European Equity Strategy: Consumer staples: cyclically challenged or structurally broken?

Research evidence excerpt

European Equity Strategy: Consumer staples: cyclically challenged or structurally broken?

of multiple expansion across the sub-

sector. Balance sheets have now largely normalised (e.g. BAT, IMB at around 2.0–2.5x ND/EBITDA), providing strong

visibility on shareholder returns through dividends and buybacks.

Our European equity strategy product offers forecasts for the performance of the European equity index and European

sectors’ relative performance based on robust, long-run relationships between these asset prices and their macro drivers. To

ensure that our recommendations are mutually consistent, we use (wherever possible) assumptions for these macro drivers

that flow from our macro analysis framework. Please note that on occasions our assumptions might differ from the BofA

house forecast for these macro drivers. Please note the document contains several charts showing “fitted” lines which

present the weighted historical performance of the combined drivers (factors identified by BofA and weighted in a manner

determined to be most highly correlated (regressed) against the PMI benchmark). There can be no assurance that such

drivers, weighted as shown, will continue to be highly correlated with the PMI. The analysis forecasting of that benchmark

(which is shown in red on other charts) is derived using a combination of actual data available and the analysts’ forecasts of

certain of the underlying drivers weighted in a manner similar to the historical fitted line and adjusted for outliers. There can

be no assurance that such predictions (of the underlying drivers or the PMIs) will be accurate. More information on the

methodology behind the analysis and forecasts can be found here.

European Equity Strategy | 15 June 2026 3