Update 18 September
From the mixed signals of US inflation to the impressive growth of Momentum Metropolitan Holdings and Adobe’s creative renaissance, in this week’s earnings review, we delve into these noteworthy events, exploring their implications and the driving factors behind them.
August witnessed the acceleration of inflation for a second consecutive month, surging to 3.7%, a notable uptick from the 3.2% seen in July. This upward trajectory managed to outpace the expectations of market forecasters, who had pegged it at 3.6%. One of the primary driving forces behind this surge was the resurgence of oil prices. These elevated prices led to a much more modest decrease in fuel prices than anticipated, subsequently influencing the overall inflation rate.
However, not all aspects of inflation painted a uniformly grim picture. Core inflation, a metric that excludes the volatile components of food and energy, offered a glimmer of stability in this economic whirlwind. It registered at 4.3% for August, mirroring market expectations and exhibiting a slight reprieve from the 4.7% figure recorded in July.
Inflationary pressures have shown signs of moderation in several key sectors. Electricity prices, for instance, clocked in at 2.1%, a noticeable deceleration from the 3% rate seen previously. Similarly, the food sector saw its inflation rate ease to 4.3%, down from 4.9% in the previous month. The housing market, a significant component of household budgets, also displayed signs of respite, with shelter inflation slowing to 7.3% from July’s 7.7%
Momentum Metropolitan Holdings (JSE: MMI)
The company released its results for the fiscal year-end on June 30, 2023. These results underscore the profound impact of improved mortality experience and investment variance, which together have propelled the company to achieve double-digit operating profit growth.
The Group’s performance is nothing short of remarkable, with operating profit surging by an impressive 31%, reaching a substantial R4.4 billion. When we look at the bottom line, we see that headline earnings per share have risen by 5%, reaching 310.7 cents, compared to the previous year’s 297.3 cents. One of the most noteworthy announcements is the declaration of a total dividend of 120 cents per share, representing a substantial 20% increase over the previous year. Outgoing CEO Hillie Meyer emphasized the significance of this dividend declaration, stating, “Our dividend declaration reflects the resilience of the group and the board’s confidence in the underlying financial strength of the business.”
However, it is worth mentioning that the challenging operating environment dampened sales volumes, particularly evident in Momentum’s new business volumes, measured by the present value of new business premiums (PVNBP), which experienced a 5% decline to R68.9 billion.
Adobe Inc (NYSE: ADBE)
Adobe reported an impressive revenue figure of $4.89 billion in this latest quarter. Furthermore, the company displayed solid financial health as cash flows from operations reached a substantial $1.87 billion. A significant highlight of this quarter’s performance is the Digital Media segment, which generated revenue of $3.59 billion. This figure reflects a remarkable 11 percent year-over-year growth or an even more impressive 14 percent when measured in constant currency.
Shantanu Narayen, Chair and CEO of Adobe, shared his excitement about the company’s achievements, stating, “We are unleashing a new era of AI-enhanced creativity around the world with innovations across our product portfolio.” Narayen highlighted recent product launches, including Firefly, Express, Creative Cloud, and GenStudio, which bring Adobe’s magic to millions of users. These innovations showcase Adobe’s commitment to harnessing the power of artificial intelligence and demonstrate its dedication to providing creative solutions that empower individuals and businesses worldwide.
Sources: Bloomberg; CNBC; MarketWatch; IOL
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