Half way through the week… Is it Friday yet?!
Today, I’m going to be covering GlaxoSmithKline, Meta and Sony.
GlaxoSmithKline (GSK) – Q4 Earnings
GSK beat expectations for Q4, tripling its operating profit year-over-year and doubling their net profit. This is largely thanks to stringent cost-cutting exercises and restructuring, following the separation of Haleon. On top of this, the company saw increased revenue in all segments, excluding Covid-19 products.
While there are still litigation concerns around Zantac, GSK seems to be putting itself in a good position to weather any oncoming storms; whether in the form of legal issues or a recession.
Key Points:
- Revenue of £7,376m, up from £7,076m (+4.2%) a year ago
- Gross profit of £5,138, up from £4,291m (+19.7%) a year ago
- Cost of sales plummeted to £2,238m, from £2,785m (-19.6%) a year ago
- Operating profit of £1,868m, up from £492m (+280%) a year ago
- Profit before tax of £1,626m, compared to £303m a year ago
- Profit after tax of £1,495m, compared to £749m a year ago
- Basic earnings per share of 37.1p
- Dividend of 13.75p per share announced, to be paid on 13th April 2023
- Guidance provided for 2023 suggests: increased revenue by 6% to 8% for the year. Adjusted operating profit is expected to increase between 10% and 12, while adjusted EPS is expected to grow by between 12% to 15% for the year. The first half of 2023 will be lower, combined with challenging comparisons to 2022, but this will be boosted by improved performance in the second half of 2023
- This is on a constant-currency basis, and excludes all Covid-19 products
- There are 69 medicines in the current pipeline, with four expected to be approved in 2023; including the much-anticipated RSV vaccine.
Facebook (META) – Q4 Earnings
Much to everyone’s surprise, after a shockingly bad third quarter, Meta exceeded analyst expectations pretty much across the board in Q4. The outlook for 2023 has also been raised, thanks to lower-than-expected restructuring costs, as well as lower costs as a whole compared to previous guidance. Most importantly to investors, though, ads revenue didn’t plummet as much as expected. To sooth investors further, a $40bn buyback was announced for 2023, in addition to the ~$27bn already repurchased in 2022.
Unsurprisingly, then, the stock price rose over 20% in after-hours trading.
Key Points:
- Revenue of $32,165m, down from $33,671m (-4.5%) a year ago
- On a constant currency basis, revenue would have been 1.5% higher year-over-year
- Gross profit of $23,829m, down from $27,323m (-12.8%) a year ago
- Operating profit of $6,399m, down from $12,585m (-49.2%) a year ago
- This includes charges related to restructuring efforts, costing $4,200m for the quarter. Without this, operating profit would have been $10,599m, down 15.8% YoY
- Profit before tax of $6,149m, compared to $12,702m a year ago
- Profit after tax of $4,652m, compared to $10,285m a year ago
- Basic earnings per share of $1.76
- Guidance for Q1 2023 suggests revenue of between $26,000m and $28,500m. Additionally, total expenses for the 2023 year have been revised down, to to between $89,000m and $95,000m ($5,000m lower than previous guidance). Capital expenditure for 2023 will also be lower than previously expected, now at between $30,000m and $33,000m ($4,000m lower than previous guidance)
- In December 2022, Facebook saw a 4% increase in daily active users, at 2.00 billion on average. Monthly active users increased 2% YoY, to T2.96 billion.
- The average price for Ad reduced by 22% YoY, but impressions for these ads rose 23% YoY
- The company authorised an additional $40,000m in share buybacks for 2023
- Meta’s Reality Labs unit, which is home to the company’s metaverse technologies, lost $4,280m in the fourth quarter, and is expected to see significantly higher losses in 2023 year-over-year
- Investors find this frustrating, but Mark Zuckerberg, Meta’s CEO, doubled down on this and stated that “Our priorities haven’t changed since last year. The two major technological waves driving our roadmap are AI today and over the longer term the metaverse.”
Sony Group (SONY) – Q4 (Fiscal Q3 2022) Earnings
As with the previous quarter, I wanted to include Sony to get an insight into supply chains and to see if there’s a resolution to the chip shortages. With Sony reporting results in Yen, I’m going to provide percentage increases instead, to prevent confusion over exchange rates.
Sony came in with higher-than-expected earnings, in part due to better supply chains allowing for higher PlayStation 5 sales.
Key Points:
- Revenue increased 12.6% year-over-year
- Operating profit came in lower, falling 7.8% year-over-year
- This is in part due to higher cost-of-sales, which rose 21% year-over-year
- Profit before tax fell 13.6% year-over-year
- Profit after tax fell 5.6% year-over-year
- Basic earnings per share 264.56yen, down 5.3% year-over-year
- Revenue guidance for the year has been lowered slightly, while operating and net profit has been revised up. Sony is now expecting to sell a total of 19 million PlayStation 5 units for the year, with 7.1 million units sold in this quarter alone
- The company reiterated that supply chain issues around chips have eased substantially, coinciding with launches such as God of War Ragnarok, which has now sold over 11 million copies
- However, there is the issue of a general downturn in the global economy, which will put upward pressure on inventory levels and profit margins, particularly in Sony’s consumer goods
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
