Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
Lloyds Bank results … here’s what the market says
Lloyds Banking Group PLC (LSE:LLOY) on Thursday saw a dim dip in price after releasing second-quarter results that underwhelmed, without offending.
“Pretty much in line with expectations”, was how one market reporter put it.
Whilst the bank has shown resilience in some areas, including lower-than-expected impairment charges for the motor finance kerfuffle and stable profit margins, the market’s reaction has been less positive.
But what was the market saying? … here, we take a curated look at some of the commentary from the City of London’s talking heads.
Hasbro stock surges as financials beat expectations
Hasbro Inc (NASDAQ:HAS) shares traded higher, gaining around 3%, thanks to positive second-quarter earnings.
Revenue was $995.3 million, easing past market consensus of $941.4 million – albeit, year-over-year the tally is down from $1.21 billion.
At $1.22, earnings per share was substantially better than the 78 cents that Wall Street analysts had anticipated. Net income came in at $138.5 million, compared to a $234.9 million loss a year ago.
The toy and boardgame maker highlighted a particularly strong performance in its digital division, where revenue increased by 20% to $452 million. Revenue in Hasbro’s digital gaming unit rose 20% to $452 million, driven by successful launches such as Modern Horizons 3, Monopoly Go!, and Baldur’s Gate 3.
After the stronger quarterly performance, Hasbro expects to report full year earnings (adjusted EBITDA) between $975 billion and $1.025 billion.
American Airlines shares lifted by revenue silver lining
American Airlines Group Inc (NASDAQ:AAL, ETR:A1G) saw its shares ascend, rising more than 6% as the trading day progressed, after it reported ‘record’ revenue for its second quarter, at $14.33 billion.
That was up 2% year-over-year, but short of consensus market expectations $14.36 billion.
Investors evidently found some silver lining and confidence, because at the same time the airline also today downgraded its full year outlook – with its full-year profit forecast dropping significantly, to between $0.70 and $1.30 per share, from $2.25 to $3.25 per share.
It pointed to a failed sales strategy, that aimed to push volume with cheaper fares rather than prioritise premium-priced business travelers. It resulted in diminished per-seat income and lower-than-expected corporate travel revenue.
AAL shares opened down by more than 5%, and traded as low as $9.78 after the bell, before rallying through morning trade. At $10.75, the stock was up 56 cents or 5.56% for the trading session.
Royal Caribbean shares stall despite soaring cruise revenues
Royal Caribbean Cruises Ltd (NYSE:RCL) shares slipped lower, down close to 4%, despite an upbeat set of financials for its second quarter.
The cruise operator highlighted increased onboard spending and pre-cruise purchases, as well as ‘exceptional demand’ for its ocean-based vacations – strength which it said continues through 2024.
It comes as the Royal Caribbean stock had gained some 32% in the year to date, and is up around 56% for the past year.
Revenue for the quarter was 16.7% higher, at $4.11, comfortably beating Wall Steet forecasts of just over $4 billion. Net income increased to $854 million, from $459 million last year. On a per share basis, this equated to $3.11 versus $1.70 a year ago.
Royal Caribbean brought back its dividend, with shareholder payouts returning for the first time since Covid.
Looking ahead, the company set a more bullish outlook – forecasting full-year profit outlook to $11.35 to $11.45 per share.
In New York, the stock was down $6.57 or 3.99% changing hands at $158 each.
Vodafone traded up after decent financials supported forecasts
Vodafone Group PLC (LSE:VOD) shares traded higher on Thursday, closing up 2.2% at 72p, after the telecoms blue-chip reported a 2.8% rise in first-quarter revenue, to €9.0 billion.
Service revenue experienced organic growth of 5.4%, amounting to €7.5 billion. This growth was driven by strong performances in Africa and Turkey, though the German market saw a decline due to regulatory changes affecting TV service sales.
Elsewhere, Vodafone took a €6.1 billion impairment charge in Europe, primarily in Spain.
The company retained its full-year guidance, which anticipates an underlying cash profit of €11 billion and free cash flow of €2.4 billion.
Vodafone’s chief executive, Margherita Della Valle, highlighted ongoing improvements and the company’s focus on customer experience, business growth, and operational execution in Germany.
British Gas owner sees shares slump after its profits “normalised”
British Gas owner Centrica PLC (LSE:CNA) slumped on Thursday, losing just over 8% to close at 131.54p, after this morning reporting a significant drop in its first half profits.
Earnings (EBITDA) fell to £1.1 billion, down from £2.3 billion during the same period last year.
British Gas, Centrica’s consumer-facing gas business, reported a first-half operating profits of £159 million, versus nearly £1 billion a year ago.
The utility pointed to a ‘normalisation’ of the international energy market, following the elevated levels in period following the war in Ukraine.
Centrica meanwhile increased its interim dividend to shareholders by 13%, to 1.5p, and extended its share buyback program by £200 million.
Chief executive Chris O’Shea, meanwhile, highlighted the company’s strategic investments in data capabilities, product innovation, and customer service, which he said have driven improvements in Centrica’s operational performance.
BT Group trading update failed to inspire much investor confidence
BT Group PLC (LSE:BT.A) shares finished Thursday nearly 1% lower, after the telecoms blue-chip told investors that it had remained on track to deliver its financial outlook for the year.
Also, it said it was sticking with its existing cash flow targets up until 2030.
BT said tight cost controls helped increase earnings in the first quarter, despite a fall in revenue that was in line with expectations.
Looking ahead, it plans to double free cash flow over the next five years.
BT, meanwhile, continues to roll out fibre at apace, but associated increases in revenue have not matched kept up with the rollout.
In London, BT shares closed 1.1p or 0.8% lower at 138.65p.
Lloyds Bank rallied after results wobble
Lloyds Banking Group PLC (LSE:LLOY) finished Thursday in positive territory as investors helped the stock rally, following a weak start to the day.
Earlier, the bank reported a 14% drop in first-half pretax profit to £3.3 billion.
The company said the decline was due to tougher trading conditions and rising costs. Operating costs rose by 7% to £4.7 billion.
Lloyds retained its guidance for the year and said it was confident in meeting its targets.
The bank announced an interim ordinary dividend of 1.06 pence per share, up 15% from the previous year.
The company’s Chief Executive, Charlie Nunn, highlighted the tougher-than-expected environment and pointed to stubborn inflation and a slower economic recovery as key challenges.
Shares were down 3% in early trading , against a broader sell-off in UK stocks, and by the close, Lloyds was up 1.04% at 60.28p.
