Shares in Apple went up by 1% after markets closed last night after the company reported a $13.6 billion profit for the first three months of the year. The world's most valuable company sold 61.1 million iPhones in the first three months of this year, driving profit up 33% from a year earlier. Revenue was up 27% to $58 billion. Sales in China leapt by 71% to $16.8 billion, outpacing sales in the US for the first time, and helping to drive the sharp profit rise.
Laura DeVoy, Portfolio Manager at Goodbody, says that Apple has now beaten expectations in 48 of the last 68 quarters. Ms DeVoy says the company's strong iPhone sales are coming through from China and were boosted by Chinese New Year sales. Investors will be keen to see if those strong sales persist throughout the rest of the year, she adds. Ms DeVoy notes that only about 20% of iPhone users had upgraded, which means that the upgrade cycle is probably still in its very early stages. The one dark spot in the Apple results in the slowdown of iPad sales. Sales of the device have now slowed for the fifth quarter in a row and the analyst says the company is experiencing some difficulty in procuring new panels for the planned bigger screen for the device. The launch of its new bigger screen is likely to be delayed until September.
The strong dollar did not seem as much an issue for Apple as it has been for other big US firms reporting in recent weeks. Ms DeVoy says the company makes 36% of its revenues in the US, so a large part of its total revenues comes from overseas. She explains that the firm has currency hedging in place and was also very good at increasing prices as it moves through the quarter if the currency changes remains against them. In its guidance for the next year, Apple said it was seeing a 0.5% headwind coming through from foreign currency.
Permanent TSB says it could return to full private ownership and have repaid its State bailout of €2.7 billion by the middle of 2018. Yesterday the State sold 25% of its stake in Permanent TSB, raising €400m. €125m was also raised via a debt instrument. The stock was priced at €4.50 a share and follows what its chief executive described as "exceptional" investor interest in the bank, which fell into State control in 2011. Bloomberg covered the story by saying that even Ireland's weakest bank can raise money in this bond market. It failed European financial stress tests last year.
John Cronin, Head of Financials Research at Investec Ireland, says yesterday's moves represented an excellent outcome for the taxpayer. Until very recently such a valuation had not been anticipated and it now means that the State is ultimately set to recoup all of the money it invested in Permanent TSB. Mr Cronin says such a notion was thought to have been "far-fetched" this time last year.
He says he believes the investors paid such a high price per share because the bank's management and the Department of Finance did an "excellent job" in educating the investor base in relation to the potential profitability for the company. Investors are also seeing the potential for provision writebacks in the context of PTBS over the next couple of years. Mr Cronin says the country's strong economic growth is allowing Permanent TSB to expand its margins on the asset sides, but more importantly the European Central Banks' QE programme is playing in well from a funding cost perspective. Funding costs are expected to reduce sharply from here and the global search for yield is really helping the situation.
MORNING BRIEFS - There were 2.4 million visits to Ikea in Ballymun in Dublin last year - an increase of 100,000 - with those visitors spending more than €2m every week. New figures from Ikea Ireland Ltd show that 2014 pre-tax profits at its Irish store jumped by 22% - from €5.8m to €7.1m. The accounts lodged with the Companies Office show that revenues increased by 8%, going from €103.9m to €112.7m.