Sanlam Reports Strong FY2025 Business Growth Despite Expected Earnings Dip

South African Market Summary

The JSE closed lower on Thursday, with the All Share index declining 0.78% to 120,167.42 and the Top 40 falling 0.93% to 111,980.12. Banking shares remained in focus after FirstRand reported an 11% increase in adjusted half-year earnings to R23.2 billion, supported by strong revenue growth, robust non-interest income and improving credit metrics. Separately, South Africa is seeking to expand domestic pharmaceutical manufacturing by encouraging local drugmakers to produce Gilead Sciences’ long-acting HIV prevention treatment, lenacapavir, with support from international partners to strengthen regional access and supply resilience.

European Market Summary

European equities declined on Thursday, with the STOXX 600 falling 1.3% as renewed geopolitical tensions in the Middle East weighed on investor sentiment and raised concerns over higher oil prices and potential spillovers to global growth. Policymakers from the European Central Bank warned that an escalation of the conflict could lift inflation while dampening economic activity, reinforcing expectations that policy rates may remain unchanged through 2026. Corporate fundamentals also softened, with data indicating fourth-quarter earnings for major European companies are now expected to decline 0.4% year on year, marking the region’s weakest earnings season in two years.

US Market Summary

U.S. equities declined on Thursday as escalating tensions in the Middle East pushed oil prices higher and renewed concerns about inflation and the Federal Reserve’s interest rate trajectory. Fears of disruption to tanker traffic through the Strait of Hormuz heightened energy market volatility. The S&P 500’s industrials, materials and healthcare sectors each fell more than 2%, while airline stocks dropped sharply. Energy shares outperformed, with Chevron gaining 3.9% amid rising crude prices. Despite the pullback, the Nasdaq has remained slightly higher since the conflict began, supported by technology stocks. Meanwhile, steady jobless claims and stronger ISM data reinforced expectations of resilient economic activity.

Asian Market Summary

Asia-Pacific markets traded mixed on Friday, reflecting weaker Wall Street sentiment as escalating tensions in the Middle East lifted global energy prices. In China, the National People’s Congress unveiled a new Five-Year Plan targeting economic growth of 4.5%–5% and reinforcing Beijing’s strategic focus on technological self-sufficiency amid intensifying competition with the United States. Fiscal policy remains supportive, with a budget deficit of 4% of GDP and a planned $44 billion capital injection into state-owned banks to strengthen financial stability and technology financing. Meanwhile, Foxconn signalled confidence in the technology cycle, expecting strong growth through 2026.

Commodity Market Summary

Commodity markets reflected heightened geopolitical and supply dynamics. Platinum group metals remained elevated after prices more than doubled in 2025, reaching above $2,700 per ounce amid tight South African supply, although Impala Platinum cautioned that current price levels do not justify new mining projects given long-term demand risks from electric vehicle adoption. Oil prices eased after a six-day rally as the United States considered market interventions and granted waivers to Indian refiners to purchase Russian crude, aiming to offset supply disruptions linked to the Iran conflict and reduced tanker traffic through the Strait of Hormuz. Gold retreated as higher U.S. Treasury yields and a firmer dollar weighed on prices.

Currency Market Summary

Currency markets reflected heightened risk aversion as escalating Middle East tensions supported the U.S. dollar. The rand weakened below 16.40 per dollar, pressured by rising oil prices and deteriorating terms of trade. The dollar remained broadly firm and was on track for its strongest weekly gain in over a year as investors sought safe-haven assets. Meanwhile, the euro and yen remained under pressure as higher energy prices raised inflation risks for import-dependent economies, complicating monetary policy expectations across major central banks. Geopolitical uncertainty continued to dominate currency market sentiment.

Impala Platinum (IMP) -7.56%

Impala Platinum reported a resilient H1 FY2026 performance, with Group 6E production rising 1% to 1.80Moz and refined production stable at 1.78Moz. Dollar revenue per 6E ounce increased 44% to US$1,917, while rand revenue rose 40% to R33,261, supporting EBITDA of R18.1 billion and headline earnings of R9.3 billion (1,035 cents per share). Capital expenditure declined 23% to R3.0 billion, enabling free cash flow of R7.0 billion and a net cash position of R12.1 billion. The group declared an interim dividend of 410 cents per share and remains on track to meet FY2026 production, cost and capital guidance.

Sanlam (SLM) -5.15%

Sanlam reported strong operational momentum for FY2025, with group new business volumes rising 18% (22% normalised) and net client cash flows more than doubling, reflecting robust demand across asset management, life and general insurance. Operational performance was supported by strong contributions from general insurance, investment management and credit businesses. However, headline earnings per share are expected to decline 15%–25%, reflecting corporate activity, structural changes and negative investment variances linked to long-dated bond yield movements. Discretionary capital increased by R3.94 billion following a partial SanlamAllianz stake sale, strengthening balance sheet flexibility and supporting future growth initiatives.

FirstRand (FSR) +0.11%

FirstRand delivered a strong operational performance for the six months to December 2025, with normalised earnings rising 11% to R23.2 billion, supported by 8% growth in net interest income and a 12% increase in non-interest revenue. Advances and deposits continued to expand, while the credit loss ratio remained well contained at 86 basis points. Margin improvement from asset-liability management initiatives lifted return on equity to 21.1%. Strong capital generation supported a Common Equity Tier 1 ratio of 14.4%, enabling an 18% increase in the interim dividend to 259 cents per share while maintaining disciplined capital allocation.

ADvTECH (ADH) +2.23%

ADvTECH expects a strong FY2025 earnings outcome, with normalised earnings per share (NEPS), headline earnings per share (HEPS) and earnings per share (EPS) projected to increase between 14% and 19% year on year to approximately 229.9–241.0 cents per share. The anticipated growth reflects continued operational momentum across the group’s education platforms. Management highlighted that normalised earnings exclude once-off corporate action and transaction-related costs. Looking ahead, 2026 student enrolments remain on track and continue to expand in line with recent trends, supporting the group’s medium-term growth outlook. Results are scheduled for release around 23 March 2026.

STADIO (SDO) +8.15%

STADIO expects strong FY2025 earnings growth, with earnings per share projected between 37.0 and 40.1 cents, representing an increase of 19.7%–29.8% year on year. Headline earnings per share and core HEPS are anticipated in a similar range of 36.9–40.1 cents, reflecting growth of approximately 17%–28%. The group continues to emphasise core headline earnings as a measure of underlying operational performance, excluding non-recurring items. The expected improvement reflects continued momentum across STADIO’s higher education platforms. The group plans to release its audited FY2025 financial results on or around 17 March 2026.

Costco (COST) -2.40%

Costco reported strong holiday-quarter results, with comparable sales excluding fuel rising 6.7%, ahead of market expectations of 5.88%. Net income increased nearly 14% to $2.04 billion as consumers continued to prioritise value amid elevated living costs. Management indicated the retailer would consider price reductions should it receive refunds following the U.S. Supreme Court’s decision to strike down emergency tariffs imposed under the International Emergency Economic Powers Act. The case formed part of a broader legal challenge involving more than 1,000 businesses. Costco shares were largely unchanged in extended trading following the announcement.

Gap (GAP) -1.93%

Gap warned that U.S. import tariffs are likely to pressure profitability, forecasting annual adjusted earnings of approximately $2.20–$2.35 per share, broadly below market expectations. Management indicated tariffs could reduce current-quarter gross margins by around 200 basis points, reflecting the retailer’s significant sourcing exposure to Southeast Asia. Holiday-quarter comparable sales rose 3%, slightly below forecasts, as price-sensitive consumers limited discretionary spending. While quarterly revenue of $4.24 billion met expectations, earnings per share marginally missed estimates. The group announced a $1 billion share repurchase programme as it continues investing in marketing and supply chain adjustments to offset tariff impacts.

Nike (NKE) -1.04%

Nike expects to record approximately $300 million in pre-tax restructuring charges, primarily related to employee severance, as part of a broader cost optimisation programme aimed at stabilising margins and refreshing its product mix. The charges will be recognised in the third quarter of fiscal 2026 following workforce reductions, including approximately 775 U.S. job cuts earlier this year. Nike-owned Converse has also reduced corporate roles to align operations with the group’s strategic restructuring. Management indicated that additional restructuring actions may follow as the company continues efforts to streamline operations and support a turnaround in sales growth.

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