Jarden Brief: Apple teams up with new 5G partner

The new partnership is part of Apple’s gargantuan investment in the US economy. Photo / AP, Andy Wong

Keeping you up to date with the latest market moves, in association with Investment firm Jarden.

International

US

Apple has announced a multi-year, multi-billion-dollar agreement with Broadcom to develop 5G radio frequency and advanced wireless connectivity components, which will be designed and built across several key American technology hubs.

CEO Tim Cook expressed the company’s commitment to deepening its investments in the US economy, saying the deal supports over 1,100 jobs at Broadcom’s manufacturing facility. Apple also supports more than 2.7 million jobs across the US through direct employment and its connections with over 9,000 U.S. suppliers and manufacturers.

This partnership, part of Apple’s US$430 billion investment in the US economy, comes after the company’s 2020 introduction of 5G technology to its devices. Apple share’s traded 1.3 per cent higher at the time of writing.

Lowe’s Companies, Inc. announced first quarter earnings ended 30 March, with earnings per share (EPS) of US$3.77, compared to EPS of US$3.51 in the comparable period in the prior year. Total sales amounted to US$22.3b, with a 4.3 per cent decrease in comparable sales due to lumber deflation, unfavourable weather, and lower DIY discretionary sales.

CEO Marvin R. Ellison highlighted positive comparable sales online and for professionals but noted a revised full-year outlook due to lower-than-expected consumer demand for discretionary purchases.

The revised 2023 outlook predicts total sales between US$87-89 billion (down from the previous US$88-90 billion forecast), a 2.0 to 4.0 per cent decrease in comparable sales, adjusted operating margin of 13.4 to 13.6 per cent, and earnings per share of US$13.20-13.60. The company also forecasted capital expenditures of up to US$2b.

Dick’s Sporting Goods reported first quarter net sales of US$2.8b, marking 5.3 per cent growth, and robust operating income margin of 11.6 per cent. Comparable store sales grew by 3.4 per cent due to a 2.7 per cent rise in transactions and higher average ticket.

The company reported an earnings per diluted share of US$3.40, compared to US$2.47. Management is reaffirming their outlook for the year, expecting full-year earnings per diluted share in the range of US$12.90 to US$13.80 and comparable store sales to range from flat to positive 2.0 per cent.

Rest of the World

Vipshop Holdings Limited, a leading online discount retailer in China, has reported strong growth in its unaudited financial results for first quarter earnings ended March 30, highlighting a 9.1 per cent increase in total net revenues, 17.9 per cent growth in gross profit, and a remarkable 69.6 per cent surge in net income year over year.

With the number of active customers and total orders on the rise, the firm attributes this momentum to effective merchandising strategies, an expansion in merchandise, and increased consumer engagement.

For the future, Vipshop intends to focus on expanding its high-value customer base and Super VIP members.

Australia

The Qantas Group projects a strong performance for FY23 with an estimated pre-tax profit of up to A$2.475 billion ($2.62b), driven by strong travel demand and the successful completion of its three-year recovery program.

Despite elevated fuel prices and operational costs, Qantas had an increase in flight activity due to new aircraft arrivals and the return of jets from long-term storage.

Domestic capacity is expected to surpass pre-Covid levels by the end of 2H23 and international capacity will reach around 100 per cent of pre-Covis levels by March 2024. Forward booking trends suggest robust travel demand continuing into FY24. Qantas plans to share the benefits of recovery with its employees, while also increasing its on-market buy-back by up to A$100 million.

SILK Laser Australia Limited has received a non-binding, indicative proposal from Hong Kong listed EC Healthcare to acquire 100 per cent of SILK’s shares at an indicative offer price of A$3.35 cash per share, a 6.3 per cent premium over the offer from Australian Pharmaceutical Industries Pty Limited (API).

The offer from EC Healthcare allows for a fully franked dividend payment of up to 10 cents per share, which would reduce the cash consideration under the proposal if paid.

The proposal is contingent upon several conditions, including completion of due diligence, unanimous board recommendation, entry into a Scheme Implementation Agreement, and necessary regulatory approvals.

SILK’s board, after careful consideration and advice from financial and legal advisers, has deemed the EC Proposal as a Superior Proposal. SILK has informed API of this Superior Proposal, allowing API five business days, until 30 May 2023, to provide a counter proposal. At this point, no action is required from SILK shareholders. This does not guarantee a change of control transaction or an offer that SILK shareholders can accept.

New Zealand

Chorus unveiled a new operating model and changes to its executive team to better align with its strategy, adapt to a new regulatory framework, and respond to market shifts.

This includes the creation of three value streams: Access, Infrastructure, and Fibre Frontier, each led by Executive General Managers under CEO JB Rousselot.

The operating model, effective in Q2 FY24, will also merge Strategy, Enterprise performance, and CX, Customer Engagement and Brand & Marketing with Finance responsibilities under a new role of Chief Operating Officer, assumed by current CFO Mark Aue.

Existing executive roles held by Andrew Carroll and Ed Hyde will be discontinued, both choosing not to pursue new roles within the restructure. Jo Mataira will take over as Chief People Officer and Katrina Smidt, Deputy CFO, will join the Executive team. A selection process will be conducted for the newly created roles, with further announcements preceding the operational shift in Q2 FY24.

Turners Automotive Group reported its financial performance for the year ending March 31, attributing its strong results to strategic diversification and de-risking measures.

Despite potential effects of the interest rate cycle on its FY25 target of $50 million profit before tax figure, the company remained resilient amid challenging conditions.

Highlights included a 13.0 per cent increase in revenue to $389.6 million, earnings before interest and tax at $52.2 million (up 9 per cent), profit before tax at $45.5 million (up 6 per cent), and NPAT at $32.6 million (up 4 per cent).

Earnings per share increased by 4.0 per cent to 37.7 cps. The Auto Retail and Insurance divisions had record earnings, while market share gains and margin improvement were noted in Auto Retail. The company’s strong culture and the successful ‘Tina’ marketing campaign were instrumental in their growth. Even though macroeconomic headwinds and uncertainty lie ahead, the company is poised for continued growth and is well-positioned to navigate rapidly changing market conditions.

Coming up today

In New Zealand, the RBNZ will provide an update to the Official Cash Rate at 2pm. This morning, retirement operator Oceania Healthcare and software company Eroad will report their earnings.

Within Australia, vehicle retailer Eagers Automotive and digital travel company WebJet will report their earnings.

For more information on the latest market moves, get in touch with Jarden.

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All market pricing and announcements are sourced from Refinitiv, NZX and ASX.