🏛️ Barclays are Back

The British bank smashed analyst estimates for Q1, Unilever hiked prices, AstraZeneca’s sales jumped despite a near zero-ing of Covid-treatment sales and US GDP growth flatlined in Q1.

April 28, 2023

Good morning. In today’s update - Thursday brought a mountain of corporate trading updates in the UK and abroad, Barclays smashed analyst estimates, Unilever hiked prices, AstraZeneca’s sales jumped despite a near zero-ing of Covid-treatment sales and US GDP growth flatlined in Q1.

Enjoy the long weekend and see you on Tuesday.

Markets

Thursday was a mixed day for UK equities as markets combed through an avalanche of corporate earnings. Despite upbeat quarterly updates from a number of the biggest names (below), the FTSE 100 still found itself -0.3% lower, held back by the mining and oil sectors.

Top Stories

🏛️ Banks continue to weather storm

Following a positive update from Standard Chartered the day before, Barclays followed up with a strong set of Q1 results. Revenue rose 11% to £7.2bn (above estimates of £6.8bn) driven predominantly by an increase in net interest income from higher rates at its consumer bank. Net profit was also a beat - £1.8bn vs estimates of £1.4bn. Another positive - despite fears regarding the effect of inflation on consumer finances, Barclays’ lending book saw “limited” deterioration in its UK business for Q1. One downside was the Investment Banking unit, where income dropped 7% to £603m - though this was mainly due to a slump in debt capital markets fees. Shares jumped 5.3% on the news. (Official)

🍦 Unilever’s price rise boost

Berry & Jerry's maker Unilever also delivered an upbeat Q1 update, reporting a 10.5% increase in revenue compared to the prior year - above market estimates. The uptick was predominantly due to an increase in prices - the consumer goods giant said selling prices had increased 10.7%, reflecting a surge in input costs. After the question of profiteering arose, Unilever claimed they were only passing on 75% of the cost increases on to customers, and expects inflation to ease "significantly" in the second half of the year. Shares rose 1.4% after the update. (Official)

🧬 AstraZeneca hot on China

Buoyant sales of cancer treatment drugs and a pick up in demand from emerging markets helped the UK’s largest public company post a solid set of Q1 results, despite a drop-off in demand for its Covid treatments. The pharma giant posted revenues of $10.9bn, down 4% compared to 2022 but above what markets were expecting. Separately, CEO Pascal Soriot praised China’s collaboration (AZ are the largest foreign pharma company in the region) after a string of recent deals in the country, whilst also criticising the UK on its tax policies and clinical trials environment. (Official)

What Else Happened?

Economics / Politics / General

New guidance is set to be published on the NSI Act - which allows the government to scrutinise and block acquisitions and investments in sensitive sectors - after foreign investors complained the rules were unclear.

The long-awaited gambling industry white paper was released on Thursday; gamblers losing over £1,000 will be subject to new checks, among other measures.

Deals

FTSE 100 electronic products distributor RS Group acquired Distrelec from Footasylum’s owner for €365m.

Thursday’s top VC deals - London-based TympaHealth raised $23m to fund the growth of its digital solutions for hearings problems; M3ter - the startup developing a platform to allow SaaS companies to manage usage-based pricing models - raised a $14m Series A round; Sustainable parcel delivery company Hived raised a £10m Series A to help build a UK-wide network; digital mortgage platform Tembo - backed by Aviva and Nationwide - raised £5m.

Company News / Trading Updates

Sainsbury’s claimed to be the “best value compared to competitors” for years, as the supermarket revealed it spent £560m to keep prices low; profit before tax fell more than 5% in Q1, despite a jump in sales. (Official)

Housebuilder Taylor Wimpey echoed rival Persimmon’s positive update yesterday, saying house buyer interest had risen over the last couple of months. (Official)

Advertising giant WPP saw shares fall 4.3%, despite posting robust Q1 sales in line with expectations. (Official)

🌎 Global Snapshot

US GDP slowed dramatically in Q1 this year as the effects of monetary tightening filtered through - the economy grew just 1.1% January-March, well below economist forecasts of a 2% increase.

Despite posting a forecast-beating set of Q1 results, driven by strength in its Cloud business, Amazon shares gave up early after-hours gains as CFO Brian Olsavsky told analysts growth was stalling in April. (Official)

Even with a slowdown in broadband customers and widening losses at streaming service Peacock, Comcast topped analyst forecast for Q1 revenue and profits. (Official)

Like Barclays, Deutsche Bank also posted a strong Q1 update with profits above consensus estimates, despite a slowdown in investment banking fees. (Official)

Japanese beer maker Kirin is looking to the vitamin market for diversification, having acquired Australian healthcare company Blackmore for $1.3bn.

Ride-hailing app Lyft announced plans to cut over 25% of its workforce, recycling the savings into “service-level improvements”.

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