Aston Martin, AB InBev still face hurdles in upcoming earnings

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Aston Martin, AB InBev still face hurdles in upcoming earnings

9:53 CAT | 27 Feb 2024

File photo: Bloomberg

Aston Martin Lagonda Global Holdings Plc will have to show how it plans to turn things around after years of losses when it reports this week.

The automaker best known for sports cars featured in James Bond movies has struggled to translate premium prices into solid margins, reduce its debt pile and streamline costs. It probably eked out a profit in the fourth quarter, though 2023 was unprofitable on the whole. Its new Vantage model and efforts to clean up its balance sheet may set it on course for a profitable 2024.

Servicing charges for the upkeep of the Valkyrie hypercar could also prove a revenue-booster for Aston Martin, whose shares have fallen about 24% this year.

Brewing giant Anheuser-Busch InBev will be trying to move past the Bud Light boycott in its key US market while Italian drinks maker Davide Campari-Milano NV remains at the mercy of fragile consumer confidence.

The week will also see updates from Dutch chip industry supplier ASM International NV, Swiss cement maker Holcim AG and Belgian drugmaker UCB SA. Shipping company Kuehne + Nagel International AG also reports.

Highlights to look out for:

Monday: No major earnings of note

Tuesday: ASM International’s (ASM NA) fourth-quarter revenue is expected to show a boost from China as chipmakers in the region increase stock ahead of export controls. China sales are more profitable than the average, which may have helped margins, says BI’s Ken Hui. The company is also expected to benefit from demand for new Gate-All-Around transistor technology. ASM International flagged in October that it expected the first meaningful GAA orders in the fourth quarter.

Campari’s (CPR IM) 2024 forecast will be key amid fragile consumer confidence and following its recent acquisition of the Courvoisier brand, where excess inventory could pressure the price mix, said BI’s Duncan Fox. He expects organic sales growth recovered to a high single-digit percentage rate in the fourth quarter after a “brutal” summer, although sales and marketing spending probably bounced too. Signs consumers are trading down to cheaper alcohol brands could hit organic revenue and margin growth in the short term. Citi analysts expect Campari to be cautious with guidance, but say “the worst is passing.”

Wednesday: Aston Martin Lagonda (AML LN) will probably report report a quarterly adjusted operating profit, though post a fourth straight annual loss. Its turnaround hinges on a 40% gross margin — which the new Vantage model is designed to deliver — and positive free cash flow, analysts say. The company’s £1.1 billion ($1.4 billion) debt pile and bloated cost structure may be a roadblock as it makes tentative steps toward a recovery, BI’s Joel Levington warns. It’s also on the hunt for a new CEO, its fourth in as many years.

Holcim (HOLN SW) could well beat consensus as growth through acquisitions combines with tight cost control, BI’s Sonia Baldeira said. US results should move to the fore as the company prepares to spin off its North America business. Resilient core-product demand likely persisted in the fourth quarter, providing a springboard for further price increases.

UCB’s (UCB BB) full-year guidance will shape expectations for new drug launches that are key to its return to growth, said BI’s Michael Shah. Consensus points to a 7.8% revenue jump this year, after two years of declines. Medicines to watch include Rystiggo and Zilbrysq for myasthenia gravis. Also look for rollout plans for psoriasis drug Bimzelx, which received some unexpected label warnings when it was approved in the US. Other potential catalysts include mid-stage data on bepranemab in Alzheimer’s disease and Phase 3 results on dapirolizumab for lupus.

Thursday: AB InBev (ABI BB) likely delivered on its 4% to 8% organic adjusted Ebitda growth forecast last year despite a double-digit percentage decline in US profitability. A potential brewery strike may stymie efforts to revive sales volume in the key US market after the Bud Light fiasco. Elsewhere, organic growth may have benefited from consumers switching to beer from more expensive drinks, especially in Latin America, BI analyst Duncan Fox said. Another share buyback would be a telling sign.

Friday: Kuehne + Nagel (KNIN SW) may have to wait until the second quarter of 2024 for higher freight rates spurred by the tensions in the Red Sea to kick through, according to BI. The Swiss logistics company will need faster growth rates to meet the all-important 2026 targets. More deals would also help, analyst Lee A Klaskow said. While the shares have rebounded from an October low, the number of sell ratings on the stock outweigh buy and hold recommendations.

Source: Bloomberg