Brewers Get Euros Boost, Carmakers Wilt: EMEA Earnings Week Ahead

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(Bloomberg) — A sports-filled summer should give brewing giants Heineken NV and Anheuser-Busch Inbev a much-needed boost.

They likely saw quarterly volumes rise as football fans followed their teams through the UEFA Euro 2024 tournament in Germany, although increased marketing spending may have suppressed margins, Bloomberg Intelligence analyst Duncan Fox said.   

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The late arrival of summer weather could brighten the outlook for Italian distiller Davide Campari-Milano NV as the Olympic Games in Paris get underway, while demand for Diageo Plc’s premium brands could help the Guinness and Smirnoff owner out of its slump.

Airlines entering the peak travel season have been plagued by falling ticket prices, air-traffic control issues and plane delivery delays. Wizz Air Holdings Plc and IAG SA’s updates come on the heels of a warning from rival Ryanair Holdings Plc, but uplifting results from EasyJet Plc.

Airbus SE, Volkswagen AG and BMW AG are also due.

Highlights to look out for:

Monday: Heineken (HEIA NA) may be tempted to raise guidance if volumes continued to grow in the second quarter, helped by the Euros and lighter year-earlier comparatives, BI said. Any forecast boost now would probably be modest as the company will want to see strong trading in July and August before upgrading further, according to Barclays. Higher marketing outlays could pressure margins in the second half. Watch for potential weakness in Vietnam.

Tuesday: Diageo’s (DGE LN) earnings are close to bottoming, so its full-year report should be “the clearing event to what remains an attractive compounding growth story,” Citi analyst Simon Hales said. With headwinds unabated and visibility in the US still unclear, don’t expect “quantitative guidance” for fiscal 2025 just yet, Deutsche Bank said. Thirst for its premium brands will be key, after the first-half slump, according to BI. Consensus points to little, if any, organic revenue growth and a 3.6% dip in organic volumes.

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• Rain-sodden weather in Europe probably dampened Campari’s (CPR IM) organic sales growth in the first half, but demand in Germany and strong aperitif growth in the US may have worked in its favor, according to Citi. Momentum could pick up in the second half, as agave prices and glass costs have come down and summer sun has finally arrived.
• Airbus’s (AIR FP) second-quarter adjusted Ebit likely slid more than 60%. The planemaker cut guidance last month over a shortage of engines, aerostructures and cabin interiors. Inflation could weigh on the operating margin, while commercial aircraft revenue probably slipped to €12 billion ($13 billion), BI said.

Wednesday: The uncertain timing of revenue flows mean it’s unlikely GSK (GSK LN) will lift guidance at this point, BI said. Restrictions on vaccinations with its RSV shot Arexvy as the infection season approaches could also affect the outlook. Watch for comments on Zantac litigation.

• Adidas (ADS GY) has been able to cash in on sporting events and the hype around its Samba models, raising guidance earlier this month when it announced better-than-expected preliminary results. With the Olympics underway, there might be scope for even more upgrades. The company’s new €1 billion operating profit forecast is still shy of the €1.1 billion consensus. The report will also be scanned for updates on Yeezy inventory, BI said.

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Thursday: The Euros may have helped nudge AB Inbev’s (ABI BB) sales volumes into positive territory last quarter, but higher marketing costs and currency headwinds in Latin America likely curtailed margins, BI said. Robust pricing, lower cost of goods and a drop in interest charges could see adjusted EPS climb 20%, consensus shows.

• Wizz Air’s (WIZZ LN) management has suggested the company can do better on pricing than peers, but that optimism must last the summer if it’s to meet its profit goal, BI’s Conroy Gaynor said. The average passenger fare is seen up 3.4% in the fiscal first quarter. Supply constraints and engine issues, which have grounded about 20% of its fleet, continue to weigh on the outlook.
• Shell’s (SHEL LN) report will probably reflect a muted second quarter as production and liquefaction volume eased with scheduled maintenance. The company has cautioned that gas trading results would be lower due to seasonal shifts in the market, while flagging impairments of up to $2 billion tied to delays with a biofuels plant and its chemicals facility in Singapore. All that may be partly offset by strong realized prices in selling liquid gas, likely topping $80 a barrel, BI said. Third-quarter buybacks are slated to hold at $3.5 billion.
• Volkswagen’s (VOW3 GY)’s second-quarter Ebit margin may be close to the bottom of its recently cut guidance for the year of 6.5% to 7% due to one-time items, BI said.
• BMW’s (BMW GY) automotive margins may end up in the lower half of its 8% to 10% guidance, despite rising deliveries, according to Barclays analysts. They view its high China exposure — equivalent to about 40% of automotive net income — as a risk. “The auto industry is in turmoil,” Stellantis Chief Executive Carlos Tavares said in an interview on Thursday, pointing to a litany of profit declines reported by major carmakers in the current earnings cycle.

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Friday: Engie’s (ENGI FP) first-half Ebit probably fell 13%, as electricity and gas prices softened. Energy inflation was a contentious issue in recent French elections, so any comment on the political uncertainty will draw attention. The outgoing government has suspended power-transmission and distribution tariff increases scheduled for next month.

• IAG’s (IAG LN) deal-making endeavors may overshadow its results, with the Air Europa takeover on the verge of collapse again. The companies have until Aug. 20 to deliver an improved package of concessions to save the deal. IAG is boosting capacity and picking up demand to southern Europe and on transatlantic flights, although soft corporate volumes remain a weak spot, BI said.

—With assistance from Laura Alviž, Laura Malsch, Jack Ryan, Valentine Baldassari, Jenny Che, Tuhin Kar and Christopher Elser.

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