Lingering macro uncertainty on Q2 2024 results tempered by hints of optimism
In Q2 2024, macroeconomic uncertainty persisted, with companies still hesitant to commit to additional efficiency investments. However, there were hints of optimism as consumer lending trends showed an upward trajectory and visibility increased over potential interest-rate cuts and inflation. Despite the lingering uncertainty, there was a growing sense of optimism in the business landscape, with FY 2024 guidance confirmed for many, albeit with caveats around the potential for ‘unforeseen events’.
FY 2024 guidance heavily contingent on continued easing of price pressure in H2 2024
Full-year guidance was confirmed with a heavy contingency on the continuation of supportive Q2 2024 trends into H2 2024, particularly pricing. While cost inflation remained challenging in specific sectors, inflation-linked price hikes appear to be receding elsewhere, with many companies reporting improved margins from lower input costs. A concerted shift is also underway from inflation-adjusted price rises to marketing, innovation, and execution to support higher prices.
The capital allocation picture was little changed
Dividends and buybacks remain critical in capital allocation strategies. Caution remains on growth Capex and M&A, with muted demand for new loans. However, acquisitions are not entirely off the table, and a more stable macro environment could be the signal for increased deal activity.
AI adoption is rapidly transforming businesses at every level
AI adoption emerged as a key theme on earnings calls, rapidly transforming the IT and corporate landscape. Amongst ‘AI providers’, the convergence with IT hardware and software is leading to a new wave of innovation, with investments heavily targeted at developing supercomputing capabilities and robust security frameworks to support the next generation of AI applications. Across ‘AI users’, AI is playing a revolutionary role in business efficiency, customer service and employee experience and is expected to be a critical driver of business efficiency in the coming years – with many companies demonstrating that value is best generated through a proprietary, business-specific approach.
Quarterly Pulse: Q2 2024 Earnings at a Glance
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With over two decades of expertise, Severine combines her in-house IR, equity and consulting background to provide Fairvue’s clients with unique insights into the ever-evolving challenges of Capital Market engagement, as well as transitioning IR into a strategic contributor to Management teams and Supervisory Boards.
