News & Insight • Weekly Newsletters

17 February 2023 | William Buckhurst

That Was The Week That Was

MACRO

• US Inflation continued to cool coming in at 6.4% in January but showed the strength of the jobs market
• To steal a Daily Telegraph headline, it “all went south north of the border” for Nicola Sturgeon after she stepped down as Scotland’s First Minister after nearly nine years
• UK price inflation fell for a third month in a row to 10.1% - still five times the Bank of England target of 2%
• Argentina’s annual inflation rate hits 99%
• After German trade figures released this week showed that China is their biggest trading partner for the 7th year running and their trade deficit with them is currently €84.3 bn, the US continued to warn Berlin on their over reliance on Beijing - especially in tech

COMPANY NEWS

• Barclays disappointed mainly due to the inaction of its investment bank as the profit before tax came in at £1.2bn – slightly lighter than expected
• Coca Cola announced a mix of results as revenue and income grew strongly but unit volume and earnings per share declined
• Natwest income was strong, as were the dividend and buyback announcements. However, it was the guidance that weighed on investors. ROTE (return on tangible equity – key financial metric) guidance was maintained at 14-16% but the market wanted more
• AirBnB beat expectations primarily due to their nights and experiences division
• John Deere raised its profit target and updated guidance sending shares higher after higher commodity prices last year aided producers to purchase new equipment or upgrade their fleets
• Segro reported a strong set of results with nearly 1m sq ft of development that is 75% pre-let while occupancy of its current assets came in at 96%. There was, however, an 11% drop in asset value and their LTV went up to 32%

THE BEAUTIFUL GAME

Jahm Najafi Vice Chair of McClaren and Chair of MSP Sports Capital, is reportedly going to bid $3.75bn for the Premier League football club Tottenham Hotspur. We also await the deadline for any takeover attempt of Manchester United with the Qataris and Jim Ratcliffe (Ineos) potential buyers.

SMALL CAP

For sale. Although there are reports that lettings divisions of various estate agents are very busy, we noticed that a previous “darling” of the small cap community, Purplebricks plc, put itself up for sale after its revised “go-to-market” strategy had created more disruption than originally envisaged. This has resulted in a £1.2m cost resulting in a £15-20m EBITDA loss (on £60-65m of revenues).

TECH WEEK

The ex-CEO of Amazon, Jeff Bezos famously coined the slogan "Your margin is my opportunity” and this was shown by the Canadian listed Shopify as it produced robust trading over the festive period but suggested its revenue growth would slow as it announced it is increasing prices due to the increasing competition from Amazon.com Inc, which is rolling out its rival “Buy with Prime” service to more retailers this year

IN OTHER NEWS

Coca Cola announces this week that Lilt will go the way of Marathon Bars and Opal Fruits as it is rebranded to the less catchy Fanta Pineapple and Grapefruit. Those of a certain age will be disheartened to see the tangy drink, which launched in 1975 with the strapline “totally tropical taste” (albeit about as tropical as a damp Wednesday afternoon at Skegness), is being discontinued.  The same generation can take solace, though, that on the same day it was revealed that Lilt was ceasing, S Club 7 announced a reunion tour

MARKET DATA

 As at 17^th February 2023. Source: FactSet

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