EU COMMUNICATIONS: Warner Bros: Q225 Results
(WBD ; Ba1 *-/BB+ *-/BB+ *-)
Headline results were strong with flatish revenues in line with expectations with an EBITDA beat. The beat was mainly driven by both Streaming (on sub growth, cost cuts, ARPU mix shift) and Studios (driven by strong theatrical titles e.g. Minecraft, Sinners and TV licensing) coming in nearly 50% above consensus on though the ongoing decline in Networks was also a smaller beat. Cash flow was lower YoY due to separation-related expenses though leverage was still a half turn lower QoQ.
- Q2 Revs: $9.8bn (+1% YoY, in line). YTD: $18.8bn (-4% YoY).
- Stream & Studios +13% YoY (22% Studios beat, Stream in line). Networks -9% YoY (1% beat).
- Q2 adj-EBITDA: $2bn (+9% YoY, 6% beat). YTD: $4.1bn (+4% YoY).
- Streaming & Studios $790mn vs $76mn YoY with both segments nearly 50% above cons
- Networks $1.5bn (-24% YoY, 4% beat).
- Total streaming subscriptions 125.7mn vs. 122.3mn in Q1 (1% beat).
- Q2 CFO $983mn (-20% YoY). Q2 FCF $702mn (-28% YoY).
- “FCF was unfavorably impacted by approximately $250 million of separation-related items.”
- Gross debt $35.6bn, cash on hand $4.9bn, net leverage 3.3x vs. 3.8x at Q124 vs. 4x at Q224.
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NZD: NZDUSD Edging Lower Ahead of RBNZ
- Unlike its antipodean counterpart, the firmer greenback on Tuesday is allowing NZD (-0.25%) to extend this week’s decline, notable given the proximity to Wednesday’s RBNZ decision. While sell-side consensus is for the RBNZ to remain on hold (consistent with market pricing), there are some forecasters looking for a rate cut tomorrow.
- Recent inflation outcomes arguably provide the strongest signal that the RBNZ should hold pat but in contrast, growth indicators are still arguing for easier policy settings. While the central bank is likely to be comfortable to preserve policy space at this juncture, it is likely to leave the door ajar for further policy support given headwinds to domestic growth. The MNI preview is here: https://mni.marketnews.com/4nxxl4h
- For NZDUSD, today’s weakness has closed the gap to an important support level at 0.5984, the 50-day EMA. A close below this average would mark the first daily close below since April 09, threatening the bullish underlying trend. Below here, 0.5883 would be the next target before 0.5847, the double bottom seen in mid-May and an important pivot support.
- As noted earlier, AUDNZD has had a solid 0.5% bounce to a six-week high of 1.0887. Trendline support drawn from the April lows has helped underpin the latest recovery, targeting a more protracted bounce to 1.0922 and the early April highs just above 1.10.
Source: Bloomberg Finance L.P. / MNI
CANADA DATA: Ivey PMI Rises In June, But Overall Points To Soft Q2 GDP
The Ivey Purchasing Manager's Index Jumped 4.4 points to 53.3 in June, the highest reading in 4 months and the first 50+ since March (signalling that more respondents indicated purchases were greater than the previous month vs those who reported fewer purchases).
- The underlying indices were mixed, with prices remaining elevated (70.2, up 3.3 points), lower supplier delivery times (44.7, down 2.8 points) and inventories (50.6, down 4.3 points), and weaker employment (49.5, down 1.6 points).
- This is in some contrast to the S&P Global PMI, whose composite index fell to a 2-month low 44.0 in June on weakness in both manufacturing and services - clearly signalling contraction amid the US-Canada trade conflict.
- The Ivey PMI is too volatile to take much signal from on a month-to-month basis, but the 3-month average 50.0 points to broadly flat/slightly negative quarterly growth in Q2. Consensus is for -0.5% Q/Q SAAR.
EQUITIES: EU Bank Put Spread seller
SX7E (20/03/26) 200/160ps, sold at 9.45 in 6k vs 1.68k at 206.40.
