2Q/1H26 Preview: 3% Going On 4?

Research evidence excerpt

2Q/1H26 Preview: 3% Going On 4?

(after a double-digit decline in ENO) as new

management improve competitiveness. We expect softness in MEA (5% of group) led by

UAE (running at around -15% in April & representing just over 1% of group sales). European

toothpaste shows resilient, volume-led growth; however, share gains appear to be slowing. We

look for some acceleration over the rest of the year.

APAC should improve. We are ahead of consensus at 6.5% vs 5.8%. China online growth

remains resilient, with c.20% growth during April–June, led by the Caltrate brand. Increased

investment in the Douyin (TikTok) platform should see China contributing more strongly to

the group over the year. We still assume some risks for Southeast Asia given weak consumer

sentiment amid higher fuel prices, with certain markets mandating working from home.

Slightly below consensus on H1 margins. We forecast 1H26 at 23.3% (vs 23.5% cons),

reflecting increased investment in markets such as Brazil to support volume recovery. Ongoing

productivity initiatives should continue to support margins. Our FY26 margin is slightly higher

at 23.8% (vs 23.7% cons), as cost savings run through higher/faster than expected, net of

investment needs.

Valuation. Our PT is unchanged. The stock has de-rated to c.16x P/E (from 21x in 2025),

reflecting disappointment with vol/mix. That has been led by ongoing frustrations with LatAm,

North America and now the challenges in the Middle East. We think the market over-discounts

these near-term pressures. We look for 2H recovery potential (JEFe 2H OSG of 4.6%, VA cons

4.2%) to support.

David Hayes * | Equity Analyst

+44 (0)20 7029 8230 | david.hayes@jefferies.com

FY (Dec) 2025A 2026E 2027E 2028E Feng Zhang * | Equity Associate

+44 (0) 20 7029 8491 | feng.zhang@jefferies.com