GSK (GSK), Microsoft (US:MSFT), house prices, Alphabet (US:GOOGL), ITM Power (ITM) and Ecora Resources (ECOR)
Blockbuster jabs Arexvy and Shringrix helped GSK (GSK) beat consensus expectations in its 2023 financial year. The group’s total sales across the 12 months to 31 December were up 5 per cent to £30bn – but excluding Covid-19 treatments, this figure was a more robust 14 per cent.
Turnover from the group’s vaccine portfolio was up 24 per cent thanks in large part to the RSV jab Arexvy, which only launched in the second half and has already logged more than £1bn in sales. Almost all of this turnover came from the United States, where the company said some 6mn of the 83mn older adults most at risk from the virus have already been vaccinated.
Investors have previously had misgivings about the weakness of GSK’s drug pipeline, but these appear to be diminishing as the company makes concerted growth efforts. At the close of last year, it had 71 vaccines and speciality medicines in clinical development, including 18 in the third and final trial stage. The group now anticipates 2024 revenue growth of 5-7 per cent. Positive as these developments seem to be, investors appear to need further convincing, as GSK’s shares had fallen more than 1 per cent by mid morning. JJ
Read more: GSK commits to dividend despite uncertain outlook
Microsoft meets high expectations
Microsoft’s (US:MSFT) revenue growth continues to be driven by the excitement around its AI products.
In the three months to December, the group’s revenue increased 18 per cent year-on-year to $62bn driven by the 30 per cent growth in its cloud computing division Azure. This was slightly ahead of Factset consensus which had forecasted revenue of $61.1bn. The earnings per share of $2.93 was way ahead of the analyst forecast of $2.77.
Promisingly, AI services boosted Azure revenue growth by 6 percentage points, up from the 3 percentage points last quarter. GitHub Copilot, its AI coding program, saw subscribers increase 30 per cent quarter-on-quarter, meanwhile, its low code AI enabled Power Platform saw users jump over 80 per cent.
Capital expenditure of $11.5bn was slightly lower than expected but this helped boost free cash flow which was up 86 per cent year-on-year to $9.1bn.
As the fastest-growing cloud computing company, Microsoft continues to take market share from Amazon and Google. For now, it remains out in front of the AI race. AS
Read more: How to find the next winning AI shares
Alphabet shares drop despite growth
Alphabet’s (US:GOOGL) revenue beat expectations but a miss on free cash flow meant its share price dropped in after hours trading.
In the three months to December, Google’s parent company saw revenue rise 13 per cent year-on-year for the quarter to $86.3bn (£68bn) which was 1.2 per cent ahead of analyst expectations. A three-percentage point jump in the operating margin to 27 per cent helped operating profit rise 30 per cent to $23.7bn. However, a big deferred tax payment meant the $7.81bn of free cash flow was less than expected.
Search revenue and YouTube revenue rose 13 per cent and 16 per cent year-on-year respectively, as the digital advertising market continues to recover, although these numbers were slightly lower than analysts expected.
Cloud computing revenue grew 26 per cent year-on-year to $9.2bn which was just ahead of expectations. This was an acceleration from the 22 per cent growth last quarter. However, it was behind Microsoft Azure’s 30 per cent growth, which was reported on the same day.
Importantly, cloud operating profit of $864mn was up $266mn from last quarter, and a big improvement on the $186mn loss in the same period last year. This shows with increased scale cloud computing margins should continue to improve and the 45 per cent increase in capex to $11bn shows Google plans to keep growing. AS
Read more: Cloud computing growth is the new benchmark
Ecora income slides
Royalty company Ecora Resources (ECOR) had signposted a significant drop in income for 2023, given the shift away from its royalty area at the Kestrel coal mine and weaker output and prices from the Voisey’s Bay cobalt stream.
The company duly reported $64mn in portfolio income for the year, down from $143mn in 2022. This was 3 per cent ahead of RBC’s forecast, however. The company should see higher revenue from Kestrel this year, and is also pushing further into nickel and cobalt, through a $7.5mn deal to raise the royalty on the pre-production Piaui mine in Brazil. Further cash is needed from Ecora to get the mine built, and the company has upped its loan book by $25mn. This takes total borrowing capacity to $225mn. AH
