Economy

BUSINESS LIVE: AstraZeneca ups profit guidance; BATS vape sales soar; Unilever cheers volume growth

The FTSE 100 is up 0.2 per cent in early trading. Among the companies with reports and trading updates today are AstraZeneca, British American Tobacco, Unilever, Compass Group, Nanoco, SSE and Watches of Switzerland Group. Read the Thursday 8 February Business Live blog below.

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Market open: FTSE 100 up 0.2%; FTSE 250 adds 0.4%

London-listed stocks are trading higher this morning, with the FTSE 100 supported by a string of upbeat results from industry giants including Unilever and British American Tobacco, while industrial metal miners climb on a softer dollar.

Shares in Unilever are up 3.1 per cent after the Dove soap maker reported a rise in fourth-quarter sales and launched a $1.6billion share buyback program.

The broader personal care, drug and grocery stores index rose 1.7 per cent on the news, leading sectoral gains.

British American Tobacco has advanced 4.6 per cent to the top of FTSE 100 after the Dunhill maker forecast low-single digit organic revenue growth in 2024, and a full-year profit beat.

Shares in catering group Compass climbed 2.5 per cent on a rise in first-quarter organic revenue and better-than-expected like-for-like volume.

Snap loses a third of its value amid advertising slowdown

Snap shares fell by more than a third yesterday as it grapples with an advertising slowdown – leaving founder Evan Spiegel and his wife Miranda Kerr nursing losses of £200million.

The social media giant saw shares fall 35 per cent after Wall Street was left frustrated by its latest quarterly performance.

Taxi app Uber hails its first ever full-year profit as demand soars

Uber has posted its first ever full-year profit as demand for its cabs soars.

The San Francisco-based company reported a profit of £870million for 2023 – after a loss of £1.4billion the year before.

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Unilever posts ‘uninspiring’ 2023

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

‘Unilever’s performance in 2023 was uninspiring, with notable weakness in Europe and ice cream, driven in part by market share losses to private label competition.

‘Unilever’s new CEO, Hein Schumacher, recognises that the group could and should be doing better. His ‘Action Plan’ is designed to reinvigorate performance through more impactful innovation, productivity savings and an improved culture, with an enhanced focus on the top 30 Power Brands.

‘The success of this Action Plan is too early to judge, but investors should not expect quick fixes. The plan isn’t just about cutting costs and increasing efficiency. It’s designed to make Unilever a more innovative business, with stronger, faster growing brands. This requires increased brand and marketing investment, and will not be quick or easy to achieve.

‘Overall, there is a lot to like in new CEO, Hein Schumacher’s Action Plan. But it is hard to escape the conclusion that the environment for Unilever and its peers has become much tougher in recent years.

‘Cost of living challenges mean private label brands have never been more appealing, meaning Unilever is having to work harder just to maintain market share, let alone grow it. This Action Plan feels like it has more substance than past initiatives, but it needs to succeed to stop the business going backwards.’

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AstraZeneca sales boosted by oncology assets

Summer Colling, healthcare analyst at Citeline:

‘AstraZeneca’s solid FY2023 revenue figures of $45.8B are in line with, albeit slightly lower than, Evaluate’s $46.8B estimate.

‘As expected, Q4 2023 sales were driven by the company’s oncology assets Tagrisso, Imfinzi, and Lynparza, its diabetes asset Farxiga, and sales of Ultomiris in the rare disease market, which have all helped to offset plummeting sales from AstraZeneca’s COVID-19 medicines.

‘Tagrisso remains the company’s leading oncology asset, having racked up sales of $5.8B in FY2023, also in line with Evaluate’s $5.9B estimate. Tagrisso sales in RoW were negatively affected in Q4 by the recent reclassification of Australian government rebates and also continue to be affected by the mandatory price reduction in Japan.

‘As expected, sales of Imfinzi in China were boosted by the new launch in biliary tract cancer, which helped to offset the effect of the anti-graft campaign launched by central government departments.

‘Sales of Farxiga in Europe do not appear to have been affected by the EMA’s recent recommendation to update product information for diabetes medicines containing dapagliflozin to reflect the risk of vulvovaginitis, balanitis and related genital infections.’

Unilever cheers volume growth

Unilever met expectations for underlying quarterly sales growth in 2023 after the consumer goods giant raised prices at a slower rate and achieved its first increase in sales volumes for 10 quarters.

The company said it expects a ‘modest improvement’ in underlying operating margin for the full year, and that underlying sales growth will be within its multi-year range of 3 to 5 per cent.

Boss Hein Schumacher said: ;Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve.

‘We are working to address this by improving our execution to unlock Unilever’s full potential.

‘In October, we set out a Growth Action Plan focused on three priorities: delivering higher-quality growth, stepping up productivity and simplicity, and adopting a strong performance focus.

‘The new leadership team has embedded the action plan at pace. We have increased investment behind our 30 Power Brands, accelerated portfolio transformation, and are driving a sharper performance focus with clear and stretching targets across the whole organisation.

‘We are at the early stages of this work and there is much to do but we are moving with speed and urgency to transform Unilever into a consistently higher performing business.’

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BATS suffers falling smoking rates but vape sales soar

British American Tobacco has forecast low-single digit organic revenue growth for the year ahead, as falling smoking rates in the US weigh on double-digit gains in its ‘new categories’ segment which includes products such as vapes.

The maker of Dunhill and Lucky Strike cigarette reported a 5.2 per cent rise in full-year profits for 2023, beating analyst expectations.

CEO Teadeu Marroco said its plans to revive performance in the US were showing early signs of progress, and it was investing further.

‘We expect these investments, together with the U.S. macro-economic pressures, will impact 2024,’ he said.

Germany remains the ‘sick man of Europe’ as industrial output falls for seventh month in row

Germany reinforced its status as ‘the sick man of Europe’ as the once-mighty industrial sector clocked up its longest downturn since the aftermath of reunification three decades ago.

Europe’s largest economy and one-time driving force said official data showed that output fell a further 1.6 per cent in December.

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AstraZeneca ups profit guidance

AstraZeneca expects higher revenue and profits in 2024, with the drugmaker betting on strong uptake of its infant RSV shot and resilient demand for its cancer and rare blood disorder drugs.

Strong sales of AstraZeneca’s cancer treatments and rare disease drugs, coupled with resilient demand in emerging markets, have since fuelled its growth.

The London-listed company said it expects total revenue and core earnings per share (EPS) to increase by a low double-digit to low teens percentage this year.

For 2023, AstraZeneca reported revenue of $45.81billion and core EPS of $7.26.

For the fourth quarter, it reported core EPS of $1.45 on total revenue of $12.02billion, compared with forecasts of a $1.50 per share profit on revenue of $12.01billion.

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