- First-quarter earnings season is off to a strong start.
- See all the biggest earnings stories here in one place.
Strong demand for electric and premium vehicles boosted Volkswagen’s first quarter profit as the company continued to rebound from the pandemic.
Europe’s largest carmaker said in a statement on Thursday that it delivered 2.4 million vehicles between January and March — a 21.2% increase on the same period last year when the coronavirus was raging in China, the group’s single largest market.
“A key driver of this increase in volume was China,” Volkswagen said. Sales in the country surged 61.4% over the prior period.
Increased sales, including of more expensive vehicles from Audi and Porsche, lifted revenue to €62.4 billion ($75.2 billion) — a 13% increase on the same period last year and 4% more than in 2019. Profit before tax jumped to €4.5 billion ($5.4 billion) from €700 million ($843.5 million) in the prior period.
“We started the year with great momentum and are on a strong operational course,” said Volkswagen CEO Herbert Diess. “Our e-offensive continues to gain momentum and we have significantly expanded it with attractive new models.”
Volkswagen wants to dethrone Tesla as the king of electric cars and is spending billions of dollars to do so. The company said on Thursday that it delivered 59,900 battery electric vehicles in the first quarter, a 78% increase over the previous year. Sales of plug-in hybrids increased 178% to 73,400.
In March, the company unveiled a massive expansion of battery production in order to secure supply and drive down production costs. UBS analysts said in a recent report that Volkswagen could match Tesla’s sales as early as next year and go on to sell 300,000 more battery electric vehicles than Tesla in 2025.
Volkswagen’s stock is up 45% this year.
The company has raised its forecast for operating profit this year, despite a global shortage of semiconductors which it expects to have a more significant impact in the second quarter.
Nintendo is still pulling in big profits as the Japanese video game company continues its pandemic-fueled hot streak.
The video game and console maker on Thursday reported that operating profit hit nearly 641 billion Japanese yen ($5.9 billion) for the fiscal year ended March, up 82% from the previous year. That exceeded the $5.4 billion forecast by analysts polled by Refinitiv.
The strong results were again thanks to software sales for its Switch devices, particularly the popular titles “Animal Crossing: New Horizons” and “Mario Kart 8 Deluxe.” Thanks to the popularity of its games, Nintendo sold 28.83 million Switch units during the fiscal year — up 37% compared to the prior year.
Nintendo says it expects to pull in 500 billion Japanese yen ($4.6 billion) during the next fiscal year, a 22% drop over this one. It also warned that a global shortage of computer chips could hamstring production.
“The production of products might be affected by obstacles to the procurement of parts, including the increase in global demand for semiconductor components,” the company said, adding that its current forecast is based on the assumption that “we will be able to secure the parts needed for the manufacture of products in line with our sales plans.”
Nintendo shares have increased 66% since March 2020 thanks to a surge in demand for home entertainment during the pandemic.
Carlos Brito is stepping down as CEO of Anheuser-Busch InBev after 15 years of furious dealmaking that created the world’s largest brewer.
Michel Doukeris, who currently heads up its North America business, will succeed Brito on July 1, the company said in a statement on Thursday.
The consummate dealmaker, Brito took over US giant Anheuser-Busch in 2008 before acquiring Mexico’s Grupo Modelo and orchestrating the $104 billion takeover of Anglo-South African brewer SABMiller in 2016.
“Brito was the architect who led and built AB InBev into the world’s leading beer company and a leading global consumer packaged goods company by masterfully integrating the many businesses that comprise AB InBev today,” AB InBev chairman Martin Barrington said in a statement.
Doukeris has been with AB InBev for over a decade, serving as president of the Asia Pacific division and as the company’s chief sales officer before becoming president of its North America business.
“Michel Doukeris is uniquely suited to accelerate AB InBev’s transformation and lead its next chapter of growth,” the company said.
The brewer of Budweiser, Corona and Stella Artois said that sales volumes grew 13.3% in the first three months of the year compared to the same period in 2020. Earnings increased 14.2% off the back of revenue growth of 17.2%.
“Our business is off to a very strong start in 2021,” it added.
Warren Buffett’s Berkshire Hathaway, much like the rest of the stock market and economy, has made a huge comeback from the depths of the Covid-19 pandemic.
Berkshire Hathaway (BRK.B) announced Saturday that it had posted a net profit of $11.7 billion during the first quarter. A year ago, the Oracle of Omaha’s conglomerate reported a nearly $50 billion loss.
Berkshire Hathaway said in a regulatory filing that the company’s manufacturing, services and retail businesses have “experienced significant recoveries” in the past few months.
Still, Buffett and Berkshire Hathaway are continuing to be conservative with the company’s massive financial resources. Berkshire Hathaway bought nearly $6.6 billion of its own stock during the quarter and also boosted its cash hoard to a whopping $145.4 billion.
The deep freeze in Texas in February dented ExxonMobil’s bottom line to the tune of nearly $600 million.
Exxon (XOM) said Friday the deadly weather event knocked out production, drove lower sales and boosted repair costs. The largest US oil company said all impacted facilities are back online.
The extreme weather did not stop Exxon from swinging to a first-quarter profit of $2.7 billion, a vast improvement from a loss of $610 million a year ago. Exxon lost $22.4 billion last year – its first annual loss since the 1999 merger that created the behemoth.
The sharp rebound was driven in large part by higher oil prices, which boosted upstream profits by $1.7 billion.
After years of being forced to borrow to afford its dividend, Exxon said its $9.3 billion of cash flow from operating activities “fully funded” both its dividend and capital spending.
Moreover, Exxon was able to shrink its pile of debt, reducing debt by $4 billion.
Even though Goldman Sachs is calling for record-breaking oil demand growth as the economy recovers, Exxon is not ramping up its spending plans. The company said if conditions continue to improve it will use additional cash to pay down debt.
Barclays’ first quarter profit almost tripled following a strong performance from its investment bank and a reduction in charges for bad loans related to the coronavirus pandemic.
Net income jumped to £1.7 billion ($2.4 billion) during the first three months of the year, from £600 million ($834.5 million) for the comparable period last year.
Revenue fell 6% to £5.9 billion ($8.2 billion) due to low interest rates and weak demand for credit cards and loans in the United Kingdom, Barclays said in a statement on Friday.
“Headwinds to income in Barclays UK are expected to persist in 2021, driven by subdued demand for unsecured lending and the low interest rate environment,” it added.
While earnings beat analyst expectations, the stock lost as much as 5.8% in London.
Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said in a research note that this could be due to mounting concerns about operational costs at the bank, which were up 10% on the same quarter last year.
Barclays’ strong overall performance was helped by a significant reduction in bad debt charges, which plummeted to £100 million ($139 million) from £2.1 billion ($2.9 billion) a year earlier, when UK banks hiked reserves for potential pandemic losses.
“While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic on the business,” CEO Jes Staley said. Pre-tax profit at the corporate and investment bank jumped 46% to £1.75 billion ($2.4 billion). That was driven by record quarterly revenue in equities, up 65%, and capital markets and advisory, up 35%.
Fixed income, currency and commodities revenue decreased 35% following a very strong comparable quarter last year, Barclays said.
The result will provide a boost to Staley’s conviction that the investment banking unit is critical to Barclays’ future success.
“Barclays investment arm is clearly still providing the financial cushion needed as its consumer business finds its feet again,” said Streeter.
Amazon’s profits more than tripled in the first quarter of 2021, as the pandemic continued to boost its online retail, cloud and advertising businesses.
The tech giant on Thursday reported a whopping $8.1 billion in quarterly net income, up 224% from the same period in the prior year, crushing Wall Street analysts’ prediction of $4.98 billion. Earnings hit $15.79 per diluted share.
Total net sales from the quarter grew 44% from the year-ago period to $108.5 billion, also beating the $104.5 billion analysts had projected.
Amazon (AMZN) shares spiked as much as 4% in after-hours trading.
“Amazon has the almost perfect business for the world right now,” James Harris, global chief strategy officer at Mindshare Worldwide, said in an email following the report. “The world’s leading e-commerce platform, a growing cloud business and a smaller but growing advertising capability all working in unison. It’s a compelling offer.”
The company’s cloud unit and biggest money maker, Amazon Web Services, posted net sales of $13.5 billion during the quarter, up 32% year-over-year, an acceleration in growth from the prior quarter as more companies adopt the technology to help manage hybrid workforces.
Among the other highlights from the quarter: Amazon now has more than 200 million paid Prime subscribers and streaming hours on Prime Video are up more than 70% year-over-year.
Despite a tough year-over-year comparison because of the surge in demand the pandemic caused last year, Amazon still expects net sales between $110 and $116 billion, up 24% to 30% from the same period in the prior year, during the second quarter of 2021, assuming that its annual Prime Day event occurs during the quarter as normal.
On Wednesday, the day before the earnings report, Amazon announced it would spend $1 billion to raise wages for more than 500,000 hourly workers by as much as $3 an hour as it continues its hiring push that has elevated its global workforce beyond 1.3 million people globally. The company will not, however, increase its $15 per hour minimum wage.
Earlier in the first quarter, Amazon faced a landmark union drive at a warehouse in Alabama that drew intense scrutiny to its labor practices. Despite popular support from celebrities and even President Joe Biden, the union vote was unsuccessful.
The latter part of this year will bring a major leadership shakeup at the company, as Amazon founder Jeff Bezos steps down from his role as chief executive, to be replaced by current Amazon Web Services CEO Andy Jassy, and the cloud unit gets a new leader.
McDonald’s entered the chicken sandwich wars this year, and it appears to be paying off.
Sales at US McDonald’s locations open at least 13 months jumped 13.6% in the first quarter compared to the same period last year. Analysts expected a more modest 9.3% spike. The company’s total revenue was $5.12 billion in the quarter.
McDonald’s attributes the increase to a number of factors: customers spending more on delivery and through the company’s digital channels, as well as to its national menu.
As of earlier this year, that menu includes three new fried chicken sandwiches. Those offerings are designed to better compete with rivals like Popeyes and Chick-fil-A, which have had success with their popular chicken sandwiches.
So far, the product’s performance is “exceeding our projections,” said Joe Erlinger, president of McDonald’s USA, during a Thursday call discussing the earnings results.
“We are selling substantially more chicken sandwiches compared to our previous chicken sandwich line,” he said. Partially, that’s because the new sandwiches’ spicy flavor profile is on trend, he said.
And the company is planning to roll out more chicken products, said CEO Chris Kempczinski.
McDonald’s (MCD) also recently announced the latest in its line of successful celebrity meals: The BTS meal, which includes Chicken McNuggets, two new dipping sauces, medium fries and a Coke, will arrive in the US late next month. The company has already partnered with two other musicians, J Balvin and Travis Scott, on their own respective meals. The Travis Scott meal was so popular, McDonald’s ran out at some locations.
But the initiatives haven’t brought more people into McDonald’s: Even though customers spent more per order, guest count was negative in the first quarter. Sluggish traffic was a problem for McDonald’s even before the pandemic.
Unilever’s share price rallied on Thursday after first quarter sales beat expectations and the consumer goods giant said it would return €3 billion ($3.6 billion) to shareholders.
The stock gained 3.1% in London to reach £42.06 ($58.66) per share.
Sales during the first three months of the year climbed 5.7% compared to the same period in 2020 to €12.3 billion ($14.9 billion), Unilever said in a statement.
“Unilever has made a good start to the year,” said CEO Alan Jope. “We are confident that we will deliver underlying sales growth in 2021.”
The strong performance — which was 2% ahead of analyst consensus — was driven by double-digit sales growth in China and India following strict lockdowns the previous year.
Volumes in Europe were negatively affected by lockdowns, which dented demand for personal care products but lifted in-home ice cream sales, Unilever said.
In North America, sales were boosted by continued demand for food consumed at home.
“Unilever gains much of its strength through the group’s diversity,” Steve Clayton, a fund manager at Hargreaves Lansdown, said in a research note.
“It sells globally, so in times like these, when European sales are in decline, growth in the United Kingdom and Asia can pick up the slack,” he added.
Unilever will begin a share buyback program of up to €3 billion ($3.6 billion) next month to be completed by the end of the year. Buybacks are one method of returning funds to shareholders.
The company said that plans to spin off its €2 billion ($2.4 billion) tea business, which could involve an IPO, are on track.
Samsung managed to pull off a strong first quarter, even as one of its chipmaking facilities was temporarily shut by a brutal US winter storm earlier this year.
The South Korean conglomerate said Thursday that it made about 65.4 trillion Korean won ($59 billion) in revenue and 9.4 trillion Korean won (almost $8.5 billion) in operating profit from January to March.
In a statement Thursday, the company attributed its performance to “solid sales of smartphones and consumer electronics, [which] outweighed lower earnings from semiconductors and displays.”
Samsung is hoping to double down on that with some splashy new devices. On Wednesday, it unveiled four new notebooks at its “Unpacked” event, showcasing how they could be integrated with its flagship Galaxy smartphones.
Like other chipmakers, Samsung has also been scrambling to address the dearth of semiconductors in recent months.
The company has previously warned that it could continue to face problems in the second quarter.
But in the second half of the year, “market conditions [are] expected to improve for the component business,” Samsung said in its statement Thursday.
The company blew Wall Street’s expectations out of the water on both its top- and bottom-line results when it posted earnings Wednesday.
The company posted total revenue of nearly $26.2 billion, up 46% year-over-year and well above the $23.7 billion analysts’ had projected. Net income from the quarter came in at nearly $9.5 billion, up 94% from the year-ago period and also ahead of analysts’ $6.8 billion projection.
Facebook’s stock shot up around 5% in after hours trading Thursday.
“We had a strong quarter as we helped people stay connected and businesses grow,” CEO Mark Zuckerberg said in a statement. “We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas like augmented and virtual reality, commerce, and the creator economy.”
The strong results come despite a slew of issues Facebook faced during the quarter, including fallout from the January 6 Capitol riot and questions about misinformation, continued antitrust scrutiny and privacy concerns after millions of users’ information was posted to a hacker site.
The advertising market is continuing to rebound from the pandemic: Facebook ad revenue grew 46% to $25.4 billion during the quarter. That growth was driven by a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered, CFO David Wehner said in the release.
“We expect that advertising revenue growth will continue to be primarily driven by price during the rest of 2021,” he said.
Microsoft’s pandemic bump still isn’t over.
The tech giant on Tuesday reported revenue of $41.7 billion for the three months ended March 31, up 19% from the same period in the prior year and slightly ahead of the $41 billion Wall Street analysts had projected. It also beat on the bottom line: posting profit of $14.8 billion, or $1.95 per share, compared to analysts’ projection of $13.5 billion.
Despite the earnings beat, Microsoft (MSFT) stock tumbled as much as 4% in after hours trading Tuesday. Microsoft’s stock has been inching higher for much of the past week as the company’s market cap nears $2 trillion.
Wedbush analyst Dan Ives called the after hours selloff a “knee jerk reaction” by investors who were hoping for an even bigger revenue beat. However, the earnings report contained quite a bit of good news.
Microsoft’s cloud platform, Azure, posted revenue growth of 50%, maintaining its strong growth rate from the December quarter. And its cloud growth is expected to continue, as companies accelerate adoption of the technology to help manage hybrid remote and in-office workforces following the pandemic.
Microsoft’s commercial bookings — which point to future revenue opportunities — grew 39% during the March quarter, and included an increase in the number of “larger, long-term Azure contracts,” the company said.
Ives said in an investor note last week that he expects global cloud spending to approach $1 trillion over the next decade, and that longtime market leader Amazon Web Services and Microsoft Azure will likely be the two biggest players competing for that business.
“We strongly believe the tide is shifting in the cloud arms race,” Ives said, adding that Microsoft is “clearly taking market share vs. AWS based on our analysis.”
Gaming was another highlight from the quarter, thanks to the popularity of Microsoft’s new Xbox S and X consoles and increased demand because the pandemic. Quarterly Xbox hardware sales grew 232%, and Xbox content and services sales were up 32%.
The earnings report comes two weeks after Microsoft announced a $16 billion acquisition of Nuance, an artificial intelligence developer for health care, an industry that’s expected to be a major customer for cloud providers.
“This deal allows Microsoft to gain wider access to the health care industry and potentially sell additional services to Nuance’s customers,” Edward Jones senior research analyst Logan Purk said in a note to investors ahead of the earnings release.
Correction: A previous version misstated Microsoft’s total quarterly revenue. It is $41.7 billion.
After a difficult year, Starbucks’ US sales are finally bouncing back.
Sales at US stores open at least 13 months jumped 9% in the three months ending March 28 compared with the same period last year. The results pointed to a “full sales recovery” in the United States, CEO Kevin Johnson said in a statement Tuesday.
Globally, same-store sales increased 15%, missing Wall Street’s expectations of 16.8% growth. Shares of the company fell about 2% after the bell.
While some restaurants, like pizzerias, have seen sales soar during the pandemic, cafes like Starbucks (SBUX) have struggled. Stay-at-home orders disrupted people’s regular commute to work, and many started drinking their morning coffee at home instead of buying it to-go.
In the last three months of 2020, Starbucks’ US same-store sales fell 5%. In fiscal year 2020, the year leading up to late September 2020, US same-store sales fell 12%.
General Electric’s revenue tumbled by more than feared at the start of 2021 as the jet engine maker continues to struggle during Covid-induced travel woes.
GE (GE) CEO Larry Culp described a “still difficult environment” for aviation, where the company’s orders slumped 26% from a year ago. Commercial service orders dropped by 40% as there were fewer shop visits and lower spare parts sales as air travel remained weak
GE’s power business also missed expectations, suffering a 3% dip in revenue as coal-fired power plant orders declined amid the shift to cleaner energy. By contrast, renewable energy orders jumped, driven by wind turbines.
Overall, GE’s first-quarter revenue declined 12% to $17.1 billion, missing estimates. Adjusted profits rose to 3 cents per share.
GE shares fell about 3% in premarket trading, giving back a slice of their big 2021 gains.
GE’s industrial businesses burned through another $845 million during the first quarter. However, that was a significant improvement from a year ago when GE burned through $2.2 billion at the onset of the pandemic.
Despite the struggles, GE reiterated its outlook for the rest of the year, predicting industrial free cash flow of $2.5 billion to $4.5 billion.
BP will return cash to shareholders after its profits more than doubled in the first quarter and it cut its debt pile.
The oil company said in a statement on Tuesday that it will spend $500 million on share buybacks in the second quarter and remains committed to returning at least 60% of surplus cashflow to investors. The stock rose 2% in London.
In the three months to March, BP’s underlying profit on a replacement cost basis — the measure of income tracked most closely by analysts — jumped to $2.6 billion from $791 million during the same period last year.
“This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins,” BP said.
Net debt fell by $5.6 billion to $33.3 billion at the end of the quarter, helped by the sale of oil and gas assets worth $4.8 billion.
“With the acceleration of divestment proceeds, together with strong business performance and the recovery in price environment, we generated strong cash flow and delivered on our net debt target around a year early,” CEO Bernard Looney said in the statement.
BP reported a loss of $5.7 billion in 2020, its first annual loss in a decade, as the economic toll from the coronavirus pandemic forced oil companies to write off billions of dollars of assets.
The British oil major unveiled plans last August to slash oil and gas production and channel vast amounts of money into clean energy.
HSBC enjoyed a better-than-expected first quarter as the global economic recovery gained traction.
The UK bank said Tuesday that pre-tax profit jumped 79% to $5.8 billion in the three months ended March, despite revenue dipping 5% to $13 billion.
HSBC said the improving economy allowed it to release $400 million that had been set aside to cover pandemic losses. All regions were profitable, and the United Kingdom was a bright spot — pulling in more than $1 billion in pre-tax profit.
“We had a good start to the year,” CEO Noel Quinn said in a statement Tuesday. “The economic outlook has improved, although uncertainties remain.”
The lender has been restructuring as it works to recover from the impact of the coronavirus pandemic. It announced in February that it would push harder into Asia, particularly China, southeast Asia and India.
In 2020, HSBC’s pre-tax profit fell to $8.8 billion, a 34% slump compared to the year before. It has been especially hit hard by record low interest rates, prompting it to place more emphasis on fee-generating businesses.
HSBC’s stock in Hong Kong rose 1.9% on Tuesday, while its shares in London ticked up 1.1%.
Snapchat’s pandemic-linked bump in user growth is still going strong.
Snap Inc. (SNAP), the parent company of the photo sharing app, reported a 22% year-over-year increase in daily active users, its highest growth rate in over three years. The app’s daily users now total 280 million.
That contributed to quarterly revenue of $77 million, up 66% from the same period in the prior year. Snap also posted its first-ever quarter of positive free cash flow as a public company, which reached $126 million — a milestone as the company works toward profitability. The company reported a net loss of $287 million.
Snap’s stock rose more than 6% in after-hours trading Thursday following the report.
“The strength of our business underscores our relentless focus on product innovation and is a testament to our team’s ability to execute well together over the long term,” CEO Evan Spiegel said in a statement.
The company reported a 40% increase in daily engagement with its augmented reality lenses, a key element of its strategy to attract sponsors and keep users on the app longer.
But there may be challenges ahead: Analysts wonder whether people will keep using Snapchat as frequently as the pandemic comes to an end. And privacy changes in Apple’s forthcoming iOS14.5 could pose risks, too.
“Apple will require any app that collects and shares users’ data for tracking purposes to explicitly ask for and get the user’s permission to track them or access their device’s advertising identifier,” Tom Johnson, chief transformation officer at Mindshare Worldwide, said in emailed commentary. “The big unknown is how many people will opt-out and this could have a big impact on Snap’s ability to prove the impact of its advertising.”
Strong PC demand caused by the pandemic help Intel (INTC) beat Wall Street’s expectations for its sales during the first quarter of 2021.
The company on Thursday reported quarterly revenue of $18.6 billion, flat from the same period in the prior year but well ahead of analysts’ projections. Intel’s non-adjusted earnings per share hit $1.39, down slightly from the year-ago period and also ahead of the $1.15 analysts predicted.
The results were buoyed by a 38% increase in PC unit sales and record notebook unit sales.
Intel’s stock initially fell nearly 2% in after hours trading Thursday. The stock reaction could point to pressure on Intel’s new CEO, Pat Gelsinger, to successfully execute his turnaround plan.
This is Gelsinger’s first earnings report as Intel’s chief executive, though he spoke on the company’s January earnings call prior to taking the helm, during which he said he wanted Intel to regain its position as the “unquestioned leader” in the semiconductor industry.
Last month, Gelsinger announced several major initiatives, collectively referred to as “IDM 2.0”: A $20 billion investment in two new chipmaking facilities; the launch of a new business unit called Intel Foundry Services to manufacture other companies’ chips; and a plan to outsource some production of its most advanced processors.
And last week, following a meeting convened by the White House to address the current semiconductor shortage, Gelsinger said Intel was in talks to manufacture chips for automakers within the next six to nine months to help alleviate the supply chain squeeze.
On Thursday, investors will likely also be looking for signs of improvement in Intel’s manufacturing delays for the smallest, most powerful chips — which have caused it to fall behind Asian chipmakers.
The company raised its guidance for full-year 2021 to earnings of $4.60 per share on revenue of $72.5 billion.
Strong demand for coffee, baking products and prepared meals lifted Nestlé’s first-quarter sales, as consumers continued to spend more time at home.
The world’s largest food company on Thursday reported organic sales growth of 7.7% for the first three months of the year compared to the same period in 2020.
“Coffee was the largest contributor to growth, fuelled by strong demand for Nespresso, Nescafé and Starbucks products,” Nestlé said in a statement.
Nespresso sales surged 17% to 1.6 billion Swiss francs ($1.7 billion).
Elevated demand for home-baking products helped dairy grow at a double-digit rate, with prepared dishes and cooking aids posting similar gains.
Sales of pet food, including Purina PetCare, also boosted growth, Nestlé said.
“We are pleased with Nestlé’s strong organic sales growth in the first quarter, building on broad-based contributions from most geographies and product categories,” CEO Mark Schneider said.
Consumer goods companies such as Nestlé, Unilever and Procter & Gamble have performed strongly during the coronavirus pandemic, as lockdowns forced consumers to prepare meals at home, and boosted demand for cleaning and hygiene products.
Nestlé’s total sales grew 1.3% to 21.1 billion Swiss francs ($23 billion) as a result of the appreciation of the Swiss franc against other currencies.
Credit Suisse is seeking to raise roughly 1.8 billion Swiss francs ($2 billion) from investors to strengthen its balance sheet as losses mount from the collapse of hedge fund Archegos Capital Management.
The Swiss bank said in a statement that it would sell convertible notes to shareholders on Thursday to raise the capital.
Losses stemming from Archegos’ collapse wiped out what would have been a strong quarter, with revenues climbing 31% over the same period last year. Credit Suisse reported a loss of 757 million Swiss francs ($827 million) for the January-March period.
The bank took a hit of 4.4 billion Swiss francs ($4.8 billion) from Archegos’ implosion in the first quarter, and said it expects to book an additional 600 million Swiss francs ($655 million) in losses later this year.
“The loss we report this quarter, because of this matter, is unacceptable,” CEO Thomas Gottstein said in the statement.
Credit Suisse announced earlier this month that its top investment banker, Brian Chin, and chief risk officer Lara Warner would both be leaving the bank. Other members of the executive board will not receive bonuses for 2020, and board chairman Urs Rohner will give up 1.5 million Swiss francs ($1.6 million) in compensation.
Archegos is the second major stumble for Credit Suisse in recent months.
In March, Credit Suisse froze $10 billion in investment funds connected to failed UK supply chain finance firm Greensill Capital, which provided cash advances to companies owed money by customers.
Credit Suisse clients invested in the funds could suffer considerable losses.
Switzerland’s financial regulator, Finma, said in a statement on Thursday that it was investigating Credit Suisse for potential risk management shortcomings in relation to Archegos and Greensill.
The regulator said it has ordered various short-term measures be put in place, including “risk-reducing measures and capital surcharges,” as well as reductions or suspensions of bonuses.
Coca-Cola’s sales are starting to recover after a year of pandemic-related lockdowns. But that doesn’t mean it’s smooth sailing ahead.
The company’s net revenues grew 5% to $9 billion in the first quarter, beating Wall Street’s expectations. Coca-Cola stock rose nearly 1% on Monday morning.
About half of Coca-Cola’s business comes from foodservice, like restaurants and cafeterias. Those businesses were hurting badly during the pandemic, impacting Coke’s sales. Last year, net revenues fell 11%.
But as lockdowns ease, things are finally starting to turn around. The company said Monday that in March, volumes returned to those reported in March 2019 as lockdowns eased in some parts of the world.
But, CEO James Quincey said, investors should expect an uneven recovery.
“Many markets haven’t yet turned a corner and are still managing through the restrictions,” CEO James Quincey said during an analyst call Monday.
In the United States, for example, soda fountain volumes remained negative in March, because while “people are going out to restaurants and there’s more mobility, it’s not back to what it was,” Quincey said. “Reopening is not an on-off switch.”
Morgan Stanley disclosed Friday it lost $911 million during the first quarter due to a “single prime brokerage client.” That client was Archegos Capital Management, a person familiar with the matter told CNN Business.
Morgan Stanley (MS) was among the many banks that lent Archegos vast sums of money before its collapse last month. However, it avoided the more dramatic losses suffered by peers like Credit Suisse (CS), which lost $4.7 billion.
“I’m very pleased with how the institution came together and responded to this very complex situation,” Morgan Stanley CEO James Gorman said during a conference call Friday.
Despite the losses, Morgan Stanley managed to report record revenue and profit during the quarter.
Gorman said the bank liquidated “very large” single stock positions late in March, fire sales that cost it $644 million.
The Morgan Stanley boss said a “management decision” was made to “completely de-risk” the remaining smaller positions, causing another $267 million in losses.
“We decided we would be out of the risk as rapidly as possible,” Gorman said. “I regard that decision as necessary and money well spent.”
The broader question is how a little-known firm, run by an executive with a checkered past, was able to amass such risky positions in the first place. Archegos’s structure as a family office, a type of firm with limited transparency requirements, played a role.
Gorman said he thinks disclosure rules “made it more difficult to understand exactly who is holding what where.”
US stocks rallied Thursday, boosted by corporate earnings and several better-than-expected economic reports.
The Nasdaq Composite, which ended the day up 1.3%, is also closing in on record territory, ending above 14,000 points for the first time in two months. Its all-time high was about 14,095 on February 12.
Wall Street is having a great day, and there is indeed plenty for investors to be excited about: Earnings season kicked off with a bang (just look at all those bank profits) and the economic data from Thursday, April 15, was better than expected across the board. This included lower jobless claims and a massive jump in retail sales in March.
All this propelled the market higher. With just under two hours left in the trading day, the Dow and the S&P 500 are on track for record highs. The Nasdaq Composite could also print its first close above 14,000 points since February. A good ol’ rally all around.
As of the early afternoon, the Dow is up 0.7%, or 251 points. The S&P 500 is up nearly 1%. and the Nasdaq is up 1.3%.
America’s appetite for Funyuns helped boost PepsiCo’s sales in the first quarter.
The snacks and beverage giant reported net revenue growth of 6.8% in the 12 weeks that ended on March 20 compared to the same period last year. That’s a pretty good showing, given the pantry loading frenzy that took hold of Americans around this time last year.
What’s behind the sales boost? PepsiCo’s strategic acquisitions and people’s love for snacks, among other things.
Lay’s had low-single digit growth, the company said Thursday. Tostitos and Doritos grew in the mid-single digits, while Ruffles delivered high-single digits sales growth during the quarter.
But the small and mighty Funyuns brand posted double-digit growth, as did Off The Eaten Path, which has veggie puffs and hummus crisps.
PepsiCo also called out its Doritos 3D Crunch and Cheetos Crunch Pop Mix as growth drivers. Some of its beverages, like Bubly and ready-to-drink coffee beverages it sells in partnership with Starbucks, also delivered high growth during the quarter.
The stock market boom is sweet music to the ears of BlackRock investors and executives: The world’s largest money manager reported strong earnings and revenue that topped forecasts on Thursday.
BlackRock now manages more than $9 trillion for clients around the globe, with more than $2.8 trillion of that total invested in exchange-traded funds. BlackRock runs the popular iShares family of ETFs.
Shares of BlackRock (BLK) rose more than 2% on the news, hitting a new record high in the process.
CEO Larry Fink, who wrote about stepping up the company’s diversity and ESG efforts in his most recent annual shareholder letter, said in the BlackRock earnings release that the company’s “deep sense of responsibility to help more and more people experience financial well-being has guided significant investments in our business over time.”
Fink added that BlackRock plans “to stay ahead of clients’ needs,” and will continue to focus on “sustainable investing” strategies.
Fink isn’t just talking a good game, either. Investors clearly want what BlackRock is selling. Fink noted that BlackRock brought in $172 billion in new client money during the first quarter — a record for BlackRock that also marked the fourth consecutive quarter in which inflows exceeded $100 billion.