nutrition & Health 2,151 2,335 2,909 3,153 3,320
Sales 3,521 3,826 4,636 4,974 5,224 GM 39.5% 38.7% 38.4% 38.1% 38.4%
Scent & Care 1.5% 7.9% 6.3% 4.4% 4.5% Adj. EBITDA 742 789 965 1,024 1,091
Taste, Nutrition & Health 3.5% 10.6% 14.5% 8.1% 5.3% % Margin 21.1% 20.6% 20.8% 20.6% 20.9%
Organic sales growth 2.7% 9.6% 11.3% 6.7% 5.0%
Adj. EBIT 488 534 656 716 773
% Margin 13.8% 14.0% 14.1% 14.4% 14.8%
Net financials -64 -43 -45 -49 -46

Tax -109 -131 -160 -170 -185
NCI 8 10 10 10 11
Adj. Net income (beia) 382 431 522 551 591
Adj. EPS (beia) 2.73 3.09 3.74 3.94 4.23

% growth 4.5% 12.9% 21.1% 5.5% 7.3%
42

Figure 75: Symrise: Summary Balance Sheet, FY20-24e Figure 76: Symrise: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 725 454 200 483 879 Net Income 315 385 469 497 541
Goodwill & intangible assets 2,194 2,482 2,363 2,258 2,152 Change in Working Capital 14 -110 -212 -111 -81

Current Liabilities 657 1,145 1,183 1,235 1,274 Dividends Paid -133 -138 -137 -159 -164
Long Term Debt 1,964 1,342 1,342 1,342 1,342 Total Change in Cash 297 -284 -254 283 396
43

HPC Investment Cases

Beiersdorf
Beiersdorf stock has enjoyed both EPS upgrades and PE re-rating YTD, unlike any of
the EU Food/HPC peers. Yet, at 20x PE24e (ex-cash), the stock remains expensive (in
line with the last 5- to 10-year valuation). Near-term outlook remains cautious with
management factoring in an ongoing impact from European delisting. Nevertheless,
management remains confident into FY23 given the acceleration in market share gains,
pricing and volumes resiliency in Consumer. We model FY23 in line with
management’s long-term guide of +5% LFL and >50bps margin rise, though we also
flag tough volumes comparatives. We are broadly in-line with Bloomberg consensus
expectations and expect potential de-rating risks weighing on the stock performance
with limited upside to earnings expectations. The potential of improving dividend
payout (to lower end of 30-50% for Staples vs low-20s over the past several years) may
help the stock. On revised estimates and rolling forward, we set a Dec-24 DCF-derived
PT of €105 (vs Dec-23 SOTP Price Target at €105 previously). We remain Neutral on
Beiersdorf.

Upside EPS risks of ~4% driven from stronger than expected China re-opening benefits
as well as recovery in W. Europe and continued strong momentum in the US on the back
of Eucerin launch and share gains for Coppertone/ La Prairie. Better than expected
growth at Tesa and Consumer could also fuel +50bps margin at the group level. A
stronger than expected top-line growth could also bolster rerating potential for the stock
coupled with peak Fed hawkishness. Downside EPS risks of ~8% in FY23 with worse
than modelled slowdown in W. Europe/ US (particularly impacted by La Prairie and
Eucerin) and slower EMs for Consumer, accentuated by retailer destocking. Tesa
demand to be impacted negatively and overall group margin under pressure from
negative Mix and deleverage. We see a risk of continued slowdown in consumer
demand lingering into FY24, even if Beiersdorf may appear better placed given its high
mass-market exposure.
Key metrics
44

Figure 77: Beiersdorf: LFL by division, FY20-24e Figure 78: Beiersdorf: Summary P&L, FY20-24e
Consumer 5,700 6,129 7,160 7,521 7,861 Sales 7,026 7,627 8,830 9,188 9,580
Tesa 1,326 1,498 1,670 1,667 1,719
Sales 7,026 7,627 8,830 9,188 9,580 GM 57.5% 57.2% 56.4% 56.8% 57.2%
R&D 246 268 310 323 337
LFL Consumer -6.6% 8.8% 10.6% 5.1% 4.5%
A&P 1,554 1,689 1,901 1,984 2,068
LFL Tesa -1.5% 13.6% 8.1% 0.4% 3.1%
EBIT 906 993 1,167 1,237 1,332
LFL Total -5.7% 9.7% 10.1% 4.2% 4.3%
% Margin 12.9% 13.0% 13.2% 13.5% 13.9%
LFL Consumer -6.6% 8.8% 10.6% 5.1% 4.5%
Western Europe -8.6% 5.7% 4.5% 2.0% 2.0% Net Financials 20 18 12 18 24
Eastern Europe -5.8% 6.3% 3.9% 2.5% 2.5% Tax -244 -252 -312 -338 -371
Europe -8.0% 5.8% 4.4% 2.1% 2.1%
North America 0.2% 13.0% 17.0% 6.0% 5.0% Adj. Net Profit 560 638 794 850 933
Latin America 5.4% 18.8% 30.0% 10.5% 5.0%
Americas 3.2% 15.9% 23.5% 8.4% 5.0% Adj. EPS 2.73 3.00 3.55 3.75 4.12
A/A/A -10.0% 8.9% 11.2% 6.6% 7.5% % Growth -19% 10% 18% 6% 10%
Figure 79: Beiersdorf: Summary Balance Sheet, FY20-24e Figure 80: Beiersdorf: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 1,652 1,652 1,424 1,893 2,425 Operating Profit 906 993 1,167 1,237 1,332
Net Intangible assets 545 538 581 581 581 Cash Earnings 821 933 1,159 1,215 1,314
Net PPE 1,630 1,845 691 805 923 Change in Working Capital 182 96 -125 -49 -53
Financial assets 3,415 3,937 3,937 3,937 3,937 Capital Expenditure -280 -413 -512 -459 -479
Short Term Debt 358 501 501 501 501 Dividends Paid -177 -177 -170 -238 -249
Current Liabilities 2,749 3,325 3,596 3,634 3,680 Total Change in Cash -143 16 -228 468 533
Long Term Debt 88 106 106 106 106
45

Essity
We upgrade Essity to Neutral (from UW) as we believe that Q422 will likely witness
earnings and operating margin trough with recovery in profitability over FY23. We raise
FY23E adj EBITA by c4% and are 3% ahead of Bloomberg consensus. Beyond near-
term upside from pricing/ cost inflation interplay, we see limited upside at this stage and
we are roughly in line with FY24 consensus EBITA (and hence Neutral). We believe
that the visibility on MT earnings path for Essity remains low for now, given the
volatility in pulp and energy costs. We expect more color on the MT targets (ROCE of
17%+ by 2025) at the upcoming CMD (divisional presentations over 7-9 Dec). Essity
will continue to face higher COGS inflation in FY23 (we assume HSD) though this
should be entirely H1-weighted with potential risks from European energy prices and
USD. Pricing acceleration (recent price hike fully reflected over Q422/Q123) should
continue to support profitability as it catches up to cumulative COGS headwinds since
Q121. Volume erosion remains a risk (JPMe -1.4% F23e) though we highlight a)
Essity’s exposure to European private label to mitigate dow-trading and b) Essity LFL
remained positive through GFC. Overall, we raise FY23e Adj. EBITA and EPS by
c4%/3% respectively. We roll forward and raise our Dec-24 SOTP PT to SEK 280 (Dec-
23 SEK 220 earlier) on revised estimates and peer multiples.

Overall, a modest slowdown (c1.5%) in cost inflation over FY23 could drive EPS23e
upside risks of ~5% helped by combination of steady energy prices, modest easing in
pulp prices from highs without necessitating significant promotional intensity.
Historically, Essity has been able to recover cost inflation via pricing over a period of
time and we expect limited risk from higher promotions in the absence of a sharp
rollover of pulp/ oil-derived or energy prices. Better than expected volumes (in light of
resilient hygiene demand) could merit further rerating for the stock. Downside EPS risks
of ~4% in FY23 from higher volume elasticities and/or combination of stickier costs
(and USD strength) impacting profitability while Essity goes through another round of
pricing negotiations.
Key metrics
Figure 81: Essity: LFL by division, FY20-24e Figure 82: Essity: Summary P&L, FY20-24e
Sales 121,752 121,867 157,044 173,623 179,676 Sales 121,752 121,867 157,044 173,623 179,676
Personal Care 46,095 46,639 25,481 27,010 28,360
Consumer Tissue 50,221 49,086 95,130 105,282 108,125 GM 32.5% 28.9% 24.8% 27.4% 27.7%
Professional Hygiene 25,418 26,143 36,434 41,331 43,191 COGS -181 -146 x x x
Other 18 -1 -1 -1 -1 SG&A 122 517 -1,413 x x
LFL -1.9% 3.3% 16.3% 7.5% 3.5% 17,626 13,680 12,343 17,576 19,206
Adj. EBITA
Personal Care -0.1% 5.0% 8.0% 4.0% 5.0%
% Margin 14.5% 11.2% 7.9% 10.1% 10.7%
Consumer Tissue 4.2% 0.5% 16.1% 7.3% 2.7%
Professional Hygiene -14.7% 5.8% 23.7% 10.4% 4.5%
Net Financials -958 -662 -1,028 -1,323 -1,229
Tax -4,053 -2,727 -1,550 -3,616 -4,017
Volume -2.3% 1.8% 2.9% -1.4% 2.7%
Price/Mix 0.4% 1.5% 13.4% 8.9% 0.8%
Adj. Net Profit 10,286 8,173 6,771 10,212 11,432
Adj. EPS 14.65 11.64 9.64 14.54 16.28

% Growth 5.3% -20.5% -17.1% 50.8% 11.9%
46

Figure 83: Essity: Summary Balance Sheet, FY20-24e Figure 84: Essity: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 4,982 3,904 3,478 8,413 16,044 EBITDA 24,429 20,590 17,378 26,640 28,586
Current assets 43,116 51,003 65,003 75,203 84,969 Cash Earnings 18,629 15,511 14,800 21,701 23,340
Net Goodwill 32,324 37,803 31,812 30,626 29,385 Change in Working Capital -810 -844 -2,144 -2,160 -629
Net Intangible assets 18,574 21,806 18,113 16,777 15,394 Capital Expenditure -6,587 -7,301 -8,166 -9,549 -9,882
Net PPE 53,631 58,918 60,923 62,744 64,630 Free Cash Flow 11,232 7,366 4,490 9,992 12,829
Total Assets 154,645 175,050 181,371 190,870 199,897
Dividends Paid -4,813 -5,312 -4,916 -5,057 -5,197

Short Term Debt 8,688 10,746 10,746 10,746 10,746
Total Change in Cash 5,680 -8,519 -426 4,935 7,632
Long Term Debt 38,202 47,443 47,443 47,443 47,443
47

Haleon
Although Haleon has seen volume/mix resilience through 9M22, this performance has
been driven largely by strong Respiratory growth (on a strong cough and cold season,
and easy base of comparison), whilst the key growth engines of Vitamins, Minerals &
Supplements (VMS) and Oral Care have been more pedestrian. Into 2023E, we expect
the tailwinds from Respiratory to abate, pressures in N. America VMS to remain, and
overall volumes growth to be more subdued (JPMe +0.4%) against a tougher macro
backdrop and unproven ability to consistently gain market share in aggregate. We see a
low visibility on margin for the year – whilst commodity inflation should ease, we
expect a pickup in labour inflation, likely increase in co-manufacturing costs, and
modest pricing versus Food/HPC peers. EPS CAGR over 2023E and 24E should be
JPMe ~5%, below the European Food/HPC average of ~8%. Haleon trades broadly in
line with key peers Reckitt and Unilever, at 11x EV/EBITDA24E, yet we see risks from
the overhang from minority shareholders, high leverage versus peers, and largely
unproven ability to deliver against mid-term growth targets, while Zantac liability risks
also remain. We roll forward our target price to Dec-2024, with a TP of 250p, at a 10%
discount to key peer Reckitt EV/EBITDA24E.
Downside / Upside Case

On the downside, we see risks to Haleon delivery in 2023E from 1) higher than
expected COGS inflation (with a greater contribution coming from harder-to-track
components such as co-manufacturers), 2) more sustained negative development in
VMS volumes given the risk of more discretionary nature in a downturn, and 3) a
decline in Respiratory volumes should a more normal cough & flu season ensue in late
2023. In this scenario, we see a risk of LFL deteriorating to ~2% and sharp operating
margin deterioration ~100bps, resulting in a -8% downside risk to 23E EPS. In an
upside scenario, volume/mix is more resilient than we model in Europe and N. America
– leading to an upside risk LFL of +5.4%, moderate margin expansion +30bps and EPS
upside risk of +LSD %. An upside risk to valuation would be positive news flow on
Zantac bellwether cases or on Haleon’s indemnities.
Key metrics
Figure 85: Haleon: LFL by division, FY20-24e Figure 86: Haleon: Summary P&L, FY20-24e
North America 3,779 3,525 4,136 4,450 4,561 Sales 9,892 9,545 10,851 11,568 12,040
EMEA & LatAm 4,059 3,877 4,284 4,575 4,790
APAC 2,054 2,143 2,431 2,543 2,688 GM 62.4% 62.9% 62.7% 62.5% 62.7%
Group Sales 9,892 9,545 10,851 11,568 12,040 A&P -2,013 -1,941 -2,138 -2,279 -2,385
Other SG&A -1,806 -1,641 -1,861 -1,963 -2,019
North America 0.7% 1.3% 6.5% 3.0% 2.5% R&D -280 -248 -293 -312 -337
EMEA & LatAm 3.1% 3.5% 10.5% 4.5% 4.7%
APAC 5.7% 9.1% 10.0% 5.5% 5.7% Adj. operating profit 2,074 2,172 2,511 2,678 2,810
Group LFL 2.8% 3.8% 8.9% 4.2% 4.1% % Margin 21.0% 22.8% 23.1% 23.2% 23.3%
Volume/mix x 1.6% 4.1% 0.4% 2.6%
Pricing x 2.2% 4.8% 3.8% 1.4% Net financials -7 -2 -196 -251 -232
Tax -483 -469 -509 -546 -580
NCI 38 49 59 71 85
Adj. Net income 1,546 1,652 1,747 1,811 1,913
Adj. EPS 16.74 17.89 18.92 19.61 20.72

% growth 24.1% 6.9% 5.8% 3.6% 5.7%
48

Figure 87: Haleon: Summary Balance Sheet, FY20-24e Figure 88: Haleon: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 334 414 668 2,119 2,510 Profit after tax 1,181 1,439 1,439 1,764 1,881
Current assets 5,008 5,251 5,878 7,499 7,974 Depreciation and amortisation 305 268 274 292 304
Intangible assets 27,218 27,195 27,168 27,139 27,108 Change in Working Capital 15 -152 55 74 44

Current Liabilities 4,014 4,238 3,840 4,085 4,214 Dividends Paid -2,371 -1,148 -11,039 -262 -634
Long Term Debt 105 87 10,823 10,823 10,061 Total Change in Cash 0 87 1,079 1,451 1,153
49

Henkel
Despite the largest EPS downgrades YTD, Henkel stock has re-rated, helped by market
preference for ‘value’ over quality/ growth. Even as the stock has outperformed post
Q322 helped by higher FY22 guide, we see limited catalysts for continued
outperformance. With few signs or visibility on the Consumer turnaround, increasing
volume elasticities in light of strong pricing in Consumer business and signs of cracks in
industrial demand, we remain on the sidelines. Henkel is expected to see 11% COGS
inflation headwinds into FY23 limiting the margin rebound. We also highlight c9-10%
EPS downside risks from the exit of Russia/Belarus business (Henkel excludes Russia/
Belarus from top-line LFL growth since Q222). With revised estimates, updated peer
multiples and rolling forward, we set our SOTP Dec-24 PT at €70 (vs Dec- 23 €65
previously).

Upside EPS risks of ~6% driven by better than feared Consumer elasticities recovery in
FY23 as well as resilient industrial demand supporting Adhesives top-line growth.
Operational leverage and Consumer merger synergies add to the margin upside risks
driving DD EPS growth. The stock will likely benefit further in this case, with
narrowing of valuation discount vs the blended HPC/ Specialty Chemical peers. Besides
a 10% earnings cut risk from Russia exit, we see a downside EPS risks of ~9% in FY23
with worse than modelled slowdown across geographies, worse volume elasticities for
Consumer (with potential risk from heightened promotions) and lower industrial
demand. Lower volume and promotional environment could lead to group margin under
pressure from deleverage. However, we expect partial recovery in FY24 with gradual
improvement in macro and consumption outlook thereafter.
Key metrics
Figure 89: Henkel: LFL by division, FY20-24e Figure 90: Henkel: Summary P&L, FY20-24e
Sales 19,250 20,066 22,606 22,967 23,620 19,250 20,066 22,606 22,967 23,620
Sales
Laundry and Home Care 6,704 6,605 7,279 7,657 7,856
Beauty 3,752 3,678 3,818 3,913 3,976
Adhesive Technology 8,684 9,641 11,290 11,290 11,177 GM 46.7% 45.2% 41.7% 42.2% 42.7%
Corporate 110 142 220 220 220 R&D -495 -504 -545 -554 -546
Selling -5,034 -5,087 -5,686 -5,845 -5,964
LFL -0.7% 7.7% 9.2% 1.6% 2.9% Administrative -906 -921 -1,015 -1,008 -1,013
Laundy and Home Care 5.6% 3.9% 7.6% 4.0% 2.6%
Beauty -2.8% 1.4% 1.0% 3.0% 1.6%
Adj. EBIT 2,579 2,686 2,352 2,471 2,734
Adhesive Technology -4.2% 13.4% 13.5% -0.5% 3.5%
Net Financials -94 -64 -96 -105 -100
Volume -0.8% 4.7% -3.2% -2.5% 2.8% Tax -501 -519 -373 -538 -633
Price/mix 0.1% 3.0% 12.5% 4.1% 0.0%
Adj. Net Profit 1,408 1,635 1,044 1,513 1,785
Adj. EPS 4.26 4.56 3.97 4.19 4.67

% Growth -21.6% 7.0% -12.8% 5.5% 11.4%
50

Figure 91: Henkel: Summary Balance Sheet, FY20-24e Figure 92: Henkel: Summary Cash Flow Statement, FY20-24e
Current assets 9,321 10,409 10,790 11,781 13,290 Depreciation and Amortisation 1,096 978 799 812 835
Net Intangible assets 16,011 16,643 15,232 15,132 15,032 Cash Earnings 2,850 2,622 1,933 2,389 2,685
Net PPE 3,688 3,909 3,924 3,962 4,002 Change in Working Capital 166 -514 -87 68 46
Financial assets 99 161 161 161 161 Capital Expenditure -715 -647 -814 -850 -874
Free Cash Flow 2,301 1,461 1,032 1,608 1,857
Short Term Debt 1,418 1,295 1,295 1,295 1,295
Current Liabilities 8,356 9,269 9,823 9,813 9,875 Share buy-back 0 0 -800 -200 0
Long Term Debt 1,666 1,543 1,543 1,543 1,543 Dividends Paid -811 -809 -654 -556 -583
Total Liabilities and Equity 30,251 32,668 31,653 32,583 34,031 Total Change in Cash 266 387 -202 1,071 1,493
51

L’Oreal
L’Oréal stock has witnessed the strongest EPS revisions YTD (up ~10%) while the
stock has also de-rated the most amongst EU Food/HPC peers as investors rotated out of
growth stocks. Overall, we remain confident in L’Oréal’s earnings model driven by
outperformance of global beauty markets (at ~2x) and sustainable margin gains.
Nevertheless, we downgrade to Neutral (from OW) for two key reasons: 1) top-line and
EPS growth outperformance vs Food/HPC peers should narrow into FY23/24e (JPMe
L’Oréal EPS 23-24e at c7% vs Food/HPC at c8%), and 2) further derating potential for
Staples in general and Quality/ Growth Staples in particular in an environment of higher
bond yields and overall growth deceleration. Into FY23, we expect top-line growth to be
supported by price/mix and two countervailing forces – slowing consumption in W.
Europe/ US (though resilient), and China re-opening support even as we model H2-
weighted gradual recovery (at HSD). On revised estimates and rolling forward, we set a
Dec-24 DCF derived Target Price of €350 (from Dec- 23 €400 previously).

Upside EPS risks of ~6-7%, leading to 14% EPS growth in FY23 with upside driven
from stronger than expected China re-opening benefits (China/ Hainan growing 30-
40%) and better than feared slowdown in W. Europe/ US. A stronger than expected top-
line growth could also bolster rerating potential for the stock coupled with peak Fed
hawkishness. Downside EPS risks of ~6% in FY23 with worse than modelled slowdown
in W. Europe/ US, accentuated by retailer destocking and slower EMs leading to margin
deleverage. Lingering risks of slowdown in premiumisation or skin care preferences
phasing out could weigh on the top line’s growth outcome into FY24.
Key metrics
Figure 93: L’Oreal: LFL by division, FY20-24e Figure 94: L’Oreal: Summary P&L, FY20-24e
Sales 27,992 32,288 38,461 41,225 43,652 Sales 27,992 32,288 38,461 41,225 43,652
Sales Growth -6.3% 15.3% 19.1% 7.2% 5.9%

GM 73.1% 73.9% 72.9% 73.3% 73.5%
Acquis/divest 0.5% 0.8% 0.2% 0.2% 0.0%
R&D -964 -1,029 -1,187 -1,272 -1,391
FX Rate -2.8% -1.6% 7.9% 0.6% 0.0%
A&P -8,648 -10,591 -12,231 -13,152 -13,904
LFL by divisions -4.1% 16.1% 11.0% 6.4% 5.9% SG&A -5,639 -6,074 -7,159 -7,714 -8,125
Consumer -4.7% 5.6% 8.7% 5.0% 4.4%
Luxury -8.1% 20.9% 10.4% 8.0% 7.4% EBIT 5,209 6,160 7,450 8,060 8,671
Professional -6.4% 24.8% 8.5% 1.1% 3.2% % Margin 18.6% 19.1% 19.4% 19.6% 19.9%
Active Cosmetics 18.9% 31.8% 22.6% 10.1% 7.6%
Net Financials 372 378 468 398 402
LFL by regions -4.1% 16.1% 11.0% 6.4% 5.9% -1,383 -1,536 -1,912 -2,045 -2,201
Tax
Europe -9.3% 10.1% 12.0% 3.4% 2.5%
North America -7.4% 22.2% 10.5% 4.9% 4.9%
Adj. Net Profit 4,099 4,939 5,960 6,365 6,824
North Asia 6.8% 17.6% 5.9% 9.0% 8.5%
SAPMENA -SSA -9.6% 13.9% 25.0% 8.5% 8.0%
Latin America -1.5% 20.6% 18.0% 10.0% 10.0% Adj. EPS 7.30 8.82 11.08 11.84 12.70
% Growth -5.7% 20.9% 25.6% 6.8% 7.3%
52

Figure 95: L’Oreal: Summary Balance Sheet, FY20-24e Figure 96: L’Oreal: Summary Cash Flow Statement, FY20-24e
Net Goodwill 10,514 11,075 5,730 5,730 5,730 Cash Earnings 5,724 6,640 8,088 8,645 9,239
Net Intangible assets 3,356 3,463 5,600 5,892 6,193 Change in Working Capital 729 88 157 70 62
Net PPE 3,225 3,266 3,266 3,266 3,266 Capital Expenditure -972 -1,075 -1,346 -1,443 -1,528
Financial assets 9,605 10,920 10,930 10,930 10,930 Free Cash Flow 5,481 5,653 6,899 7,273 7,773
Total Assets 43,607 43,014 44,892 49,698 54,694
Share buy-back 0 -10,061 -500 -500 -500
Short Term Debt 1,243 5,042 5,042 5,042 5,042 Dividends Paid -2,191 -2,352 -2,687 -3,048 -3,272
Current Liabilities 11,130 16,583 18,505 19,365 20,120 Total Change in Cash 769 62 3,312 3,725 4,001
Long Term Debt 1,303 1,258 1,258 1,258 1,258
53

Reckitt
Over 2020-23e, Reckitt is set to deliver the best-in-class top-line LFL growth of 6.4%
CAGR, second only to L’Oréal amongst EU Food/HPC peers. Yet Reckitt is trading at
valuation multiples near 10-year lows, as investors appear to doubt the consistency of
Reckitt’s delivery despite reinvestments and better growth over the past seven quarters.
CEO Durante has reiterated confidence in delivering the MT targets as he recently
endorsed the current strategy, while the search for a new CEO is ongoing and could take
9-12m to complete. We believe RKT will reiterate MSD growth ambition for Health/
Hygiene in FY23 even as Nutrition laps extraordinary gains from FY22. With COGS
and wage inflation a pertinent topic for the industry, Reckitt is also set to deliver margin
expansion over FY21-23e while large-cap Food peers will likely remain below FY21
levels and only Beauty peers ahead. Reckitt stock remains near three-year lows and
close to historic discount to peers, offering significant upside from rerating as we
believe near-term earnings expectations have been largely reset (on lower Nutrition and
softer Europe). We remain confident in management’s effort to drive Reckitt as an MSD
top-line growth story with 7-9% MT earnings growth potential. On revised estimates,
rolling forward and higher WACC, we set Dec-24 DCF-derived target price of £75 (vs
Dec-23 £85 earlier). We also remove Reckitt from AFL given the uncertainty over the
CEO succession.

Upside EPS risks of ~3% driven from better than expected retention of US IFCN gains
vs competition (we assume 50% retention vs our base case where we assume RKT loses
all WIC sales and retains 50-60% of non-WIC sales gained from competition in FY22).
Further, better volume elasticites in Health/ Hygiene should add to top-line upside. With
improved leverage and IFCN profitability, we expect margin upside for FY23. The stock
will likely benefit further in this case, with narrowing of valuation discount vs EU Food/
HPC peers. Downside EPS risks of ~2% in FY23 from higher volume elasticities in
Hygiene and assuming slower than normal Cold & Flu season with additional margin
pressure from deleverage and negative mix.
Key metrics
Figure 97: Reckitt: LFL by division, FY20-24e Figure 98: Reckitt: Summary P&L, FY20-24e
FY20 FY21 FY22E FY23E FY24E Sales 13,993 12,851 14,467 14,976 15,664
Hygiene 5,816 5,911 6,000 6,312 6,596
Health 4,890 4,646 5,492 5,808 6,098 GM 60.3% 58.5% 57.8% 57.5% 57.7%
Nutrition 2,426 2,294 2,975 2,856 2,971 -288 -313 -352 -365 -382
R&D
Group sales 13,132 12,851 14,467 14,976 15,664
Distribution costs -3,611 -3,460 -3,779 -3,897 -4,045
Administrative expenses -1,681 -1,503 -1,649 -1,707 -1,785
Hygiene 19.5% 7.5% -2.5% 4.7% 4.5%
Health 12.1% -0.1% 14.5% 5.0% 5.0%
EBIT 3,301 2,944 3,435 3,457 3,684
Nutrition 5.4% 0.6% 19.9% -6.0% 4.0%
% Margin 23.6% 22.9% 23.7% 23.1% 23.5%
Group LFL 13.9% 3.5% 7.6% 2.6% 4.6%
Volume 9.6% 0.6% -1.5% -1.1% 4.2% Net Financials -286 544 -232 -271 -219
Price/mix 2.2% 2.8% 9.1% 3.7% 0.4% Tax -720 208 -684 -733 -797
Adj. Net Profit 1,154 15 2,518 2,453 2,667
Adj. EPS 327.01 297.86 350.81 340.67 369.57

% Growth -6.3% -8.9% 17.8% -2.9% 8.5%
54

Figure 99: Reckitt: Summary Balance Sheet, FY20-24e Figure 100: Reckitt: Summary Cash Flow Statement, FY20-24e
Goodwill & Intangible assets 22,979 18,868 18,948 19,031 19,117 Cash Earnings 2,752 2,021 3,009 2,976 3,230
Net PPE 2,233 2,178 2,346 2,430 2,502 922 -313 204 38 60
Change in Working Capital
Financial assets 136 194 194 194 194
Capital Expenditure -394 -373 -579 -524 -548
Total Assets 31,292 26,803 27,509 27,846 28,228
Free Cash Flow 3,280 1,335 2,634 2,490 2,741
Short Term Debt 9,794 7,078 5,450 4,212 2,729

Share buy-back 127 75 0 0 0
9,794 7,078 5,450 4,212 2,729 Dividends Paid -1,257 -1,263 -1,246 -1,252 -1,259
Long Term Debt
Shareholders Equity 9,115 7,256 8,910 10,271 11,844 Total Change in Cash 253 -374 1,628 1,238 1,483
55

Unilever
We expect Unilever will continue to see volume/mix pressures in 2023E (JPMe -2.0%)
but sustained high pricing. Significant price increases throughout 2022 should annualize
in 2023E, and we see further pricing actions with the company set to see COGS
inflation continuing into H123. We expect 23E LFL +4.9%. The company has one of the
highest volume elasticities in Food/HPC combined with one of the highest pricing
increases – and expect the greatest volume pressures in Home Care, Personal Care, and
by region in Europe and L. America. Though we expect all categories and regions to see
volume pressure. We forecast COGS basket inflation of 10% in 2023E, compared with
>20% in 2022E. With pricing benefit set to exceed incremental costs in 2023E, we see
margins set to recover modestly by +30bps to 16.6%, though A&P reinvestments and
labour inflation should limit the margin rebound. We expect some increase in interest
rates by ~20bps per year over 2022-25E. Nonetheless, whilst we expect the quantum of
earnings growth to be defensive, at CAGR +7% (reported and CC), the quality of
delivery is likely to be low in 2023-24E (pricing led, with continued negative volumes).
We roll forward our target prices to Dec-2024. We set our Dec-24 PTs at €45/£39 (vs
Dec-23 €43/£36 previously), valuing Unilever at a 15% discount to selected European
Food and HHD peers (18x PE24E).

The downside risks to Unilever are that, after sharp price increases through 2021-23, the
pressures on competitiveness and volumes lead to increased promotional activity and
steeper increase in A&P. This could lead us to revise down our price/mix assumptions
(promotions, downtrading) as well as pressure the pace of margin recovery. The upside
risks meanwhile are that Emerging Markets (~60% of turnover) prove more resilient and
further pricing drives a more significant margin recovery. All in all, we see +7%/-5%
upside/downside risks.
Key metrics
Figure 101: Unilever: LFL by division, FY20-24e Figure 102: Unilever: Summary P&L, FY20-24e
Beauty & Wellbeing 9,082 10,138 12,285 12,828 13,215 Sales 50,724 52,444 60,179 61,781 63,571
Personal Care 12,042 11,763 13,598 14,032 14,453
Home Care 10,460 10,572 12,441 13,086 13,478 GM 43.5% 42.3% 39.9% 40.1% 41.3%
Nutrition 12,486 13,104 13,911 13,499 13,838 Distribution and selling costs -3,104 -3,313 -3,922 -3,903 -4,016
Ice Cream 6,654 6,867 7,944 8,336 8,586 SG&A -12,673 -12,549 -14,219 -14,474 -15,212
Group sales 50,724 52,444 60,179 61,781 63,571 Incl. A&P -7,091 -6,873 -7,646 -8,035 -8,586
Incl. R&D -800 -847 -972 -998 -1,027
Beauty & Wellbeing -4.0% 8.5% 7.8% 4.9% 3.0%
Personal Care 5.3% 0.3% 7.4% 4.8% 3.0% Adj. EBIT 9,367 9,636 9,784 10,271 11,009
Home Care 4.5% 3.8% 12.1% 5.2% 3.0% % Margin 18.5% 18.4% 16.3% 16.6% 17.3%
Nutrition 1.9% 5.6% 8.5% 4.4% 2.5%
Ice Cream 0.2% 5.7% 10.6% 4.9% 3.0% Net financials -440 -354 -412 -412 -424
Group LFL 1.9% 4.5% 9.2% 4.9% 2.9% JV and others 133 208 185 189 193
Volume/mix 1.6% 1.5% -2.0% -2.0% 0.3% Tax -2,049 -2,113 -2,247 -2,364 -2,538
Pricing 0.3% 2.9% 11.4% 7.0% 2.6% Minorities -492 -572 -629 -692 -761
Adj. Net Profit 6,532 6,839 6,681 6,992 7,478
Adj. EPS 2.48 2.62 2.62 2.78 2.99

% Growth -2.4% 5.5% 0.0% 6.1% 7.5%
56

Figure 103: Unilever: Summary Balance Sheet, FY20-24e Figure 104: Unilever: Summary Cash Flow Statement, FY20-24e
Cash and cash equivalents 6,356 4,571 4,571 4,571 4,571 EBIT 8,303 8,702 8,580 9,654 10,373
Goodwill & intangible assets 34,941 38,591 38,591 38,591 38,591 Change in Working Capital 680 -47 795 -39 -39
Net PPE 10,558 10,347 10,028 9,702 9,365 Capital Expenditure -932 -1,239 -1,685 -1,730 -1,780
Financial assets 6,003 8,756 8,756 8,756 8,756 Free Cash Flow 7,671 6,393 6,895 6,833 7,320
Total Assets 67,659 75,095 76,496 76,729 77,013
Share buy-back 0 -3,018 -1,500 -1,500 0
Short Term Debt 4,461 7,252 7,252 7,252 7,252 Dividends Paid -4,279 -4,483 -4,509 -4,628 -4,789
Current Liabilities 20,592 24,778 27,292 27,813 28,395 Total Change in Net Cash 1,097 -2,978 4,386 705 2,531
Long Term Debt 22,844 22,881 18,495 17,790 15,260
57

Tobacco Investment Cases

British American Tobacco
In addition to its strong execution in cigarettes driving share gains, BAT is a true multi-
category player in next-generation products (NGP). Its three-pronged NGP approach
that is well placed to take advantage of Vapor's transition towards profitability and the
rapidly improving Vapor margin profile fundamentally change our view on the speed at
which BAT will be able to reach breakeven for its NGP business as a whole (now FY24e
with upside risk vs FY25 target). Supported by share buybacks and improving Vapor
profitability we believe double-digit MT EPS growth for BAT is now well underpinned,
albeit we see +8.5% EPS growth in FY23 due to the expected Russia disposal and US
consumer pressures. While we acknowledge that US consumer pressures and regulatory
risks (PMTA outcomes, EU TPD/TED, FDA proposed ban of menthol cigarettes and
potential nicotine reduction proposal) may lead to near-term volatility, we believe this is
mostly incorporated into market expectations and any near-term weakness will be more
than offset by the underlying strength of the business over the MT. We lower our DCF-
derived Dec-24 price target to £40.00 as we incorporate a higher WACC (10.0%)
following recent interest rates increases. BATtrades on PE24E 7.6x and EV/
EBITDA24E 6.9x (vs EU/US Tobacco 11.8/9.6x).

Downside risks for BAT continue to center around regulation in particular, given the
potential movement in regulation noted above, especially in the US and EU. The US
consumer also remains a key risk. We see upside risk to estimates should the US
business return to more normalized volumed declines and/or downtrading headwinds
weaken. Favorable regulatory outcomes, including the removal of all major competition
in US Vapor could lead upside to sales forecasts by £1bn or more, though this is likely
to materialize over FY23-25 rather than a single point in time.
Key metrics
Figure 105: BAT: LFL by division, FY20-24e Figure 106: BAT: Summary P&L, FY20-24e
Sales 25,776 25,684 27,811 28,360 29,696 Sales 25,776 25,684 27,811 28,360 29,696
Sales Growth -0.2% -0.4% 8.3% 2.0% 4.7% EBIT 11,365 11,150 12,286 12,995 13,784
Organic change 3.3% 7.2% 3.4% 4.5% 4.7% % Margin 44.1% 43.4% 44.2% 45.8% 46.4%
FX -3.5% -7.3% 5.3% 0.1% 0.0% % Growth 4.8% 5.2% 2.9% 5.4% 6.1%
M&A/ others 0.0% -0.3% -0.4% -2.7% 0.0%
Net Financials -1,592 -1,431 -1,562 -1,668 -1,623
Organic sales growth Tax -2,430 -2,399 -2,681 -2,832 -3,040
United States (US) 11.2% 9.2% -1.3% 4.0% 5.1%
Asia Pacific / Middle East (APME) -9.9% 1.5% 9.5% 6.8% 4.9% Adj. Net Profit 7,613 7,556 8,380 8,890 9,567
1.4%
Americas and Sub-Saharan Africa (AMSSA) 7.8% 4.0% 2.1% 2.4%
Europe and North Africa (ENA) 2.1% 7.3% 7.8% 5.5% 5.3% Adj. EPS 331.7 329.0 371.0 403.1 448.0
% Growth 2.4% -0.8% 12.8% 8.6% 11.1%
Combustibles 2.8% 4.3% -0.1% 4.4% 2.1%
New categories 15.4% 50.9% 41.2% 24.9% 22.8%
Traditional oral 7.7% 3.0% 0.8% 2.4% 2.9%
58

Figure 107: BAT: Summary Balance Sheet, FY20-24e Figure 108: BAT: Summary Cash Flow Statement, FY20-24e
PPE 5,060 4,953 5,336 5,287 5,267 Change in Working Capital -164 223 11 3 7
Free Cash Flow 7,295 7,447 8,996 9,424 10,118
Short Term Debt 4,041 3,992 3,992 3,992 3,992
-807 -3,865 -1,500 -1,000 -1,000
Shareholders Equity 62,955 67,401 68,668 69,344 69,892 Dividends & buybacks -4,881 -5,054 -7,178 -8,291 -9,113
Total Liabilities and Equity 137,690 137,365 140,171 140,312 140,640 Total Change in Cash 855 -425 289 111 -13
59

Imperial Brands
We see current valuation as pricing in severe downside risks, leaving risk/reward tilted
strongly to the upside. Supported by its robust FCF, we see IMB’s c50% payout ratio as
sustainable, with a further £1.5bn+ p.a. available for cash returns or M&A from FY24e
following the initial £1bn share buyback in FY23. We forecast a double-digit medium-
term EPS CAGR (vs wider EU Staples at M-HSD) driven by more targeted NGP
investment and continued tobacco margin expansion, along with a sizeable boost of
share buybacks. FY23 marks the first year of accelerated earnings growth under IMB’s
5-year turnaround plan – though there are still some near-term headwinds such as the
Russia disposal and a re-acceleration of NGP investments, we model +5% CC EPS
growth (or c+10%, boosted by FX). IMB trades on PE24E 6.6x and EV/EBITDA24E
6.6x EU/US Tobacco 11.8x/9.6x).

As is often the case in Tobacco, regulation and tax are key risks to earnings, as well as
litigation. On the tax side the environment is relatively benign (other than inflation-
linked tax increases), though the US environment remains subject to regulatory
newsflow, particularly on menthol and NGPs (the latter having less of an impact on
IMB). To the upside, sustained share gains as seen in FY22 could drive upside to FY23
estimates, or further acceleration in NGP top line growth, particularly in Heated
Tobacco.
Key metrics
Figure 109: IMB: LFL by division, FY21-25e Figure 110: IMB: Summary P&L, FY21-25e
Sales 8,679 8,839 9,300 9,457 9,621 Sales 8,679 8,839 9,300 9,457 9,621
Sales Growth -3.6% 1.8% 5.2% 1.7% 1.7% GM 69.4% 68.3% 68.8% 69.3% 69.8%
Organic change 1.9% 2.1% 2.3% 1.9% 1.7% Distribution & selling costs % sales 24.4% 22.9% 24.0% 24.0% 24.0%
Administrative & Other % sales 3.9% 3.7% 2.0% 1.1% 0.3%
Organic tobacco sales growth 1.5% 1.1% 1.9% 1.3% 1.1%
Europe -0.6% -1.0% 2.0% -0.8% -1.1% EBIT 3,573 3,694 3,980 4,178 4,380
Americas 10.4% 5.2% 1.0% 2.9% 2.6% % Margin 41.2% 41.8% 42.8% 44.2% 45.5%
Africa, Asia, and Australasia -6.8% 3.9% 3.5% 3.0% 3.2% % Growth 4.8% 2.1% 4.3% 5.2% 4.8%
Organic NGP sales growth -3.9% 10.9% 16.4% 19.6% 16.8% Net Financials -417 -326 -370 -381 -400
Europe 28.8% 34.2% 30.0% 25.0% 20.0% Tax -716 -755 -791 -870 -951
Americas -15.5% -29.7% -37.1% -20.0% -20.0%
Africa, Asia, and Australasia -78.3% -100.0% 0.0% 0.0% 0.0% Adj. Net Profit 2,451 2,598 2,803 2,911 3,011
Adj. EPS 247.1 262.6 289.9 321.7 359.4

% Growth -2.9% 6.3% 10.4% 11.0% 11.7%
60

Figure 111: IMB: Summary Balance Sheet, FY21-25e Figure 112: IMB: Summary Cash Flow Statement, FY21-25e
PPE 1,715 1,659 1,741 1,822 1,894 Change in Working Capital -664 40 -11 -113 -116
Free Cash Flow 2,852 3,698 3,788 3,933 4,140
Short Term Debt 1,107 1,011 1,011 1,011 1,011
-1,366 -766 0 0 500
Shareholders Equity 5,940 7,473 7,428 7,044 6,705 Dividends & buybacks -1,398 -1,409 -2,425 -2,922 -2,978
Total Liabilities and Equity 29,090 30,958 31,195 30,761 30,873 Total Change in Cash -330 515 200 -241 309
61

Philip Morris International

PMI is global leader in both cigarettes and Heated Tobacco Products, and so far has led
the industry transition to healthier nicotine alternatives via its flagship IQOS product.
The Russia/Ukraine war has led to a setback in its medium-term NGP targets, with
Russia and Ukraine previously accounting for 23% of its HTU volume. After seeing
EPS decline in FY22E due to significant FX headwinds, we anticipate another year of
earnings declines in FY23E on the expected Russia disposal as well as further FX
headwinds, and a step up in NGP investments behind its IQOS ILUMA rollout.
Although the MT growth algorithm remains robust driven by the highly attractive
economics of HTP while a strong balance sheet gave it the ability to put forward an
acquisition offer for Swedish Match, with valuation still near 3yr highs (relative and
absolute) we see limited scope for outperformance near term. PMI trades on PE24E
16.1x and EV/EBITDA24E 12.0x (EU/US Tobacco 11.8/9.6x).

If the Russia disposal takes longer than expected, this could drive upside to FY23E EPS.
Outside of this, stronger than expect growth behind IQOS ILUMA or a rebound in
Ukraine could also be sources of upside. Downside risks remain prevalent on the tax
and regulatory front, especially as we await the details of the EU TED change which
could drive taxes higher on IQOS in the EU. Emerging market taxes also remain a risk.
Key metrics
Figure 113: PMI: LFL by division, FY20-24e Figure 114: PMI: Summary P&L, FY20-24e
Sales 28,694 31,651 31,441 30,291 32,292 Sales 28,694 31,651 31,441 30,291 32,292
Sales Growth -3.7% 10.3% -0.7% -3.7% 6.6% GM 66.7% 67.5% 65.6% 65.1% 65.8%
Organic volume -7.9% 2.6% 2.5% 0.6% 0.1% Marketing, admin & research
25.7% 26.2% 25.7% 24.7% 24.2%
Organic price/mix 6.8% 5.3% 4.2% 7.1% 6.0% costs % sales
Organic sales growth EBIT 11,817 14,438 13,825 12,239 13,452
Combustibles -7.3% 0.4% 2.8% -0.4% 0.9% % Margin 41.2% 45.6% 44.0% 40.4% 41.7%
RRP 23.3% 33.1% 21.0% 26.9% 15.5% % Growth -1.3% 22.2% -4.2% -11.5% 9.9%
Net Financials -618 -628 -575 -620 -608

-1.9% 1.5% 4.3% 1.0% -0.1% Tax 2,377 2,671 2,481 2,523 2,791
European Union
Eastern Europe 0.2% 0.0% -8.2% 5.8% 7.5%
-13.3% 9.3% 3.5% 0.4% 1.6% Adj. Net Profit 8,036 9,084 8,794 8,410 9,333
Middle East & Africa
South & Southeast Asia -17.2% -1.8% 2.7% -0.6% -1.2%
East Asia & Australia -2.1% 3.9% -2.9% 3.9% 0.5% Adj. EPS 5.2 6.1 5.9 5.4 6.0
Americas -10.2% 1.5% 1.1% -2.4% -1.2% % Growth -0.4% 17.6% -3.5% -7.7% 10.8%
62

Figure 115: PMI: Summary Balance Sheet, FY20-24e Figure 116: PMI: Summary Cash Flow Statement, FY20-24e
Current assets 21,492 17,717 17,559 16,672 17,421 Depreciation and Amortisation 981 998 1,069 1,030 1,098
PPE 6,365 6,168 6,231 6,291 6,324 Change in Working Capital 267 1,004 1,018 524 -411
Free Cash Flow 9,210 11,219 9,539 9,312 9,366
Short Term Debt 3,368 3,023 3,023 3,023 3,023
-356 -3,042 -301 0 -1,000
Shareholders Equity -10,631 -8,208 -7,093 -6,050 -4,483 Dividends & buybacks -7,364 -8,355 -7,996 -7,905 -8,174
Total Liabilities and Equity 44,815 41,290 41,921 42,644 43,264 Total Change in Cash 420 -2,785 787 -292 192
63

Investment Thesis, Valuation and Risks

Anheuser Busch InBev (Overweight; Price Target: €70.00)
Investment Thesis
Best-known for extracting synergies and efficient operations, ABI’s transition to a higher-
quality top-line growth story is well underway; we model HSD organic sales in FY23E
(ahead of consensus) supported by sustainable LatAm momentum, and contrary to investor
concerns we see upside to the US and China. Alongside easing COGS inflation from H223,
we believe ABI can deliver EBITDA growth above its MT guide in FY23E and at the top-
end of its guidance range over the MT with best-in-class teens EPS CAGR from FY23E
onwards and an attractive valuation as shares trade below their historical average discount
to the sector.
Valuation
Our December 2024 DCF-derived PT is €70.00 using a 2.5% LT growth rate and 10.5%
WACC.
Our BUD (ADR) Dec-24 PT is $70.00 using a EUR USD exchange rate of 1.00.
Risks to Rating and Price Target
Downside Risks:
FX. Broad USD strengthening or devaluation of currencies in key markets, especially in

Latin America.
Re-acceleration of raw material inflation
Increased competition or innovation in core markets
Economic pressure in key emerging markets impacting beer per capita consumption
Further rises in interest rates over the medium term
64


Anheuser-Busch InBev (ADR) (Overweight; Price Target: $70.00)
Investment Thesis
Best-known for extracting synergies and efficient operations, ABI’s transition to a higher-
quality top-line growth story is well underway; we model HSD organic sales in FY23E
(ahead of consensus) supported by sustainable LatAm momentum, and contrary to investor
concerns we see upside to the US and China. Alongside easing COGS inflation from H223,
we believe ABI can deliver EBITDA growth above its MT guide in FY23E and at the top-
end of its guidance range over the MT with best-in-class teens EPS CAGR from FY23E
onwards and an attractive valuation as shares trade below their historical average discount
to the sector.
Valuation
Our December 2024 DCF-derived PT is €70.00 using a 2.5% LT growth rate and 10.5%
WACC.
Our BUD (ADR) Dec-24 PT is $70.00 using a EUR USD exchange rate of 1.00.
Downside Risks:
FX. Broad USD strengthening or devaluation of currencies in key markets, especially in

Latin America.
Re-acceleration of raw material inflation
Increased competition or innovation in core markets
Economic pressure in key emerging markets impacting beer per capita consumption
Further rises in interest rates over the medium term
65


Britvic (Overweight; Price Target: 1,050p)
Investment Thesis
Britvic is #2 in UK & Ireland soft drinks with leading niche positions in France and Brazil
juices and concentrates. Britvic delivered a strong finish to FY22 with +15.5% FY22 organ-
ic sales (H2 +13.1%) and EPS 3.4% ahead despite input cost pressures, driven by strong cost
discipline. We expect 2023 to be another year of input cost pressure amid a tougher consum-
er environment and forecast organic sales +7.4% driven by price/mix, but mostly offset by
cost pressures below the top line and therefore forecast EPS +0.8%. Having reached 1.9x
ND/EBITDA we continue to model £75m of share buyback per annum with a combined 8%
Dividend + SBB yield for FY23E that we believe should provide support amid near-term
uncertainty. While the EPS growth outlook is not the fastest in our coverage and with a still
volatile/inflationary raw material environment, we see Britvic as a relatively defensive play
within Beverages at an attractive valuation.
Valuation
Our DCF-derived (to better capture interest rate changes) Dec-24 price target of 1,050p uses
an 8.6% WACC and 2.0% LT growth rate.
Figure 118: Britvic DCF summary

NPV of FCF 1,498
NPV of Terminal Value 1,683
Total EV 3,181
Net Debt + Pension (558)
Minorities & Associates adjustment 0
Equity Value 2,623
Number of shares 250
Equity value per share (GBp) 1050
Source: J.P. Morgan estimates.

• Consumer pressure driving downtrading or volume pressure in the face of strong pricing
• Cost savings achieved behind schedule and/or raw material inflation trends (e.g. sugar,
glass, PET) worsening.
• Negative outcome on pricing negotiations with retailers compressing sales growth and/
or margins.
66


Davide Campari-Milano NV (Neutral; Price Target: €11.00)
Investment Thesis
CPR is delivering market share gains across almost all available markets/channels and a
particular emphasis on the tequila and apertivo brands/occasions like Aperol and Campari,
with the next leg of outperformance expected to come from US Whiskeys (boosted by recent
M&A) and potentially a LT growth story in China. However, after guiding to flat EBIT
margins in FY22 due to elevated COGS (from glass and logistics supply constraints & infla-
tion), we believe inflation headwinds are likely to be greater than expected again in 2023,
setting up for another disappointing margin guide to start FY23 (JPMe flat EBIT margin).
For 2023E, we model +6.6% organic sales and +6.7% EBIT growth on some volume soft-
ness in Europe and the cost pressures.
Valuation
Our DCF-derived Dec-24 price target of €11.00 applies an 8.6% WACC and 3.0% LT
growth rate.
Upside risks:
• Better than expected pricing is able to more than offset elevated input cost inflation
• Sustained demand momentum for its portfolio
• Easing input cost pressures
Downside risks:
• Agave prices remaining at current elevated levels (or rising further) could put pressure
on our margin expansion outlook
• On-trade weakness pressuring market share and overall spirits demand
• Heightened competitive environment in key categories (eg rum, tequila, vodka, US
whiskey) put market share gains under pressure and/or limit ability to take price increas-
es in key markets
67


Carlsberg (Underweight; Price Target: Dkr800.00)
Investment Thesis
Our revamped COGS tracker concludes that Carlsberg is set to face +16% COGS inflation
in FY23E, with H123 likely to be peak COGS inflation (up high-teens) and limited relief
in H223 (up low-teens). We see several significant risks to its European business (on vol-
ume, price, mix, and costs) and limited potential offset from a China pandemic recovery
(with even downside risk to China forecasts). Given the substantial risks, in our view its
EV/EBITDA premium to ABI is not warranted, and we believe Carlsberg could guide to
organic EBIT decline in FY23 (vs consensus +3.6%). As a result, we have Carlsberg on
Negative Catalyst Watch into FY22 results on 7th February 2023.
Valuation
Our December 2024 DCF-derived PT is DKK800 using a 2.0% LT growth rate and 10.5%
WACC.
Upside risks
• Continued fall in input cost prices setting the stage for a margin recovery in 2024
• EPS accretion from meaningful M&A and/or accelerated share buybacks given balance
sheet optionality.
• Better pricing than expected.
• Rapid China recovery as lockdowns ease, including further rollout of the Big Cities
strategy.
• Sustained exceptional growth in Vietnam.
68


Coca-Cola Europacific Partners (Overweight; Price Target: $66.50)
Investment Thesis
(CCEP), increasing the business by c20% and bringing opportunities to adapt its European
top-line value growth and cost savings playbook to Australia and New Zealand as well as
some LT emerging market optionality (Indonesia). At its recent Capital Markets Day, CCEP
outlined its confidence in achieving its raised medium-term ambitions, although 2023
COGS inflation expectations increased further and uncertainty remains highly elevated as
we look into 2023. For FY23 we model +0.2% organic volumes, +7.5% organic sales, and
+7.1% organic EBIT growth. Overall, we see MT top-line guidance as well underpinned by
category growth and share gains in its core business, with significant headroom in Indonesia
and RTDs providing upside potential, while there are further efficiency opportunities. We
believe that CCEP’s valuation offers significant opportunities to close the gap vs the sector
as the market gets comfortable on MT category and execution dynamics.
Valuation
Our DCF-derived (to better capture interest rate changes) Dec-24 price target of €/$66.50
applies an 8.6% WACC and 2.0% LT growth rate and assumes EURUSD of 1.00.
Figure 120: CCEP DCF summary

NPV of FCF 17,813
Total EV 39,099
Net Debt + Pension (8,493)
Minorities & Associates adjustment (220)
Equity Value 30,386
Equity value per share 66.50

Downside risks:
Issues with integration of Coca-Cola Amatil assets including trade disputes with leading
customer, key employee losses or cultural fit etc
Worsening conditions for the European consumer which could impact mix or volumes.
Further expansion of sugar taxes or adoption of bottle deposit schemes/levies could create
operational complexities across CCEP’s geographies.
Further step-up in input cost inflation above ability to take price or margin dilution from new
innovation volumes.
69


Coca-Cola Europacific Partners (Euro) (Overweight; Price Target:
€66.50)
Investment Thesis
(CCEP), increasing the business by c20% and bringing opportunities to adapt its European
top-line value growth and cost savings playbook to Australia and New Zealand as well as
some LT emerging market optionality (Indonesia). At its recent Capital Markets Day, CCEP
outlined its confidence in achieving its raised medium-term ambitions, although 2023
COGS inflation expectations increased further and uncertainty remains highly elevated as
we look into 2023. For FY23 we model +0.2% organic volumes, +7.5% organic sales, and
+7.1% organic EBIT growth. Overall, we see MT top-line guidance as well underpinned by
category growth and share gains in its core business, with significant headroom in Indonesia
and RTDs providing upside potential, while there are further efficiency opportunities. We
believe that CCEP’s valuation offers significant opportunities to close the gap vs the sector
as the market gets comfortable on MT category and execution dynamics.
Valuation
Our DCF-derived (to better capture interest rate changes) Dec-24 price target of €/$66.50
applies an 8.6% WACC and 2.0% LT growth rate and assumes EURUSD of 1.00.
Figure 122: CCEP DCF summary

NPV of FCF 17,813
Total EV 39,099
Equity Value 30,386
Equity value per share 66.50

Downside risks:
Issues with integration of Coca-Cola Amatil assets including trade disputes with leading
customer, key employee losses or cultural fit etc
Worsening conditions for the European consumer which could impact mix or volumes.
Further expansion of sugar taxes or adoption of bottle deposit schemes/levies could create
operational complexities across CCEP’s geographies.
Further step-up in input cost inflation above ability to take price or margin dilution from new
innovation volumes.
70


Coca-Cola Hellenic Bottling Company (Neutral; Price Target: 2,200p)
Investment Thesis
Despite a strong historical top-line and cost execution track record, increasing uncertainty
on its emerging market business keeps us Neutral on CCH for now, with the situation in
Ukraine adding a further layer of uncertainty. Looking ahead to FY23, while the top-line
momentum is solid and there is room for further price/mix growth, double-digit COGS/case
inflation will weigh on margins and we expect consumer pressure to begin to impact vol-
umes, with yoy decline expected in Russia. As a result, for FY23E we model -2% organic
EBIT to €852m on +4% organic sales and -5% organic volume (+9% organic price/mix).
We still believe in the LT execution strengths of the business and the strong portfolio across
Sparkling, Energy and increasingly interesting adjacencies (eg Coffee). However, given the
still active geopolitical risks, substantial inflation, and uncertainty on consumer demand
across most of its markets, we believe risk/reward if fairly balanced for now.
Valuation
a 12.3% WACC and 3.0% LT growth rate.
Figure 124: CCH DCF summary

NPV of FCF 5,320
Total EV 10,016
Equity Value 8,074

Upside risks
• A favourable resolution to the geopolitical crisis in Eastern Europe
• Limited impact on demand from consumer disposable income pressures
• Easing of commodity and energy price headwinds to provide ease inflation in CCH’s
input cost basket and a relief to consumer disposable incomes/discretionary spending
Downside risks
• General consumer demand deterioration in central/eastern Europe due to disposable
income pressure
• Further upticks in input costs, notably sugar, juice, aluminum and PET above the MSD-
HSD guidance for 2022 and into 2023;
• Significant currency depreciation and emerging market macroeconomic/ political dete-
riorations (eg Ukraine, Russia, Nigeria and now Egypt).
71


Diageo (Overweight; Price Target: 4,500p)
Investment Thesis
Having seen strong delivery from on-trade re-opening across Europe, robust emerging mar-
kets and continued super-normal growth in the US (with strong contribution from both
tequila and RTDs), Diageo has delivered well above its FY23-25 MT targets for 5-7% organ-
ic sales and +6-9% organic EBIT CAGR. We expect a normalization of growth in FY23E
(+6.5% organic sales, +7.4% organic EBIT) as we incorporate some volume pressure in the
US and Europe from H2 FY23. Within the current economic context, we see its geographical
exposure as attractive (50% of EBIT in US), with a smaller footprint to China (lockdown
risks) while offering a hedge vs cost inflation (premium pricing, aged liquids, high gross
margin).
Valuation
Our Dec-24 £45.00 PT values shares at a 5% premium on 2024 P/E to international spirits
peers (21x) driven by Diageo’s strong execution track record.
Downside risks:
Reversal of favourable market share momentum due to increased competition or failure of
innovations leading to a slowing of group LFL growth.
Further acceleration of input cost pressures with productivity savings unable to offset.
Moderation of Tequila category outperformance in the US.
Capacity limitations in Tequila or Whiskey holding back growth or increasing the cost of
key inputs.
Unfavorable excise tax or regulatory developments in key markets
Unfavorable FX movement, especially the strengthening of GBP vs USD.
72


Fevertree Drinks (Neutral; Price Target: 1,200p)
Investment Thesis
Fevertree (FEVR) has a unique position in premium mixers with significant LT growth
opportunities, particularly in the US, strongly leveraging on the wider trends for internation-
al spirits premiumisation, new customer/distribution wins and innovations (formats and fla-
vours). Bar some weakness in the more profitable UK, FEVR’s top-line momentum has
been impressive, helped by new capacity expansion in the US. The concern has been on
margin delivery and profitability, though, with a series of profit warnings due to margin
pressures. FY23 is likely to offer little respite, as the premium end of the market could see
demand pressure from downtrading, and on-trade (a key driver of growth and brand aware-
ness) likely to see lower frequency, compounded by cost inflation pressures. We forecast
“just” +9% sales growth and +18% operating profit driven by an easing of some logistics
costs pressures in H2. While expectations/communications in the market may now be fully
bottomed, the market is likely to remain skeptical on FEVR’s ability to grow profitably
given the challenging recent execution, there are external/commodity pressures and valua-
tion remains full.
Valuation
a 9.4% WACC and 4.0% LT growth rate.
Figure 126: Fevertree DCF summary

NPV of FCF 503
Total EV 1,559
Net Debt + Pension (150)
Equity Value 1,409

Upside risks
• Fast ramp-up of domestic US production capacity supporting acceleration of market

growth rates and quicker than anticipated recovery of gross margins
• Continued off-trade category demand in key European and international markets (eg
Canada, Australia, Asia)
• A quicker than anticipated recovery to on-trade demand, especially in the more profita-
ble UK market
Downside risks
• Consumer pressures limiting demand for premium mixers
73

• Further commodity cost pressures and/or limited pricing impacting FEVR’s ability to
protect and grow its gross margins
• Increasing competition in premium mixers impacting FEVR’s market share, pricing
power or ability to growth in its more mature markets
74


Heineken (Neutral; Price Target: €100.00)
Investment Thesis
Heineken’s focus on top-line growth and premiumisation should help it to sustainably out-
perform the global beer market and peers in the long-term, particularly post-pandemic as
part of the EverGreen strategic journey. However, with more limited cost savings benefit
expected in FY23, we believe consensus margin expectations need to move lower near-
term. On the positive side we expect good momentum in emerging markets as well as the
tail end of the cost savings program to provide an offset to European weakness, and we
anticipate price/mix growth well ahead of consensus with valuation undemanding. Besides
the operational performance, we also note that CEO Dolf van den Brink (in the role since
mid-2020) made two important strategic transactions – majority stake in United breweries
in India, acquisition of Distell in south Africa – that strengthens its regional footprint in
emerging markets and supports the LT ambition for consistent top-line outperformance.
Valuation
Our December 2024 DCF-derived PT is €100 using a 2.5% LT growth rate and 10.1%
WACC.
Upside risks:
• Continued fall in input cost prices setting the stage for a margin rebound in 2024
• Better pricing than expected.
• Sustained strong momentum in Mexico, Vietnam, Brazil, as well as a recovery in the US
Risks to the downside:
• Weaker-than-expected volume and pricing in mature markets and slower-than-expected

growth in key emerging markets of Mexico, Africa and South East Asia;
• Further FX and/or commodity input cost headwinds unable to be offset by adequate
pricing pressuring margins;
• COVID-19 reoccurrence or other macroeconomic deterioration in key developed and
emerging markets.
75


Pernod-Ricard SA (Overweight; Price Target: €220.00)
Investment Thesis
We see Pernod Ricard offering a combination of strong organic top-line and best-in-class
EPS growth amongst large-cap European Staples over the medium term returning to 4-7%
organic sales and +50-60bp pa margin expansion delivery FY23-25 (double-digit EPS
CAGR). Having delivered a substantial sales and EBIT recovery over FY21/22 despite nor-
malization of structure costs and increased A&P reinvestment as well as rising input and
logistics costs, we see HSD sales growth and further margin expansion in FY23 driven by
underlying business momentum. Strong FCF delivery and ND/EBITDA at 2.5x should
allow for ongoing share buyback support (including €500-750m in FY23) along with further
likely bolt-on M&A. Currently trading at over a 20% discount vs International Spirits, we
believe RI’s sales momentum and quality margin delivery should see RI trading at least in
line with International Spirits peers.
Valuation
Our peer-multiple derived Dec-24 PT is €220. We value the shares at a 15% discount to
International Spirits peers on calendar 2024E P/E given the greater risk profile (more EM
exposure) for similar MT growth.
Key downside risks to our rating and target price include:
• Consumer disposable incomes pressures impacting volume and/or mix

• Slowing demand in China leading to worse-than-expected price/mix or deceleration of
recovery in other Asian markets, notably India;
• Changing category trend dynamics in the US or accelerated market share losses impact-
ing growth in the market;
• Limited margin benefit from cost savings programs and/or higher than anticipated rein-
vestments in A&P/structure costs; and
• Further Euro strength versus key currencies (USD, CNY, INR).
76


Remy Cointreau SA (Underweight; Price Target: €145.00)
Investment Thesis
While cognac is a structurally appealing category vs other spirits segments (supply/aging
constraints and oligopolistic market structure), it is also highly cyclical and prone to some-
times sharp contractions. Cognac demand in the US accelerated in 2020/21, boosted by gov-
ernment payments, while China growth remained strong thanks to strong off-trade and
e-commerce demand. After seeing early signs of slowing demand in the US (albeit with
depletions still well ahead of 2019), we believe the US is unlikely to recover in FY24 and
model further volume declines due to consumer disposable income pressures especially for
lower-income consumers. RCO is ahead of schedule on its ambitious LT FY30 targets of
72% gross margins and 33% EBIT margin (vs 66% and 21% in FY20), and we believe it will
continue to step up A&P spend even in the face of slowing demand, leaving downside to
margin expectations. RCO has the highest valuation in our spirits coverage and is most at
risk of valuation pressure in periods of macroeconomic slowdown, in addition to potential
earnings downside risk (especially in the US, as well as uncertainty in China).
Valuation
Our €145 December-24 price target is based on a 5% P/E premium to International Spirits
peers as we believe negative earnings momentum and the current phase of the cycle will
cause the current valuation premium to reduce.
Upside risks
Further momentum in sell-out and sell-in trends in the key US market would boost organic
sales growth;
Continued demand recovery in greater China remains resilient supportive for volume and
price/mix and margin outlook
Additional cash returns or M&A given balance sheet strength.
77


Royal Unibrew (Neutral; Price Target: Dkr500.00)
Investment Thesis
Royal Unibrew (RBREW) is the #2 multi-beverage player in Denmark and Finland with
expanding niche soft-drink and beer positions in several markets including Italy, France,
Germany and the Baltics. RBREW’s premium-skew (especially energy drinks, RTD/ciders,
no-sugar soft drinks and no-alcohol beers amongst others), organic white-space expansion
opportunities and positive M&A track record are supportive of the business over the medi-
um to long term, but there are significant cost headwinds facing the business (which are
expected to continue into 2023) and limited visibility on potential 2023 volume elasticity
as further pricing comes through amid deteriorating consumer demand.
Valuation
Our DCF-derived (to better capture interest rate changes) Dec-24 price target of DKK500
uses a 8.6% WACC and 2.0% LT growth rate.
Figure 128: Royal Unibrew DCF summary

NPV of FCF 11,911
Total EV 27,806
Equity Value 24,212
Number of shares 48

Upside potential
Faster than anticipated recovery in overall on-trade and premium product demand in core
European markets post-COVID-19
Acceleration in portfolio mix shifts towards higher-margin and lower-capital intensity
activities such as long drinks/RTDs and soft drinks (eg energy) driving higher price/mix and
margins
Further M&A to contribute to earnings growth and potential for mid-term cost savings, par-
ticularly in new Norwegian and Swedish market consolidation
Downside risks
Renewed promotional intensity in key categories in core Nordic & European markets could
negatively impact growth, market share and/or margins, particularly with regards to accel-
erating raw material inflation
Unfavourable developments in excise tax and regulatory environments in core markets
impacting demand or pricing
Extended COVID-19 restrictions limiting on-trade recovery and consumer sentiment
78


Chr. Hansen (Neutral; Price Target: Dkr460.00)
Investment Thesis
We are Neutral on Chr. Hansen. The company has an outlook for solid organic growth into
FY23, yet we see risks to delivery remaining. End markets should see more pressured vol-
ume performance amidst macro slowdown as well as softer supplements growth in the US.
Delivery is therefore contingent on pricing pass through and maintaining volumes, whilst
COGS inflation is set to remain, and with FX a key contributor to the top-line and margin
guide. We remain Neutral given low visibility on delivery, whilst valuation remains expen-
sive versus broader Staples.
Valuation
We set a Dec-2024 target price of Dkr 460 at a 5% premium to EU Ingredients PE24E (26x).
Upside risks include:1) Health claim approval on probiotics; 2) Faster than expected accel-
eration of Lighthouse roll-out (Bioprotection, Fermented Plant Bases, Plant Health and
HMO); 3) Higher M&A margin synergies driving better than expected MT margin profile;
4) Appreciation of the dollar relative to the euro, which would positively impact earnings.
Downside risks include:1) Weaker near-term top-line on H&N volatility; 2) Steeper than
expect RM inflation and slower pass-through on price; 3) Execution risk on continued M&A
integration and Lighthouse development.
79


Danone (Overweight; Price Target: €65.00)
Investment Thesis
We see Danone as a mid-term turnaround company, with reinvestments and strategy
announced by management to seize the opportunity in categories underappreciated by the
market. Mid-term, we see potential in Danone’s end markets (we see ~60% of Danone’s
sales in solid growth areas) led by probiotics, plant-based, protein, premium Waters, and
medical nutrition, and improved market share with reinvestments and execution-focus as
well as portfolio management. Meanwhile margins should improve moderately mid term.
Near term, though the company should see further COGS inflation in 2023E, as well as some
volume pressures, we see ex-Russia delivery as broadly resilient. With depressed valuation
and discount to EU Food peers, we see the stock as an optionality on mid-term turnaround.
Valuation
We set our SOTP valuation at a Dec-24 target price of €65.
Table 1: Danone SOTP Dec-24 Target Price

Adj profit from
Division (2024E, EURm) Revenues Op D&A EBITDA Multiple Value
EDP 16,149 1,264 541 1,805 12 21,392
Essential Dairy 13,221 1,000 443 1,443 10 14,139
Plant-based 2,928 264 98 363 20 7,253
Specialised Nutrition 9,061 2,106 304 2,410 10 24,096
Waters 5,335 582 179 761 10 7,610
Group 30,571 3,952 1,025 4,977 11 53,098
Net debt (FY24E) (10,873)
Pension (FY24E) (1,105)
Minorities (FY24E) (135)
Associates (Market value) 165
Equity Value 41,150
No. of shares (FY24E) 636
Implied share price (EUR) Dec-24 65

Downside risks to rating and target price include: 1) China ELN growth disappoints because
of competition and/or market growth, or margins deteriorate further, 2) risk of material
down-trading or switch to private labels, 3) Plant-based growth disappoints, failing to drive
EDP acceleration, 4) Market share losses across EDP and Waters worsen, 5) worse than
expected performance in Emerging Markets, 6) Raw Materials inflation intensifies, unable
to be offset by pricing, 7) risks to cost savings delivery.
80


Givaudan (Underweight; Price Target: CHF2,840.00)
Investment Thesis
Near term, we see a challenging set-up with a continued squeeze to profitability from raw
materials inflation, energy and labour costs. We expect a potentially pressured volume
growth for 2023E as the EU Ingredients sector faces headwinds from easing consumer
demand and customer destocking risks, whilst Givaudan may see a more pedestrian topline
development versus peers Symrise and Kerry and volumes broadly flat. While we acknowl-
edge the long-term defensive and quality attributes of the company, we believe the valuation
will be harder to defend with earnings CAGR over 2023E and 24E likely to be modest.
Valuation
We set a Dec-24 TP of CHF2,840 where we value Givaudan in line with EU Ingredients
peers on PE24E (26x).
Upside risks include: 1) A better than expected volume development if demand from cus-
tomers proves more resilient, 2) pricing contribution is faster and higher than forecast, 3)
cost inflation headwinds ease faster than expected.
81


JDE Peet's (Underweight; Price Target: €28.00)
Investment Thesis
Although the long term fundamentals of the coffee category are for strong premiumisation
led growth, we see headwinds for JDE Peet’s near term from the pressure of volume declines
and Private Label revival in Europe (key to Group sales and profit). The dependence of the
group on profits from Russia (a meaningful contribution to Group EBIT) also adds to uncer-
tainty in our view. Furthermore, stock overhang remains from the potential for their minority
shareholder to sell down their stake.
Valuation
We value the stock at a 25% discount to EU Food (given inflation uncertainties, down-trad-
ing risk and minority shareholder overhang), with equal weight on PE and EV/EBITDA
24E. We derive a Dec-24 PT of €28.
Upside risks include: 1) faster-than-expected rebound in Away-from-Home channels, 2)
accelerated pricing to mitigate commodity inflation, or better-than-expected scope for pro-
ductivity savings, 3) @Home consumption growth remains stronger than we currently fore-
cast, with market share trajectory improving.
82


Kerry Group (Overweight; Price Target: €118.00)
Investment Thesis
We rate Kerry Overweight. Thanks to meaningful changes to its portfolio, we think the com-
pany is positioned to sustainably deliver MSD top-line growth in the mid term, which should
lead to a narrowing in valuation gap vs EU Ingredients peers. Coupled with mid-term margin
improvement, this should help to drive strong EPS CAGR. Near term, though we are cau-
tious on the set-up for Ingredients into 2023, we see Kerry as relatively more defensive
(Food portfolio, private label exposure, record of outperformance versus end-markets). We
expect Kerry’s valuation gap could narrow given their more defensive position and on fur-
ther squeeze to the multiples of highly valued growth/quality peers.
Valuation
We set a Dec-24 PT of €118 where we value the stock at a 10% discount to the EU Ingredients
sector PE24E (26x)to reflect the lower valuation of Dairy.
We believe the key downside risks that could keep our rating and target price from being
achieved include: 1) Lower-than-expected volume growth; 2) M&A execution – higher-
than-expected potential dilution on disposals or execution of a value-destructive acquisition
or a large capital project; 3) Integration of potential acquisitions pose downside risk; and 4)
Greater-than-expected RM and FX pressure to earnings.
83


Nestle (Overweight; Price Target: CHF130.00)
Investment Thesis
We rate Nestlé Overweight and believe it remains well placed to outperform the sector from
a top-line perspective driven by RIG (strong execution in high growth categories of Pet,
Coffee and Health Science), alongside a sustainable improvement in its trading profit mar-
gins in constant currencies mid-term. This should drive earnings growth ahead of peers, on
our estimates, with strong balance sheet for further M&A and cash returns to shareholders.
Near term, Nestle has a track record of defensive performance amidst macro downturn pres-
sures.
Valuation
We set our Dec-24 PT of CHF130 on a 20% premium to the EU Food/HPC sector PE24E,
given Nestlé’s solid earnings growth profile.
Downside risks include: 1) a deterioration in consumer disposable income and wallet share
for staples leading to down-trading or volume weakness; 2) further strengthening of the
Swiss franc; 3) higher input cost inflation than expected; and 4) increased price competition
as a result of lower commodity costs.
84


Symrise (Neutral; Price Target: €110.00)
Investment Thesis
We rate Symrise Neutral. As we caution on Ingredients risks into 2023E, on customer
destocking, slower end markets, and more material energy and labour inflation, Symrise is
not immune to these headwinds. Furthermore, valuation remains expensive versus overall
Staples despite de-rating through 2022. Yet we also see underlying strengths in Symrise
portfolio that may offset the weak underlying backdrop – most notably continued strong
growth in Pet Care.
Valuation
We set a Dec-24 TP of €110 using EPS adj. for M&A amortization, valuing Symrise in line
with EU Ingredients PE24E (26x).
We believe the key risks that could keep our rating and target price from being achieved
include the following:
Upside Risks: 1) Stronger-than-expected recovery in OOH consumption (Fine Fragrances;

Foodservices) along with resilient Retail demand post COVID-19; 2) Raw material costs
being recovered more quickly than expected through successful price initiatives; and 3) Any
attractive material acquisition.
Downside Risk: 1) Weaker top-line outlook, with risk from re-balance of growth in OOH/
At-Home demand and weaker volume outlook for FMCG players given inflationary price
environment; 2) RM headwinds to margin and downside to earnings as a result; 3) Dilutive
and value-destructive M&A.
85


Beiersdorf (Neutral; Price Target: €105.00)
Investment Thesis
Beiersdorf stock remains expensive (in line with the last 5- to 10-year valuation). Manage-
ment remains confident into FY23 given the acceleration in market share gains, pricing and
volumes resiliency in Consumer. We model FY23 in line with management’s long-term
guide of +5% LFL and >50bps margin rise, though we also flag tough volumes compara-
tives. We are broadly in-line with Bloomberg consensus expectations and expect potential
de-rating risks weighing on the stock performance with limited upside to earnings expecta-
tions. The potential of improving dividend payout (to lower end of 30-50% for Staples vs
low-20s over the past several years) may help the stock.
Valuation
We set our DCF-derived (in-line with peer L’Oreal vs SOTP-derived earlier) Dec-24 Target
Price of €105 with a WACC of +8.5% and LT growth of +2.0%.
Figure 129: Beiersdorf: DCF Valuation

Beiersdorf: DCF Valuation
PV of Cash Flow (23-32e) 7,172
+Terminal Value 10,859
Firm Value 18,031
-Net Debt/(Cash) -5,755
Minorities 23
Equity Value 23,763
Value per Share (€) 105
WACC 8.5%
LT Growth Rate 2.0%

Risk to Rating and Price Target
Upside risks include a faster-than-anticipated recovery in top-line performance and cost-

savings delivery boosting margin performance for the Consumer division. Also, improving
macro demand could drive Tesa earnings higher than current expectations.
Downside risks include plateauing or weakening skincare demand globally and prolonged
slowdown in key W. European markets, or worse macro conditions impacting the Tesa busi-
ness along with adverse FX movements.
86


Essity (Neutral; Price Target: Skr280.00)
Investment Thesis
We are Neutral on Essity. We expect profitability and earnings to trough near term and recov-
er into 2023. However, beyond near term upside from pricing/ cost inflation interplay, we
see limited upside at this stage and we are roughly in-line with FY24 consensus EBITA. We
believe that the visibility on MT earnings path for Essity remains low for now. We expect
more color on the MT targets (ROCE of 17%+ by 2025) and the path to that to be key stock
driver beyond FY23.
Valuation
Our SOTP-derived Dec-24 price target is SEK280 (rounded).
Essity: Sum-of-the-parts valuation

Division Sales 24E EBITDA 24E Margin % Multiple Value
Health & Medical 28,360 4,195 14.8% 8.0 33,727
Consumer Goods 108,125 17,123 15.9% 8.5 146,486
Professional 43,191 8,444 19.6% 9.4 79,204
Hygiene
Other -1 -1,266 - 8.0 -10,130
Total 179,676 28,586 15.9% 8.7 249,287
Net Debt + Pen- - -43,705

sion Liabilities
Minorities -8,633
Total Fair Value - 196,949

(FV)
Theo. Share Price SEK 280

(Dec-24)

Upside risk include the following: faster and higher than expected pricing realisation, cost
savings acceleration and potential acquisitions driving upside to earnings. Other upside
risks include improvement in consumer demand in Europe and the US, leading to higher
capacity utilisation. Additionally, a weakening of the SKr could impact earnings positively.
Downside risk: further escalation in raw material/ energy prices and failure to mitigate
through pricing/ cost savings. Lower demand in key markets like China, Europe and the US
could also impact negatively along with further strengthening in the USD.
87


Haleon (Underweight; Price Target: 250p)
Investment Thesis
We are Underweight Haleon stock, reflecting our caution on the company's earnings trajec-
tory, the risks from high leverage and the overhang from stake disposal by minority share-
holders. We concede Haleon’s pure-play position in the highly fragmented consumer health
sector, an industry that we believe offers good growth prospects, strong margin potential and
consolidation opportunities. Yet we see the company as over- exposed to the less exciting
parts of the market, and we worry that investments and culture changes needed to deliver
on growth ambitions will dent already well-optimized operations. We are also concerned
about the margin pressure in the face of standalone costs and cost inflation, while its high
leverage adds risks amid an uncertain macro backdrop. We believe that Haleon's valuation
fails to reflect the unproven track record, margin downside risk, leverage and share sale
overhang from its two major shareholders.
Valuation
We derive our Dec-24 TP of £2.50, based on Haleon trading at a discount of 10% to key
European peer Reckitt EV/EBITDA24E, given the share overhang and Zantac uncertain-
ties.
Key upside risks that could keep our rating and target price from being achieved include:
stronger-than-expected geographic/channel roll-out helping market share gain and solid
top-line growth. Stronger-than-expected pricing which could offset cost pressure and accel-
erate operating margin improvement helping earnings growth and cash generation, thereby
allowing the company to de-lever faster than expected.
88


Henkel (Neutral; Price Target: €70.00)
Investment Thesis
We rate Henkel Neutral. Despite a compelling valuation versus blended peers, we see limit-
ed catalysts for outperformance in the near term as the company navigates high input costs
inflation and logistics costs. Importantly, we believe that the market remains unconvinced
on the business turnaround amid persistent market share losses in US Laundry and lack of
revival in Retail Beauty performance. We see limited catalysts for the valuation discount to
narrow until there is an evidence of sustained improvement in Consumer businesses growth
and/or potential structural changes driven by the board.
Valuation
Our SOTP-derived Dec-24 PT is €70.
Figure 130: Henkel: SOTP Valuation

Sales 24E EBITDA 24E Margin % Multiple Value
Laundry 7,856 1,077 13.7% 9.1 9,802
Cosmetics 3,976 510 12.8% 6.5 3,318
Adhesives 11,568 2,084 18.0% 8.4 17,502
Corporate 220 -102 - 8.0 -820
Total 23,620 3,569 15.1% 8.4 29,803
Net Debt + Pension Liabilities - 225
Theoretical Equity Value inc pension liabilities - 29,578
Conglomerate Discount - 10%
Total Fair Value - 26,620
Share Price Pref. - € 70

Upside risks include: better-than-expected pricing pass through of raw material input costs,
better market conditions in Consumer and Adhesives businesses, faster market share turna-
round. Downside risks include: higher-than-expected competitive intensity driving higher
reinvestments, impacting margins negatively, deterioration in trading conditions for Adhe-
sives and Consumer business.
89


L'Oréal (Neutral; Price Target: €350.00)
Investment Thesis
We believe L’Oréal remains best positioned within the global beauty market to outperform,
leveraging its Digital leadership, investments in innovation and diversified category/chan-
nel mix. Yet we downgrade to Neutral (from OW) for two key reasons: 1) top-line and EPS
growth outperformance vs Food/HPC peers should narrow into FY23/24e and 2) further
derating potential for Staples in general and Quality/ Growth Staples in particular with peak
bond yields and overall growth deceleration.
Valuation
We set a Dec-24 DCF derived Target Price of €350 (WACC of 8.5%; LT growth rate of 3%).
Upside risks to our rating and price target include: stronger than expected China re-opening
benefits and better than feared slowdown in W. Europe/ US. Downside risks to our rating
and price target include: deterioration in trading conditions in its key markets, e.g. Europe/
US/China, a material change in the value of their minority stake and mergers and acquisi-
tions. Additionally, retail lockdown, or travel restrictions could weigh on the company neg-
atively as well as a strengthening of the euro could lead to earnings downgrades.
90


Reckitt (Overweight; Price Target: 7,500p)
Investment Thesis
Over 2020-23e, Reckitt is set to deliver the best-in-class top-line LFL growth, second only
to L’Oréal amongst EU Food/HPC peers. Yet Reckitt is trading at valuation multiples near
10-year lows, as investors appear to doubt the consistency of Reckitt’s delivery despite rein-
vestments and better growth. We believe RKT will reiterate MSD growth ambition for
Health/ Hygiene in FY23 even as Nutrition laps extraordinary gains from FY22. With
COGS and wage inflation a pertinent topic for the industry, Reckitt is also set to deliver
margin expansion over FY21-23e. We remain confident in management’s effort to drive
Reckitt as an MSD top-line growth story with 7-9% MT earnings growth potential.
Valuation
We set a Dec-24 TP of £75 based on a DCF of the combined businesses (WACC of 8.5%;
LT growth rate of 2.5%).
We believe the key downside risks that could keep our rating and target price from being
achieved include: continued growth disappointment, higher costs for the new organization
structure, high raw material costs, and a deterioration in trading conditions in Europe and
the US, driven by weaker consumer demand as well as heightened competition. Rolling out
or extending the Health franchise in existing or new markets also poses risks from a regula-
tory perspective. Integration of potential acquisitions also poses downside risks to earnings.
91


Unilever NV (Underweight; Price Target: €45.00)
Investment Thesis
We rate Unilever Underweight. We expect Unilever will continue to see volume/mix pres-
sures in 2023E but sustained high pricing. The company has one of the highest volume elas-
ticities in Food/HPC combined with one of the highest pricing increases – and expect the
greatest volume pressures in Home Care, Personal Care, and by region in Europe and L.
America. Though we expect all categories and regions to see volume pressure. Whilst we
expect the quantum of earnings growth to be defensive, in-line with peers, yet, the quality
of delivery remains weak (pricing led with continued negative volumes) compromising
competitiveness.
Valuation
We set our Dec-24 TP at €45/£39 valuing Unilever at a 15% discount to select European
Food/HPC peers PE24E (18x), given the downside to near-term earnings and lower MT
earnings growth.
Upside risks: 1) material improvement in trading conditions in Europe and the US, 2) better-
than-expected acceleration in LFL sales growth in emerging markets, 3) disposal of under-
performing assets and/or accretive acquisitions, and 4) stronger than expected cost savings
programs.
92


Unilever plc (Underweight; Price Target: 3,900p)
Investment Thesis
We rate Unilever Underweight. We expect Unilever will continue to see volume/mix pres-
sures in 2023E but sustained high pricing. The company has one of the highest volume elas-
ticities in Food/HPC combined with one of the highest pricing increases – and expect the
greatest volume pressures in Home Care, Personal Care, and by region in Europe and L.
America. Though we expect all categories and regions to see volume pressure. Whilst we
expect the quantum of earnings growth to be defensive, in-line with peers, yet, the quality
of delivery remains weak (pricing led with continued negative volumes) compromising
competitiveness.
Valuation
We set our Dec-24 TP at €45/£39 valuing Unilever at a 15% discount to select European
Food/HPC peers PE24E (18x), given the downside to near-term earnings and lower MT
earnings growth.
Upside risks: 1) material improvement in trading conditions in Europe and the US, 2) better-
than-expected acceleration in LFL sales growth in emerging markets, 3) disposal of under-
performing assets and/or accretive acquisitions, and 4) stronger than expected cost savings
programs.
93


British American Tobacco (Overweight; Price Target: 4,000p)
Investment Thesis
In addition to its strong execution in cigarettes driving share gains, BAT is a true multi-cate-
gory player in next-generation products (NGP). Its three-pronged NGP approach that is well
placed to take advantage of Vapor's transition towards profitability and the rapidly improv-
ing Vapor margin profile fundamentally change our view on the speed at which BAT will
be able to reach breakeven for its NGP business as a whole (now FY24e with upside risk
vs FY25 target). Supported by share buybacks and improving Vapor profitability we believe
double-digit MT EPS growth for BAT is now well underpinned, albeit we see +8.5% EPS
growth in FY23 due to the expected Russia disposal and US consumer pressures. While we
acknowledge that US consumer pressures and regulatory risks (PMTA outcomes, EU TPD/
TED, FDA proposed ban of menthol cigarettes and potential nicotine reduction proposal)
may lead to near-term volatility, we believe this is mostly incorporated into market expecta-
tions and any near-term weakness will be more than offset by the underlying strength of the
business over the MT.
Valuation
Our Dec-24 PT of £40.00 is obtained using DCF valuation methodology with a -2% terminal
growth rate and 10.0% WACC, accounting for future cash flow risks due to regulation and
NGP uncertainties.
Downside risks include: 1) unfavorable regulatory outcomes, particularly in US Vapor or
NGPs more broadly, 2) faster-than-anticipated industry volume declines, 3) price competi-
tion in key markets (e.g. US, WE), and 4) deterioration of macroeconomic conditions and
FX depreciation in emerging markets (particularly vs. the dollar)
94


Imperial Brands PLC (Overweight; Price Target: 2,350p)
Investment Thesis
We see current valuation as pricing in severe downside risks, leaving risk/reward tilted
strongly to the upside. Supported by its robust FCF, we see IMB’s c50% payout ratio as
sustainable, with a further £1.5bn+ p.a. available for cash returns or M&A from FY24e fol-
lowing the initial £1bn share buyback in FY23. We forecast a double-digit medium-term
EPS CAGR (vs wider EU Staples at M-HSD) driven by more targeted NGP investment and
continued tobacco margin expansion, along with a sizeable boost of share buybacks. FY23
marks the first year of accelerated earnings growth under IMB’s 5-year turnaround plan –
though there are still some near-term headwinds such as the Russia disposal and a re-acceler-
ation of NGP investments, we model +5% CC EPS growth (or c+10%, boosted by FX).
Valuation
Our Sep-24 PT of £23.50 is obtained using DCF valuation methodology with a -2.5% termi-
nal growth rate and 9.7% WACC, accounting for future cash flow risks due to NGP.
Downside risks to our rating and price target include:
Greater NGP investments than expected.

An acceleration of NGP penetration in key profit pools of US, Germany, UK;
Irrational excise tax increases and new tobacco regulations in key markets; and
Corporate tax rate increases.
95


Philip Morris International (Neutral; Price Target: $95.00)
Investment Thesis
PMI is global leader in both cigarettes and Heated Tobacco Products, and so far has led the
industry transition to healthier nicotine alternatives via its flagship IQOS product. The Rus-
sia/Ukraine war has led to a setback in its medium-term NGP targets, with Russia and
Ukraine previously accounting for 23% of its HTU volume. After seeing EPS decline in
FY22E due to significant FX headwinds, we anticipate another year of earnings declines in
FY23E on the expected Russia disposal as well as further FX headwinds, and a step up in
NGP investments behind its IQOS ILUMA rollout. Although the MT growth algorithm
remains robust driven by the highly attractive economics of HTP while a strong balance
sheet gave it the ability to put forward an acquisition offer for Swedish Match, with valuation
still near 3yr highs (relative and absolute) we see limited scope for outperformance near
term.
Valuation
Our Dec-23 PT of $95.00 is obtained using a DCF valuation methodology with a -1.5%
terminal growth rate and 8.7% WACC, accounting for future cash flow risks due to NGPs
but appreciating PMI's NGP lead versus peers.
Upside risks to our rating are: 1) Fast resolution to the Ukraine conflict; 2) stronger than
expected success of IQOS ILUMA launches; 3) Faster than expected share gains in Vapor
and Modern Oral; 4) Favorable FX movements; 5) Regulatory developments that aid PMI's
competitive positioning.
Downside risks to our rating are: 1) Regulatory and/or tax changes that impact the HTP
opportunity, 2) Slower than expected RRP top line growth due to supply chain constraints,
3) Greater RRP investments than expected dragging on margins, 4) Acquisitions of unprof-
itable business depleting the potential buyback support, 5) Unfavorable litigation outcomes,
6) USD appreciation, 7) Excise tax step changes causing disruption in key markets.
96


Swedish Match (Neutral; Price Target: Skr116.00)
Investment Thesis
Philip Morris International has offered SEK116.00 for Swedish Match. We believe there is
at least 50% probability of a deal being completed given the lack of material anti-trust con-
cerns and PMI’s significant balance sheet flexibility. However, we do note potential unfa-
vorable regulatory decisions regarding SWMA’s US ZYN and/or Cigars that could impact
completion. Beyond the offer, US ZYN volume momentum has continued to surprise to the
upside and the Nicotine Pouch category may be a beneficiary of a wider US nicotine down-
trading environment.
Valuation
Our Dec-23 PT of SEK116.00 is obtained using DCF valuation methodology with a +1%
terminal growth rate and 7.6% WACC. Our 7.6% WACC incorporates the reduced risk pre-
mium following PMI’s offer, and SWMA’s tobacco exposure that is below EU Tobacco
peers (12-13%) due to SWMA's more limited regulatory risk thanks to its greater exposure
to potentially reduced-risk products.
Upside risks:
An increased offer price from PMI.

Re-acceleration of US ZYN volume growth.
Strong-than-expecting US ZYN pricing/margins, or slower than expected US ZYN share
losses.
Sustained better-than-expected growth in Cigars.
Share gains in Scandinavia Smokefree.
Downside risks:
SWMA and PMI do not reach an agreement on the potential acquisition

FDA issues unfavorable decisions on SWMA's portfolio, including potentially limiting fla-
vors in Nicotine Pouches
Swedish Match Scandinavia market share deteriorates more quickly
US Nicotine Pouch industry growth slows
97

Anheuser Busch InBev: Summary of Financials

Income Statement FY20A FY21A FY22E FY23E FY24E Cash Flow Statement FY20A FY21A FY22E FY23E FY24E
Revenue 46,880 54,304 58,379 61,780 65,177 Cash flow from operating activities 10,807 14,800 12,528 13,621 15,040
COGS (19,635) (23,098) (26,589) (28,628) (30,199) o/w Depreciation & amortization 4,598 4,771 4,999 5,240 5,492
Gross profit 27,245 31,206 31,790 33,152 34,978 o/w Changes in working capital 592 2,459 1,065 935 934
SG&A (15,368) (17,574) (17,680) (18,113) (18,752)
Adj. EBITDA 17,321 19,209 19,929 20,905 22,356 Cash flow from investing activities 6,336 (5,877) (4,716) (4,842) (5,114)
D&A (4,598) (4,771) (4,999) (5,240) (5,492) o/w Capital expenditure (3,781) (5,640) (4,816) (4,942) (5,214)
Adj. EBIT 12,723 14,438 14,930 15,665 16,864 as % of sales 8.1% 10.4% 8.3% 8.0% 8.0%
Net Interest (7,697) (5,609) (4,008) (4,416) (4,011)
Adj. PBT 1,923 8,216 10,652 11,249 12,853 Cash flow from financing activities (8,475) (8,395) (10,312) (8,779) (9,926)
Tax (1,932) (2,350) (2,806) (3,150) (3,599) o/w Dividends paid (1,800) (2,364) (1,265) (1,921) (2,120)
Minority Interest (797) (1,444) (1,574) (1,638) (1,725) o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 5,024 5,774 5,791 6,758 7,855 o/w Net debt issued/(repaid) (8,294) (5,308) (9,047) (6,858) (7,807)
Reported EPS 0.70 2.33 2.68 3.35 3.88 Net change in cash 7,994 0 (2,500) (0) 0
Adj. EPS 2.51 2.88 2.88 3.35 3.88
Adj. Free cash flow to firm 11,579 13,149 12,811 13,195 13,937
DPS 0.57 0.59 0.53 0.52 0.52 y/y Growth (9.7%) 13.6% (2.6%) 3.0% 5.6%
Payout ratio 81.1% 25.4% 19.6% 15.4% 13.3%
Shares outstanding 1,998 2,007 2,012 2,017 2,022
Balance Sheet FY20A FY21A FY22E FY23E FY24E Ratio Analysis FY20A FY21A FY22E FY23E FY24E
Cash and cash equivalents 15,648 12,471 14,518 14,376 14,183 Gross margin 58.1% 57.5% 54.5% 53.7% 53.7%
Accounts receivable 5,660 5,667 5,312 5,000 4,689 EBITDA margin 36.9% 35.4% 34.1% 33.8% 34.3%
Inventories 4,482 5,399 5,044 4,732 4,421 EBIT margin 27.1% 26.6% 25.6% 25.4% 25.9%
Other current assets 729 411 411 411 411 Net profit margin 10.7% 10.6% 9.9% 10.9% 12.1%
Current assets 26,519 23,948 25,285 24,519 23,703
PP&E 26,419 26,678 26,495 26,198 25,920 ROE 7.0% 8.4% 8.1% 8.7% 9.5%
LT investments - - - - - ROA 2.2% 2.6% 2.7% 3.1% 3.6%
Other non current assets 173,471 167,000 167,000 167,000 167,000 ROCE (0.0%) 6.4% 7.0% 7.2% 7.9%
Total assets 226,409 217,626 218,780 217,717 216,623 SG&A/Sales 32.8% 32.4% 30.3% 29.3% 28.8%
Net debt/Equity 1.1 1.0 0.8 0.7 0.5
Short term borrowings 3,086 1,461 1,461 1,461 1,461 Net debt/EBITDA 4.8 4.0 3.4 2.9 2.4
Payables 1,522 1,008 1,008 1,008 1,008
Other short term liabilities 27,744 31,715 32,070 32,382 32,693 Sales/Assets (x) 0.2 0.2 0.3 0.3 0.3
Current liabilities 32,352 34,184 34,539 34,851 35,162 Assets/Equity (x) 3.2 3.2 3.0 2.8 2.6
Long-term debt 95,478 87,369 80,369 73,369 65,369 Interest cover (x) 2.3 3.4 5.0 4.7 5.6
Other long term liabilities 115,708 104,104 97,104 90,104 82,104 Operating leverage 216.3% 85.1% 45.4% 84.6% 139.2%
Total liabilities 148,060 138,288 131,643 124,955 117,266 Tax rate 100.5% 28.6% 26.3% 28.0% 28.0%
Shareholders' equity 68,024 68,669 75,100 79,967 85,911 Revenue y/y Growth (10.4%) 15.8% 7.5% 5.8% 5.5%
Minority interests 10,327 10,671 12,037 12,796 13,445 EBITDA y/y Growth (17.8%) 10.9% 3.7% 4.9% 6.9%
Total liabilities & equity 226,411 217,628 218,780 217,717 216,623 EPS y/y Growth (30.8%) 14.4% 0.0% 16.4% 16.0%
Valuation FY20A FY21A FY22E FY23E FY24E
BVPS 34.05 34.21 37.33 39.65 42.49
P/E (x) 23.0 20.1 20.1 17.3 14.9
y/y Growth (10.8%) 0.5% 9.1% 6.2% 7.2%
P/BV (x) 1.7 1.7 1.6 1.5 1.4
EV/EBITDA (x) 12.1 10.5 9.7 8.9 8.0
Net debt/(cash) 82,916 76,359 67,312 60,454 52,647
Dividend Yield 1.0% 1.0% 0.9% 0.9% 0.9%
Source: Company reports and J.P. Morgan estimates.
Note: $ in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
98

Anheuser-Busch InBev (ADR): Summary of Financials

Gross profit 27,245 31,206 31,790 33,152 34,978 o/w Changes in working capital 592 2,459 1,065 935 934
SG&A (15,368) (17,574) (17,680) (18,113) (18,752)
Adj. EBITDA 17,321 19,209 19,929 20,905 22,356 Cash flow from investing activities 6,336 (5,877) (4,716) (4,842) (5,114)
Net Interest (7,697) (5,609) (4,008) (4,416) (4,011)
Minority Interest (797) (1,444) (1,574) (1,638) (1,725) o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 5,024 5,774 5,791 6,758 7,855 o/w Net debt issued/(repaid) (8,294) (5,308) (9,047) (6,858) (7,807)
Reported EPS 0.70 2.33 2.68 3.35 3.88 Net change in cash 7,994 0 (2,500) (0) 0
Adj. EPS 2.51 2.88 2.88 3.35 3.88
DPS 0.57 0.59 0.53 0.52 0.52 y/y Growth (9.7%) 13.6% (2.6%) 3.0% 5.6%
Payout ratio 81.1% 25.4% 19.6% 15.4% 13.3%
Other current assets 10,871 11,477 10,767 10,143 9,521 Net profit margin 10.7% 10.6% 9.9% 10.9% 12.1%
Current assets 26,519 23,948 25,285 24,519 23,703
PP&E 26,419 26,678 26,495 26,198 25,920 ROE 7.0% 8.4% 8.1% 8.7% 9.5%
Other non current assets 173,471 167,000 167,000 167,000 167,000 ROCE (0.0%) 6.4% 7.0% 7.2% 7.9%
Net debt/Equity 1.1 1.0 0.8 0.7 0.5
Payables 1,522 1,008 1,008 1,008 1,008
BVPS 34.05 34.21 37.33 39.65 42.49
P/E (x) 23.4 20.5 20.5 17.6 15.2
y/y Growth (10.8%) 0.5% 9.1% 6.2% 7.2%
P/BV (x) 1.7 1.7 1.6 1.5 1.4
EV/EBITDA (x) 12.1 10.5 9.7 8.9 8.0
Net debt/(cash) 82,916 76,359 67,312 60,454 52,647
Dividend Yield 1.0% 1.0% 0.9% 0.9% 0.9%
99

Britvic: Summary of Financials

Revenue 1,412 1,405 1,618 1,755 1,815 Cash flow from operating activities 169 225 240 236 239
COGS (782) (754) (885) (973) (1,003) o/w Depreciation & amortization 70 68 67 80 82
Gross profit 631 651 733 782 811 o/w Changes in working capital 2 2 (6) (7) 0
SG&A (219) (206) (218) (231) (237)
Adj. EBITDA 231 239 266 287 304 Cash flow from investing activities (38) (97) (84) (93) (90)
D&A (70) (68) (67) (80) (74) o/w Capital expenditure (50) (67) (85) (90) (90)
Adj. EBIT 161 171 199 207 230 as % of sales 3.5% 4.7% 5.2% 5.1% 5.0%
Net Interest (19) (18) (17) (23) (25)
Adj. PBT 142 153 181 184 205 Cash flow from financing activities (69) (163) (140) (166) (168)
Tax (32) (41) (36) (42) (49) o/w Dividends paid (58) (75) (68) (76) (77)
Minority Interest - - - - - o/w Shares issued/(repurchased) 4 2 (45) (75) (75)
Adj. Net Income 115 118 153 150 156 o/w Net debt issued/(repaid) 14 (65) (1) 20 20
Reported EPS 39.86 41.19 54.11 54.64 62.35 Net change in cash 60 (38) 16 (23) (19)
Adj. EPS 43.17 44.27 57.26 57.73 62.35
Adj. Free cash flow to firm 131 128 155 143 149
DPS 21.60 24.20 29.00 28.86 31.17 y/y Growth 17.0% (1.8%) 21.2% (7.9%) 4.3%
Payout ratio 54.2% 58.7% 53.6% 52.8% 50.0%
Shares outstanding 266 267 267 259 250
Cash and cash equivalents 109 71 88 65 46 Gross margin 44.7% 46.3% 45.3% 44.5% 44.7%
Accounts receivable 336 376 445 483 499 EBITDA margin 16.4% 17.0% 16.4% 16.3% 16.8%
Inventories 119 135 172 186 193 EBIT margin 11.4% 12.2% 12.3% 11.8% 12.7%
Current assets 619 610 775 804 808
PP&E 541 544 583 599 612 ROE 29.3% 30.2% 34.0% 31.1% 33.1%
Other non current assets 138 173 195 195 195 ROCE 11.7% 12.4% 15.3% 14.7% 16.2%
Net debt/Equity 1.5 1.2 1.1 1.1 1.2
Short term borrowings 79 2 42 42 42 Net debt/EBITDA 2.4 2.1 1.9 1.9 1.8
Payables 359 418 509 562 580
Other short term liabilities 145 145 170 170 170 Sales/Assets (x) 0.8 0.8 0.9 0.9 0.9
Current liabilities 583 565 721 775 792 Assets/Equity (x) 4.4 4.4 4.1 4.1 4.3
Long-term debt 586 577 563 563 563 Interest cover (x) 12.2 13.5 15.4 12.5 12.1
Other long term liabilities 731 749 758 758 758 Operating leverage 252.8%(1175.5%) 105.5% 51.2% 327.6%
Shareholders' equity 373 411 488 474 469 Revenue y/y Growth (8.6%) (0.5%) 15.2% 8.4% 3.4%
Minority interests - - - - - EBITDA y/y Growth (16.3%) 3.4% 11.2% 7.8% 6.1%
BVPS 1.40 1.54 1.83 1.83 1.88
P/E (x) 18.6 18.2 14.0 13.9 12.9
y/y Growth (10.0%) 9.9% 19.0% (0.2%) 2.7%
P/BV (x) 573.4 522.0 438.8 439.6 428.2
EV/EBITDA (x) 11.8 11.2 10.1 9.5 9.0
Net debt/(cash) 556 508 518 540 559
Dividend Yield 2.7% 3.0% 3.6% 3.6% 3.9%
Source: Company reports.
Note: £ in millions (except per-share data).Fiscal year ends Sep. o/w - out of which
100

Davide Campari-Milano NV: Summary of Financials

COGS (746) (876) (1,087) (1,181) (1,228) o/w Depreciation & amortization 78 80 94 102 109
Gross profit 1,026 1,297 1,591 1,742 1,874 o/w Changes in working capital 44 5 (286) (48) (36)
SG&A (626) (782) (930) (1,006) (1,078)
Net Interest (43) (20) (19) (35) (31)
Minority Interest 1 2 0 (8) (9) o/w Shares issued/(repurchased) (265) (2) (620) 0 0
Adj. Net Income 202 305 389 423 462 o/w Net debt issued/(repaid) - - - - -
Reported EPS 0.18 0.27 0.35 0.37 0.41 Net change in cash (337) 274 (691) 230 290
Adj. EPS 0.18 0.27 0.35 0.37 0.41
DPS 0.06 0.06 0.06 0.07 0.08 y/y Growth (34.9%) 97.3% (93.5%) 1518.5% 19.3%
Payout ratio 30.9% 22.2% 18.7% 19.9% 20.7%
Inventories 655 742 937 994 1,039 EBIT margin 18.2% 20.0% 21.2% 21.7% 22.1%
Current assets 1,550 1,910 2,284 2,376 2,444
PP&E 563 646 739 798 844 ROE 9.2% 14.0% 17.5% 18.7% 17.4%
LT investments 33 31 31 31 31 ROA 4.3% 6.3% 7.3% 7.5% 8.0%
Other non current assets 2,406 2,506 2,506 2,506 2,506 ROCE 6.5% 8.8% 10.0% 10.7% 11.4%
Net debt/Equity 0.5 0.3 0.6 0.4 0.3
Payables 321 395 482 526 558
Current liabilities 754 945 1,032 1,076 1,108 Assets/Equity (x) 2.1 2.2 2.4 2.5 2.2
Other long term liabilities 589 573 573 573 573 Operating leverage 550.8% 155.5% 131.0% 127.4% 136.1%
Minority interests 2 3 3 3 3 EBITDA y/y Growth (16.7%) 28.7% 28.5% 11.3% 8.0%
BVPS 1.76 2.11 1.85 2.17 2.53
P/E (x) 56.2 37.0 29.0 26.7 24.5
y/y Growth (15.7%) 19.6% (12.1%) 17.4% 16.5%
P/BV (x) 5.7 4.8 5.4 4.6 4.0
EV/EBITDA (x) 31.3 23.8 19.6 17.2 15.5
Net debt/(cash) 911 658 1,329 1,063 742
Dividend Yield 0.5% 0.6% 0.6% 0.7% 0.8%
Note: € in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
101

Carlsberg: Summary of Financials

Gross profit 28,361 28,569 32,818 33,919 35,738 o/w Changes in working capital 288 1,419 144 334 147
SG&A (14,276) (14,202) (16,659) (17,933) (18,772)
Adj. EBITDA 14,085 14,367 16,160 15,985 16,966 Cash flow from investing activities (5,871) (4,383) (4,464) (4,881) (4,940)
Net Interest (411) (385) (794) (552) (590)
Minority Interest (778) (1,163) (1,275) (1,316) (1,444) o/w Shares issued/(repurchased) (2,900) (3,600) (4,500) (4,500) (4,500)
Adj. Net Income 6,363 6,943 7,726 7,093 7,616 o/w Net debt issued/(repaid) 5,060 (1,611) 0 0 0
Reported EPS 41.27 46.90 (15.37) 52.61 58.57 Net change in cash 2,288 (1,758) (1,870) (1,504) (1,378)
Adj. EPS 43.55 48.27 55.42 52.78 58.75
DPS 22.00 24.00 29.65 26.52 29.26 y/y Growth (23.8%) 13.5% (4.9%) (7.4%) 5.9%
Payout ratio 53.3% 51.2% NM 50.4% 50.0%
Current assets 18,996 22,900 21,239 20,878 20,792
PP&E 26,299 26,648 17,932 18,462 18,941 ROE 15.4% 16.7% 20.8% 24.0% 26.9%
LT investments 4,188 5,175 5,175 5,175 5,175 ROA 5.3% 5.7% 6.5% 6.3% 6.7%
Net debt/Equity 0.5 0.4 0.6 0.6 0.7
Short term borrowings 959 6,167 6,167 6,167 6,167 Net debt/EBITDA 1.6 1.4 1.3 1.4 1.4
Payables 16,598 20,642 20,201 21,126 21,975
Other long term liabilities 17,714 11,590 11,590 11,590 11,590 Operating leverage 65.5% 166.8% 87.8% (52.8%) 157.0%
Minority interests 4,054 4,815 5,487 6,180 6,942 EBITDA y/y Growth (6.1%) 2.0% 12.5% (1.1%) 6.1%
Total liabilities & equity 118,816 126,383 113,009 113,178 113,571 EPS y/y Growth 6.3% 10.8% 14.8% (4.8%) 11.3%
BVPS 270.90 309.68 221.61 219.01 217.28
P/E (x) 20.5 18.5 16.1 16.9 15.2
y/y Growth (7.7%) 14.3% (28.4%) (1.2%) (0.8%)
P/BV (x) 3.3 2.9 4.0 4.1 4.1
EV/EBITDA (x) 10.7 10.3 9.3 9.4 8.9
Net debt/(cash) 22,157 20,578 21,654 22,606 23,394
Dividend Yield 2.5% 2.7% 3.3% 3.0% 3.3%
Note: Dkr in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
102

Coca-Cola Europacific Partners: Summary of Financials

COGS (6,809) (8,606) (11,159) (11,941) (12,368) o/w Depreciation & amortization 727 782 868 899 926
Gross profit 3,797 5,157 6,192 6,591 6,924 o/w Changes in working capital 295 264 287 175 119
SG&A (2,008) (2,603) (3,190) (3,431) (3,577)
Adj. EBITDA 1,789 2,554 3,002 3,160 3,348 Cash flow from investing activities (486) (585) (747) (1,067) (1,066)
Net Interest (108) (125) (122) (108) (94)
Adj. PBT 1,079 1,642 2,013 2,153 2,327 Cash flow from financing activities 216 (1,729) (1,994) (1,747) (1,847)
Minority Interest - - (14) (14) (15) o/w Shares issued/(repurchased) (129) 0 0 0 0
Adj. Net Income 821 1,302 1,556 1,656 1,781 o/w Net debt issued/(repaid) 808 4,203 (1,285) (811) (862)
Reported EPS 1.80 2.86 3.41 3.63 3.90 Net change in cash 1,220 (197) (0) 0 0
Adj. EPS 1.80 2.86 3.41 3.63 3.90
DPS 0.85 1.40 1.68 1.81 1.95 y/y Growth (14.7%) 52.6% 30.2% (12.4%) 5.7%
Payout ratio 47.2% 49.0% 49.3% 50.0% 50.0%
Inventories 681 1,157 1,215 1,205 1,158 EBIT margin 11.3% 12.9% 12.3% 12.2% 12.6%
Current assets 4,076 5,760 6,202 6,375 6,446
PP&E 3,860 5,248 4,889 4,816 4,713 ROE 13.5% 19.9% 21.1% 20.4% 19.9%
Net debt/Equity 0.9 1.6 1.3 1.1 0.9
Short term borrowings 805 1,350 1,210 1,070 930 Net debt/EBITDA 3.2 4.6 3.4 3.0 2.5
Payables 2,754 4,237 4,966 5,314 5,504
Minority interests - 177 191 205 220 EBITDA y/y Growth (22.7%) 42.8% 17.5% 5.3% 5.9%
BVPS 13.21 15.42 16.89 18.62 20.52
P/E (x) 28.5 18.0 15.1 14.2 13.2
y/y Growth 0.7% 16.7% 9.5% 10.2% 10.2%
P/BV (x) 3.9 3.3 3.0 2.8 2.5
EV/EBITDA (x) 16.5 14.0 11.5 10.6 9.7
Net debt/(cash) 5,664 11,733 10,308 9,357 8,355
Dividend Yield 1.7% 2.7% 3.3% 3.5% 3.8%
103

Coca-Cola Europacific Partners (Euro): Summary of Financials

SG&A (2,008) (2,603) (3,190) (3,431) (3,577)
Adj. EBITDA 1,789 2,554 3,002 3,160 3,348 Cash flow from investing activities (486) (585) (747) (1,067) (1,066)
Net Interest (108) (125) (122) (108) (94)
Adj. PBT 1,079 1,642 2,013 2,153 2,327 Cash flow from financing activities 216 (1,729) (1,994) (1,747) (1,847)
Minority Interest - - (14) (14) (15) o/w Shares issued/(repurchased) (129) 0 0 0 0
Adj. Net Income 821 1,302 1,556 1,656 1,781 o/w Net debt issued/(repaid) 808 4,203 (1,285) (811) (862)
Reported EPS 1.80 2.86 3.41 3.63 3.90 Net change in cash 1,220 (197) 0 (0) 0
Adj. EPS 1.80 2.86 3.41 3.63 3.90
DPS 0.85 1.40 1.68 1.81 1.95 y/y Growth (14.7%) 52.6% 30.2% (12.4%) 5.7%
Payout ratio 47.2% 49.0% 49.3% 50.0% 50.0%
Current assets 4,076 5,760 6,202 6,375 6,446
PP&E 3,860 5,248 4,889 4,816 4,713 ROE 13.5% 19.9% 21.1% 20.4% 19.9%
Net debt/Equity 0.9 1.6 1.3 1.1 0.9
Short term borrowings 805 1,350 1,210 1,070 930 Net debt/EBITDA 3.2 4.6 3.4 3.0 2.5
Payables 2,754 4,237 4,966 5,314 5,504
Minority interests - 177 191 205 220 EBITDA y/y Growth (22.7%) 42.8% 17.5% 5.3% 5.9%
BVPS 13.21 15.42 16.89 18.62 20.52
P/E (x) 27.8 17.5 14.7 13.8 12.8
y/y Growth 0.7% 16.7% 9.5% 10.2% 10.2%
P/BV (x) 3.8 3.2 3.0 2.7 2.4
EV/EBITDA (x) 16.0 13.6 11.1 10.3 9.4
Net debt/(cash) 5,664 11,733 10,308 9,357 8,355
Dividend Yield 1.7% 2.8% 3.4% 3.6% 3.9%
104

Coca-Cola Hellenic Bottling Company: Summary of Financials

Revenue 6,132 7,168 9,062 9,486 10,001 Cash flow from operating activities 962 1,142 792 1,078 1,169
SG&A (1,651) (1,763) (2,132) (2,325) (2,413)
Adj. EBITDA 1,060 1,167 1,320 1,288 1,396 Cash flow from investing activities 242 (1,258) (985) (640) (675)
Net Interest (70) (68) (88) (87) (84)
Minority Interest (0) (0) (0) (1) (1) o/w Shares issued/(repurchased) 8 20 0 0 0
Adj. Net Income 431 578 603 572 645 o/w Net debt issued/(repaid) (503) (68) (50) (150) (150)
Reported EPS 1.19 1.58 1.65 1.56 1.76 Net change in cash 395 (432) (590) (143) (32)
Adj. EPS 1.19 1.58 1.65 1.56 1.76
DPS 0.64 0.71 0.94 0.80 0.88 y/y Growth 13.8% 20.8% (73.1%) 142.3% 12.9%
Payout ratio 54.0% 44.8% 57.0% 51.1% 50.1%
Cash and cash equivalents 1,216 783 192 49 17 Gross margin 44.2% 40.9% 38.1% 38.1% 38.1%
Accounts receivable 787 975 1,201 1,233 1,300 EBITDA margin 17.3% 16.3% 14.6% 13.6% 14.0%
Current assets 2,527 3,157 2,921 2,823 2,844
PP&E 2,617 2,831 3,017 3,221 3,446 ROE 16.2% 20.1% 20.3% 19.6% 20.5%
Net debt/Equity 0.6 0.7 1.0 0.9 0.8
Payables 583 678 905 946 996
Other long term liabilities 2,914 2,881 2,881 2,781 2,681 Operating leverage 89.5% 139.6% 28.8% (102.3%) 205.0%
Minority interests 3 3 3 3 3 EBITDA y/y Growth (7.3%) 10.1% 13.1% (2.5%) 8.4%
Total liabilities & equity 7,573 8,514 8,464 8,571 8,816 EPS y/y Growth (17.5%) 33.6% 4.0% (5.2%) 12.7%
BVPS 7.23 8.53 7.75 8.21 9.01
P/E (x) 19.7 14.7 14.1 14.9 13.2
y/y Growth (2.6%) 18.1% (9.1%) 5.8% 9.8%
P/BV (x) 3.2 2.7 3.0 2.8 2.6
EV/EBITDA (x) 8.6 8.2 7.7 7.9 7.2
Net debt/(cash) 1,710 2,155 2,745 2,789 2,720
Dividend Yield 2.7% 3.0% 4.0% 3.4% 3.8%
105

Diageo: Summary of Financials

Gross profit 7,695 9,479 10,574 11,129 11,902 o/w Changes in working capital 331 (179) (274) (124) (200)
SG&A (3,949) (4,682) (4,920) (5,153) (5,472)
Adj. EBITDA 4,193 5,625 6,169 6,515 6,982 Cash flow from investing activities (1,091) (1,341) (675) (1,166) (1,207)
D&A (447) (828) (516) (538) (552) o/w Capital expenditure (613) (1,080) (1,118) (1,140) (1,181)
Net Interest (373) (422) (530) (507) (519)
Tax (823) (1,080) (1,274) (1,399) (1,515) o/w Dividends paid (1,646) (1,718) (2,042) (2,156) (2,323)
Minority Interest (139) (89) (211) (239) (271) o/w Shares issued/(repurchased) (60) (2,266) (900) (1,500) (1,500)
Adj. Net Income 2,746 3,520 4,085 4,312 4,645 o/w Net debt issued/(repaid) 495 (1,232) 398 (375) (309)
Reported EPS 117.50 151.86 179.70 192.22 209.85 Net change in cash 1,067 (2,383) 890 (650) (509)
Adj. EPS 117.50 151.86 179.70 192.22 209.85
DPS 72.55 76.18 89.85 96.11 104.93 y/y Growth 74.5% (8.2%) 13.2% 11.2% 6.5%
Payout ratio 61.7% 50.2% 50.0% 50.0% 50.0%
Current assets 11,445 12,934 13,609 14,054 14,704
PP&E 4,849 5,848 6,570 7,197 7,851 ROE 40.2% 47.9% 49.5% 48.2% 48.8%
Net debt/Equity 1.4 1.4 1.3 1.2 1.2
Payables 4,786 6,046 6,447 6,767 7,218
Shareholders' equity 6,897 7,798 8,689 9,189 9,856 Revenue y/y Growth 8.3% 21.4% 11.3% 4.4% 6.1%
Minority interests 1,534 1,716 1,833 1,972 2,134 EBITDA y/y Growth 5.1% 34.2% 9.7% 5.6% 7.2%
Total liabilities & equity 31,953 36,516 37,687 39,021 40,609 EPS y/y Growth 7.4% 29.2% 18.3% 7.0% 9.2%
BVPS 295.12 336.41 382.29 409.64 445.24
P/E (x) 32.4 25.1 21.2 19.8 18.1
y/y Growth 2.2% 14.0% 13.6% 7.2% 8.7%
P/BV (x) 12.9 11.3 10.0 9.3 8.6
EV/EBITDA (x) 21.5 15.9 14.3 13.5 12.6
Net debt/(cash) 11,978 13,735 13,337 13,712 14,021
Dividend Yield 1.9% 2.0% 2.4% 2.5% 2.8%
Note: £ in millions (except per-share data).Fiscal year ends Jun. o/w - out of which
106

Fevertree Drinks: Summary of Financials

Revenue 252 311 360 392 432 Cash flow from operating activities 38 47 34 33 45
COGS (136) (180) (237) (257) (274) o/w Depreciation & amortization 4 5 6 6 7
Gross profit 116 131 122 135 158 o/w Changes in working capital (2) (9) (1) (6) (4)
SG&A (59) (68) (81) (87) (95)
Net Interest 0 0 0 1 2
Minority Interest - - - - - o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 42 45 26 30 40 o/w Net debt issued/(repaid) (2) (1) 0 0 0
Reported EPS 35.78 38.17 21.85 25.66 34.21 Net change in cash 15 23 (44) 9 21
Adj. EPS 35.78 38.17 21.85 25.66 34.21
DPS 15.68 15.99 16.31 16.64 16.97 y/y Growth (45.8%) 22.4% (31.4%) (10.3%) 43.7%
Payout ratio 43.8% 41.9% 74.6% 64.8% 49.6%
Current assets 240 276 249 269 299
PP&E 8 10 9 10 11 ROE 17.5% 16.7% 9.9% 12.3% 15.2%
Total assets 298 336 307 327 356 SG&A/Sales 23.5% 21.8% 22.5% 22.3% 22.0%
Net debt/Equity NM NM NM NM NM
Short term borrowings 0 0 0 0 0 Net debt/EBITDA NM NM NM NM NM
Payables 42 49 65 70 75
Long-term debt 1 2 2 2 2 Interest cover (x) NM - NM NM NM
Other long term liabilities 3 4 4 4 4 Operating leverage 896.4% 35.5% (277.6%) 207.5% 378.7%
Total liabilities 46 55 70 76 80 Tax rate 19.2% 19.8% 20.0% 22.5% 25.0%
Shareholders' equity 253 282 237 251 275 Revenue y/y Growth (3.2%) 23.4% 15.6% 9.1% 10.0%
Minority interests - - - - - EBITDA y/y Growth (25.9%) 10.5% (34.4%) 15.7% 30.8%
Total liabilities & equity 298 336 307 327 356 EPS y/y Growth (28.8%) 6.7% (42.7%) 17.4% 33.3%
BVPS 2.17 2.42 2.03 2.15 2.36
P/E (x) 32.6 30.5 53.3 45.4 34.1
y/y Growth 12.2% 11.2% (16.0%) 6.1% 9.7%
P/BV (x) 536.3 482.1 574.0 540.8 493.1
EV/EBITDA (x) 21.2 18.9 29.9 25.6 19.2
Net debt/(cash) (142) (164) (120) (129) (150)
Dividend Yield 1.3% 1.4% 1.4% 1.4% 1.5%
Note: £ in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
107

Heineken: Summary of Financials

SG&A - - - - -
Net Interest (447) (413) (396) (429) (384)
Adj. PBT 1,952 3,155 4,278 4,534 5,080 Cash flow from financing activities (804) (794) (1,147) (1,273) (1,388)
Tax (592) (872) (1,148) (1,205) (1,353) o/w Dividends paid (811) (796) (1,147) (1,273) (1,388)
Adj. Net Income 1,155 2,042 2,807 2,976 3,320 o/w Net debt issued/(repaid) - - - - -
Reported EPS 2.01 3.55 4.87 5.17 5.76 Net change in cash (173) 336 60 (1,424) 39
Adj. EPS 2.01 3.55 4.87 5.17 5.76
DPS 0.70 1.24 1.68 1.90 2.10 y/y Growth (27.9%) 48.1% (5.7%) 4.3% 10.7%
Payout ratio 34.9% 35.0% 34.5% 36.7% 36.4%
Current assets 8,919 9,445 9,476 9,513 9,525
PP&E 11,551 12,401 12,544 14,154 14,539 ROE 7.8% 13.3% 15.6% 15.4% 16.0%
Total assets 42,531 48,717 48,991 50,738 51,234 SG&A/Sales - - - - -
Net debt/Equity 1.0 0.7 0.6 0.5 0.4
Payables 6,107 7,750 7,719 7,682 7,670
Other short term liabilities 1,080 978 978 978 978 Sales/Assets (x) 0.4 0.5 0.6 0.6 0.7
BVPS 23.27 30.13 32.37 34.74 37.49
P/E (x) 44.1 24.9 18.2 17.1 15.3
y/y Growth (17.3%) 29.5% 7.4% 7.3% 7.9%
P/BV (x) 3.8 2.9 2.7 2.5 2.4
EV/EBITDA (x) 12.4 12.1 9.7 9.2 8.3
Net debt/(cash) 14,196 13,625 12,324 12,393 10,909
Dividend Yield 0.8% 1.4% 1.9% 2.1% 2.4%
108

Pernod-Ricard SA: Summary of Financials

Gross profit 5,293 6,473 7,430 7,826 8,307 o/w Changes in working capital (54) (252) (452) (120) (167)
SG&A (2,870) (3,449) (3,836) (3,995) (4,195)
Adj. EBITDA 2,790 3,405 4,009 4,247 4,531 Cash flow from investing activities (486) (1,204) (1,374) (765) (741)
Net Interest (371) (260) (226) (247) (262)
Adj. PBT 2,161 2,809 3,368 3,584 3,850 Cash flow from financing activities (724) (1,639) (1,770) (2,003) (2,083)
Tax (668) (677) (792) (842) (905) o/w Dividends paid (704) (826) (1,070) (1,253) (1,333)
Minority Interest (24) (34) (71) (76) (81) o/w Shares issued/(repurchased) (20) (813) (700) (750) (750)
Adj. Net Income 1,611 2,120 2,506 2,666 2,864 o/w Net debt issued/(repaid) (688) 956 0 0 0
Reported EPS 6.16 8.16 9.79 10.57 11.51 Net change in cash 830 (506) (557) 317 420
Adj. EPS 6.16 8.16 9.79 10.57 11.51
DPS 3.12 4.12 4.90 5.28 5.75 y/y Growth 63.2% 7.4% (3.4%) 30.9% 7.7%
Payout ratio 50.6% 50.5% 50.0% 50.0% 50.0%
Current assets 10,321 11,896 12,177 12,769 13,547
PP&E 3,177 3,591 4,027 4,377 4,699 ROE 11.2% 13.8% 15.6% 16.1% 16.5%
Net debt/Equity 0.5 0.5 0.5 0.5 0.4
Payables 2,337 3,019 3,390 3,546 3,737
Minority interests 246 309 380 456 537 EBITDA y/y Growth 6.9% 22.0% 17.7% 5.9% 6.7%
BVPS 56.70 61.39 63.34 67.04 71.26
P/E (x) 30.7 23.1 19.3 17.9 16.4
y/y Growth 7.2% 8.3% 3.2% 5.8% 6.3%
P/BV (x) 3.3 3.1 3.0 2.8 2.7
EV/EBITDA (x) 20.1 16.7 14.3 13.5 12.5
Net debt/(cash) 7,287 8,060 8,617 8,301 7,880
Dividend Yield 1.7% 2.2% 2.6% 2.8% 3.0%
Note: € in millions (except per-share data).Fiscal year ends Jun. o/w - out of which
109

Remy Cointreau SA: Summary of Financials

COGS (330) (412) (498) (508) (529) o/w Depreciation & amortization 36 49 54 56 59
Gross profit 680 901 1,100 1,143 1,235 o/w Changes in working capital (13) (140) (30) (86) (76)
SG&A (444) (567) (655) (685) (740)
Adj. EBITDA 273 383 499 510 554 Cash flow from investing activities 9 (66) (80) (79) (83)
Net Interest (15) (13) (12) (11) (10)
Minority Interest 0 0 0 0 0 o/w Shares issued/(repurchased) 0 3 0 0 0
Adj. Net Income 148 228 306 311 340 o/w Net debt issued/(repaid) (239) 94 (30) (30) (30)
Reported EPS 2.96 4.52 6.03 6.13 6.69 Net change in cash (68) (85) 71 11 49
Adj. EPS 2.96 4.52 6.03 6.13 6.69
DPS 1.85 2.85 3.05 3.05 2.26 y/y Growth 411.7% (50.2%) 163.3% (18.8%) 17.5%
Payout ratio 62.5% 63.0% 50.6% 49.8% 33.8%
Current assets 1,861 1,996 2,171 2,284 2,442
PP&E 354 392 424 452 482 ROE 10.0% 14.2% 17.7% 16.8% 17.0%
Net debt/Equity 0.2 0.2 0.2 0.1 0.1
Payables 586 683 757 772 805
Long-term debt 424 364 364 364 364 Interest cover (x) 18.7 29.0 42.0 45.7 53.0
Other long term liabilities 88 86 86 86 86 Operating leverage (693.5%) 139.1% 151.9% 63.9% 127.4%
BVPS 30.92 32.92 35.30 37.79 40.84
P/E (x) 55.7 36.4 27.3 26.9 24.6
y/y Growth 9.8% 6.5% 7.2% 7.0% 8.1%
P/BV (x) 5.3 5.0 4.7 4.4 4.0
EV/EBITDA (x) 31.1 22.2 16.9 16.5 15.1
Net debt/(cash) 314 353 282 271 222
Dividend Yield 1.1% 1.7% 1.9% 1.9% 1.4%
Note: € in millions (except per-share data).Fiscal year ends Mar. o/w - out of which
110

Royal Unibrew: Summary of Financials

SG&A (1,839) (2,236) (3,117) (3,581) (3,751)
Adj. EBITDA 1,863 2,004 2,094 2,186 2,300 Cash flow from investing activities (258) (1,604) (1,403) (623) (626)
Net Interest (43) (42) (59) (74) (72)
Adj. PBT 1,505 1,647 1,959 1,569 1,677 Cash flow from financing activities (1,465) (146) (435) (1,288) (1,407)
Minority Interest (15) 1 1 1 o/w Shares issued/(repurchased) (362) (582) (550) (550) (600)
Adj. Net Income 1,183 1,261 1,248 1,240 1,326 o/w Net debt issued/(repaid) (503) 1,093 800 (50) (75)
Reported EPS 24.11 26.84 25.37 25.30 27.48 Net change in cash 11 (7) 83 91 (115)
Adj. EPS 24.08 26.07 25.45 25.30 27.48
DPS 13.50 14.50 13.98 14.05 15.19 y/y Growth 38.2% (9.2%) 3.9% 1.4% (6.2%)
Payout ratio 56.0% 54.0% 55.1% 55.5% 55.3%
Accounts receivable 639 1,188 1,163 1,311 1,361 EBITDA margin 25.5% 22.9% 18.0% 16.7% 16.9%
Inventories 517 780 932 1,064 1,097 EBIT margin 20.7% 18.7% 13.8% 12.5% 12.8%
Current assets 1,291 2,143 2,353 2,724 2,692
PP&E 2,455 2,734 4,672 4,751 4,825 ROE 36.9% 38.0% 29.0% 23.5% 25.1%
Net debt/Equity 0.7 1.1 0.8 0.8 0.8
Short term borrowings 150 624 1,424 1,374 1,299 Net debt/EBITDA 1.2 1.8 2.0 1.9 1.8
Payables 1,047 1,721 2,044 2,537 2,657
Other long term liabilities 2,730 3,771 3,771 3,771 3,771 Operating leverage (51.8%) 40.9% (5.8%) 18.4% 167.9%
Total liabilities & equity 8,306 10,914 13,987 14,437 14,480 EPS y/y Growth 4.0% 8.3% (2.4%) (0.6%) 8.6%
BVPS 67.34 68.85 107.69 107.88 109.62
P/E (x) 20.2 18.6 19.1 19.2 17.7
y/y Growth 8.0% 2.3% 56.4% 0.2% 1.6%
P/BV (x) 7.2 7.1 4.5 4.5 4.4
EV/EBITDA (x) 17.0 16.3 16.1 15.4 14.4
Net debt/(cash) 2,193 3,536 4,253 4,112 4,152
Dividend Yield 2.8% 3.0% 2.9% 2.9% 3.1%
Note: Dkr in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
111

Chr. Hansen: Summary of Financials

Revenue 1,077 1,218 1,355 1,435 - Cash flow from operating activities 328 309 380 399 -
COGS (464) (542) (602) (629) - o/w Depreciation & amortization 101 107 120 126 -
Gross profit 613 677 753 805 - o/w Changes in working capital (5) (33) (5) (19) -
SG&A (228) (256) (272) (285) -
Adj. EBITDA 399 433 492 529 - Cash flow from investing activities (472) (142) (182) (149) -
D&A (101) (107) (120) (126) - o/w Capital expenditure (154) (142) (182) (149) -
Adj. EBIT 298 326 372 404 - as % of sales 14.2% 11.6% 13.4% 10.4% -
Net Interest (16) (6) (5) (5) -
Adj. PBT 276 306 354 387 - Cash flow from financing activities (658) (138) (199) (250) -
Tax (48) (68) (86) (95) - o/w Dividends paid (116) (116) (145) (160) -
Minority Interest 0 0 0 0 - o/w Shares issued/(repurchased) (10) (9) 0 0 -
Adj. Net Income 216 229 266 293 - o/w Net debt issued/(repaid) (532) (17) (54) (90) -
Reported EPS 1.51 1.71 2.02 2.22 - Net change in cash (801) 43 0 (0) -
Adj. EPS 1.64 1.74 2.02 2.22 -
Adj. Free cash flow to firm 175 167 199 250 -
DPS 1.76 0.95 1.10 1.22 - y/y Growth (17.3%) (4.2%) 18.9% 25.5% -
Payout ratio 117.0% 55.6% 54.8% 54.8% -
Shares outstanding 132 132 132 132 -
Cash and cash equivalents 55 83 83 83 - Gross margin 56.9% 55.5% 55.5% 56.1% -
Accounts receivable 240 235 252 267 - EBITDA margin 37.1% 35.5% 36.3% 36.9% -
Inventories 134 181 201 213 - EBIT margin 27.7% 26.8% 27.4% 28.2% -
Other current assets 0 0 0 0 - Net profit margin 20.1% 18.8% 19.6% 20.4% -
Current assets 429 498 536 563 -
PP&E 782 877 972 1,030 - ROE 17.2% 13.3% 14.1% 14.5% -
LT investments - - - - - ROA 7.2% 7.1% 7.9% 8.5% -
Other non current assets 1,903 1,941 1,909 1,875 - ROCE 10.0% 9.5% 10.0% 10.6% -
Total assets 3,114 3,317 3,417 3,468 - SG&A/Sales 21.2% 21.0% 20.1% 19.9% -
Net debt/Equity 0.6 0.5 0.4 0.4 -
Short term borrowings 163 110 110 110 - Net debt/EBITDA 2.2 2.0 1.7 1.4 -
Payables 132 133 165 172 -
Other short term liabilities 169 145 145 145 - Sales/Assets (x) 0.4 0.4 0.4 0.4 -
Current liabilities 464 387 420 427 - Assets/Equity (x) 2.4 1.9 1.8 1.7 1.7
Long-term debt 843 898 845 755 - Interest cover (x) 24.8 74.6 92.9 112.9 -
Other long term liabilities 181 208 208 208 - Operating leverage (79.5%) 71.1% 125.8% 146.5% -
Total liabilities 1,488 1,493 1,472 1,390 - Tax rate 17.6% 22.2% 24.4% 24.6% -
Shareholders' equity 1,626 1,824 1,945 2,078 - Revenue y/y Growth 11.1% 13.0% 11.2% 5.9% -
Minority interests 0 0 0 0 - EBITDA y/y Growth (0.3%) 8.4% 13.6% 7.6% -
Total liabilities & equity 3,114 3,317 3,417 3,468 - EPS y/y Growth (10.8%) 5.8% 16.1% 10.1% -
BVPS 12.33 13.83 14.75 15.75 -
P/E (x) 35.8 33.8 29.1 26.5 -
y/y Growth 82.2% 12.1% 6.6% 6.8% -
P/BV (x) 4.8 4.2 4.0 3.7 -
EV/EBITDA (x) 21.8 20.0 17.5 16.1 -
Net debt/(cash) 898 881 827 737 -
Dividend Yield 3.0% 1.6% 1.9% 2.1% -
Note: € in millions (except per-share data).Fiscal year ends Aug. o/w - out of which
112

Danone: Summary of Financials

COGS (12,267) (12,760) (15,262) (15,939) (16,524) o/w Depreciation & amortization 803 814 936 982 1,025
SG&A (7,651) (7,843) (8,832) (9,261) (9,666)
Adj. EBITDA 4,120 4,151 4,374 4,651 4,977 Cash flow from investing activities (609) 561 (1,200) (1,258) (1,313)
D&A (803) (814) (936) (982) (1,025) o/w Capital expenditure (962) (1,043) (1,200) (1,258) (1,313)
Net Interest (310) (267) (273) (289) (290)
Tax (828) (841) (867) (926) (1,003) o/w Dividends paid (1,418) (1,376) (1,297) (1,350) (1,404)
Minority Interest (75) (70) (74) (77) (81) o/w Shares issued/(repurchased) 0 (801) 0 0 0
Adj. Net Income 2,174 2,140 2,206 2,359 2,560 o/w Net debt issued/(repaid) (450) (219) 0 0 0
Reported EPS 3.37 3.35 3.51 3.75 4.06 Net change in cash (51) 65 (125) 148 874
Adj. EPS 3.34 3.31 3.47 3.71 4.02
DPS 1.94 1.94 2.02 2.10 2.18 y/y Growth (18.2%) 21.3% (52.9%) 27.8% 52.2%
Payout ratio 57.6% 57.9% 57.5% 56.0% 53.7%
Cash and cash equivalents 593 659 533 681 1,555 Gross margin 48.1% 47.4% 45.3% 45.6% 46.0%
Current assets 10,612 11,964 12,466 12,940 14,125
PP&E 6,572 6,843 7,225 7,625 8,043 ROE 13.0% 12.8% 12.8% 13.5% 14.0%
Net debt/Equity 0.7 0.6 0.6 0.6 0.5
Payables 3,467 3,998 4,803 5,038 5,245
Total liabilities & equity 42,776 45,420 46,182 46,929 48,400 EPS y/y Growth (13.2%) (1.0%) 4.7% 7.0% 8.5%
BVPS 24.96 26.73 27.07 27.86 29.83
P/E (x) 15.0 15.1 14.4 13.5 12.4
y/y Growth (6.2%) 7.1% 1.3% 2.9% 7.1%
P/BV (x) 2.0 1.9 1.8 1.8 1.7
EV/EBITDA (x) 11.2 10.8 10.3 9.6 8.8
Net debt/(cash) 11,940 10,520 10,645 10,497 9,623
Dividend Yield 3.9% 3.9% 4.0% 4.2% 4.4%
113

Givaudan: Summary of Financials

Gross profit 2,659 2,855 2,887 2,896 3,033 o/w Changes in working capital (134) (96) (299) 71 (65)
SG&A (1,602) (1,722) (1,713) (1,718) (1,755)
Adj. EBITDA 1,442 1,504 1,531 1,517 1,604 Cash flow from investing activities (844) (796) (308) (298) (302)
Net Interest (86) (94) (103) (89) (84)
Adj. PBT 876 965 931 994 1,097 Cash flow from financing activities (936) (283) (627) (645) (664)
Minority Interest 0 0 0 0 0 o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 936 982 926 961 1,031 o/w Net debt issued/(repaid) (365) 306 0 0 0
Reported EPS 79.96 88.35 86.21 92.00 101.50 Net change in cash (563) 191 400 390 444
Adj. EPS 100.73 105.68 99.70 103.43 110.95
DPS 64.00 66.00 68.00 70.00 72.00 y/y Growth 26.0% 2.9% 1.9% (0.3%) 6.1%
Payout ratio 80.0% 74.7% 78.9% 76.1% 70.9%
Current assets 3,299 3,406 3,753 3,663 3,761
PP&E 2,222 2,291 2,380 2,457 2,528 ROE 26.1% 26.4% 22.6% 21.7% 21.6%
Net debt/Equity 1.2 1.1 1.0 0.8 0.7
Payables 809 1,008 1,056 1,037 1,070
Other long term liabilities 1,109 922 922 922 922 Operating leverage 348.5% 117.4% 47.2% (8.5%) 203.5%
Minority interests - - - - - EBITDA y/y Growth 8.3% 4.3% 1.8% (0.9%) 5.8%
Total liabilities & equity 10,658 11,420 11,693 11,533 11,564 EPS y/y Growth 9.2% 4.9% (5.7%) 3.7% 7.3%
BVPS 377.52 424.12 459.25 493.65 534.25
P/E (x) 31.4 29.9 31.7 30.6 28.5
y/y Growth (4.2%) 12.3% 8.3% 7.5% 8.2%
P/BV (x) 8.4 7.5 6.9 6.4 5.9
EV/EBITDA (x) 24.1 22.9 22.5 22.4 20.9
Net debt/(cash) 4,040 4,394 4,293 3,832 3,453
Dividend Yield 2.0% 2.1% 2.2% 2.2% 2.3%
Note: CHF in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
114

JDE Peet's: Summary of Financials

Gross profit 2,833 2,973 2,997 3,163 3,288 o/w Changes in working capital 61 339 332 (178) 25
SG&A (1,900) (1,865) (1,921) (2,031) (2,087)
Adj. EBITDA 1,575 1,591 1,598 1,657 1,734 Cash flow from investing activities (230) (293) (234) (249) (262)
Net Interest (137) (112) (73) (66) (63)
Minority Interest (59) 3 (8) (9) (10) o/w Shares issued/(repurchased) 824 13 (500) 0 0
Adj. Net Income 786 898 931 930 984 o/w Net debt issued/(repaid) (1,779) (800) (500) (500) (500)
Reported EPS 0.61 1.52 1.74 1.63 1.75 Net change in cash (398) 248 61 (141) 156
Adj. EPS 1.57 1.79 1.90 1.92 2.03
Adj. Free cash flow to firm 876 1,368 1,483 898 1,157
DPS 0.70 0.70 0.97 0.91 0.97 y/y Growth (25.6%) 56.1% 8.4% (39.4%) 28.8%
Payout ratio 113.9% 45.9% 55.6% 55.7% 55.7%
Inventories 732 872 1,199 1,172 1,168 EBIT margin 19.2% 18.6% 15.1% 15.6% 16.1%
Current assets 1,819 2,313 2,878 2,721 2,893
PP&E 1,600 1,683 1,660 1,637 1,614 ROE 9.4% 8.5% 8.4% 8.3% 8.5%
Net debt/Equity 0.5 0.4 0.3 0.3 0.2
Payables 2,955 3,696 4,532 4,339 4,379
Other long term liabilities 1,668 1,689 1,689 1,689 1,689 Operating leverage (43.3%) 38.7% (17.0%) 339.2% 256.4%
BVPS 20.42 21.99 22.50 23.52 24.37
P/E (x) 18.8 16.5 15.6 15.3 14.5
y/y Growth 58.0% 7.7% 2.3% 4.6% 3.6%
P/BV (x) 1.4 1.3 1.3 1.3 1.2
EV/EBITDA (x) 12.6 11.8 11.4 10.8 9.9
Net debt/(cash) 5,091 4,254 3,652 3,293 2,637
Dividend Yield 2.4% 2.4% 3.3% 3.1% 3.3%
Source: Company reports and J.P. Morgan estimates. Note: Given limited historical data pre-IPO, we use our share count for 2020 to calculate the FY19A Adj. EPS.
115

Kerry Group: Summary of Financials

Revenue 6,953 7,351 8,721 9,468 9,902 Cash flow from operating activities 672 654 857 1,000 1,128
COGS - - - - - o/w Depreciation & amortization 201 202 225 244 252
Gross profit - - - - - o/w Changes in working capital (107) (184) (111) (60) (35)
SG&A - - - - -
Adj. EBITDA 998 1,077 1,224 1,332 1,461 Cash flow from investing activities (520) (624) (672) (426) (396)
Adj. EBIT 769 841 965 1,056 1,177 as % of sales 3.9% 4.0% 4.5% 4.5% 4.0%
Net Interest (72) (70) (75) (73) (62)
Adj. PBT 696 771 890 983 1,115 Cash flow from financing activities (116) 415 (180) (192) (211)
Minority Interest - - - - - o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 611 675 778 859 948 o/w Net debt issued/(repaid) 35 577 0 0 0
Reported EPS 3.45 3.81 4.39 4.85 5.35 Net change in cash 37 445 4 382 521
Adj. EPS 3.45 3.81 4.39 4.85 5.35
DPS 0.87 0.95 1.05 1.15 1.27 y/y Growth (16.6%) (11.3%) 29.7% 23.6% 27.5%
Payout ratio 25.0% 25.0% 23.9% 23.8% 23.7%
Cash and cash equivalents 563 1,039 1,039 1,039 1,039 Gross margin - - - - -
Current assets 2,595 3,458 3,903 4,145 4,286
PP&E 1,991 2,091 2,539 2,721 2,865 ROE 13.3% 13.2% 13.5% 13.9% 14.1%
Net debt/Equity 0.4 0.4 0.3 0.2 0.2
Payables 1,543 1,792 2,126 2,279 2,385
Minority interests - - - - - EBITDA y/y Growth (8.8%) 7.9% 13.6% 8.8% 9.7%
BVPS 26.30 31.61 33.59 36.35 39.56
P/E (x) 26.3 23.9 20.7 18.8 17.0
y/y Growth 1.9% 20.2% 6.3% 8.2% 8.8%
P/BV (x) 3.5 2.9 2.7 2.5 2.3
EV/EBITDA (x) 17.9 16.7 14.7 13.2 11.7
Net debt/(cash) 1,858 1,997 1,993 1,610 1,089
Dividend Yield 1.0% 1.0% 1.2% 1.3% 1.4%
116

Nestle: Summary of Financials

Gross profit 41,710 42,002 43,853 45,503 47,773 o/w Changes in working capital 314 (173) 1,078 323 311
SG&A (25,231) (25,213) (26,036) (26,808) (28,067)
Net Interest (874) (873) (975) (1,078) (1,220)
Minority Interest (140) (291) (367) (387) (409) o/w Shares issued/(repurchased) (6,814) (6,548) (10,000) (5,000) (5,000)
Reported EPS 4.29 6.06 4.41 4.76 5.10 Net change in cash (6,635) (4,223) (7,296) (566) 37
Adj. EPS 4.21 4.42 4.81 5.17 5.52
DPS 2.75 2.80 2.86 2.91 2.97 y/y Growth (15.1%) (12.0%) 21.8% 15.1% 5.3%
Payout ratio 64.1% 46.2% 64.8% 61.2% 58.2%
Current assets 34,068 39,257 41,694 42,242 42,957
PP&E 25,840 28,345 31,188 32,162 33,175 ROE 24.5% 25.0% 26.0% 28.8% 30.0%
Net debt/Equity 0.7 0.6 0.8 0.8 0.8
Payables 18,515 20,907 23,738 24,440 25,266
BVPS 16.04 19.04 17.53 18.00 18.57
P/E (x) 26.9 25.6 23.5 21.9 20.5
y/y Growth (9.6%) 18.7% (7.9%) 2.7% 3.2%
P/BV (x) 7.1 5.9 6.5 6.3 6.1
EV/EBITDA (x) 18.3 18.1 17.3 16.5 15.7
Net debt/(cash) 31,338 32,579 39,875 40,441 40,404
Dividend Yield 2.4% 2.5% 2.5% 2.6% 2.6%
Note: CHF in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
117

Symrise: Summary of Financials

SG&A (534) (564) (681) (726) (757)
Adj. EBITDA 742 789 965 1,024 1,091 Cash flow from investing activities (150) (714) (692) (274) (235)
Net Interest (64) (43) (45) (49) (46)
Minority Interest (8) (10) (10) (10) (11) o/w Shares issued/(repurchased) - - - - -
Adj. Net Income 382 431 522 551 591 o/w Net debt issued/(repaid) 183 0 0 0 0
Reported EPS 2.20 2.68 3.28 3.48 3.80 Net change in cash 297 (284) (254) 283 396
Adj.EPS 2.73 3.09 3.74 3.94 4.23
FCFE - - - - -
DPS 0.97 1.02 1.19 1.23 1.34
Payout ratio 44.2% 38.0% 36.2% 35.2% 35.2%
Current assets 2,300 2,330 2,320 2,754 3,260
PP&E 1,205 1,321 1,385 1,454 1,476 ROE 15.8% 15.4% 16.3% 16.6% 16.0%
Net debt/Equity 0.5 0.4 0.5 0.3 0.2
Payables 334 413 440 472 496
Current liabilities 657 1,145 1,183 1,235 1,274 Assets/Equity (x) 2.5 2.2 2.1 2.0 1.9
Minority interests - - - - - EBITDA y/y Growth 4.9% 6.3% 22.2% 6.2% 6.5%
BVPS 16.90 23.27 22.52 25.00 27.75
P/E (x) 39.8 35.3 29.2 27.6 25.8
y/y Growth (4.6%) 37.7% (3.2%) 11.0% 11.0%
P/BV (x) 6.4 4.7 4.8 4.4 3.9
EV/EBITDA (x) 23.7 22.2 18.4 17.1 15.7
Net debt/(cash) 1,248 1,242 1,496 1,213 817
Dividend Yield 0.9% 0.9% 1.1% 1.1% 1.2%
118

Beiersdorf: Summary of Financials

Revenue 7,025 7,627 8,830 9,188 9,580 Cash flow from operating activities 821 933 1,159 1,215 1,314
SG&A (2,885) (3,123) (3,523) (3,666) (3,812)
Adj. EBITDA 1,163 1,280 1,499 1,583 1,693 Cash flow from investing activities (762) (884) (1,093) (459) (479)
Adj. EBIT 906 993 1,167 1,237 1,332 as % of sales 4.0% 5.4% 5.8% 5.0% 5.0%
Net Interest 20 18 12 18 24
Adj. PBT 899 967 1,139 1,207 1,324 Cash flow from financing activities (177) (177) (170) (238) (249)
Adj. Net Income 619 681 805 850 933 o/w Net debt issued/(repaid) - - - - -
Reported EPS 2.47 2.81 3.50 3.75 4.12 Net change in cash (325) (80) (103) 517 586
Adj. EPS 2.73 3.00 3.55 3.75 4.12
DPS 0.70 0.70 1.00 1.05 1.06 y/y Growth 0.9% (3.8%) 24.4% 16.7% 10.5%
Payout ratio 28.4% 24.9% 28.6% 28.0% 25.8%
Current assets 4,276 4,631 4,692 5,248 5,878
PP&E 1,630 1,845 691 805 923 ROE 10.1% 10.4% 13.0% 14.5% 14.3%
Short term borrowings 358 501 501 501 501 Net debt/EBITDA NM NM NM NM NM
Payables 1,642 1,973 2,227 2,260 2,300
Long-term debt 88 106 106 106 106 Interest cover (x) - - - - -
Other long term liabilities 1,105 974 974 974 974 Operating leverage 210.1% 112.4% 111.2% 147.9% 180.5%
BVPS 24.99 27.78 21.76 24.54 27.65
P/E (x) 38.1 34.6 29.3 27.7 25.2
y/y Growth 3.7% 11.2% (21.7%) 12.8% 12.6%
P/BV (x) 4.2 3.7 4.8 4.2 3.8
EV/EBITDA (x) 17.3 15.3 13.2 12.2 11.1
Net debt/(cash) (234) (237) (9) (478) (1,010)
Dividend Yield 0.7% 0.7% 1.0% 1.0% 1.0%
119

Essity: Summary of Financials

COGS (82,132) (86,628)(118,072)(126,022)(129,877) o/w Depreciation & amortization 7,671 7,391 9,306 10,251 10,621
Gross profit 39,620 35,239 38,972 47,600 49,799 o/w Changes in working capital (810) (844) (2,144) (2,160) (629)
SG&A - - - - -
Net Interest (958) (662) (1,028) (1,323) (1,229)
Minority Interest (1,519) (1,190) (1,190) (1,238) (1,287) o/w Shares issued/(repurchased) 0 0 0 0 0
Adj. Net Income 10,286 8,173 6,771 10,212 11,432 o/w Net debt issued/(repaid) (3,626) 7,441 0 0 0
Reported EPS 14.65 11.64 9.64 14.54 16.28 Net change in cash 1,326 (1,598) (1,252) 3,903 6,675
Adj. EPS 14.65 11.64 9.64 14.54 16.28
DPS 6.75 7.00 7.20 7.40 7.60 y/y Growth (16.4%) (34.4%) (39.0%) 122.5% 28.4%
Payout ratio 46.1% 60.2% 74.7% 50.9% 46.7%
Current assets 43,116 51,003 65,003 75,203 84,969
PP&E 53,631 58,918 60,923 62,744 64,630 ROE 19.0% 14.3% 11.9% 17.9% 17.8%
Net debt/Equity 0.7 0.8 0.9 0.7 0.6
Payables 14,791 18,030 24,575 26,229 27,031
Other long term liabilities 12,028 12,205 12,205 12,205 12,205 Operating leverage (204.9%)(24286.9%) (33.3%) 402.0% 262.6%
Minority interests 8,990 8,633 8,633 8,633 8,633 EBITDA y/y Growth 7.4% (17.5%) 2.5% 29.7% 7.3%
Total liabilities & equity 154,645 175,050 181,371 190,870 199,897 EPS y/y Growth 5.3% (20.5%) (17.1%) 50.8% 11.9%
BVPS 77.39 85.25 76.76 85.86 96.57
P/E (x) 17.4 21.9 26.4 17.5 15.6
y/y Growth 0.4% 10.2% (10.0%) 11.9% 12.5%
P/BV (x) 3.3 3.0 3.3 3.0 2.6
EV/EBITDA (x) 9.7 12.3 12.1 9.1 8.2
Net debt/(cash) 41,908 54,285 54,711 49,776 42,145
Dividend Yield 2.7% 2.7% 2.8% 2.9% 3.0%
Note: Skr in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
120

Haleon: Summary of Financials

Gross profit 6,173 6,002 6,803 7,233 7,551 o/w Changes in working capital 15 (152) 55 74 44
SG&A (3,819) (3,582) (3,999) (4,242) (4,404)
Adj. EBITDA 2,351 2,413 2,785 2,970 3,114 Cash flow from investing activities 1,030 (33) (318) (332) (337)
Net Interest (7) (2) (196) (251) (232)
Adj. PBT 2,067 2,170 2,315 2,427 2,578 Cash flow from financing activities (2,437) (1,236) (1,392) (599) (1,734)
Tax (483) (469) (509) (546) (580) o/w Dividends paid (2,402) (1,183) (11,086) (319) (701)
Adj. Net Income 1,546 1,652 1,747 1,811 1,913 o/w Net debt issued/(repaid) 28 8 10,736 0 (762)
Reported EPS 16.74 17.89 18.92 19.61 20.72 Net change in cash (6) 82 254 1,451 391
Adj. EPS 16.74 17.89 18.92 19.61 20.72
DPS - - 2.84 6.86 8.29 y/y Growth 191.9% (41.0%) 17.8% 24.0% 4.3%
Payout ratio - - 15.0% 35.0% 40.0%
Cash and cash equivalents 334 414 668 2,119 2,510 Gross margin 62.4% 62.9% 62.7% 62.5% 62.7%
Current assets 5,008 5,251 5,878 7,499 7,974
PP&E 1,486 1,563 1,655 1,753 1,855 ROE 5.8% 6.3% 8.1% 10.4% 10.2%
Net debt/Equity 0.0 0.0 0.6 0.5 0.4
Payables 3,268 3,002 3,429 3,674 3,803
Other short term liabilities 664 1,157 332 332 332 Sales/Assets (x) 0.3 0.3 0.3 0.3 0.3
Long-term debt 105 87 10,823 10,823 10,061 Interest cover (x) 335.9 1,206.5 14.2 11.8 13.4
Other long term liabilities 3,788 3,646 3,646 3,646 3,646 Operating leverage 152.5% (134.7%) 114.1% 100.7% 120.8%
Shareholders' equity 26,112 26,355 16,696 18,128 19,291 Revenue y/y Growth 16.7% (3.5%) 13.7% 6.6% 4.1%
BVPS 2.83 2.85 1.81 1.96 2.09
P/E (x) 17.0 15.9 15.0 14.5 13.7
y/y Growth (4.4%) 0.9% (36.6%) 8.6% 6.4%
P/BV (x) 100.5 99.5 157.1 144.7 136.0
EV/EBITDA (x) 11.3 11.0 13.3 12.0 11.1
Net debt/(cash) 208 18 10,500 9,049 7,896
Dividend Yield - - 1.0% 2.4% 2.9%
121

Henkel: Summary of Financials

COGS (10,255) (10,999) (13,171) (13,267) (13,526) o/w Depreciation & amortization 1,096 978 799 812 835
Gross profit 8,995 9,067 9,435 9,700 10,094 o/w Changes in working capital 166 (514) (87) 68 46
SG&A (5,940) (6,008) (6,701) (6,854) (6,978)
Adj. EBITDA 3,675 3,664 3,151 3,283 3,569 Cash flow from investing activities 1,904 1,555 1,032 1,608 1,857
D&A (1,096) (978) (799) (812) (835) o/w Capital expenditure (715) (647) (814) (850) (874)
Net Interest (43) (15) (45) (55) (50)
Adj. PBT 2,486 2,622 2,257 2,367 2,636 Cash flow from financing activities (1,507) (1,387) (1,454) (756) (583)
Minority Interest (17) 5 (15) (16) (17) o/w Shares issued/(repurchased) 0 0 (800) (200) 0
Adj. Net Income 2,358 1,848 1,978 1,683 1,765 o/w Net debt issued/(repaid) (696) (578) 0 0 0
Reported EPS 4.26 4.86 3.37 4.38 5.19 Net change in cash 3,247 2,790 1,512 3,241 3,959
Adj. EPS 4.26 4.56 3.97 4.19 4.67
DPS 1.85 1.85 1.85 1.87 1.89 y/y Growth (1.6%) (8.4%) (41.8%) 36.7% 16.9%
Payout ratio 43.5% 38.0% 54.9% 42.7% 36.4%
Current assets 9,321 10,409 10,790 11,781 13,290
PP&E 3,688 3,909 3,924 3,962 4,002 ROE 13.0% 9.9% 10.5% 9.0% 8.9%
Net debt/Equity 0.0 0.0 0.0 NM NM
Short term borrowings 1,418 1,295 1,295 1,295 1,295 Net debt/EBITDA 0.1 0.0 0.1 NM NM
Payables 3,953 4,385 4,834 4,809 4,844
Other long term liabilities 2,347 2,063 2,063 2,063 2,063 Operating leverage 463.4% 97.9% (98.2%) 316.9% 374.5%
Minority interests 101 79 79 79 79 EBITDA y/y Growth (7.6%) (0.3%) (14.0%) 4.2% 8.7%
Total liabilities & equity 30,251 32,668 31,653 32,583 34,031 EPS y/y Growth (21.6%) 7.0% (12.8%) 5.5% 11.4%
BVPS 32.09 48.59 36.43 47.53 54.16
P/E (x) 16.0 15.0 17.2 16.3 14.6
y/y Growth (16.7%) 51.4% (25.0%) 30.5% 13.9%
P/BV (x) 2.1 1.4 1.9 1.4 1.3
EV/EBITDA (x) 7.5 7.4 8.4 7.7 6.7
Net debt/(cash) 536 23 225 (845) (2,339)
Dividend Yield 2.7% 2.7% 2.7% 2.7% 2.8%
122

L'Oréal: Summary of Financials

SG&A (5,639) (6,074) (7,159) (7,714) (8,125)
Adj. EBITDA 7,237 7,941 9,571 10,334 11,079 Cash flow from investing activities (972) (1,075) (1,346) (1,443) (1,528)
D&A (2,028) (1,781) (2,122) (2,274) (2,408) o/w Capital expenditure (972) (1,075) (1,346) (1,443) (1,528)
Net Interest 277 319 428 356 362
Minority Interest (4) (6) (7) (7) (8) o/w Shares issued/(repurchased) 0 (10,061) (500) (500) (500)
Adj. Net Income 4,099 4,939 5,960 6,365 6,824 o/w Net debt issued/(repaid) (350) 3,754 0 0 0
Reported EPS 7.30 8.82 11.08 11.84 12.70 Net change in cash 1,707 532 3,555 3,654 3,939
Adj. EPS 7.30 8.82 11.08 11.84 12.70
DPS 4.00 4.80 5.67 6.09 6.53 y/y Growth 4.5% 17.1% 20.6% 8.0% 7.3%
Payout ratio 54.8% 54.4% 51.1% 51.4% 51.4%
Cash and cash equivalents 6,406 6,026 9,751 13,752 Gross margin 73.1% 73.9% 72.9% 73.3% 73.5%
Other current assets 234 2,850 136 136 136 Net profit margin 14.6% 15.3% 15.5% 15.4% 15.6%
Current assets 14,560 12,076 17,152 21,666 26,361
PP&E 3,225 3,266 3,266 3,266 3,266 ROE 14.0% 18.8% 25.3% 24.9% 23.0%
Net debt/Equity NM 0.3 0.0 NM NM
Short term borrowings 1,243 5,042 5,042 5,042 5,042 Net debt/EBITDA NM 0.8 0.1 NM NM
Payables 4,765 6,068 7,228 7,748 8,204
Long-term debt 1,303 1,258 1,258 1,258 1,258 Interest cover (x) NM NM NM NM NM
BVPS 51.62 42.13 43.78 51.14 59.05
P/E (x) 48.6 40.2 32.0 30.0 27.9
y/y Growth (1.2%) (18.4%) 3.9% 16.8% 15.5%
P/BV (x) 6.9 8.4 8.1 6.9 6.0
EV/EBITDA (x) 26.8 25.5 19.7 17.9 16.3
Net debt/(cash) (2,846) 6,661 635 (3,090) (7,091)
Dividend Yield 1.1% 1.4% 1.6% 1.7% 1.8%
123

Reckitt: Summary of Financials

Gross profit 8,435 7,521 8,365 8,615 9,042 o/w Changes in working capital 922 (313) 204 38 60
SG&A (5,292) (4,963) (5,428) (5,604) (5,830)
Adj. EBITDA 3,773 3,367 3,926 3,980 4,246 Cash flow from investing activities (512) (1,356) (339) (524) (548)
Net Interest (286) 544 (232) (271) (219)
Adj. PBT 1,874 (193) 3,203 3,185 3,464 Cash flow from financing activities (1,229) (1,342) (1,246) (1,252) (1,259)
Tax (720) 208 (684) (733) (797) o/w Dividends paid (1,257) (1,263) (1,246) (1,252) (1,259)
Reported EPS 159.44 0.56 350.81 340.67 369.57 Net change in cash 1,011 (677) 1,424 1,200 1,423
Adj. EPS 327.01 297.86 350.81 340.67 369.57
Adj. Free cash flow to firm 2,534 518 2,613 2,660 2,851
DPS 174.60 174.60 175.10 175.60 176.60 y/y Growth 48.3% (79.6%) 404.8% 1.8% 7.2%
Payout ratio 109.5%31155.6% 49.9% 51.5% 47.8%
Current assets 5,314 4,862 5,321 5,491 5,714
PP&E 2,233 2,178 2,346 2,430 2,502 ROE 25.3% 26.0% 31.0% 25.5% 24.0%
Net debt/Equity 1.0 1.1 0.7 0.5 0.3
Short term borrowings 763 2,485 2,485 2,485 2,485 Net debt/EBITDA 2.3 2.4 1.6 1.3 0.9
Payables 5,742 5,267 5,929 6,138 6,420
Long-term debt 9,794 7,078 5,450 4,212 2,729 Interest cover (x) 13.2 NM 16.9 14.7 19.3
Other long term liabilities 5,401 4,327 4,327 4,327 4,327 Operating leverage (21.9%) 132.5% 132.7% 17.9% 142.7%
Total liabilities 22,133 19,493 18,546 17,522 16,329 Tax rate 38.4% (107.8%) 21.4% 23.0% 23.0%
Shareholders' equity 9,115 7,256 8,910 10,271 11,844 Revenue y/y Growth 8.9% (8.2%) 12.6% 3.5% 4.6%
Minority interests 44 54 54 54 54 EBITDA y/y Growth (0.6%) (10.8%) 16.6% 1.4% 6.7%
Total liabilities & equity 31,292 26,803 27,509 27,846 28,228 EPS y/y Growth (6.3%) (8.9%) 17.8% (2.9%) 8.5%
BVPS 1,282.16 1,016.59 1,246.54 1,432.91 1,647.90
P/E (x) 18.2 20.0 17.0 17.5 16.1
y/y Growth (3.0%) (20.7%) 22.6% 15.0% 15.0%
P/BV (x) 4.6 5.9 4.8 4.2 3.6
EV/EBITDA (x) 13.6 15.0 12.5 12.0 10.9
Net debt/(cash) 8,756 8,086 6,458 5,220 3,737
Dividend Yield 2.9% 2.9% 2.9% 3.0% 3.0%
124

Unilever NV: Summary of Financials

Gross profit 22,040 22,185 24,013 24,776 26,256 o/w Changes in working capital 680 (47) 795 (39) (39)
SG&A (15,777) (15,862) (18,141) (18,377) (19,227)
Adj. EBITDA 11,385 11,382 11,787 12,328 13,125 Cash flow from investing activities (1,650) (3,394) 1,815 (1,730) (1,780)
Net Interest (440) (354) (412) (412) (424)
Minority Interest (492) (572) (629) (692) (761) o/w Shares issued/(repurchased) 0 (3,018) (1,500) (1,500) 0
Reported EPS 2.11 2.31 2.24 2.57 2.77 Net change in cash 1,097 (2,978) 4,386 705 2,531
Adj. EPS 2.48 2.62 2.62 2.78 2.99
DPS 1.66 1.71 1.78 1.85 1.92 y/y Growth 21.8% (16.8%) 8.1% (0.9%) 6.9%
Payout ratio 78.4% 74.0% 79.2% 71.8% 69.2%
Other current assets 400 2,725 2,725 2,725 2,725 Net profit margin 12.9% 13.0% 11.1% 11.3% 11.8%
Current assets 16,157 17,401 19,120 19,680 20,301
PP&E 10,558 10,347 10,028 9,702 9,365 ROE 45.9% 42.3% 35.6% 34.0% 34.1%
Net debt/Equity 1.2 1.3 0.9 0.9 0.7
Payables 14,132 14,861 17,053 17,507 18,014
Minority interests 2,389 2,639 2,639 2,639 2,639 EBITDA y/y Growth (4.4%) (0.0%) 3.6% 4.6% 6.5%
BVPS 5.83 6.58 8.02 8.30 9.23
P/E (x) 19.4 18.4 18.4 17.4 16.2
y/y Growth 15.6% 12.9% 22.0% 3.4% 11.3%
P/BV (x) 8.3 7.3 6.0 5.8 5.2
EV/EBITDA (x) 13.3 13.6 12.6 11.8 10.9
Net debt/(cash) 20,949 25,562 21,176 20,471 17,941
Dividend Yield 3.4% 3.5% 3.7% 3.8% 4.0%
125

Unilever plc: Summary of Financials

Gross profit 19,589 19,066 20,243 20,844 22,090 o/w Changes in working capital 604 (40) 670 (33) (33)
SG&A (14,023) (13,632) (15,294) (15,461) (16,177)
Adj. EBITDA 10,119 9,782 9,937 10,372 11,043 Cash flow from investing activities (1,467) (2,917) 1,530 (1,455) (1,498)
Net Interest (391) (304) (347) (346) (356)
Minority Interest (437) (492) (530) (582) (641) o/w Shares issued/(repurchased) 0 (2,594) (1,265) (1,262) 0
Reported EPS 187.85 198.22 189.10 216.49 233.41 Net change in cash 975 (2,559) 3,698 593 2,129
Adj. EPS 220.77 225.22 220.89 233.78 251.28
DPS 147.36 146.72 149.68 155.35 161.57 y/y Growth 23.4% (19.5%) 6.1% (1.1%) 6.9%
Payout ratio 78.4% 74.0% 79.2% 71.8% 69.2%
Other current assets 356 2,342 2,297 2,293 2,293 Net profit margin 12.9% 13.0% 11.1% 11.3% 11.8%
Current assets 14,361 14,954 16,119 16,557 17,080
PP&E 9,384 8,892 8,454 8,162 7,879 ROE 46.2% 41.6% 35.3% 33.9% 34.1%
Net debt/Equity 1.2 1.3 0.9 0.9 0.7
Payables 12,561 12,772 14,376 14,729 15,156
Other long term liabilities 5,838 6,609 6,483 6,470 6,470 Operating leverage 422.9% 1773.6% (3.2%) 194.4% 247.7%
Shareholders' equity 13,569 14,702 17,181 17,496 19,376 Revenue y/y Growth (1.1%) (0.0%) 12.6% 2.5% 2.9%
Minority interests 2,123 2,268 2,225 2,220 2,220 EBITDA y/y Growth (3.1%) (3.3%) 1.6% 4.4% 6.5%
BVPS 517.83 565.48 676.48 698.07 776.92
P/E (x) 18.8 18.4 18.8 17.7 16.5
y/y Growth 17.2% 9.2% 19.6% 3.2% 11.3%
P/BV (x) 8.0 7.3 6.1 5.9 5.3
EV/EBITDA (x) 13.3 13.6 12.6 11.8 10.9
Net debt/(cash) 18,620 21,968 17,852 17,223 15,094
Dividend Yield 3.6% 3.5% 3.6% 3.7% 3.9%
126

British American Tobacco: Summary of Financials

COGS - - - - - o/w Depreciation & amortization 1,450 1,076 1,138 1,132 1,156
Gross profit - - - - - o/w Changes in working capital (164) 223 11 3 7
SG&A - - - - -
Adj. EBITDA 12,456 12,013 13,229 13,929 14,731 Cash flow from investing activities (831) (1,173) (689) (746) (782)
D&A (1,091) (863) (943) (933) (948) o/w Capital expenditure (755) (745) (709) (766) (802)
Net Interest (1,592) (1,431) (1,562) (1,668) (1,623)
Minority Interest (172) (191) (210) (223) (239) o/w Shares issued/(repurchased) (1) (81) (2,000) (2,500) (3,000)
Adj. Net Income 7,613 7,556 8,380 8,890 9,567 o/w Net debt issued/(repaid) (807) (3,865) (1,500) (1,000) (1,000)
Reported EPS 331.72 328.95 371.04 403.07 447.97 Net change in cash (882) (1,904) (1,305) (1,590) (1,670)
Adj. EPS 331.72 328.95 371.04 403.07 447.97
DPS 215.60 217.80 241.17 261.99 291.18 y/y Growth 9.7% 0.6% 17.6% 5.1% 6.2%
Payout ratio 65.0% 66.2% 65.0% 65.0% 65.0%
Cash and cash equivalents 3,139 2,809 3,098 3,209 3,196 Gross margin - - - - -
Current assets 13,612 12,807 13,860 14,169 14,635
PP&E 5,060 4,953 5,336 5,287 5,267 ROE 12.0% 11.8% 12.7% 13.3% 14.2%
Net debt/Equity 0.6 0.6 0.6 0.5 0.5
Payables 10,561 10,456 11,249 11,454 11,952
Shareholders' equity 62,673 65,416 66,643 67,277 67,780 Revenue y/y Growth (0.2%) (0.4%) 8.3% 2.0% 4.7%
Minority interests 282 300 340 382 427 EBITDA y/y Growth 1.2% (3.6%) 10.1% 5.3% 5.8%
Total liabilities & equity 137,690 137,365 140,171 140,312 140,640 EPS y/y Growth 2.4% (0.8%) 12.8% 8.6% 11.1%
BVPS 2,743.14 2,934.31 3,040.45 3,144.13 3,272.51
P/E (x) 10.2 10.3 9.1 8.4 7.6
y/y Growth (2.0%) 7.0% 3.6% 3.4% 4.1%
P/BV (x) 1.2 1.2 1.1 1.1 1.0
EV/EBITDA (x) 9.5 9.5 8.5 7.9 7.3
Net debt/(cash) 40,829 36,849 37,060 35,949 34,962
Dividend Yield 6.4% 6.4% 7.1% 7.7% 8.6%
127

Imperial Brands PLC: Summary of Financials

Gross profit 6,027 6,038 6,399 6,555 6,717 o/w Changes in working capital (664) 40 (11) (113) (116)
SG&A (2,454) (2,344) (2,420) (2,377) (2,336)
Adj. EBITDA 3,842 3,938 4,237 4,439 4,646 Cash flow from investing activities 710 (155) (302) (307) (304)
Net Interest (417) (326) (370) (381) (400)
Tax (716) (755) (791) (870) (951) o/w Dividends paid (1,398) (1,409) (1,425) (1,422) (1,478)
Minority Interest (116) (113) (119) (122) (126) o/w Shares issued/(repurchased) 0 0 (1,000) (1,500) (1,500)
Adj. Net Income 2,335 2,485 2,684 2,789 2,885 o/w Net debt issued/(repaid) (1,366) (766) 0 0 500
Reported EPS 247.09 262.63 289.93 321.72 359.44 Net change in cash (339) 563 200 (241) 309
Adj. EPS 247.09 262.63 289.93 321.72 359.44
DPS 139.08 141.17 148.77 165.08 184.44 y/y Growth (47.5%) 50.4% 0.0% 2.1% 3.9%
Payout ratio 56.3% 53.8% 51.3% 51.3% 51.3%
Current assets 8,207 8,921 9,470 9,347 9,780
PP&E 1,715 1,659 1,741 1,822 1,894 ROE 45.7% 40.7% 39.3% 42.1% 46.1%
Net debt/Equity 1.6 1.2 1.2 1.3 1.4
Payables 9,106 9,506 9,844 9,850 9,857
BVPS 566.35 725.01 736.22 741.88 758.81
P/E (x) 8.6 8.1 7.3 6.6 5.9
y/y Growth 9.8% 28.0% 1.5% 0.8% 2.3%
P/BV (x) 3.8 2.9 2.9 2.9 2.8
EV/EBITDA (x) 6.3 6.4 6.4 6.3 6.2
Net debt/(cash) 9,616 9,283 9,083 9,324 9,515
Dividend Yield 6.5% 6.6% 7.0% 7.8% 8.7%
Note: £ in millions (except per-share data).Fiscal year ends Sep. o/w - out of which
128

Philip Morris International: Summary of Financials

COGS (9,569) (10,276) (10,804) (10,581) (11,047) o/w Depreciation & amortization 981 998 1,069 1,030 1,098
Gross profit 19,125 21,375 20,637 19,710 21,245 o/w Changes in working capital 267 1,004 1,018 524 (411)
SG&A (7,384) (8,304) (8,065) (7,492) (7,814)
Adj. EBITDA 12,582 14,467 14,104 13,120 14,392 Cash flow from investing activities (1,154) (2,358) (1,975) (2,639) (969)
D&A (981) (998) (1,069) (1,030) (1,098) o/w Capital expenditure (649) (782) (975) (939) (969)
Net Interest (618) (628) (575) (620) (608)
Minority Interest (536) (601) (511) (537) (564) o/w Shares issued/(repurchased) 0 (775) (199) 0 0
Adj. Net Income 8,053 9,477 9,105 8,410 9,333 o/w Net debt issued/(repaid) (356) (3,042) (301) 0 (1,000)
Reported EPS 5.16 5.83 5.67 5.41 6.00 Net change in cash 420 (2,785) 787 (292) 192
Adj. EPS 5.17 6.08 5.87 5.41 6.00
DPS 4.74 4.90 5.04 5.10 5.37 y/y Growth (0.3%) 21.8% (15.0%) (2.4%) 0.6%
Payout ratio 91.9% 84.1% 88.9% 94.2% 89.5%
Current assets 21,492 17,717 17,559 16,672 17,421
PP&E 6,365 6,168 6,231 6,291 6,324 ROE (66.7%) (83.6%) (93.8%) (93.0%) (112.6%)
Payables 2,780 3,331 3,404 3,334 3,481
Current liabilities 19,615 19,255 19,341 19,289 19,611 Assets/Equity (x) NM NM NM NM NM
Shareholders' equity (12,567) (10,106) (9,297) (8,791) (7,787) Revenue y/y Growth (3.7%) 10.3% (0.7%) (3.7%) 6.6%
Minority interests 1,936 1,898 2,204 2,741 3,305 EBITDA y/y Growth (0.4%) 15.0% (2.5%) (7.0%) 9.7%
Total liabilities & equity 44,815 41,290 41,921 42,644 43,264 EPS y/y Growth (0.4%) 17.6% (3.5%) (7.7%) 10.8%
BVPS (8.07) (6.48) (5.99) (5.66) (5.01)
P/E (x) 19.3 16.4 17.0 18.4 16.6
y/y Growth 8.6% (19.6%) (7.6%) (5.5%) (11.5%)
P/BV (x) NM NM NM NM NM
EV/EBITDA (x) 12.8 11.1 11.3 12.2 11.1
Net debt/(cash) 24,256 23,310 22,222 22,515 21,323
Dividend Yield 4.8% 4.9% 5.1% 5.1% 5.4%
129

Swedish Match: Summary of Financials

COGS (5,751) (6,248) (7,631) (8,736) (9,408) o/w Depreciation & amortization - - - - -
SG&A (3,969) (4,565) (5,614) (6,027) (6,386)
D&A (589) (616) (750) (871) (953) o/w Capital expenditure (1,189) (1,180) (1,192) (1,307) (1,372)
Net Interest (347) (345) (307) (352) (421)
Minority Interest 0 (1) (1) (1) (1) o/w Shares issued/(repurchased) (3,099) (3,802) (750) (6,000) (6,200)
Adj. Net Income 5,175 5,983 6,831 8,343 9,294 o/w Net debt issued/(repaid) 2,402 (457) 2,033 1,276 474
Reported EPS 3.04 3.97 4.49 5.60 6.51 Net change in cash 1,042 (1,574) 3,919 (1,028) (1,571)
Adj. EPS 3.22 3.83 4.49 5.61 6.51
DPS 1.50 1.86 2.20 2.80 3.30 y/y Growth 4.2% 9.5% 11.0% 27.7% 17.0%
Payout ratio 49.4% 46.8% 49.0% 50.0% 50.7%
Current assets 7,363 7,029 11,872 11,687 10,679
PP&E 3,633 4,556 5,212 5,891 6,577 ROE (73.2%) (82.5%) (134.7%) (211.0%) (187.8%)
Short term borrowings 1,850 990 990 990 990 Net debt/EBITDA 1.8 1.6 1.2 1.1 1.2
Payables 409 464 567 649 699
Current liabilities 5,759 4,839 4,942 5,024 5,074 Assets/Equity (x) NM NM NM NM NM
Shareholders' equity (7,814) (6,685) (3,453) (4,456) (5,441) Revenue y/y Growth 13.3% 10.7% 21.7% 16.2% 9.3%
BVPS (4.86) (4.27) (2.27) (2.99) (3.81)
P/E (x) 35.8 30.1 25.6 20.5 17.7
y/y Growth 28.9% (12.0%) (46.9%) 32.0% 27.3%
P/BV (x) NM NM NM NM NM
EV/EBITDA (x) 25.3 22.4 19.0 15.7 14.1
Net debt/(cash) 13,523 14,035 11,746 14,050 16,095
Dividend Yield 1.3% 1.6% 1.9% 2.4% 2.9%
Note: Skr in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
130

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J P M O R G A N Europe Equity Research

Consumer Staples 2023 Outlook

European Consumer Goods and

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Equity Ratings and Price Targets

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Adj. EPS Estimate Changes

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Beverages - Investment Cases

Upside / Downside Risks

Organic sales growth EBIT 12,723 14,438 14,930 15,665 16,864

Adj. EPS 2.51 2.88 2.88 3.35 3.88

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Upside / Downside Risks

Reported sales growth EBIT 177 206 215 230 247

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Upside / Downside Risks

Reported sales by region EBIT 322 435 568 634 687

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Upside / Downside Risks

Central & Eastern Europe -4.3% 10.1% 14.2% 10.9% 5.1%

Adj. EPS 43.6 48.3 55.4 52.8 58.8

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Free Cash Flow 5,057 7,769 8,160 7,735 8,188

Short Term Debt 959 6,167 6,167 6,167 6,167

Total Liabilities and Equity 118,816 126,386 113,009 113,178 113,571

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Coca-Cola Europacific Partners

Upside / Downside Risks

Sales Growth -11% 9% 17% 7% 4% GM 36.9% 37.8% 35.7% 35.6% 35.9%

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Upside / Downside Risks

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Upside / Downside Risks

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Upside / Downside Risks

Sales growth by region EBIT 53 58 35 41 56

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Short Term Debt 0 0 0 0 0 Net increase/(decrease) from borrowings -1 0 0 0 0

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Upside / Downside Risks

790 1,126 1,301 -69 1,485

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Upside / Downside Risks

Reported sales by region EBIT 2,423 3,024 3,594 3,831 4,112

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Upside / Downside Risks

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Upside / Downside Risks

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Food & Ingredients Investment Cases

Upside / Downside Risks