The stock market analysts of Citigroup seem to have lost faith in a number of European large distributors. For five of the eleven companies the analysts follow closely, they lowered their advise. Four others fare better, with a striking role for Belgian Colruyt; which could "become part of a small group of European leaders".
Five companies drop in stature
Citigroup ascertained that, without taking inflation and price evolution into account, the profit of the sector dropped 12% over the past decade. The group also expects this negative trend to continue due to the economic crisis and the ever more difficult macro-economic circumstances.
This is why Citigroup lowered its advises for French Casino, British Sainsbury’s and German Metro from “Neutral” to “Sell”. Belgian Delhaize and British Morrison dropped from “Buy” to “Neutral”.
Shares take hits
The consequences were immediately visible on the trading floors: the share of Delhaize took a hit of 4.55% (far worse than the -2.33% of the Bel20 in Brussels), while Casino (-2.05%) also did worse than Parisian CAC40 (-1.71%). Even Carrefour, with its unchanged advice (even though Citigroup is expecting an organic growth below expectations), had to take a hit: the share of Carrefour dropped 4.24% at the exchange in Paris.
The German company Metro had its biggest loss in a single day for three months in Frankfurt (-5.43%, while the DAX ‘only’ lost 1.24%). According to Citigroup the explanation can be found in the growth slowdown in Russia, a region responsible for a quarter of the operational cash flow of the company.
“Colruyt to become leading distributor”
Some distributors however will get better through the crisis than others, predict the analysts of Citigroup. In that respect they are looking at Portuguese retailer Jeronimo, British Cash & Carry group Booker and Dutch company Ahold.
Colruyt will also be part of that group: together with the three other companies, the Belgian distributor should become part of a “small group of European leaders within ten years”, says Citigroup. That however does not guarantee success on the short term: Colruyt lost 2.92% yesterday - and Ahold lost even more with 4.16%.