Royal Unibrew Downgraded After Losing Key Pepsi Deal

Brokerages Downgrade Royal Unibrew on Contract Loss

Royal Unibrew A/S (CSE:RBREW) has received a series of analyst downgrades after the company announced the loss of its Pepsi bottling contract. The agreement for the Nordic and Baltic regions will conclude at the end of 2028.

Overview of the Situation

The termination of the bottling deal places approximately 13% of the company's total group revenue at risk. This development has prompted a swift reaction from financial institutions that cover the stock, raising concerns about the company's long-term earnings potential.

Impact on Market and Stock

In response to the news, Deutsche Bank lowered its rating on Royal Unibrew stock to “hold” from a previous “buy”. Similarly, Goldman Sachs revised its rating to “neutral”. Both investment banks have significantly cut their fiscal year 2029 earnings forecasts for the beverage company, citing the future revenue gap.

Summary

The loss of the Pepsi contract represents a material challenge for Royal Unibrew. Investors and the market will be closely monitoring the company's strategy to replace the lost revenue and mitigate the impact on its future financial performance post-2028.

FAQ

Q: Why was Royal Unibrew's stock downgraded?
A: The company was downgraded due to the future loss of its Pepsi bottling contract for the Nordic and Baltic regions, which is expected to materially reduce its earnings from 2029.

Q: Which financial institutions downgraded Royal Unibrew?
A: Deutsche Bank downgraded the stock to “hold” from “buy,” and Goldman Sachs moved its rating to “neutral.”

Source: Investing.com