Weekly Earnings Roundup

​This week, earnings will get busier with US Tech companies like Amazon, Facebook, and Google reporting and locally, a couple of mining giants like Harmony, Exxaro, Impala, and Amplats are also releasing their report cards.

Update 2 May 2023

Coca-Cola (NYSE: KO) 1Q23 Earnings Soar

Coca-Cola had a solid start to the year, as their earnings for the first quarter ending on March 31, 2023, were impressive. The company’s earnings per share (EPS) rose by 6.3% compared to the previous year, reaching $0.68. Additionally, net revenue increased by 4.5% to $11 billion, which was $220 million higher than what was expected. Despite the company’s increased marketing and operating costs, its success was mainly due to substantial growth in most operations, including a significant worldwide recovery in unit case volumes. Specifically, the company’s flagship product, Coke, experienced a 3% increase in unit volumes. At the same time, Coke Zero Sugar, Coffee, and Water saw an increase in volume by 8%, 9%, and 5%, respectively, although Tea and sports drinks lagged.

James Quincey, the company’s CEO, expressed optimism about the results, saying, “We are encouraged by our first quarter 2023 results,” in a press release.

JP Morgan Chase & Co’s (NYSE: JPM) Successful Offer Hopes to Bring Stability to the Financial System

Worrying results from First Republic Bank have sparked concerns about the stability of the US banking industry. In the first quarter, the bank’s profits plummeted by 33%, dropping from $401 million in the previous year to $269 million. Furthermore, revenue decreased by 13% to $1.2 billion.

These disappointing figures occurred mainly before the bank acquired costly loans from the Federal Reserve and Federal Home Loan Bank due to a deposit run. This event will likely hinder future earnings. To address the discrepancy between its assets (longer-dated) and liabilities (deposits), the bank considered selling between $50 billion and $100 billion of long-dated mortgages and securities. This move is part of a rescue plan following the deposit run, which led to the bank being on the brink of collapse.

On Monday, JP Morgan Chase & Co emerged as the savior of the troubled lender by submitting a successful offer. The bank has agreed to take on all of First Republic’s $92 billion in deposits, both insured and uninsured, and is acquiring most of the bank’s assets, which include around $173 billion in loans and $30 billion in securities. The FDIC has also agreed to share losses with JP Morgan on First Republic’s loans. This acquisition will enable First Republic branches to resume normal business hours. JP Morgan’s Chief Executive, Jamie Dimon, stated that the bank made the bid to help stabilize the financial system and that “This part of the crisis is over.”

SA Inflation Cooldown: Producer Prices Slow Down in March

In March, the year-on-year producer price inflation decelerated to 10.6% compared to 12.2% in February, which was due, in part, to the base effects resulting from a substantial increase in the previous year.

The main contributors to Headline PPI, which include petroleum, chemical, rubber, and plastic products, saw a decline in inflation from 16.9% in February to 12.2% year-on-year. Additionally, food inflation also continued to decline. On a monthly basis, there was a 1% increase in producer prices in March, which is the most significant increase in eight months. However, this increase was slightly lower than market predictions of a 1.4% rise.

Sources: Statistics SA, Vending Times, iOL, The Wall Street Journal

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