European Food & HPC: Zooming in on hard currency profit growth (redux)

Research evidence excerpt

European Food & HPC: Zooming in on hard currency profit growth (redux)

Global Research

22 July 2026ab

European Food & HPC Equities

Europe including UKZooming in on hard currency profit growth

(redux) Consumer, Non-Cyclical

Guillaume Delmas

Analyst

guillaume.delmas@ubs.com

Hard currency growth to become increasingly topical +44-20-7568 8568

Across European Food & HPC, focus has centred squarely on both organic sales growth Andrei Condrea

(OSG) and the companies' strategies of accelerating it, including trimming poorly Analyst

performing tail-end brands or operations. This tends to overlook the expected impacts andrei.condrea@ubs.com

of foreign exchange on the topline, particularly as high inflation has driven high pricing, +44-20-7568 5061

but also significant FX headwinds. This rings true for operating profits as well, where the

impact is then compounded by the headwinds coming from divesting profitable

operations. As such, this meant operating profits have seen very little growth, if any,

while consensus estimates appear to underestimate these headwinds, forecasting

(perhaps unwarranted) strong improvements in profit growth. We expect hard currency

growth to become an increasingly important point for investors as underlying markets

and categories remain sluggish.

Consensus expects a much narrower op. profit growth spread from 2027e

onwards

Over the last 10 years, large cap Food & HPC operating profits saw wide dispersion vs

the sector's 5.4% organic growth (HEN3/RKT -260/-200bps below vs OR/HLN/

Essity +270/+240/+140bps ahead), which only widened when accounting for FX and

M&A (NESN/HEN3 -370/-200bps vs OR/Essity +440/+450bps). Consensus expects these

gaps to narrow significantly, driven by moderating FX (sector -0.3% vs last 10 years' -