Ferrari Races Ahead with Record Earnings
UBS Q4 2024 Earnings Summary, Consulting Firms Expect M&A Rebound in 2025, Alphabet Q4 2024 Earnings Summary, Ferrari Races Ahead with Record Earnings
UBS Q4 2024 Earnings Summary: UBS reported Q4 net profit of $770 million, with revenue at $11.635 billion. Shares fell 5.57% as investors were unimpressed by the $3 billion share buyback plan. The Credit Suisse integration remains on track. UBS faces regulatory scrutiny, economic headwinds, and global trade risks but remains focused on expanding its US business, increasing assets, and improving profitability by 2026-2028.
Consulting Firms Expect M&A Rebound in 2025: PwC and BCG expect a resurgence in M&A activity in 2025, driven by private equity deployments and corporate transformations, boosting advisory revenues. Dealmaking is set to rebound, supported by loosening U.S. regulations and CEO confidence.
Alphabet Q4 2024 Earnings Summary: Alphabet reported Q4 revenue of $96.47 billion, with net income up 28% to $26.54 billion. Google Cloud revenue missed expectations, rising 30% YoY but slowing from 35%. Concerns over $75 billion in AI infrastructure spending and regulatory scrutiny led to an 8% stock drop, erasing $200 billion in market value.
Ferrari Races Ahead with Record Earnings: Ferrari roars into 2024 with record-breaking earnings, driven by customisation demand and a strong hybrid lineup (51% of shipments). Net profit surged 16.7% to €1.53 billion, with Q4 alone up 31%. Despite a 21% drop in China, strong US and European sales kept shipments rising. With six new models launching in 2025, including its first EV in October, Ferrari is set to accelerate past its 2026 profit targets a year early
UBS Q4 2024 Earnings Summary
Financial Performance
Net profit: $770 million, exceeding analyst expectations of $483 million but below the LSEG forecast of $886 million.
Group revenue: $11.635 billion, slightly below expectations of $11.64 billion.
Investment banking: Strong performance with a 37% YoY increase in revenues, driven by global banking and market activities.
Global Wealth Management: Revenue grew 10% YoY, largely due to higher recurring net fee income and improved transaction-based income.
Despite solid results, UBS shares fell 5.57% following the announcement. Investors were unimpressed by the bank's $3 billion share buyback plan, which includes a $1 billion repurchase in the first half of 2025 and an additional $2 billion in the second half, as it remains contingent on financial targets and Swiss regulatory stability. UBS also proposed a $0.90 per share dividend for 2024, representing a 29% year-on-year increase.
The integration of Credit Suisse remains on track, with client account migrations in Luxembourg, Hong Kong, Singapore, and Japan already completed, while Swiss business migrations are set to begin in the second quarter of 2025. UBS has made significant progress in cost reductions, having already achieved $7.5 billion in savings out of its $13 billion target by 2026, with $2.5 billion more expected in 2025. Additionally, UBS successfully reduced risk-weighted assets (RWA) in its Non-Core & Legacy division by 52%, surpassing initial projections. In line with its restructuring efforts, UBS sold its 50% stake in Swisscard AECS GmbH to American Express, with client migrations set to take place in the coming quarters.
Despite these positive developments, UBS faces increasing regulatory scrutiny and economic headwinds. Concerns persist over whether Swiss authorities will impose further capital requirements due to UBS's systemic importance. The Swiss economy remains fragile, with inflation at just 0.6% in December and the Swiss franc continuing to strengthen, creating challenges for Swiss exports. CEO Sergio Ermotti also warned that ongoing global trade tensions and tariff escalations could have severe economic repercussions, potentially leading to recessionary pressures or inflation spikes.
Looking ahead, UBS expects a decline in net interest income (NII) for the first quarter of 2025, with low-to-mid single-digit declines in Global Wealth Management and a steeper 10% drop in Personal & Corporate Banking. However, the bank remains confident in its long-term strategy, targeting $100 billion in net new assets in 2025, with plans to double that figure by 2028. UBS is also working to expand its U.S. wealth management business, enhance advisor compensation, and strengthen its banking capabilities with the goal of securing a national bank charter.
By the end of 2026, UBS aims to achieve a return on common equity tier 1 capital (RoCET1) of around 15%, improve its cost/income ratio to below 70%, and cap investment banking risk-weighted assets at 25% of total Group RWA. By 2028, the bank expects to increase its RoCET1 to 18%, solidifying its position as a leading global financial institution. While UBS remains on a strong trajectory, its success will depend on navigating regulatory challenges, global market volatility, and interest rate pressures in the coming years.
Consulting Firms Expect M&A Rebound in 2025
PwC and Boston Consulting Group (BCG) expect a revival in mergers and acquisitions (M&A) activity this year, driven by pent-up demand and evolving corporate strategies, which will likely increase advisory revenues. BCG's CEO, Christoph Schweizer, noted a rise in M&A activities, particularly in due diligence and post-merger integration. PwC’s global chair, Mohamed Kande, emphasized that CEOs are eager to transform their businesses, boosting demand for consulting services. After hitting a nine-year low in 2024, the global M&A market is anticipated to recover in 2025 as companies regain confidence post-election uncertainty. A significant factor in this resurgence is the need for private equity firms to deploy $2.51 trillion in uncommitted capital. Schweizer mentioned that many buyout firms will need to exit and reinvest, stimulating M&A activity. Additionally, potential looser regulations under a Trump administration may facilitate dealmaking. BCG expects continued revenue growth in 2025, driven by technology and M&A advisory, while PwC UK anticipates increased consulting demand due to the UK government's focus on economic growth. As optimism returns, both firms plan to expand their workforce in 2025. KPMG’s Carole Streicher noted that the first half of 2025 might be a peak time for dealmaking before inflation risks arise due to new tariffs. Overall, consulting firms are gearing up to capitalize on the recovery in deal advisory, technology transformation, and corporate restructuring.
Alphabet Q4 2024 Earnings Summary
Alphabet reported strong earnings growth in the fourth quarter, driven by its advertising business, but investors focused on slower-than-expected cloud revenue growth and aggressive AI-related capital expenditure plans, leading to a sharp 9% drop in after-hours trading.
Financial Performance
Revenue: $96.47 billion vs. $96.56 billion expected
Earnings per share: $2.15 vs. $2.13 expected
YouTube advertising revenue: $10.47 billion vs. $10.23 billion expected
Google Cloud revenue: $11.96 billion vs. $12.19 billion expected
Traffic acquisition costs (TAC): $14.89 billion vs. $15.01 billion expected
Net income: $26.54 billion, up 28% year-over-year
Alphabet's revenue grew by 12% year-over-year, slightly down from 13% last year. Google's advertising revenue growth slowed to 10.6%, with search revenue at 12.5% and YouTube ads at 13.8%. A major factor in the stock drop was cloud revenue, which hit $11.96 billion, missing estimates and growing 30% year-over-year, down from 35%. CFO Anat Ashkenazi noted a supply-demand imbalance in AI products and confirmed plans to increase capacity in 2025. Alphabet plans to spend $75 billion on infrastructure, significantly above the $58.84 billion expected by analysts. CEO Sundar Pichai defended the spending, citing AI's expanding applications. Following these announcements, Alphabet's stock dropped 8%, losing $200 billion in market value, although it remains up 45% over the past year with a valuation of $2.5 trillion. This sell-off mirrors Microsoft’s recent loss due to similar concerns about cloud growth and AI spending. Regulatory challenges are also looming, with the U.S. DOJ alleging monopolistic behaviour by Google and China reviving antitrust investigations. Despite these issues, Alphabet's search ad revenue grew 13% to $54 billion, and YouTube continued to perform well. However, worries about slowing cloud growth, significant AI spending, and regulatory threats persist.
Ferrari Races Ahead with Record Earnings
Financial Performance (2024)
Net Revenues: €6.7 billion (+11.8% YoY)
Net Profit: €1.53 billion (+16.7% YoY), diluted EPS of €8.46
EBITDA: €2.56 billion (+12.1%), EBITDA margin of 38.3%
EBIT: €1.89 billion, EBIT margin of 28.3%
Industrial Free Cash Flow: €1.03 billion
Q4 Net Profit: €386 million (+31% YoY), Revenue: €1.7 billion (+14%)
Key Drivers and Market Trends
Ferrari’s record profitability was driven by strong demand for customisation, which continues to be a major source of high-margin revenue. While hybrid models now make up 51% of total shipments, internal combustion engines still play a crucial role in Ferrari’s lineup. Despite a 21% drop in sales to China, Hong Kong, and Taiwan, overall shipments rose by 2%, with strong demand in the US and Europe. CEO Benedetto Vigna hinted at a possible shift in Ferrari’s China strategy, given the rising demand for luxury EVs.
New Models and Electric Vehicle Strategy
Ferrari will launch six new models in 2025, including its first fully electric vehicle, set for an October unveiling. The company has stated that this EV will integrate Formula 1 technology to optimise energy efficiency and deliver a unique driving experience. However, Vigna remains secretive about the specifics, teasing an "innovative and unique" presentation.
Outlook for 2025
Ferrari expects to hit its 2026 profit targets a year early, forecasting an adjusted EBIT margin above 29%. The company remains unfazed by global economic concerns, relying on flexibility in market strategy and premium pricing power to sustain growth. With continued demand for personalised vehicles and upcoming product launches, Ferrari is positioned to outperform the broader luxury auto market.
References:
FT: BCG and PwC predict boost from dealmaking rebound
FT: Alphabet shares sink after cloud growth stalls and spending surges
CNBC: Alphabet Earnings report
FT: Ferrari to unveil its first EV this year as it reports strong rise in profits