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Emerson highlights and expands. Moody's warns. Salesforce predicts.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
Logical logistics
CRM-company Salesforce released a report-forecast on, what joys and sorrows await U.S. consumers and companies later this year, in the season of the greatest holiday spending. We have highlighted the most important for you.
Volumes are growing! Sales in the field of e-commerce in the United States will grow by 10% compared to the same period 2020, in the world as a whole, growth will be 7%. That's pretty good., but much less rate in 2020, when the growth was greater 50%. The volume of spending online will be 259 billion in the Us and 1.2 trillion in the world as a whole - that, in general,, will be a record.
Overall, this is good news for all companies., working in the field of online commerce, but, On the other hand, the slowdown in sales growth indicates that, that the rapid improvement of the financial performance of these companies should not be counted on.
Price increases. Buyers are waiting for an increase in prices for 20%, which for obvious reasons would be very bad for them.. Salesforce notes, that such a rise in prices will popularize the method of payment in installments.
The cost of goods in the United States in the holiday season will grow by $ 223 billion, which will be very bad for retailers. The reasons for the increase in value are as follows: logistic difficulties, increase in production costs due to lack of production capacity and lack of workers. Therefore, it is possible to prepare for mixed results of reporting of retail chains in February.: with revenue growth, but the fall in business margins.
More automation
Emerson Electric Industrial Enterprise (NYSE: EMR) is going to buy industrial software maker Aspen Technology (NASDAQ: AZPN) for $ 11 billion - about the price 160 $ per share.
The deal will be partially financed by money - $ 6 billion, and the remaining amount will be provided in the form of shares. For Aspen shareholders, the deal looks very nice: they will receive 87 $ And 0,42% shares of the new combined enterprise for each share of Aspen, which is owned by. Also part of the new enterprise, which will retain the name Aspen, Emerson's own software units will be included. Emerson in the new Aspen will own more than half of the shares.
The deal will also add to Emerson's debt.: according to the latest company statements, it has only $2.86 billion and $2.754 billion in counterparty debts., and total debt is approximately $15 billion, of which approximately $5.835 billion is long-term debt..
However, Emerson still has liquid assets. And Aspen itself has little debt., especially against emerson background, but Emerson still pays dividends, which takes 1.2 billion a year. Therefore, it is quite possible, that Emerson will have to borrow new — or cut payments, and this will lead to a drop in prices.
Aspen is bought with a premium of about 27% to the value of its shares before the news of the purchase of the company appears - and approximately for 22 its annual revenues, с Fr / It's about 35. But at the same time, Aspen is a business with a final margin. 45% from proceeds. So in the long run, it's a good acquisition for Emerson.. But specifically here and now, it will lead to a heavier debt burden of the company and can negatively affect its ability to pay dividends.. However, merger may not yet take place.
At the same time, if we ignore the situation with Emerson itself., then, certainly, this deal is more than logical: U.S. industrial companies are increasingly spending on the acquisition of software manufacturers, to increase the efficiency of their plants. So you can look at other manufacturers of industrial software like UiPath.
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Oil must flow!
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p class=’paragraph’>Moody's experts have calculated, that the lack of investment in exploration and production in new oil fields threatens to lack oil supplies in the coming years. Therefore, oil companies need to increase the volume of investments in production by 54% — up to 542 billion dollars.
Interesting, what, despite rising energy prices, oil companies' production costs remain lower, than before the pandemic. Some companies, namely credited shale miners, which even before the collapse of oil prices for years worked at a loss, prefers to repay huge debts with free money. Other players in the industry, probably, stops a combination of causes.
Firstly, everyone understands, that rising supply in the market will reduce the price of oil and affect their revenues and ability to pay debts. So the situation with the lack of supply and high prices they are more than satisfied..
Secondly, powerful ESG-lobby has an extremely negative view of new projects in the field of hydrocarbon production. Any more or less serious project at a new field requires large loans, which at a sane percentage can not be obtained. Finally, there are risks of ignoring or even reducing quotations due to such initiatives. Therefore, whether oil companies will increase investment in production in such conditions is still a big question..
That's certainly bad news for all energy consumers, from individuals to corporations.. When existing deposits are depleted, prices will rise even more.
Also, such uncertainty will have a bad effect on the business of oilfield services companies., who can not yet count on the growth of orders. But if oil companies follow Moody's advice., then the situation will change for the better - although this may drop oil prices.
