ADM sees increased cardboard demand, weak ethanol use during pandemic
The coronavirus pandemic is fueling demand for cardboard boxes - a boon for global food company Archer Daniels Midland Co’s (ADM.N) industrial starches business - as consumers rush to order goods online amid widespread shutdowns, company executives said on Thursday....And today this popped up at Markets Now, hosted on the FT Alphaville site:
....And Davy has a note considering the pandemic’s effects on cardboard, which steps Mondi back to “neutral” from “outperform”.
The COVID-19 pandemic has long-term, fundamental implications for the European packaging sector. While the short-term impact on earnings continues to be negative, as detailed in this report, the importance of packaging in supply chains has been firmly established. Security of supply and changing consumer behaviours will favour larger players like Smurfit Kappa Group (SKG) and DS Smith. Further industry consolidation is likely to follow, which will ultimately drive a sector re-rating. Therein lies the opportunity.So, interested readers ask themselves, as an intrepid investor, how can I participate in this gold rush which may be a major ongoing trend?
We are reducing our full year forecasts for the European packaging sector on the expectation of a sharp fall in demand in 2020 with a gradual recovery in 2021. For SKG, we are reducing our 2020 and 2021 forecasts by 10% and 2% respectively. For Mondi, we are cutting our 2020 and 2021 forecasts by 10% and 6%. For DS Smith, we are reducing our FY 2021 and FY 2022 forecasts by 11% and 4%.
Despite the forecast revisions, all three companies remain solidly cash generative through the cycle. All three have substantial liquidity, while both Mondi and SKG remain within their stated leverage targets....MUCH MORE
Well, besides the obvious major players, Packaging Corp (PKG)—who seem to be doing just fine, thank you very much or International Paper—who I seem to remember supply about half the cardboard Amazon uses—besides those two and a few others we have this from Dave Meslin back in February:
And from there it just gets better and better.
2. When the delivery arrived at my door, it was a box of Chocolate Sea Salt Granola packets. pic.twitter.com/IJq0UIKYTe— dave meslin (@meslin) February 7, 2020
4. A few days later, another box of granola arrived. pic.twitter.com/kSHUKERAsG— dave meslin (@meslin) February 7, 2020
THREAD
