Berenberg sees ingredients companies' destocking headwinds fading
08/12/2023 13:28
** There has been positive commentary from some ingredients
companies, providing confidence that the headwinds from
destocking may be starting to fade, Berenberg says
** However, destocking is still relevant, the broker says,
and in 2024, the companies will be under pressure to demonstrate
that they can return to volume-led growth and bring margins back
to prior levels
** Destocking headwinds abating would help demonstrate
higher growth, while a return to positive operating leverage
should support margin progression, it adds
** The brokerage does not expect any further destocking in
chocolate, but sees cosmetics companies to finish winding down
inventories in Q1 2024, with general food and general household
and personal care (HPC) companies following at the end of Q2
2024
** It is least optimistic about the outlook for beverages,
expecting destocking there to end in Q4 2024
** Symrise SY1G.DE ("buy") remains the broker's top pick
in the sector, saying the flavour and fragrance maker offers the
highest medium-term growth outlook, with guidance for 5-7%
organic growth, driven by investments in high-growth segments
** Berenberg maintains "buy" on cocoa-products manufacturer
Barry Callebaut BARN.S , food ingredients company Kerry
KYGa.I , and sweetener maker Tate & Lyle TATE.L
** It keeps "hold" on food processing company AAK AAK.ST ,
fragrance and flavour maker Givaudan GIVN.S , and chemicals
company International Flavors & Fragrances IFF.N
(Reporting by Marta Frackowiak)
((Marta.frackowial@thosmonreuters.com))