Deutsche Bank cut its price target on The Magnum Ice Cream Company (LSE:MICC), to EUR13.50 from EUR14.50, as analysts noted that trading in the first half underwhelmed.
Analysts at the German bank reckon the ice-cream maker traditionally generates more than 70% of annual EBIT in the first half, so weak sell-in in January and February makes March-May decisive, and supports the view that the Northern Hemisphere summer sell-in may already have locked most of the year’s profitability.
Tom Sykes highlights a solid first quarter, 4.5% organic growth comprising 2.9% volume/mix and 1.6% price, and notes cocoa is hedged six to nine months ahead while European ice-cream production peaks at the turn of the year, which complicates when lower cocoa costs flow through into sold product.
