- US Equities nudge down as bond yields continue to rise
- Tesla down over 5% in after-hours trading
- Andrew Bailey hints at further Bank of England rate rises
- AB InBev serves up record beer volumes
Tesla Master Plan Disappoints
Markets in the US ended down a little yesterday with the S&P 500 falling 0.47% to 3,951.39,and the NASDAQ composite following suit closing 0.66% to 11,379.48. The fall came as 10-year bond yields in the US climbed again, flirting briefly with the psychologically important 4% level.
Q4 2022 hedge fund letters, conferences and more
In after-hours trading, shares in Tesla Inc (NASDAQ:TSLA) were down by over 5% following Elon Musk’s annual presentation, which spooked investors. Rather than the widely anticipated specifics on a sub $30,000 electric vehicle, his comments focused on a ‘Master Plan 3’ towards a fully sustainable earth, requiring investment of some $10 trillion.
Inflation Fears Persist
In London, the FTSE 100 is expected to open broadly flat. This follows a caution by the Bank of England’s chief Andrew Bailey, that interest rates may have to rise further as Threadneedle street balances the continuing conundrum of stubborn inflation and a fragile housing market.
Later today Eurozone inflation data is due for the Eurozone with consensus expecting the rate of price growth to slow from 8.6% at the last check to 8.2%. However, with France, Spain and Germany all seeing inflation rising over February, there is some room for disappointment.
AB InBev's Earnings
The world’s largest brewer, AB InBev, which owns brands such as Budweiser and Corona has reported 2022 results, expanding volumes by 2.3%, which combined with robust pricing and a trend towards premiumization drove revenue growth of 11.2% to $57.8 billion.
Underlying operating profit growth was more muted at 5.4%, held back by currency headwinds and higher commodity costs. In 2023, the company anticipates EBITDA to grow in line with its medium-term outlook of between 4-8%, and revenue to increase at a faster rate.
Given the growth in beer sales one might also expect a strong performance in hangover cures. Consumer health giant Haleon, the maker of Panadol and Advil, has put out its maiden full year numbers. Revenues grew 13.8% to £10.9m with underlying operating margins maintained at 22.8%.
Free cash flow came in at $1.6bn enabling the repayment of a £1.5bn term loan. Net debt was £9.9bn down from £10.7bn at the time of the GSK plc (LON:GSK) merger. The debt position equates to 3.6x underlying cash profits, on track to fall below 3x in 2024.
The group’s 2023 guidance expects organic revenue growth of 4-6% and flat underlying operating margins assuming no changes in currency rates. The Board proposed an inaugural final dividend of 2.4p per share.
Meanwhile, Brent Crude remains over $84 dollars holding on to earlier gains in the week, fueled by hopes of rising demand in China.”
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Article by Derren Nathan, head of equity research at Hargreaves Lansdown
