Eli Lilly Lowers 2024 Revenue Forecast, Anticipates Strong Growth in 2025

LOCAL MARKET COMMENTARY

The JSE Top 40 index closed 0.2% higher at 73,714.8 points yesterday, marking only its second gain in the last six sessions. The All Share index edged up 0.1% to end the session at 82,123.9 points. Reinet Investments SCA finalized the sale of its 2% stake in British American Tobacco Plc, generating £1.22 billion ($1.49 billion). The sale price of £28.20 per share reflected a 3.9% discount to the previous close. BAT shares dropped as much as 2.9% during the session, marking their sharpest intraday decline since October. Separately, reports from a South African gold mine detailed the rescue of 82 survivors and recovery of 36 bodies following illegal mining operations.

EUROPEAN MARKET COMMENTARY

European markets closed relatively flat on Tuesday as rising yields continued to pressure equities. Italian industrial output slightly exceeded expectations in November with a 0.3% month-on-month increase. However, the manufacturing sector remained under strain, with output falling 0.4% over the three months leading to November and 1.5% lower year-on-year. S&P Global warned that challenges in Europe's automotive sector could impact central European banks' asset quality, though their resilience to withstand stress remains strong. Meanwhile, Italy introduced tax incentives to encourage domestic purchases of government bonds, part of broader efforts to manage its nearly €3 trillion public debt.

US MARKET COMMENTARY

The S&P 500 gained marginally, while the Nasdaq ended slightly lower after a volatile trading day. Investors reacted to December’s producer price index (PPI) data, which rose just 0.2%, below the expected 0.4%. Core PPI, excluding food and energy, remained unchanged. Despite this, U.S. Treasury yields stayed elevated, with the 10-year note yield at 4.784%, close to a 14-month high. Investors are now turning their attention to earnings reports from major banks, which are anticipated to show robust profits driven by increased dealmaking and trading activities.

ASIA MARKET COMMENTARY

Asian markets saw mostly positive movement this morning, buoyed by softer U.S. inflation data and a rebound in Japanese business sentiment. The Reuters Tankan survey showed an improvement in sentiment among large manufacturers, with a reading of +2 for January compared to -1 in December. Optimism among non-manufacturers also ticked up slightly. In South Korea, unemployment reached a three-year high of 3.7% in December, with the number of unemployed rising by 18.1% year-on-year to 1.12 million people.

CURRENCY MARKET COMMENTARY

The South African rand strengthened against the dollar on Tuesday, recovering from a nine-month low hit earlier in the week. Market attention remains on U.S. inflation data, expected to provide further guidance on the Federal Reserve’s interest rate decisions. The British pound faced its sixth consecutive day of losses against the dollar and a fresh 2.5-month low against the euro as concerns about the UK’s fiscal position lingered. Meanwhile, the dollar’s rally paused ahead of key U.S. inflation data, leading to a more cautious market environment.

COMMODITY MARKET COMMENTARY

Gold prices extended their gains on Tuesday as weaker-than-expected U.S. inflation data fuelled hopes for a continued easing in Federal Reserve rate hikes, which weighed on the dollar. Oil prices remained largely flat after falling the previous day. U.S. crude inventories declined by 2.6 million barrels last week, according to industry data, though this was offset by increases in gasoline and distillate stocks. The EIA revised its global oil demand forecast for 2025 slightly lower to 104.1 million barrels per day, still marginally below projected supply levels.

Reinet Investments S.C.A. (RNI) +5.72%

Reinet Investments S.C.A. (‘Reinet’) has announced the full divestment of its stake in British American Tobacco p.l.c. (‘BAT’). Through its subsidiary Reinet Jersey Holdings Limited (‘RJHL’), the company sold 43,310,286 BAT shares at £28.20 per share, raising gross proceeds of £1,221 million. The transaction was completed via an aftermarket accelerated bookbuild process initiated on 13 January 2025, with J.P. Morgan Securities plc acting as Sole Global Coordinator and Bookrunner. As of 30 September 2024, BAT shares comprised 24% of Reinet’s net asset value, equivalent to 48.3 million shares. Additionally, RJHL sold 5 million BAT shares in late 2024 for £148.5 million and released 11.1 million shares previously pledged as collateral. The proceeds will fund Reinet Fund S.C.A. F.I.S.’s ongoing investments, and Reinet will no longer hold any BAT shares post-settlement on 16 January 2025. Reinet’s net asset value for 31 December 2024 will be announced on 23 January 2025, followed by a Q4 2024 management statement. BAT will not benefit from the proceeds of this transaction.

Barloworld Limited (BAW) -0.19%

Barloworld Limited (‘Barloworld’) announced a delay in distributing its Circular regarding the Scheme and Standby Offer outlined in its firm intention announcement (FIA) on 11 December 2024. The Circular, required within 20 business days per Takeover Regulations, contains full details of the Scheme, Standby Offer, and notice for the Barloworld General Meeting to consider the Scheme Resolution. Due to South Africa’s December holiday period, finalisation was delayed, and the Takeover Regulation Panel has extended the deadline for distribution to 11 March 2025.

Cilo Cybin Holdings Limited (CCC) +18.42%

Cilo Cybin Holdings reported its interim results for the six months ending 30 September 2024, reflecting a 141% increase in investment income to R2,561 million (Mar 2024: R1,064 million, Sep 2023: R0). Gross profit improved to R936,1 thousand (Mar 2024: R455,4 thousand, Sep 2023: -R47,0 thousand), while headline earnings per share increased to 0.87 cents (Mar 2024: 0.51 cents, Sep 2023: -0.05 cents). The company issued 7,101,791 shares following its AltX listing on 25 June 2024. Operationally, Cilo Cybin pursued its acquisition strategy, entering into a R845 million share purchase agreement to acquire Cilo Cybin Pharmaceutical Proprietary Limited, subject to conditions precedent. Cash outflows from operations totalled R1,92 million, leaving R60,2 million in cash reserves. Revenue growth of 141% was driven by IPO funds held in escrow, supporting the company’s acquisition efforts and reinforcing its strategic direction.

Eli Lilly and Company (LLY) -6.59%

Eli Lilly revised its 2024 revenue guidance downward on Tuesday, citing lower-than-expected demand for its weight-loss and diabetes treatments. The company now forecasts full-year revenue of approximately $45 billion, below its October projection of $45.4 billion to $46 billion, though this still represents a 32% year-on-year increase. For the fourth quarter, expected revenue is $13.5 billion, with contributions of $3.5 billion from Mounjaro and $1.9 billion from Zepbound. Analysts surveyed by LSEG had predicted $13.94 billion in quarterly revenue and $45.49 billion for the full year. Despite the revision, Eli Lilly projects fiscal 2025 sales to range between $58 billion and $61 billion. The company will release its complete quarterly earnings report on February 6.

BP Plc (BP) -2.54%

BP announced on Tuesday that its fourth-quarter earnings would be adversely impacted by weaker oil and gas production, reduced refining mar

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