Lyft Hits Record Revenue but Warns of Weak Bookings Amid Competition & Market Disruptions

Local Market Commentary

The JSE Top 40 and All Share indices declined by 0.2% and 0.23%, closing at 79,765.2 and 87,562.7 points, respectively. South Africa’s manufacturing sector contracted by 1.2% year-on-year in December, following a revised 1.9% decline in November, according to official data. In regulatory developments, the government has streamlined public-finance laws to ease approval processes for public-private projects under R2 billion ($108 million). Meanwhile, BMW South Africa plans to export its locally manufactured fourth-generation X3 SUV to the U.S. from 2026, contingent on geopolitical developments.

European Market Commentary

European equities reached record highs despite market volatility, with the STOXX 600 rising 0.2%, driven by a 1.4% gain in banking stocks. Investors assessed the EU’s response to U.S. President Donald Trump’s tariff hikes on steel and aluminium, which weighed on basic resources shares. European Commission President Ursula von der Leyen criticized the tariffs, vowing firm countermeasures. Meanwhile, the French economy is projected to return to growth in Q1, with the central bank forecasting a 0.1-0.2% GDP expansion, driven by a rebound in services, while manufacturing remains stagnant.

U.S. Market Commentary

Wall Street closed mixed on Tuesday as gains in Coca-Cola and Apple balanced out Tesla’s decline, while investors analysed Federal Reserve Chair Jerome Powell’s latest remarks. Powell indicated that the Fed is in no hurry to cut interest rates, citing a strong economy, low unemployment, and inflation still above the 2% target. His Senate testimony marks the first of two days of congressional hearings, with a House Financial Services Committee appearance scheduled for Wednesday. Markets anticipate at least one 25-basis-point rate cut this year, with a 44% probability of a second, according to LSEG data. Investors now await January’s consumer price index release.

Asia Market Commentary

Asia-Pacific markets mostly advanced this morning as investors assessed the impact of U.S. President Donald Trump’s tariffs on regional economies. A Reuters poll indicated that Malaysia’s economic growth likely slowed in Q4 2024, with weakness in manufacturing, agriculture, and mining outweighing strong household spending. Despite sluggish sectoral performance, domestic demand remained resilient, supported by a decade-low unemployment rate of 3.1% in December. Meanwhile, Japanese markets resumed trading following Tuesday’s National Day holiday.

Currency Market Commentary

The South African rand remained largely unchanged on Tuesday as traders assessed the potential impact of U.S. President Donald Trump's tariffs on steel and aluminium imports, which could escalate into a broader trade war. Meanwhile, sterling dipped slightly against the euro and remained stable against the dollar, with investors awaiting economic data and a speech from Bank of England Governor Andrew Bailey. The U.S. dollar retreated from its recent highs, as traders held off on further moves ahead of key inflation data and developments in the ongoing trade tensions, with expectations that U.S. tariffs might lead to shifts in global trade flows.

Commodity Market Commentary

Gold prices retreated this morning after reaching record highs in the previous session, as Federal Reserve Chair Jerome Powell’s hawkish stance reinforced expectations of slower rate cuts. Investors now await key U.S. inflation data for further direction. Meanwhile, oil prices declined after an industry report showed a 9.4 million-barrel rise in U.S. crude stockpiles, dampening sentiment despite recent gains driven by escalating Middle East tensions and sanctions. Gasoline and distillate inventories fell, while the Energy Information Administration raised its U.S. crude production forecast for 2025 to 13.59 million barrels per day, maintaining its demand outlook.

Santam Limited (SNT) +2.75%

Santam Limited forecasts a 40% to 60% increase in Headline Earnings per Share (HEPS) for the year ended 31 December 2024, reaching between 3,234 and 3,696 cents per share. This growth is attributed to improved underwriting performance in conventional insurance and earnings growth in alternative risk transfer businesses. Earnings per Share (EPS) is projected to rise between 0% and 20%, reaching 2,973 to 3,568 cents per share, reflecting the absence of a one-off gain of R705 million recorded in 2023. The underwriting margin for conventional insurance remains within the target range of 5% to 10%, despite significant weather-related and large losses. Santam expects satisfactory gross written premium growth and maintains a strong solvency position within the target range of 145% to 165%. Audited results will be released on or about 3 March 2025.

Impala Platinum Holdings Limited (IMP) +0.80%

Impala Platinum (Implats) achieved solid operational performance in H1 FY2025, with refined 6E production increasing by 2% to 1.79 million ounces. However, gross Group 6E production decreased by 4% to 1.82 million ounces due to restructuring efforts and operational adjustments. Sales volumes rose 5% to 1.77 million ounces, but revenue per 6E ounce sold declined to around R23,800 due to an 8% retracement in rand pricing. Despite cost containment measures limiting unit cost growth to 3%, headline earnings fell between 40% and 49% to R1.65 billion – R1.95 billion (184 – 217 cents per share). Basic earnings rose by 2% to 21%, recovering from prior-year impairments. EBITDA for the period reached approximately R6.5 billion, with capital expenditure decreasing to R4.0 billion. Full results for the six months ending 31 December 2024 will be released on or about 27 February 2025.

Tongaat Hulett Limited (TON) 0.00%

Tongaat Hulett (THL) has entered agreements to divest its Mozambique operations as part of its business rescue plan. The company will transfer 85% of Tongaat Hulett Açucareira de Moçambique S.A., 100% of Tongaat Hulett Açúcar Lda, and 100% of Sociedade De Assistência A Agricultura E Industria S.A. to Ball Foundry Holdings Limited (Vision Nominee). The purchase price, determined by an independent valuer, will offset a portion of the Lender Group Claims. This transaction aligns with the business rescue plan approved on 11 January 2024 and is subject to suspensive conditions. The effective date will be the first business day of the month following the fulfilment of these conditions. The Business Rescue Practitioners (BRPs) believe that continued implementation of the plan enhances the likelihood of a successful turnaround for THL.

Lyft Inc. (LYFT) -4.83%

Lyft forecasted lower-than-expected gross bookings for the first quarter, ranging between $4.05 billion and $4.20 billion, as it competes with larger rival Uber Technologies (UBER.N) and faces disruptions from wildfires and extreme weather events in key markets. Despite this, the company reported a record high revenue of $1.55 billion for the December quarter, a 26.6% increase, in line with estimates. Lyft also posted its first full year of positive free cash flow and profit in 2024, with an adjusted profit of 29 cents per share in Q4, exceeding expectations. Additionally, Lyft announced a $500 million stock buyback and forecasted adjusted core earnings of $90 million to $95 million for the upcoming quarter, slightly below market estimates.

Coca-Cola Company (KO) +4.73

Coca-Cola reported a surprise rise in quarterly revenue, driven by limited edition flavours and price hikes, despite sluggish demand in the packaged foods industry. The company's sparkling drinks segment, including seasonal flavours like Sprite Winter Spice Cranberry and Fanta Beetlejuice, saw a 2% volume increase in Q4, reversing flat growth from the previous quarter. Coca-Cola's global volumes grew, with North America up 1%. Despite potential cost impacts from U.S. President Trump's 25% tariffs on aluminum imports, the company plans to utilize affordable packaging options like plastic bottles. The company is also tapping into emerging markets, such as India, by catering to local tastes and offering varied price points. Coca-Cola forecasted annual organic revenue growth of 5%-6% and comparable profit growth of 2%-3%. Q4 net revenue rose 4.2% to $11.40 billion, exceeding analyst expectations, while earnings of 55 cents per share beat estimates by 3 cents.

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