Assessing early signs of price repositioning and thoughts into capital markets day

研报英文原文证据摘录

Assessing early signs of price repositioning and thoughts into capital markets day

d we note DGE's overall NABCA price/mix is running From To % ch Cons.

-4/-5%. The outcome so far is less negative volume share trends on Casamigos (-50bps v 06/26E 160.44 160.32 -0 158.00

06/27E 161.61 159.61 -1 160.40

>-100bps in 2024/2025), but still far from stabilising. We forecast FY27 US Spirits

06/28E 171.24 167.24 -2 171.60

organic sales -7% (cons -3%), with price/mix alone -4%, driving North America EBIT

c10% below. Beyond price repositioning, Diageo needs to develop a compelling Sanjeet Aujla

consumer proposition in RTDs, which are increasingly taking share from bottled Spirits. Analyst

sanjeet.aujla@ubs.com

+44-20-7567 4529

Upside to cost savings: We think a US topline and margin reset can be largely

absorbed by incremental cost savings - relative to 2019 levels, we estimate group Arnaud Autier

headcount is +15% (adjusted for disposals), including +24% in North America; +45% in Associate Analyst

arnaud.autier@ubs.com

Global supply chain & procurement and +34% in Corporate head office/Other. By way

+44-20-7901 6849

of sensitivity, rightsizing in these three areas back to 2019 levels can yield $350m

incremental gross cost savings. In terms of reinvestment, Diageo's marketing budget is

already competitive relative to industry peers, but we expect increased support in

frontline sales and distribution, especially Europe.

Valuation: Diageo trades on 13x 2027E P/E and 15x EV/NOPAT, a -22/-14% discount to

European staples (Food/HPC), which we think is warranted given the organic sales

growth underperformance.

Highlights (US$m) 06/23 06/24 06/25 06/26E 06/27E 06/28E 06/29E 06/30E

Revenues 17,113 20,269 20,245 19,703 18,926 19,141 19,740 20,378