Moody's on Dec. 13 said it expects the global consumer packaged goods, U.S. packaged food and U.S. consumer durables sectors to be stable in 2020, and forecast a positive outlook for the global beverage sector.
The rating agency expects operating profit growth of 3% to 3.5% in the global consumer packaged goods sector in 2020, driven by higher demand from developing markets and growth in the prestige beauty segment, as well as increased profitability due to lower input costs and higher prices.
The U.S. packaged food sector is expected to register operating profit growth of about 3%, with net sales to increase between 1% and 2%. Moody's said its stable outlook reflects trends, including companies paring down their debts and increased M&A, to stimulate growth. However, competition and inflation will limit potential for profit growth from higher investments, it added.
The U.S. consumer durables sector will see operating profit growth of 3% to 4% as lower raw material prices and cost-cutting measures by manufacturers will contribute to higher margins. Discretionary spending among affluent customers will benefit companies selling high-end products, including Tempur Sealy International Inc., Brunswick Corp. and Whirlpool Corp.
It added that some home products companies are expected to feel pressure from a tepid housing market and tariff uncertainty, primarily due to the U.S.-China trade conflict.
Moody's said the global beverage sector is expected to post operating profit growth in the range of 5.5% to 6.5%, reflecting strong pricing power, consumer preferences for premium beverages and improved margins due to cost-cutting measures and synergies from M&A.
The agency expects GDP growth in the G-20 economies to be 2.6%, with 1.4% growth in advanced economies and 4.6% in emerging markets. The agency also noted that a slowing Chinese economy could hurt large packaged goods companies such as Reckitt Benckiser Group PLC, Nestlé SA and Danone SA.