Harley-Davidson Earnings, Kraft Heinz Pricing Power, Starbucks Turnaround, and Tesla Batteries | Bloomberg Intelligence

Harley-Davidson's Financial Strategy

• 📈 Harley-Davidson's stock surged by 20% primarily due to the sale of a minority stake in its captive finance unit to KKR and Pimco for $1.25 billion.
• 💰 The proceeds from this sale will be allocated to share repurchases, debt reduction, and capital investment.
• 💡 The captive finance business is Harley-Davidson's most profitable segment, generating over 50% of its overall profits, surpassing profits from vehicle manufacturing.
• 📉 Despite the financial maneuver, the motorcycle manufacturing side faces challenges, with sales down 13% over the last decade and margins shrinking from 20% to 5%.

Kraft Heinz and Consumer Staples

• 🥫 Kraft Heinz reported a decent quarter, utilizing price increases to offset a 2% decline in organic revenue, with pricing contributing 0.7 percentage points.
• 🌶️ The company is focusing on innovation in flavors and sauces, particularly hot sauces, to cater to younger generations' preference for spicy and dual taste experiences.
• 📊 While commodity costs remain elevated, retailers are working to moderate inflation, but consumers are still bearing the brunt of price increases across the supply chain.
• 📉 Kraft Heinz's stock has seen a compounded annual return of only 1% over the last five years, though it offers a dividend yield of 5.5%.

Starbucks' Turnaround Efforts

• ☕ Starbucks is showing signs of a turnaround, with improved value perception scores, reduced hourly turnover, and better service times.
• 🚀 The company plans to launch new protein cold foam and healthier food items as part of an initiative to offer more health-conscious options.
• 📉 Despite some positive indicators, comparable sales dropped 2% in the fiscal third quarter.

Tesla's Battery Deal and EV Market Dynamics

• ⚡ Tesla is set to purchase $4.3 billion worth of US-built batteries from LG Energy Solution for its energy storage business, a highly profitable segment with 30% gross margins.
• 🚗 This deal is separate from batteries used in Tesla's electric vehicles.
• 📉 The US EV tax credit expiring in September is expected to cause a surge in demand for EVs, including Tesla, followed by a potential demand fall-off in late 2025 and early 2026.
• 💡 Tesla's future demand may depend on the successful rollout of a cheaper vehicle model.
• 👨‍💻 Elon Musk appears to be refocused on managing Tesla and his other businesses.