| Here's your daily business briefing. - 🥤 Coca-Cola exceeds expectations with a price hike
- 🔍 Deep Dive: China spends $40B on chip gear amid U.S. curbs
- 🛒 Walmart eyes Vizio
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Coca-Cola ($KO) reported quarterly earnings in line with analyst forecasts, posting adjusted earnings per share of $0.49, surpassing revenue estimates at $10.85B compared to the expected $10.68B. Despite obstacles like the Middle East crisis, which executives believed had a 1% impact on volume growth, unit case volume increased by 2% for the quarter. More: - Coca-Cola's organic sales increased by 12% during the quarter, not counting acquisitions and divestitures.
- In the North American segment, a 1% volume decline is attributed to reduced demand for water, sports drinks, coffee, and tea.
- Coca-Cola's increased prices mitigated the volume decrease, with premium categories, including Fairlife, Core Power, and Simply, showing robust growth.
- Coca-Cola expects 6%-7% organic revenue growth and a 4%-5% rise in comparable earnings per share for 2024, facing potential challenges from foreign exchange rates.
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What the numbers say: In 2023, China witnessed a 14% increase in chipmaking machinery imports, totaling nearly $40B, the second-highest value since 2015. Despite an overall decline in total imports by 5.5%, the notable surge in chipmaking machinery imports underscores China's dedication to strengthening its semiconductor industry for self-sufficiency, with a considerable rise seen in imports from the Netherlands, especially in December. Relevance: China's substantial investment in chipmaking machinery underscores its strategic goal of reducing reliance on foreign technology and navigating export controls. The notable surge in imports from the Netherlands, particularly for lithography equipment, highlights the urgency among Chinese firms, including Semiconductor Manufacturing International Corp., to secure essential machinery before new export controls occur. More data: ASML Holding NV halted machine shipments to China at the U.S. government's request, underlining the impact of export controls on advanced chipmaking equipment. The rush to secure machinery before export bans emphasizes the competitive dynamics in the global semiconductor industry and China's strategic need for advanced technology. | | | |
| 3 | | The WSJ reports Walmart ($WMT) is discussing purchasing smart TV maker Vizio ($VZIO) for over $2B, emphasizing the significance of consumer data and advertising space for major retailers competing with Amazon. Walmart is the No. 1 seller of Vizio TVs, and Vizio is the best-selling brand at Walmart. More: - According to Insider Intelligence, the retail media space is predicted to generate $59.6B in U.S. ad revenue this year, an increase of about 30% YoY.
- Like Amazon, Walmart wants to use its Walmart Connect ad unit to boost income outside its grocery division.
- Acquiring Vizio would grant Walmart access to a TV operating system, expanded ad inventory, and proprietary viewing data, bolstering its advertising capabilities.
- Amazon commands a 17% share of operating systems in connected TVs, surpassing Vizio's 8%, while Roku leads with a 25% market share, as reported by Parks Associates.
- After the news, Vizio's stock price increased by around 25% to $9.75, almost reaching $2B on the stock market.
Zoom Out: - Vizio is primarily recognized for its affordable TVs and has endeavored to diversify its business into advertising and streaming in recent years.
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| 4 | | Restaurant Brands International ($QSR) exceeded Q4 earnings expectations with adjusted EPS of $0.75 (vs. expected $0.73) and quarterly revenue of $1.82B (vs. expected $1.81B). Strong Tim Hortons sales, especially in cold drinks and afternoon snacks, contributed to the robust performance. More: - The Canadian coffee chain Tim Hortons, the primary revenue driver for Restaurant Brands, exceeded expectations with an 8.4% growth in same-store sales.
- Burger King revealed a 6.3% gain in same-store sales, attributed to a turnaround strategy that included remodeling restaurants and increasing advertising expenditures.
- Popeyes saw a 5.5% increase in same-store sales during the quarter, helped by permanently adding chicken wings to the menu and its first-ever Super Bowl advertising.
- RBI's international segment achieved 4.6% growth in same-store sales for the quarter.
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| 5 | | Toy sales in 2023 witnessed an 8% decline in dollar terms and a 6% decrease in unit sales YoY, including during the crucial Christmas toy-buying period. Despite this decline, the toy industry recorded a $5.7B sales increase compared to pre-pandemic levels in 2019, driven by consumer preference for lower-priced toys, leading to a 2% decrease in the average selling price in the fourth quarter. More: - In Q4, Hasbro's ($HAS) revenue declined over 20%, with a loss of $1.06B, or $7.64 per share, significantly wider than the previous year, and a pessimistic outlook for 2024.
- Since August 2023, consumer spending on games, toys, and hobbies has climbed monthly after accounting for inflation; in December, this growth was positive for the first time since 2017.
- Student loan repayment among millennials is a significant factor affecting toy purchases, given that this demographic forms a major toy consumer base.
- In 2023, households' credit card debt increased, and consumer savings were exhausted due to persistent inflation and financial strains.
- Toy Joy, a toy store chain, saw strong growth in toy buying among young millennials and Gen Z collectors despite an overall decline in purchases among families with young children.
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| 6 | | Digital freight broker CDL 1000 acquired rival Next Trucking in an equity deal, seeking to consolidate their technology-focused businesses matching trucks and shipments. The acquisition comes amid challenges for digital freight startups in the logistics industry, marked by the closure of companies like Convoy and losses reported by Uber Freight. More: - Next Trucking is a California-based company specializing in the country's busiest container port complex between Los Angeles and Long Beach.
- Next Trucking was established in 2015, raised $273M before being acquired, and as of July 2023, its valuation was $196M.
- Chicago-based CDL 1000, known for short-haul route management between seaports and warehouses, has expanded its services and nationwide reach by acquiring Next Trucking.
- The financing for CDL 1000 came from a group of investors that had previously supported Next Trucking, including Brookfield Growth, Mucker Capital, and SVB Capital.
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 | 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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