Bottles, CDMOs and asset sales
Pernod Ricard, Guerbet, Savencia, Azelis, VINCI, Capgemini, Wallix, Gerresheimer, Laboratorios Rovi and BASF
Pernod Ricard (RI) Signs of stability, but no growth yet
We discussed Pernod Ricard’s latest earnings which didn’t exactly blow anyone away, but they did offer a more reassuring tone from management.
The company is acknowledging its challenges head-on, adopting a more measured approach, and outlining clear cost-cutting plans. That was enough to give the stock a 3% boost, but let’s be honest—the numbers still paint a tough picture. Sales took a hit, especially in China and the US, and EBIT slipped as well. Throw in some unfavorable currency effects, and you’ve got a business that’s still struggling to find its footing.
That said, there’s at least a clearer roadmap. Management now expects a slight decline in sales this year rather than the modest growth they had previously hoped for. Next year is being positioned as a “transition period” before things (hopefully) start picking up again in 2026. The long-term target is a return to 3-6% growth by the end of the decade.
It’s a more cautious approach than before, but given the market’s low expectations, it should at least prevent further panic selling. The stock is already cheap, trading at ~14 times forward earnings, so there’s not a whole lot of downside risk—just not much of a catalyst for a big rebound either.
So where does that leave us? The company is doing the right things in terms of discipline and messaging, but the reality is that visibility remains limited. Investors have heard the “recovery is coming” story before, and so far, it keeps getting pushed back.
Guerbet (GBT) Holding up, but can it pick up the pace?
Guerbet wrapped up 2024 with a bit of a mixed bag. Sales came in a little lighter than expected, but the company did a solid job of protecting its margins, which is definitely a win. The MRI segment had a rougher time than anticipated, mainly because of pricing pressure in the US and some delays getting new products off the ground in France and Switzerland. On the flip side, X-ray and interventional radiology held up well, giving the overall business some much-needed balance.
On the earnings call, management didn’t sound overly upbeat about the near-term outlook. There’s still a lot of uncertainty, especially with the ongoing price battles in the MRI space and demand trends that aren’t exactly predictable.
The company also hasn’t put out official guidance for 2025 yet, but it doesn’t seem like there’s a ton of momentum carrying over from 2024. Investors are in a bit of a tough spot—the stock looks cheap on paper, but low trading volumes and a lack of visibility on future sales make it hard to call it a slam dunk.
The big question is whether Guerbet can keep up its strong profitability while getting sales growth back on track. The French market is still a wild card, and the MRI business needs a clearer path forward. Until there’s more confidence in sales picking up or pricing stabilizing, the stock might just tread water despite its attractive valuation.
Savencia (SAVE) A strong finish
Savencia wrapped up 2024 on a high note, delivering better-than-expected sales growth thanks to some favorable currency moves and strong demand in its non-cheese dairy products.
Even with milk prices on the rise, the company managed to push through, with a particularly strong finish in Q4. Seasonal products helped boost revenue, and smart pricing strategies kept things moving, even as inflation continued to weigh on overall food consumption.
Cheese sales were steady—not spectacular, but not disappointing either. The real excitement came from the other dairy products segment, which posted impressive double-digit growth. Butter prices played a big role, adding a nice lift in the second half of the year.
But can this momentum last? Pricing tailwinds won’t last forever, and inflationary pressures on milk could make things trickier going forward.
For now, Savencia is keeping its cards close to the chest, with no concrete guidance for 2025.
Investors will be looking for more details on how the company plans to handle pricing, cost pressures, and market trends across different regions. The latest numbers were encouraging, but without a clear roadmap for the future, there’s still some uncertainty about how the next year will shake out.
Azelis (AZE) Slow and steady
Azelis is gearing up to report its Q4 results and expectations are pointing to continued recovery.
After nearly two years of struggling to generate organic growth, the company finally turned a corner in Q3, and that trend looks set to continue. While overall sales growth remains modest, the positive momentum in demand recovery—especially in industrial chemicals—suggests the worst may be behind it.
Europe is still navigating some economic uncertainty, and China remains a soft spot, making the path forward slightly uneven. The Americas have been a bright spot, with steady performance in life sciences and a slow but noticeable rebound in Latin America. Meanwhile, the Asia-Pacific region is stabilizing, with India showing resilience, though China’s ongoing weakness continues to be a drag. Despite these regional variations, Azelis appears to be finding its footing again, and pricing pressures, which have been a challenge in recent quarters, seem to be easing.
Looking at the bigger picture, the long-term growth potential remains intact. With a compelling valuation and the company’s ability to grow through acquisitions as well as organic expansion, there’s reason to be optimistic. While the immediate outlook isn’t explosive, the steady improvements suggest that Azelis could be in for a stronger run over the next few years as market conditions normalize.
VINCI (DG) Beating expectations
VINCI delivered a strong set of results, driven by solid performances from its energy and airport divisions.
The construction side of the business was steady, with international markets providing much of the growth, while France continues to lag behind. Importantly, free cash flow blew past forecasts, helped by strong client payments in the energy and airport segments, reinforcing the group’s financial strength.
Looking to 2025, VINCI expects another year of growth across most of its businesses, with motorway traffic inching up and airport revenues still climbing, albeit at a slower pace than in 2024. On the contracting side, energy and Cobra IS are set to see further sales and margin expansion, while the construction business will remain stable. However, one major factor weighing on the outlook is the increase in corporate tax in France, which the company estimates will hit earnings by about €400m in 2025.
Despite these headwinds, VINCI remains an attractive stock, especially given its solid free cash flow generation and strong dividend yield. The political and economic uncertainty in France has been a drag on sentiment, but the company’s fundamentals remain robust.
Capgemini (CAP) North America picking up, but Europe Is dragging its feet
Capgemini is getting ready to drop its full-year 2024 results, and while there’s no big shock expected, there’s a chance things could come in slightly better than feared.
The story here is a clear divide: North America is finally showing some strength, thanks to a rebound in financial services, which is a huge market for Capgemini. Other IT service companies in the region have already reported better-than-expected trends, so Capgemini should get a lift from that too. But Europe, especially France, is struggling. Growth there continues to slow, acting as a deadweight on any real momentum.
The tough conditions in Europe aren’t going away anytime soon, and the first half of the year is likely to stay challenging. North America should continue improving, but it won’t be enough to make this a big growth year. Margins might improve a little, but the company’s long-term target of hitting a 14% operating margin is probably getting pushed out even further.
Investors are slowly warming up to IT services again, believing that the worst of the slowdown is behind us. But Capgemini is still lagging behind some of its global peers when it comes to growth, and that’s keeping its stock valuation stuck in neutral. Until Europe starts showing signs of life, it’s going to be hard for Capgemini to win over more bullish investors.
Wallix (ALLIX) Finally turning the corner in cybersecurity
The company has been shifting toward a subscription-based model, and that’s proving to be the right call. Recurring revenue now makes up nearly 70% of total sales, which is great news because it gives Wallix more predictable, stable income. On the flip side, one-time license sales and other non-recurring revenue are still sliding, which has made overall growth look a bit uneven.
The real positive takeaway is Management’s confidence that Wallix will hit operating breakeven in the second half of 2024. The full-year results will probably still show a loss, but the cash burn is slowing down, and that’s a big step in the right direction.
2025 is shaping up to be a turning point. Demand for cybersecurity is only getting stronger, new regulations are pushing companies to upgrade their security, and Wallix has plenty of opportunities to upsell to its existing customers.
Wallix has been through a rough patch, and investor confidence has taken a hit. But now, with a clearer path to profitability and a growing base of recurring revenue, things are looking up.
If the company can execute well, there’s a lot of upside for the stock. The momentum is finally moving in the right direction, and Wallix looks like it’s on track for a much stronger 2025.
Gerresheimer (GXI) Takeover talks heating up
Gerresheimer just confirmed that it’s in early discussions with private equity investors who are exploring a potential takeover. Right now, these talks are informal and non-binding, but the news has already sparked speculation about what’s next for the company.
Initially, investors were mainly interested in Gerresheimer’s moulded glass unit as a potential divestment. However, with the stock taking a major hit since last September’s profit warning, it seems that attention has shifted toward acquiring the whole company.
Looking at the bigger picture, Gerresheimer has a lot going for it. The company has been shifting toward high-value solutions, targeting fast-growing segments, and is well-positioned to benefit from the booming GLP-1 drug market. Its long-term goal of achieving double-digit organic growth still stands. But short-term headwinds can’t be ignored. Over the past few years, management has set aggressive expectations, which have backfired. On top of that, destocking in its glass vial business is still weighing on results, making the near-term outlook a bit shaky.
For now, destocking issues are expected to linger into the first quarter, and the recent Bormioli acquisition could slightly dilute Gerresheimer’s 2025 organic growth target.
Until management provides a clearer plan to navigate these hurdles, the stock remains a mixed bag—potentially exciting in the short term due to M&A interest, but still facing some real operational challenges.
Laboratorios Rovi (ROVI) ST struggles, LT growth still in play
Rovi warned that its 2024 EBITDA will come in 10-15% lower than expected, mainly due to weaker activity in its contract manufacturing (CDMO) business during Q4. Management isn’t sharing many details yet—those will come in the full earnings call later this month—but the update has understandably rattled investors. The company is sticking to its 2025 guidance for a mid-single-digit revenue decline, reinforcing concerns that this rough patch isn’t going away anytime soon.
That being said, the real story here isn’t about short-term earnings—it’s about whether Rovi can successfully ramp up its CDMO business by bringing in new clients. There’s a growing mismatch between supply and demand for injectables, which should work in Rovi’s favor.
We’ve seen big deals in the sector, like Catalent being bought out at a massive premium, and private equity firms have already shown interest in Rovi’s CDMO unit. If the company can secure new contracts, today’s weak earnings won’t matter much in the long run.
Right now, sentiment is rough, and Rovi’s management hasn’t done itself any favors with weak communication. The stock has taken a beating, and that’s understandable given the near-term uncertainty.
But with shares trading well down, strong financials and good upside if new clients come in, there’s a solid long-term opportunity here. The upcoming CMD in March could be a key turning point if Rovi can prove it has a clear path forward.
BASF (BAS) Moving ahead with asset sales
BASF has officially started the process of selling its Brazilian decorative paints business, Suvinil. This move isn’t surprising—it was flagged at the company’s CMD last September. Suvinil is a major player in Brazil, holding a 25% market share and generating around €510 million in sales in 2023. While profitability details haven’t been disclosed, estimates suggest it could fetch at least €750 million, given comparable valuations in the sector.
The bigger story is that this is just the first step. BASF is also looking to divest its broader coatings business, which includes surface treatments, automotive, and refinish coatings.
If everything goes according to plan, the company is expected to officially start that process in Q2 2025, potentially leading to a deal by late 2025 or early 2026. Estimates vary, but this unit could be valued at €4-6 billion.
For investors, this progress on selling non-core businesses is a key catalyst. While broader market conditions and geopolitical factors will continue to influence the stock, BASF’s efforts to streamline its portfolio and monetize standalone assets should help drive value.
If you appreciate this post, feel free to share and subscribe below!
Hey! Any take on Guerbet's latest release and steep share price decline?