Swiggy reports a 24% increase in revenue and plans for an IPO. German ifo business confidence data to be released. Traders and investors monitor key economic events worldwide. Plus, the UK faces challenges in the housing market and job market.
Sources:
https://economictimes.indiatimes.com/tech/technology/swiggys-fy24-revenue-up-24-quick-commerce-unit-economics-improve-prosus/articleshow/111223536.cms
https://www.rttnews.com/3455887/european-economic-news-preview-german-ifo-business-confidence-due.aspx
https://www.kaohooninternational.com/economics/541252
https://www.theguardian.com/business/live/2024/jun/24/uk-economic-misery-index-election-advertised-salaries-fall-ftse-stock-markets-business-live
Outline:
(00:00:00) Introduction
(00:00:50) Swiggy’s FY24 revenue up 24%; quick commerce unit economics improve: Prosus
(00:03:34) European Economic News Preview: German Ifo Business Confidence Due
(00:06:05) Economic Calendar for 24 - 28 June 2024 with Fed's and ECB's Speeches, GDP, and Inflation Data
(00:08:13) UK facing rise in economic Misery Index; advertised salaries fall
Simply Economics
Swiggy’s Impressive Growth, German Business Confidence, Global Economic Calendar
Swiggy reports a 24% increase in revenue and plans for an IPO. German ifo business confidence data to be released. Traders and investors monitor key economic events worldwide. Plus, the UK faces challenges in the housing market and job market.Sources:https://economictimes.indiatimes.com/tech/technology/swiggys-fy24-revenue-up-24-quick-commerce-unit-economics-improve-prosus/articleshow/111223536.cmshttps://www.rttnews.com/3455887/european-economic-news-preview-german-ifo-business-confidence-due.aspxhttps://www.kaohooninternational.com/economics/541252https://www.theguardian.com/business/live/2024/jun/24/uk-economic-misery-index-election-advertised-salaries-fall-ftse-stock-markets-business-liveOutline:(00:00:00) Introduction(00:00:50) Swiggy’s FY24 revenue up 24%; quick commerce unit economics improve: Prosus(00:03:34) European Economic News Preview: German Ifo Business Confidence Due(00:06:05) Economic Calendar for 24 - 28 June 2024 with Fed's and ECB's Speeches, GDP, and Inflation Data(00:08:13) UK facing rise in economic Misery Index; advertised salaries fall
- Duration:
- 11m
- Broadcast on:
- 24 Jun 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Monday, June 24th. On today's show, Swiggy's revenue for FY24 increases by 24 percent and their quick commerce unit economics improve according to process. Plus, we have a preview of the German EFO Business Confidence Report in the European Economic News, and don't miss the economic calendar for June 24th to 28th featuring speeches from the Fed and ECB as well as GDP and inflation data. This coverage and more, up next. I'm David, and you're listening to Simply Economics. We start off with some positive news from India's food and grocery delivery sector. Swiggy, one of the country's leading players, has reported strong growth for the fiscal year ended March 31st, 2024, according to its largest shareholder process. The company's revenue grew 24 percent year over year as it reached its 10th year of operations. For more details on Swiggy's performance, we're joined now by our correspondent. So what were some of the key drivers behind Swiggy's growth this past year? Swiggy saw its gross order value or GOV increase by 26 percent compared to the previous year. This was driven by double-digit growth in its core food delivery business, with higher order volumes and increased average order values. Swiggy was also able to improve its operating leverage by adding new revenue streams like restaurant advertising and introducing nominal platform fees. All of this helped support better operational profitability for the company. Swiggy has also been expanding beyond just restaurant food delivery. How did its newer business lines perform? Swiggy's quick commerce business, which rapidly delivers grocery and convenience items, significantly outpaced the broader e-commerce industry's growth. The company now operates 487 dark stores across 26 cities to fulfill these quick commerce orders. It has also greatly expanded its product selection, now listing over 9,500 unique items on the quick commerce platform. As a result of larger basket sizes, a growing user base, and improved operational efficiency, the unit economics of Swiggy's quick commerce business continued to get better. Swiggy hit a major milestone in terms of its user base as well, correct? That's right. Swiggy's total number of transacted users reached 104 million by the end of December 2023, that's a significant achievement as the company continues to scale and attract new customers to its platform. Building that large of a user base provides a strong foundation for future growth. Now Swiggy is also gearing up for a potential IPO. What do we know about those plans? Swiggy has confidentially filed for a $1.2 to $5 billion initial public offering with India's market regulator Sebi. As the company's largest shareholder with a 32.6% stake, process is expected to be designated as a promoter in the IPO. Going public would give Swiggy access to a large pool of capital to fund its expansion and strategic initiatives. It would also provide liquidity for existing investors. However, the exact timing and details of the offering are still unclear at this stage. Thank you for that update and analysis of Swiggy's latest annual results. It will certainly be an IPO to watch when they do move forward. Shifting our focus to Europe, we have some key economic data coming out today. Germany's Business Sentiment Survey is the headliner, but a few other reports are also on tap. For more, let's bring in our correspondent. What's the latest? That's right, David. It's a relatively light day for economic data, but the German Business Sentiment Survey from the IFO Institute will be closely watched. Economists are expecting the Business Climate Index to tick up slightly to 89.7 in June from 89.3 in May. This would suggest a modest improvement in business confidence, though still at subdued levels overall as Germany's economy has struggled in recent months. And Germany is Europe's largest economy, so this business sentiment data can give a good read on the broader economic picture. What are some of the factors weighing on business confidence there? A few key issues have been dragging on the German economy and business sentiment. High energy prices stemming from the war in Ukraine have squeezed businesses. Supply chain problems, while easing somewhat, are still a challenge. And rising interest rates could be starting to cool demand as well. Many German businesses are export-oriented, so the global economic slowdown is a concern too. Okay, so we'll see if that Business Sentiment Index can beat expectations. You mentioned a few other data points out today as well. What else is on the calendar? We'll also get June Business Confidence data out of the Czech Republic. Over in the UK, the Confederation of British Industry releases their Industrial Trend Survey. The orderbook balance there is expected to improve slightly to -26% from -33% in May. So still in contractionary territory, but moving in the right direction. Poland has retail sales data out as well. A mixed bag of data then to start the week. Any final thoughts on what to make of all these reports? I think the broad takeaway is that Europe's economy is still facing some stiff headwinds, but there are glimmers of improvement in certain areas like business confidence in Germany. It will be important to see if these green shoots continue to emerge in the months ahead, especially as central banks continue to raise interest rates to combat inflation. Definitely an economic situation that bears close watching. Indeed it is. Thanks for that update. We'll continue to monitor the European economy closely here at Simply Economics. Looking ahead, we have a busy economic calendar this week with key data releases and central bank speeches on tap. Joining me now for a look at what to watch is our correspondent. So what are the main highlights this week? It's shaping up to be an eventful week for the global economy. In the U.S. we'll get the final reading on first quarter GDP on Thursday, which is expected to show growth slowed to a 1.3% annualized pace from the previous estimate of 3.4%. On Friday, the Fed's preferred inflation gauge, the core PCE price index is forecast to ease slightly to 2.6% year over year. And there are also several Fed speeches throughout the week. How much impact could those have? The remarks from Fed officials will certainly be closely parsed for any clues on the interest rate outlook. While no major shifts in rhetoric are expected, any surprises could move markets. The Fed recently paused its aggressive rate hike campaign, but has signaled borrowing costs will likely stay elevated to keep inflation in check. Over in Europe and Asia, what are some of the key data points to watch? In the Eurozone, ECB officials Lane and Schnabel are both scheduled to speak, which could offer insight into the central bank's thinking. Remember, the ECB just last week signaled more rate hikes are likely as inflation remains stubbornly high. Meanwhile, in Japan, the jobless rate is expected to hold steady at 2.6% in May. We'll also get retail sales and industrial production figures, which should give a sense of how the world's third largest economy is fairing. And finally, I see Thailand has some data out on Friday as well. That's right. Thai industrial output likely slowed sharply in May to just a 0.45% annual growth rate down from over 3% the previous month, according to the consensus forecast. But analysts will also be watching the private consumption figures for any signs of weakening domestic demand. Thanks for that rundown, David. We'll be tracking all the data and bringing updates as they cross the wires. In other economic news, the monthly mortgage payment for a typical first-time home buyer in Britain has soared by over 60% since the last general election, now exceeding 1,000 pounds per month, according to new figures from property website RightMove. This highlights the financial challenges facing Britain's trying to get on the housing ladder. For more on this, we turn to our economics correspondent. What is driving this steep increase in mortgage costs for first-time buyers? The main factors behind this 400 pounds per month jump in average mortgage payments are the steady march higher of both house prices and interest rates over the past five years. Wages have only risen about 27% during this same period, so the higher borrowing costs are really squeezing the finances of these younger buyers. Many are being forced to look for smaller, more affordable properties, or to stretch out their mortgage terms to ultra-long durations in order to make the monthly payments manageable. And what is the longer-term outlook for the British housing market and the prospects for first-time buyers being able to find affordable homes? It's a very challenging environment right now. Home prices remain elevated and the Bank of England is expected to continue raising interest rates in the near-term to combat high inflation. This will keep borrowing costs rising and make homeownership even more unaffordable for many. The government has proposed some support measures for first-time buyers, but critics argue much more needs to be done to boost housing supply and provide assistance. Without significant action, the dream of homeownership risks moving out of reach for a large swath of young Britons. Turning to some corporate news, shares of British soft drink maker Brittvick jumped 7% this morning on news that Danish brewer Karlsberg may make another takeover offer for the company. Brittvick has already rejected two approaches from Karlsberg but says it is still considering its position. A key hurdle to any deal appears to have been cleared with Brittvick's U.S. partner PepsiCo agreeing to waive a change of control clause in its bottling agreement with the British firm. This would allow that deal to remain in place if Karlsberg acquires Brittvick. Yes, that bottling deal with PepsiCo is crucial for Brittvick. It gives them exclusive distribution rights for major brands like 7Up and Lipton Ice-T in the UK until 2040. Losing that deal would make Brittvick a much less attractive takeover target. So PepsiCo agreeing to waive the change of control provision clears the way for Karlsberg to potentially make a higher offer that Brittvick's board would accept. But there are no guarantees. Karlsberg says it is still weighing its options at this point. Finally, UK building materials supplier Sig warned today that its profits this year will be well below expectations due to a slowdown in demand in key European markets with the company pointing to particularly challenging conditions in France and Germany that are weighing on sales causing Sig shares to tumble as investors brace for a tough period ahead. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. (dramatic music) You