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| Here’s your daily business briefing. - 🎃 Halloween chocolate prices up due to El Niño
- 📊 Deep Dive: Automakers love EVs, buyers hesitant
- 🏢 Morgan Stanley shares tumble after wealth management miss
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram
p/Shriram | |
| 1 | | Cocoa futures soared to a 44-year high, reaching $3,786 per metric ton on Monday, as hotter and drier weather patterns adversely affect cacao bean crops used in chocolate production. Major cocoa-producing regions in West Africa, including the Ivory Coast, Ghana, Cameroon, and Nigeria, where nearly 75% of global cocoa beans are harvested, grapple with a warmer farming season and reduced rainfall. More: - The ongoing El Niño weather pattern, predicted to last through the first half of 2024, is partially to blame for the current heat and dryness impacting cocoa-growing regions.
- Halloween candy has become more expensive this year due to the lack of cocoa, raising the cost of chocolate and candies.
- Candy prices were 7.5% higher in September than in the previous year, and according to a survey conducted in 2023, consumers will spend $3.6B on candy for Halloween, up from $3.1B in 2022.
- While some specialist chocolatiers who use premium cocoa sources have so far been able to escape significant price rises, they may soon feel the effects of the cocoa crisis.
Q: How has the rising cost of chocolate and candy impacted your Halloween traditions and celebrations? Join the conversation here. |     | |
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What the numbers say: The average cost of a battery-powered vehicle in September was $50,683, down from $65,000 in the same period last year, and hybrid sales surged by 48% in the first three quarters of this year, reversing a 6% decline from the previous year. EV sales in the U.S. increased by 51% in the first nine months of this year, while EVs' retail market share has stabilized at approximately 9% for the past few months. Relevance: Automakers are reevaluating their plans as the surge in sales of electric vehicles appears to be slowing down. Despite several incentives, buyers seem less inclined to buy EVs, and unsold inventory is building up for certain manufacturers. More data: Last month, Hyundai, Kia, and Volkswagen increased their EV inventories compared to a year ago. However, Hyundai and Kia lost eligibility for the $7,500 federal EV tax credit in August, making their EVs more costly for buyers. Hybrid and plug-in hybrid sales are up by 48% in the first three quarters of the year, while Toyota's emphasis on hybrids led to Prius shortages in September, even as their new electric SUV, the bZ4X, had over a two-month supply. | | | |
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| 3 | | Morgan Stanley's Q3 earnings outperformed profit expectations with earnings per share at $1.38, surpassing the LSEG estimate of $1.28, although revenue for the quarter came in slightly below expectations at $13.27B compared to the anticipated $13.23B. The bank's profit fell by 9% YoY to $2.41B, or $1.38 per share, and net interest income dropped 9% from the second quarter, with further declines anticipated in the fourth quarter. More: - Morgan Stanley's trading division exceeded forecasts, with $1.95B coming from bond traders and $2.51B from stock traders.
- With $6.4B in revenue, the wealth management division underperformed compared to expectations, missing more than $200M because of higher compensation expenses.
- After the announcement, the bank's stock ended more than 6% down the day.
- With $938M in income, investment banking likewise fell short of forecasts, citing flaws in mergers and initial public offerings.
- CEO James Gorman acknowledged a "mixed" business climate, mentioning that the wealth management division attracted fewer new assets as investors opted for money market funds and Treasuries amidst rising interest rates, and he reiterated his intention to transition the CEO role to a successor in the coming months.
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| 4 | | Procter & Gamble (P&G) posted quarterly earnings and revenue that outperformed analyst forecasts, with earnings per share at $1.83, surpassing the estimated $1.72, and quarterly revenue reaching $21.87B, exceeding the expected $21.58B. P&G's fiscal first-quarter net income attributable to the company was $4.52B, or $1.83 per share, compared to $3.94B, or $1.57 per share, in the previous year. More: - P&G's product price increases were the leading cause of the quarter's 7% growth in organic revenue, which helped the company's net sales rise by 6% to $21.87B.
- P&G's volume decreased by 1% this quarter despite the good results, mainly caused by the company's ongoing product price hikes.
- CFO Andre Schulten stated, "Despite some turning to cheaper private-label alternatives due to higher prices, P&G has seen volume declines narrow in recent quarters and foresees volume growth for the fiscal year."
- The grooming segment of P&G, which includes Venus and Gillette products, recorded a 2% volume reduction, while the baby, feminine, and family care segment, which includes brands like Pampers and Bounty, had a 3% volume decrease.
- The only P&G business to have a volume increase during the quarter was the healthcare division, which was propelled by solid demand for respiratory products like Vicks.
- Additionally, the company raised its sales forecast for the upcoming fiscal year (2024) from the previous estimate of 3% to 4%, predicting growth of 2% to 4%.
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| 6 | | ADM reported Q3 earnings above expectations, driven by solid ethanol and sweetener margins and robust Brazilian crop exports, with an adjusted profit of $1.63 per share, surpassing the estimated $1.52 per share. Despite this, ADM's Q3 earnings were lower than the previous year, but the company has increased its full-year earnings outlook to "over $7 per share" from "around $7" due to a strong performance in the first three quarters and a favorable market environment. More: - The American multinational food processing company profited from the increased demand for food, animal feed, and biofuel.
- ADM's Nutrition segment had reduced results due to lower demand for meat protein substitutes and production disruptions at a central soy processing facility after a September incident.
- Brazil's record-breaking maize and soybean crops partially offset drought-affected Argentina and Ukraine's decreased supply.
- ADM's largest segment by revenue, Ag Services and Oilseeds, reported a 21% decline in operating profit due to higher crop exports from South America
- This business' profit drop was also attributed to worse oilseed crushing results than the previous year.
- Strong margins in starches, sweeteners, and ethanol propelled ADM's Carbohydrate Solutions sector to a 49% rise in operating profit.
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Term of the Day Capital expenditure: CapEx is the spending by a company for the acquisition, improvement, or maintenance of long-term assets such as buildings, equipment, or land Question of the Week What's one tool or app that has significantly made your life easier at work? Join the conversation |
INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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