Diageo posts first sales slump in four years

 

Adam Vettese, Market Analyst at eToro, says: “In what is perhaps a reality check from the pandemic boom for Diageo, they have posted their first yearly sales decline since 2020, which is in fact worse than analysts initially feared. A fancy bottle of whiskey for locked down consumers with a little extra cash in their pocket was the perfect treat at the time but now it seems that increased competition and price consciousness have hit Diageo’s bottom line.

“The firm issued a profit warning due to inventory issues in the key Latin America region as well as loss of market share in the US. It is fair to say that times are tougher now, with consumers facing more pressure on their own finances and as such luxury drinks are one of the first casualties of the household budget. This is particularly so in regions such as Latin America, where income is generally lower and there are cheaper, local alternatives on offer.

“Diageowill now be hoping that an improvement in the cost of living that will come with global interest rates making a shift downward can reinvigorate sales. With a share price that has come down 40% from its 2022 record high, there may be some investors out there eyeing up a recovery play.”

 

Pearson sales slip, profit flat

 
Adam Vettese, Market Analyst at eToro, says: “Pearson’s results are reflective of some restructuring in some of its business areas with total sales softer than last year and profit sitting flat. Whilst we have not seen any growth in earnings per share, profit margins are creeping up. Effects of inflation and FX headwinds are also reducing which has led the firm to reaffirm its guidance for this year and next.
“Pearson are continuing to return cash to shareholders via a £200m buyback scheme, which is almost complete and the dividend has been hiked by 6%. This however has increased their total debt position. Shares are down this morning off the back of this update putting them marginally ahead for the year, but it seems investors need a little more convincing about the trajectory of the company.”

 

BP shares jump as oil giant beats on Q2 earnings

 
Mark Crouch, Market Analyst at eToro, says: “BP declared a quarterly profit of $2.8bln in their Q2 earnings, beating expectations. BP confirmed it intends to extend its buyback programme to purchase $7 billion shares this year while shareholders were also treated to a bump in the dividend. 

“Strong operating cash flow and lower debt further underline the strength of BP’s ongoing operations with the company now intending to refocus on its bioenergy business.
“BP’s shares have fallen nearly 15% since April so investors will be feeling positive that certain challenges – such as the company scaling back refining operations in Germany – are behind them and that the company can kick on and finish the year strongly.

“With the ongoing balancing act between investing in renewable energy methods and maintaining profits and shareholder returns that are predominantly from fossil fuel operations, BP will be driven by what is in the best interests of their shareholders first and foremost.
“And with wind and solar struggling to meet growing global energy demand, while oil and gas demand continues to increase, that looks to be exactly what BP is doing.” 





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