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| Here’s your daily business briefing. - 🛡️ UnitedHealth revenue beats despite cyberattack
- 🍹 Deep Dive: Western liquor Vs. China's drink
- 👜 LVMH sales slow with handbag demand
Thanks for reading! Shriram
p/Shriram | |
| 1 | | UnitedHealth Group's first-quarter revenue surpassed analysts' estimates at $100.08B, while adjusted earnings per share stood at $7.16, exceeding expectations of $6.61. However, the company faced a net loss of $1.41B, or $1.53 per share, due to a charge of around $7B from selling its Brazil operations. More: - The cyberattack on Change Healthcare's subsidiary's financial impact included direct response efforts and business disruption costs, amounting to a $0.74 per share impact for the quarter.
- Optum, a key business unit of UnitedHealth, saw its revenue increase to $61.1B in the first quarter from $54.1B in the corresponding period last year.
- UnitedHealthcare, a significant business division, recorded first-quarter revenue of $75.4B, buoyed by a rise in the U.S. customer base.
- Due to the cyberattack and the sale of its Brazil operations, the company adjusted its full-year net earnings forecast to $17.60 and $18.20 per share.
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What the numbers say: In 2022, China led the global alcohol market with sales totaling $340B, primarily fueled by the popularity of its national spirit, baijiu, according to Euromonitor. China's baijiu market, valued at around $167B in 2023, significantly outpaces the whiskey and cognac markets. Euromonitor projects 88% growth for whiskey in the country by 2026, accounting for approximately 3% of the total spirits market. Relevance: Global beverage giants like Diageo and Pernod Ricard are focusing on younger Chinese consumers and expanding their presence in China's burgeoning spirits market, investing in marketing, online platforms, and product innovation. Despite the dominance of baijiu, Western firms see opportunities in China's evolving drinking habits and growing middle class, adapting strategies and introducing new products to compete with local producers. More data: Boston Consulting Group projects that China's middle-class and affluent population will grow by 80 million by 2030, reaching nearly 40% of the population. While top baijiu brands like Moutai command high prices, sales of the most expensive labels are slowing, prompting producers to innovate with new products to cater to younger consumers, challenging Western players' efforts to gain market share. | | | |
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| 3 | | LVMH experienced a deceleration in sales growth in Q1 attributed to reduced demand for Louis Vuitton handbags and Hennessy Cognac, with organic revenue for its largest division, the fashion and leather goods unit, increasing by 2% compared to 18% growth in the previous year. Despite this, LVMH shares saw a 3.6% rise in Paris trading, easing investor concerns. More: - Fashion and leather goods experienced a nearly 10% rise in Chinese demand during the quarter, balancing out sluggish sales within mainland China.
- According to Bloomberg Intelligence, Chinese consumers accounted for approximately 23% of global luxury goods spending in 2024, down from 33% before the pandemic.
- LVMH saw a 6% drop in organic revenue in Asia, but sales surged by nearly a third in Japan, with the U.S. and Europe experiencing 2% growth.
- The wine and spirits division of LVMH underperformed, with revenue declining by 12%.
- Louis Vuitton outperformed the unit's average growth slightly, while Dior's performance lagged behind, according to the CFO, with the selective retailing unit, spearheaded by Sephora, emerging as LVMH's top performer.
- Tiffany & Co., with approximately half of its sales in the U.S., faces more significant exposure to inflation-conscious customers than Bulgari, which relies more on its presence in Asia.
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| 4 | | Adidas AG revised its profit target for the year to approximately $745M, previously set at $532M. Despite analysts' average estimate of $927M for Adidas' operating profit, which exceeds the revised target, the company aims for steady growth in both sales and profit after experiencing a decline in net sales in 2023. More: - Adidas's first-quarter revenue of $5.8B was more significant than the $5.6B analysts predicted.
- The recent Yeezy release yielded approximately $159M in revenue and $53M in operating profit during the first quarter.
- Bjørn Gulden, the CEO, wants to see Adidas develop again by emphasizing iconic models like the Samba and Gazelle.
- Nike's stock decreased by 26% YoY, while Adidas increased by almost 25%.
- The sportswear firm aims to benefit from collaborations with the Olympics, Paralympics, EURO 24, and Copa events in the current year.
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| 5 | | The Biden administration has awarded Samsung Electronics up to $6.4B in grants for chip production expansion in Texas under the 2022 Chips and Science Act. This funding will support the establishment of two chip production facilities, a research center, and a packaging facility in Taylor, Texas, and the expansion of Samsung's semiconductor facility in Austin to enhance chip output for various industries and national security. More: - Samsung Co-CEO Kyung Kye Hyun underscores the investment's aim to equip fabs with advanced process technologies to meet rising demand for future products like AI chips.
- Analysts predict production will start in 2026 and use 4-nanometer chips first before moving on to 2-nanometer chips in the long run.
- The aim is to decrease dependence on China and Taiwan, given that the U.S. share of global semiconductor manufacturing capacity has declined from 37% in 1990 to 12% in 2020.
- Samsung intends to inject approximately $45B into Texas facilities by 2030, to enhance U.S.-based manufacturing, bolster national security, and foster job growth.
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| 6 | | The all-share agreement between TGI Fridays and its franchisee in the U.K., Hostmore, is estimated to be worth $220M. The combined company will trade openly on the London Stock Exchange with the ticker "TGIF." More: - The company's headquarters will remain in Dallas, Texas, and Weldon Spangler will continue as CEO.
- In the U.S. and the U.K., the new corporation will own 189 locations.
- In 2022, TGI Fridays brought in $75.2M, highlighting its bar options and returning to its roots.
- Earlier this year, the business closed 36 underperforming restaurants in the U.S.
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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 Shriram Jeevakumar | |
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