Weekly Market Update- Week Ending 27/10/2023
Earnings season got up to a gallop this week with many of the world’s largest companies updating shareholders. The moves at an index level in the United States were dominated by a mixed bag of results from tech giants, including Microsoft (beat expectations), Alphabet (missed), Amazon (beat) and Meta (beat).
Across Europe, some of the continent’s largest consumer-facing businesses missed expectations, prompting investors to consider if some of the recent weak economic data is starting to feed into lower corporate profits. Reckitt Benckiser recorded sales growth of 3.4%, behind analysts’ expectations of 3.7%, but maintained it was on track to deliver its full-year targets. The owner of blockbuster brands, including Dettol, Nurofen, and Vanish, announced that it will shortly commence a £1bn share buyback program, which will run over the next 12 months.
Unilever blamed the weather and pointed to disappointing sales from its ice cream division as its Q3 earnings failed to gather much cheer from investors. The owner of brands including Ben & Jerry’s, Dove, and Domestos recorded overall Q3 sales growth of 5.2%, in line with expectations, but declared that ice cream sales fell 10% year-on-year as the soggy summer in many parts of northern Europe affected sales. The revenue grew from increasing prices on average 5.8%, with volumes falling 0.6% as some consumers, in the face of higher prices, traded down to supermarket own-brand products. Unilever announced that it will hold its quarterly dividend steady. Having grown its total annual dividend each year since 1995, the company remains a firm favourite with income investors, and it looks likely to continue that enviable record this year.
As it owns many of the brands we love in the UK (or perhaps hate, in the case of Marmite?), it is easy to think of the company as focused on the UK. In fact, the UK only makes up a relatively small percentage of its overall sales, with Europe its smallest region and around 60% of turnover coming from Emerging Markets.
John Naylor, Chartered FCSI – Head of Investment Committee
