BRI: Hey Big Spenders – Investment Risk in Global HPC: Unilever, Procter and Gamble, Reckitt Benckiser, Church & Dwight Most Exposed

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Hey Big Spenders – Investment Risk in Global HPC: Unilever, Procter and Gamble, Reckitt Benckiser, Church & Dwight Most Exposed

— Kevin Grundy, European HPC and Beverages Analyst
 Martin Deboo, European Food & HPC Analyst

The $600+ million of stepped-up investment by Colgate-Palmolive, Henkel and Beiersdorf for 2019 in Household & Personal Care reflects increased costs of growth and risks matching investment and/or a breakdown in pricing rationality in the big categories of oral care, laundry, and skin care. Yet Jefferies notes that current Street CY19 estimates for companies most at-risk call for ‘normal’ algo-type delivery (i.e., operating margins +40 basis points), while group valuation appears full at 22x next-12-month P/E (above hist. averages.). Most exposed: Unilever, Procter & Gamble, Reckitt Benckiser, Church & Dwight; Least exposed: Clorox, Kimberly-Clark, Energizer Holdings, Newell Brands. FULL REPORT