The half-year results season has kicked off. 32 companies from the 13 countries monitored by Scalens (Europe, Switzerland, UK, US) have now released their half-yearly results. They are mainly British, and tend to be in the services sector. The sample is very small compared with the 1,200 companies covered, but it does provide an initial overview.
At a time when economists around the world are sounding the alarm about rising interest rates and falling purchasing power, these listed companies, which are speaking out fairly early, are announcing nothing but good news.
Sales in this first sample are up by 20% in value terms, compared with 16% in the first half of 2022, which was already a record year. The British are up by more than 30%, the French are about average, and the Nordic countries are below 10%. This reflects the ranking of inflation levels.
Margins are up 31%, compared with 23% last year, showing that companies have done more than pass on price rises to their customers.
This year, operational efficiency has been achieved mainly through job cuts, with massive lay-off plans in the first quarter across all sectors. This is in stark contrast to 2022, when cost reductions were achieved without downsizing. The cohesion of the social body, considered since the health crisis of 2020 as a new lever for success, is no longer so celebrated. Even so, the employment market in general is in good shape, with unemployment at its lowest level in most of the countries monitored by Scalens, particularly the United States.
The American companies most affected by these redundancy plans have not yet published their results – only the agricultural machinery company John Deere has done so, announcing an excellent half-year.
Among the difficulties encountered, inflation and exchange rate instability come first, and uncertainty about China remains. Companies are no longer talking about the problems of 2022, securing energy supplies, the supply chain or the geopolitical uncertainties over Ukraine; they have organised themselves for a long war.
EPS is the net profit indicator that now features at the top of press releases, rather than overall net profit, the indicator of previous years. Share buy-backs have had an impact.
Cash flow is down, almost three times lower than in 2022, which itself was a third lower than in 2021. The two main uses in the first half of the year were to increase dividends and to buy back shares. In 2022, it was external growth. But there have been few M&A deals since January 2023.
As a sign of the times, two-thirds of companies are taking stock of their environmental commitments. The reduction of CO2 emissions is accelerating, and more women are working in the teams.
The outlook for 2023 has been revised upwards for more than a third of these companies. 70% give quantitative guidelines, a proportion comparable to 2022 (64%), and much higher than 2021 (45%).
The priority for the second half of the year is clearly to restore a good level of cash flow, by continuing to grow the topline. In 2022 at the same date, the priority was growth, with a good level of margin. Companies facing inflation now need to rebuild their cash cushions.
Lire l’article en francais