Vodafone looks to 2021 as revenue rises in Q3

Liam Roche
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Vodafone looks to 2021 as revenue rises in Q3

Shares in Vodafone up by 4%

The Vodafone share price (LON:VOD) rose by over 4% on Monday’s market opening after the company revealed a resilient trading performance for Q3. 

The telecommunication company’s service revenue has increased by 0.4% to €9.4bn.

This figure follows a 0.4% fall during the previous quarter of the financial year.

The group attributed its return to service revenue growth to “continued commercial momentum” which came despite further lockdown measures.

Vodafone saw its service revenue grow by 1% across all segments in Germany, the country’s largest market, up from a fall of 0.1% during Q2.

Whilst Vodafone’s alternative measure of service revenue grew, reported total revenue fell 4.7% to €11.2bn.

Nick Read, group chief executive of Vodafone, praised the company’s return to revenue growth and looked ahead to 2021 with an optimistic perspective. 

“I am pleased the Group returned to service revenue growth in Q3 as a result of the continued commercial momentum across our business, including our largest market Germany. Our good trading performance underscores our confidence in the outlook for the full year,” Read said.

Read attributed Vodafone’s record data traffic to lockdowns which increased reliance on the company’s services. He also reaffirmed the goal of Vodafone’s European network to be wholly powered by renewable electricity by July 2021. 

“Our networks have successfully delivered another quarter of record data traffic as many countries continue to endure COVID-19 lockdowns and customers depend on our services. We have achieved this while further reducing our carbon footprint and we are making fast progress towards our important target of having our European networks wholly powered by renewable electricity by July this year.”

Mobile call time rose by half after the first lockdown as people in the UK spent more time speaking on the phone.

Moonpig shares jump as group joins stock market

Safiya Bashir
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Moonpig shares jump as group joins stock market

Moonpig shares jumped 17% as the group joined the stock market on Tuesday, valuing the company at £1.4bn.

The company placed 140m shares at an initial price of 350p. New investors will have a 14% stake in the greetings card company and retailer.

“Now is the perfect time for us to bring the company to the public market, and we are excited about Moonpig’s prospects for the future,” said chief executive of Moonpig Group, Nickyl Raithatha.

The group’s floatation comes after a strong Christmas, where Moonpig reported £156m in sales in the six months to the end of October. This was a record number as the group benefitting from high street closures and people staying at home amid the pandemic.

Dominick Mondesir, EMEA Private Capital Analyst at PitchBook, commented on Moonpig’s IPO and said: ‘’The short-term performance of the Moonpig IPO reflects equity investors willingness to pay for growth, especially for tech-enabled assets. The stock was priced at the top end of its valuation range and surged in its first day of trading.

The challenge for Moonpig and its private equity owner—who are heavily reliant on post-IPO performance due to lock up periods— will be executing on an M&A and organic strategy that allows the company to grow into its lofty valuation once earnings normalize and a sense of normalcy resumes through lifting lockdowns. A potential headwind will likely come from retaining new customers, particularly those in the baby boomer and gen x cohort, who tend to prefer the brick & mortar experience of gift picking,” he added.

Alphabet beats Q4 estimates

Safiya Bashir
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Alphabet beats Q4 estimates

Alphabet, the Google parent company, beat estimates for the fourth quarter in 2020 thanks to strong ad spending over the holiday period.

According to IBES data from Refinitiv, analysts expected revenues to come in at $53.13bn. Alphabet beat this and reported revenues of $56.9bn.

The Alphabet advertising business, including YouTube, saw sales rise by 23% on a year ago. They now account for 81% of total sales.

Philipp Schindler, Google’s chief business officer, said in a call: “YouTube continues, in our view, to be amazing for brand advertisers. Our brand business was hit hard in the early stages of the pandemic, but rebounded in Q3 and into Q4. It really helps advertisers reach a younger audience.”

“We now reach more 18 to 49 year olds than all linear TV networks combined. Our direct-response business on YouTube was practically non-existent three years ago. Now, it’s one of our largest and fastest-growing ad offerings on YouTube,” he added.

The strong results from Alphabet come when growth had slowed at the beginning of the pandemic. Haris Anwar, senior analyst at Investing.com, commented: “A stay-at-home holiday shopping season and a continuing ad rebound from the beginning of the pandemic has helped Google to post a strong fourth quarter. This robust turnaround in business should divert investors’ attention for the time being.”

Shares in Alphabet rose over 7% in after hours trading following the group’s earnings report.

Bezos to resign as Amazon reports record profits

Safiya Bashir
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Bezos to resign as Amazon reports record profits

Jeff Bezos has announced plans to resign from Amazon this year.

The chief executive and founder has said that he will be stepping down and instead will take on the roll of executive chair.

The news came as the group released its latest financial results. In the final three months of the year, the group reported record sales of over $100bn for the first time. Results were ahead of forecasts and the company recorded an increase of net profits from $3.3bn to $7.2bn in the fourth quarter.

Andy Jassy, chief executive of Amazon Web Services, will replace Bezos. The company provides cloud computing and storage for governments and big companies and has become one of Amazon’s most important businesses. It accounts for 52% of the company’s profits.

“Amazon is what it is because of invention. If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention,” said Bezos.

“Right now, I see Amazon at its most inventive ever, making it an optimal time for this transition.”

Tim Hubbard is the assistant professor of management at the University of Notre Dame’s Mendoza College of Business. He said: “Andy Jassy stepping into the CEO role at Amazon is a natural fit. Amazon Web Services is a powerhouse within the company, driving a lot of profitability.

“This transition may free up Bezos to focus on other ideas that he’s been accumulating over the years. In one way, I think it might be freeing for him to have the space to personally innovate again, without having to manage the rest of the company.”

“Given the recent successes at Amazon, especially during the pandemic, it’s going to be hard to disrupt their momentum,” he added.

FTSE 100 sees gains despite bad day for BP, silver falls

Liam Roche
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FTSE 100 sees gains despite bad day for BP, silver falls

The FTSE 100 climbed on hopes for an economic recovery and a US stimulus package, with hotels outweighing a fall in BP profits.

The FTSE 100 index rose by 30 points to 0.4%, in anticipation of negotiations between President Biden and US Senators for a $1.9tn (£1.4tn) Covid stimulus.

Spreadex analyst Connor Campbell said “all eyes were on” the negotiations after the “lowball $600bn offer made by Republicans over the weekend”.

“A swift and decisive move on the relief bill would keep any other fears at bay,” Campbell said. 

Elsewhere in markets silver fell as other companies subject to recent rallies on the back of Reddit forums also retreated. 

“Supporting a more positive mood was an apparent calming of the Reddit-inspired frenzy on markets as well as hopes for a vaccine-led exit from lockdown. On the other side of the coin weak results for index heavyweight BP and strength in sterling helped cap some of its gains for the FTSE relative to European indices,” said Russ Mould, investment director at AJ Bell.

BP

BP slumped to an overall loss of $5.69bn in 2020 as the coronavirus pandemic took its toll on the energy market.

By mid-afternoon trade BP was down by 5% to 53p, the second biggest faller in the FTSE 100, behind silver miner Fresnillo. 

“The pandemic’s hit to oil demand contributed to the kind of loss that the market just can’t ignore,” said Russ Mould, investment director at AJ Bell.

Silver

Thanks to the continued focus of Reddit traders, silver closed ahead yesterday, however much of those gains reversed in line with other markets which have been the focus of Reddit forums. 

“The swarm of retail investors that descended upon Gamestop recently has turned its attention to silver,” said David Madden, analyst at CMC Markets.

However, just one day after reaching its highest price in eight years, silver plunged down by nearly 6% on Tuesday. 

Silver prices going back down “isn’t surprising, as any longer-term price upside due to social media-driven collaboration and conspiracy theories was always going to be unsustainable,” Gavin Wendt, a senior resource analyst at MineLife, told Bloomberg.

Silver comes crashing down after eight-year high

Liam Roche
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Silver comes crashing down after eight-year high

Margins on Comex silver futures raised to $16,500 per contract

Just one day after reaching its highest price in eight years, silver plunged down by nearly 6% on Tuesday. 

The precious metal’s rally came to a halt as The CME Group raised margins on Comex silver futures. 

As of February 2, margins will rise from $14,000 to $16,500 per contract. 

Traders looking to buy and sell silver futures are now required to put up more collateral in order to prove they are able to meet their obligations. 

The decision, according to a statement by the exchange, was based on “the normal view of market volatility to ensure adequate collateral coverage.”

Ross Norman, chief executive officer of Metals Daily, described the margins rise as “standard procedure to maintain stability”. 

The announcement comes soon after silver became the focus of the Reddit investors who are reported to be behind the upturn in the value of the precious metal.  

The online community of investors have targeted various stocks, most notably GameStop, in an attempt to “short squeeze” institutional investors.

Silver prices going back down “isn’t surprising, as any longer-term price upside due to social media-driven collaboration and conspiracy theories was always going to be unsustainable,” Gavin Wendt, a senior resource analyst at MineLife, told Bloomberg. 

“There is a big difference however between trying to manipulate trading in an equity compared to a major exchange-traded commodity,” he added.

SSE on ‘strong strategic footing’

Liam Roche
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SSE on ‘strong strategic footing’

The energy company will recommend dividend between 80p per share

SSE, the multinational energy company, intends to recommend a full-year dividend of 80p per share plus RPI for the coming year. 

According to the company’s trade statement, this is based on two assumptions.

“Normal weather conditions prevailing”, causing renewables to be just over 5% below plan, and the coronavirus pandemic having an impact on SSE’s profits between £150m and £250m.

SSE earned in excess of £2bn from its disposable programme in December. The company also raised £995m by selling its Multifuel assets, as well gas exploration and production assets.

These sales, along with its commitment to treble renewables output by 2030, “underlined SSE’s ESG credentials and focus”, according to its trade statement.  

Greg Alexander, finance director of SSE, praised the company’s ability to cope with the coronavirus pandemic.

“With solid operational performance and strong strategic execution, SSE is well positioned as we move towards the end of our financial year. Our robust business model is mitigating the impact of coronavirus, our disposal programme is proceeding at pace and at Dogger Bank we have shown yet again that we can develop opportunities and create value from world-class assets,” Alexander said.

Alexander also cheered the energy policy of the UK government for laying the foundations for a positive year for SSE

“With a number of uncertainties lifting and an increasingly supportive policy environment which further underpins our clear strategic focus on the transition to net zero, SSE is on a strong strategic footing for the rest of 2020/21 and beyond.”

BP profits down as pandemic hits oil industry

Liam Roche
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BP profits down as pandemic hits oil industry

Profits fell by 96% in final quarter of 2020

BP slumped to an overall loss of $5.69bn in 2020 as the coronavirus pandemic took its toll on the energy market.

The company’s underlying replacement cost profit, a barometer for net profit/less, was at $0.1bn over the final quarter of the year. This compared to a $2.6bn profit for BP over the final three months of 2019. 

The company’s share price fell 2.7% to 259p in mid-morning trade on Tuesday.   

BP has said the results were caused by a fall in energy prices, significant exploration write-offs, reduced demand and weaker refining margins. 

The company wrote off assets valued at $6.5bn in anticipation of falling oil prices over the long-term, as well as confirming 10,000 staff would be let go across the world.

The oil industry was one of the worst affected by the pandemic during 2020 with the price of crude oil falling as low as $20 per barrel after lockdowns cut demand.

Bernard Looney, chief executive officer of BP, retained a sense of optimism over the company’s performance, while acknowledging the damaging impact of the pandemic on the oil industry. 

“Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins. It was also a pivotal year for the company. We launched a net zero ambition, set a new strategy to become an integrated energy company and created an offshore wind business in the US,” Looney said.

“We began reinventing bp – with nearly 10 thousand people leaving the company. We strengthened our finances – taking out costs and closing major divestments.”

Having cut their dividend in 2020, BP maintained their dividend of 5.25 cents per share in Q4. 

Analysts have mixed views on the results as Russ Mould, investment director at AJ Bell, highlighted the destruction to the oil market in the short-term but the progress in realigning their long-term strategy.

“There are two ways of looking at full year results from BP. On the one hand the pandemic’s hit to oil demand contributed to the kind of loss that the market just can’t ignore,” said Mould.

House prices fall 0.3% in January

Safiya Bashir
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0
House prices fall 0.3% in January

This January saw house prices fall for the first time in six months.

The house price index from Nationwide reported a 0.3% fall in the average UK property price to £229,748.

It is the first time that house prices have declined since June, which may be as a result of the upcoming end to the stamp duty holiday.

The housing market has boomed over the past year and UK mortgage approvals hit the highest level since 2007. New data from the Bank of England showed a surge in mortgage applications in the second half of the year as the stamp duty holiday was introduced. 

Commenting on the housing market, Nationwide’s chief economist Robert Gardner said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”

 “Looking ahead, shifts in housing preferences are likely to continue to provide some support for the market,” he added, “However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.”

The stamp duty holiday is set to end at the end of March.

Hargreaves Lansdown posts 10% profit rise

Safiya Bashir
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0
Hargreaves Lansdown posts 10% profit rise

Hargreaves Lansdown has reported a rise in half-year profits.

The retail investment company has seen a growth in younger clients. The group added 84,000 new clients over the past six months – many of whom are aged between 30 and 54.

Stock trading volumes surged 123% in the second half of 2020, which led to the 10% rise in pre-tax profits to £188m.

Hargreaves Lansdown said that the vaccine hopes and the US election result led to a growth in younger clients.

Chief executive Chris Hill said: “The Covid-19 pandemic has […] reinforced the importance of saving and investing and the need for individuals to be financially resilient. Over the course of the pandemic, many have found the time and seen the need to prioritise household savings which has enabled and led them to invest for the first time.

“In turn, this change in behaviour is leading to a dynamic shift in the broader investment and wealth market. Younger people are taking a greater interest in investing for the future, recording an increased appetite for investment, and prioritising financial resilience and saving.

“Whilst events at the end of 2020 provided further stability to the external environment, with the conclusion of the Brexit deal and the completion of the US election, the Covid-19 pandemic and the resulting economic consequences will continue to impact markets and businesses over the remainder of this financial year and beyond,” he added.

Hargreaves Lansdown shares closed 4.51% lower at 1.631,50.

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