Monster Beverage Misses Revenue Estimates as U.S. Energy Drink Sales Weaken

Local Market Commentary

The JSE ended lower on Thursday, with the Top 40 index down 0.63% to 83,463.8 points and the All Share index slipping 0.66% to 90,890.1 points, amid mixed domestic economic data. Net foreign reserves improved to $64.318 billion in April from $63.167 billion in March, while manufacturing output contracted by 0.8% year-on-year in March, missing expectations for growth. President Ramaphosa launched Phase 2 of Operation Vulindlela, prioritising municipal reform to address poor service delivery by unbundling constitutional oversight from operational execution, which may be outsourced or managed internally.

European Market Commentary

European stocks closed higher on Thursday, with the STOXX 600 index rising by 0.4%, driven by optimism following U.S. President Donald Trump's announcement of a trade deal with the UK to reduce tariffs. The agreement will lower UK tariffs to 1.8% from 5.1% and enhance access to U.S. goods, while maintaining a 10% tariff on UK imports to the U.S. Elsewhere, the central banks of Sweden and Norway kept interest rates unchanged, leaving room for potential future cuts, mirroring the U.S. Federal Reserve’s decision to hold rates steady. In the UK, the Bank of England (BoE) cut rates by 0.25% to 4.25% in response to the anticipated impact of U.S. tariffs. However, a surprise split among policymakers cooled expectations for further rate cuts, with the BoE acknowledging that global tariff increases could dampen UK economic growth and inflation, though the outlook remains uncertain.

U.S. Market Commentary

U.S. stocks rose on Thursday, driven by investor optimism following the announcement of a new U.S.-UK trade deal, which saw Britain agree to reduce tariffs to 1.8% from 5.1% and provide greater access to U.S. goods. However, a 10% baseline tariff on UK goods entering the U.S. remains in place. Airline stocks surged, with the S&P 500 passenger airlines index jumping 5.4%, led by a 7.2% rise in Delta Air Lines, as the deal exempted Rolls-Royce plane parts from tariffs. Boeing’s shares rose 3.3% after U.S. Commerce Secretary Howard Lutnick revealed that the UK would purchase $10 billion worth of Boeing aircraft. On the economic front, weekly initial jobless claims fell more than expected, suggesting stability in the labor market, although worker productivity dropped in Q1 for the first time in nearly three years.

Asia Market Commentary

Asia-Pacific markets were mixed on Friday as investors assessed China's April trade data. Exports surged 8.1% year-on-year in U.S. dollar terms, significantly surpassing the 1.9% growth forecast, despite the impact of U.S. tariffs. Imports fell by 0.2%, a smaller decline than the expected 5.9% drop, as Beijing increased stimulus measures. In Japan, household spending in March rose 2.1% in real terms, exceeding the forecasted 0.2% increase and potentially giving the Bank of Japan more leeway to raise interest rates and normalise monetary policy. However, average household income in Japan fell 2% year-on-year in real terms to 524,343 yen.

Commodity Market Commentary

Gold prices fell on Friday after U.S. President Donald Trump announced a trade deal with the UK, reducing bullion's safe-haven appeal, while market focus shifted to upcoming U.S.-China trade talks. Despite the drop in gold prices, inflows into physically backed gold exchange-traded funds (ETFs) in April reached their highest level since March 2022, with China-listed funds driving the increase due to the ongoing trade war with the U.S., according to the World Gold Council. Oil prices remained largely unchanged early Friday after a 3% rise in the previous session, as easing trade tensions between the U.S. and China, along with the announcement of a U.S.-UK trade deal, supported the market.

Currency Market Commentary

The South African rand strengthened on Thursday, driven by optimism following U.S. President Donald Trump's announcement of a trade deal with Britain, boosting expectations for further trade agreements. Meanwhile, the U.S. dollar was on track for a weekly gain against most major peers on Friday, as the U.S.-UK trade deal raised hopes for progress in upcoming U.S.-China talks. Additionally, the Federal Reserve's signal that it was not in a rush to cut interest rates led to a reduction in bets on imminent rate cuts. Financial markets are heading into the weekend with a focus on the U.S.-China trade negotiations set to begin on Saturday in Switzerland.

Anheuser-Busch InBev (ANH) +1.84%

Anheuser-Busch InBev delivered a 7.9% increase in Q1 operating profit, comfortably exceeding analysts' expectations of a 3.1% rise, as operational efficiencies and disciplined cost management helped offset a 2.2% decline in global volumes. U.S. revenue declined 5.1% year-on-year, impacted by fewer trading days, adverse weather conditions, and a late Easter. Chinese volumes also contracted by 9.2%. Despite these volume pressures, AB InBev’s focus on cost containment and resilient pricing underpinned stronger-than-anticipated earnings performance.

Mondi plc (MNP) +1.22%

Mondi plc reported a solid start to 2025, with underlying Q1 EBITDA rising to €290 million from €261 million in Q4 2024, driven by stronger sales volumes, firm cost control, and reduced maintenance downtime, despite softer average selling prices. The Corrugated and Flexible Packaging divisions saw improved demand and benefits from recent price adjustments, while Uncoated Fine Paper remained under pressure from subdued pricing, partially offset by operational efficiencies. Progress continues on key expansion initiatives, including the strong performance of the new kraft paper machine in Steti and the successful commissioning of the Duino plant in Italy. The Group also finalised the acquisition of Schumacher’s Western European packaging assets, integrating 2,200 employees and expanding its customer base.

KAL Group Limited (KAL) +2.44%

KAL Group Limited posted a steady interim performance for the six months to 31 March 2025, with gross profit up 0.9% to R1.66 billion. EBITDA declined by 2.1% to R557.1 million and profit before tax softened 3.9% to R440.6 million. Earnings per share decreased 3.6% to 394.29 cents, while headline and recurring headline EPS fell by 4.0% and 3.7%, respectively. Net cash from operating activities eased 3.1% to R553.6 million. Notably, the Group enhanced its financial position, reducing its net interest-bearing debt to equity ratio to 48.4% from 56.5%. Reflecting continued cashflow strength, KAL declared a 3.7% increase in its interim dividend to 56.00 cents per share.

Sappi Limited (SAP) -8.94%

Sappi reported a challenging second quarter to March 2025, with revenue broadly unchanged at US$1.35 billion, while adjusted EBITDA declined sharply by 41% to US$107 million due to ongoing margin pressures. EBITDA excluding special items fell 51% to US$90 million, and the Group recorded a US$20 million net loss (Q2 2024: US$29 million profit). For the half-year, revenue rose 3% to US$2.71 billion, with adjusted EBITDA flat at US$310 million. Headline earnings per share were negative 3 US cents for the quarter but recovered to 9 US cents for the half-year, compared to a 16 US cent loss in the prior period. Net debt increased by 22% to US$1.67 billion, while net asset value per share improved by 5% to 407 US cents.

Monster Beverage Corporation (MNST) -0.69%

Monster Beverage reported a surprise 2.3% decline in first-quarter revenue, as U.S. consumers reduced spending on premium energy drinks amidst economic uncertainty. Softer consumer spending, driven by colder weather and high inflation, along with changes in bottler and distributor ordering patterns in the U.S. and Europe, contributed to the drop. The company also faced foreign currency headwinds and rising aluminum costs, partially offset by hedging efforts. While Monster plans to open a facility in Brazil to mitigate the impact of aluminum tariffs, the tariffs themselves were not expected to significantly affect overall results. The company’s net sales for its energy drinks segment fell 0.8% to $1.72 billion, and total revenue missed analysts' expectations, declining to $1.85 billion. Despite these challenges, price increases helped raise the company’s gross profit margin to 56.5%, up from 54.1% a year ago. Excluding items, Monster earned 45 cents per share, slightly missing analysts’ estimate of 46 cents.

Restaurant Brands International Inc. (QSR) -0.53%

Restaurant Brands missed first-quarter revenue and profit estimates, with sluggish demand at its restaurant chains, including Burger King and Tim Hortons, due to tariff-related uncertainty and shifting consumer behaviour. The ongoing sales decline in the restaurant industry, driven by budget-conscious Americans opting for home-cooked meals, contributed to a 0.1% drop in comparable sales at Tim Hortons and a 1.3% fall at Burger King. Rising commodity costs, particularly for coffee, also pushed up supply chain expenses. The company reported quarterly revenue of $2.11 billion, below analysts’ expectation of $2.13 billion, and adjusted earnings of 75 cents per share, missing the forecast of 78 cents.

 Peloton Interactive Inc. (PTON) -6.73%

Peloton Interactive raised its 2025 revenue forecast but reported a larger-than-expected third-quarter loss, as the company continues to struggle with post-pandemic challenges. The fitness brand, which has shifted focus from equipment sales to subscriber growth for its live and on-demand workout videos, saw a slowdown in both areas as consumers reduced discretionary spending amid economic uncertainty. For the quarter ended March 31, Peloton posted a loss per share of 12 cents, exceeding analysts’ expectations of 6 cents. Revenue from equipment sales fell 27% to $206 million, while paid memberships dropped by about 500,000 year-over-year to 6.1 million. The company raised its 2025 revenue forecast to between $2.46 billion and $2.47 billion, and slightly adjusted its forecast for connected fitness subscriptions to 2.77 million, but app-based subscriptions are now expected to decline. The quarter also marked the first earnings release under new CEO Peter Stern.

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