Sasfin : Exxon smashes Western oil majors earnings record by $56 billion profit

MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

On the Johannesburg Stock Exchange, the All-Share index dropped more than 1% yesterday to 79,476, while the Top-40 lost about 1.2%. Looking at data, South Africa's trade surplus diminished to R5.43 billion in December from a revised surplus of R7.30 billion in November. Other data showed that the country's private sector credit expanded 7.73% year on year in December after rising by 8.3% in November.

EUROPEAN MARKET COMMENTARY

European markets fell yesterday as euro zone growth figures came in better than expected. The pan-European Stoxx 600 index closed down 0.2%, with Basic Resources stocks closing down 1.2% and the Food and Beverage sector ending 0.9% higher. Data released yesterday showed that euro zone economy grew 0.1% in the last quarter of 2022, above the 0.1% contraction estimated. In other data news, German retail sales for December fell as the biggest European economy contracted by 0.2% in the last quarter of 2022.

US MARKET COMMENTARY

US stocks were up yesterday as the employment cost index showed compensation increased 1% in the fourth quarter of 2022. The news came as investors digested a slew of earnings reports and await the Federal Reserve's latest decision on interest rates. General Motors, PulteGroup and Exxon Mobil shares all jumped as the companies announced good earnings reports. In other news, PayPal said yesterday that it has plans to cut 2,000 jobs with a challenging macro-economic environment being the main cause. PayPal's stock gained 2% yesterday.

LOCAL COMPANIES

TRANSPACO LIMITED (TCP) +9.7%

The company believe that earnings per share for the six months ended 31 December 2022 will be between 308 and 324 cents per share, up between 35.4% and 42.5% from 227.4 cents per share a year ago on 31 December 2021. Headline earning per share are believed to be between 309 and 325 cents per share, up from last year where it was 218.8 cents per share. This represents an increase in headline earnings per share of between 41.3% and 48.6%.

SEA HARVEST GROUP LIMITED (SHG) -5.3%Trading Statement

The Group expects earnings before interest and tax ("EBIT") of between R490 million and R510 million, representing a decrease of between 24% and 27%, compared to EBIT of R670 million for the comparative period. Basic earnings per share ("EPS") of between 109 cents and 114 cents, representing a decrease of between 32% and 35%, compared to the EPS of 168 cents reported for the comparative period and basic headline earnings per share ("HEPS") of between 102 cents and 107 cents, representing a decrease of between 32% and 35%, compared to the HEPS of 157 cents reported for the comparative period.

HUDACO INDUSTRIES LIMITED (HDC) 0.0%

The company advised that, for the year ended 30 November 2022 headline earnings per share ('HEPS') are expected to be between 1977 cents and 2037 cents. This is between 20% and 24% higher than the HEPS of 1641 cents reported for the year ended 30 November 2021 while basic earnings per share ('EPS') are expected to be between 1977 cents and 2037 cents. This is between 20% and 24% higher than the EPS of 1643 cents reported for the year ended 30 November 2021. Comparable earnings per share ('CEPS') are expected to be between 1921 cents and 1981 cents. This is between 19% and 23% higher than the CEPS of 1613 cents reported for the year ended 30 November 2021.

INTERNATIONAL COMPANIES

McDonald (MCD) -1.3%

MacDonald's beat Wall Street's estimates on earnings and revenue as US customers flock to its restaurants. Consumers have reduced their restaurant spending to fight inflation but the less expensive Big Macs and McNuggets are proving to be an affordable alternative. Earnings per share came in at $2.59 per share, above the $2.45 per share expected while revenue was $5.93 billion, against the expected $5.68 billion. For the fourth-quarter net income was $1.9 billion up from $1.64 billion a year earlier. same-store sales were up 12.6% in the quarter, with strong demand in the US and some parts of Europe being the catalyst. Looking ahead, MacDonalds plan to expand their global footprint by adding at least 100 new stores throughout the year.

GM (GM) +8.4%

General Motors topped Wall Street's expectations for the fourth quarter and forecast growth for the upcoming year. Shares in GM added roughly 8% in early trading yesterday after reporting adjusted earnings per share of $2.12 per share, above the $1.69 per share expected. Revenue also beat expectations coming in at $43.11 billion against the expected $40.65 billion. Full-year 2022 revenue came in at $156.7 billion and adjusted earnings before interest and tax was at a record $14.5 billion. But not all news was good news, net income for the full-year 2021 was $9.9 billion, down by less than 1% from 2021. This meant that profit margin dropped this year but with the company saying that it incurred special expenses in the fourth quarter, forecasts still looked positive.

Exxon (XOM) +2.2%

Exxon Mobil has had a record breaking year, making $56 billion in profits. Adjusted profit per share came in at $3.40 per share beating the expected $3.29 per share. Exxon reported cash flow from operations of $76.8 billion last year, up from $48.1 billion in 2021. Profit for the full year was $59.1 billion while production was up by about 100,000 barrels per day. Last year, Exxon's spending bounced back to $22.7 billion, up 37% from the prior year as the company look to continue spending money on looking for oil in Guyana, in the top U.S. shale field, and on fuel refining and chemicals.

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