the times | Wednesday January 19 2022 35
Business
The boss of THG came under renewed
pressure yesterday as the ecommerce
group warned investors that profit mar-
gins would fall short of market forecasts
and revenue growth would slow.
Matthew Moulding, its billionaire
co-founder, hailed record annual reve-
nues of £2.2 billion and insisted that the
new year had “started well”, but the
group’s cautious outlook was punished
Pressure mounts on THG as profit margin warning sinks shares
Dominic Walsh by the market, as the shares lost
another 18p, or 9.6 per cent, to 167¾p.
That is a far cry from the 500p at
which THG — formerly The Hut
Group — was floated in September
2020, valuing it at £5.4 billion, and there
has been speculation that Moulding,
49, could seek to take THG private.
In a fourth-quarter trading update,
the ecommerce-to-technology logis-
tics business reported group revenues
in the last three months of the year of
£711.7 million, up 27.1 per cent on 2020
and 92.4 per cent ahead of 2019. That
took revenues for the year to £2.18 bil-
lion, a year-on-year increase of 35 per
cent and up 91.1 per cent on 2019 levels.
THG was founded in 2004 by Mould-
ing and John Gallemore as an online
CD and DVD retailer, but has devel-
oped into a beauty and nutrition busi-
ness with 300 websites and 10,000 staff.
Although THG insisted that “mo-
mentum coming into the new year re-mains strong”, with a substantial pipe-
line of website launches in its Ingenuity
technology division, it said that early in
the year it faced “a more challenging
comparable period” after global lock-
downs last year and record commodity
prices in its nutrition division.
It was now expecting an underlying
earnings margin for the year of
between 7.4 per cent and 7.7 per cent,
compared with a consensus of about
7.9 per cent, after allowing for accountcurrency movements. This implies
earnings of £161 million and £168 mil-
lion, but THG said that it expected
margins to grow during the year.
Sales growth for the coming year is
also now forecast to undershoot, with
guidance cut to between 22 per cent
and 25 per cent, compared with consen-
sus of 30 per cent. However, revenue
guidance for the coming year in its
Ingenuity unit was reiterated at
between £108 million and £112 million.LUCA BRUNO/AP ; DANIELE VENTURELLI/GETTY IMAGESActivision snapped up in record tech deal
Microsoft to
buy Call of
Duty maker
Callum Jones
Microsoft is to buy the video games
group behind Call of Duty in a deal
worth $75 billion in the largest takeover
yet by one of America’s tech giants.
The company has swept up Acti-
vision Blizzard, a prolific developer that
has been ensnared by controversy, in an
all-cash deal that surprised markets
when it was announced yesterday. The
purchase price includes Activision’s
$6.37 billion of net cash, valuing the
company at $68.7 billion.
Satya Nadella, chairman and chief
executive of Microsoft, acknowledged
that it was investing “deeply” in the
gaming industry. Under the terms of
the agreement, it will pay $95 per share
for Activision, a marked premium on
Friday evening when the publisher’s
stock closed at $65.39. Shares in Activi-
sion surged by $16.92, or 25.9 per cent,
to close at $81.88; Microsoft slipped
$7.55, or 2.4 per cent, to $302.65, valuing
it at $2.3 trillion.
The blockbuster deal was billed by
Microsoft as an acquisition of “building
blocks” for the metaverse, a realm
where users can interact virtually that
has increasingly preoccupied Big Tech
executives.
Activision makes games including
Crash Bandicoot, Candy Crush and
World of Warcraft. The company, based
in Santa Monica, California, was
founded in 1979 and has about 9,500
staff, while its games are played by
400 million people in 190 countries.
It has been grappling with claims of
workplace misconduct. California reg-
ulators filed a gender-bias lawsuit last
summer alleging that female staff had
faced “unwanted sexual advances” and
were paid less than male counterparts.
At first the company was dismissive,
but later it vowed to address concerns.
More than 20 employees had left, it
announced in October, with 20 others
facing disciplinary action after an inter-
nal investigation. Weeks earlier, it
emerged that the US Securities and
Exchange Commission, the markets
watchdog, had launched an inquiry.
Bobby Kotick, 59, chief executive of
Activision, initially will remain in his
job, although his future is in question
once the deal is completed. He has been
criticised over his handling of the mis-
conduct controversy.
Microsoft, founded in 1975 by Bill
Gates and Paul Allen, has operations
spanning Azure, the cloud computing
unit, and Windows, the operating
system, LinkedIn, the social network,
and Xbox, the gaming business. It is
based in Redmond, Washington State.
The deal, which is subject to approval
from regulators and Activision share-
holders, is expected to be completed
next year. It would forge the world’s
third biggest gaming business by sales,
behind Tencent and Sony.
There is heightened interest in take-
overs in the gaming sector. Last week
Take-Two Interactive, the group be-
hind Grand Theft Auto, agreed to buy
Zynga, a specialist mobile developer
that made FarmVille, for $12.7 billion.
Nadella, 54, said: “Gaming is the most
exciting category in entertainment to-
day and will play a key role in the devel-
opment of metaverse platforms. We’re
investing deeply in world-class content,
community and the cloud to usher in a
new era of gaming that puts players and
creators first and makes gaming safe,
inclusive and accessible to all.”
Microsoft takes a $70bn shot at ruling the
metaverse, pages 36-37Men in black Jeff Goldblum and Kyle Maclachlan stride the catwalk at Milan Fashion Week for Prada’s autumn and winter
2022-23 collection. Prada sales bounced back in 2021 with group sales up 41 per cent to €3.4 billion, 8 per cent above 2019Yemen conflict pushes up oil prices
Emily Gosden Energy EditorOil prices hit their highest level since
2014 yesterday amid fears of supply
disruptions as analysts forecast a return
to $100 a barrel this year.
Brent crude briefly touched more
than $88 a barrel after Saudi Arabia
launched air raids overnight on Sanaa,
the Yemeni capital, in the wake of
attacks on fuel facilities in the UAE by
Yemen’s Iran-backed Houthi rebels.
Last night the international bench-
mark was at its highest settle value
since October 2014, up 1.2 per cent on
the day at $87.51 a barrel, a gain of
12.5 per cent since the start of the year.
Adnoc, the UAE’s oil company, said
after the incident it had activated busi-
ness continuity plans to ensure an un-interrupted supply to its customers.
However, the Houthi movement has
warned it could target more facilities.
Louise Dickson, senior oil market
analyst at Rystad Energy, a consultancy,
said: “The damage to the oil facilities in
Abu Dhabi is not significant, but it raises
the question of even more supply dis-
ruptions in the region in 2022.
“The attack raises the geopolitical risk
in the region and may signal the Iran-US
nuclear deal is off the table, meaning
Iranian oil barrels are off the market,
boosting demand for similar grade crude
originating elsewhere.”
Political tensions elsewhere have
been pushing up oil prices, with con-
cerns growing over a potential Russian
invasion of Ukraine.
Oil prices have been on a roller-coaster ride over the past two years,
plunging to less than $20 a barrel when
the pandemic hit in 2020 but recover-
ing rapidly thanks to vaccine break-
throughs and supply curbs by the
Opec+ alliance of producers.
Analysts at Goldman Sachs lifted
their oil price forecasts for the next two
years, predicting that Brent crude
would hit $100 a barrel by the third
quarter of this year on the assumption
the Omicron variant of the coronavirus
would have a far smaller impact on
demand than had been feared.
The analysts now see Brent averag-
ing $96 a barrel this year, up from $81
forecast previously, and $105 a barrel
next year, from a prior forecast of
$85, with global demand hitting record
Continued on page 38, col 1commoditiescommodities currenciescurrencies
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€1.1985 (+0.0017) ¤world markets (Change on the day)
Gold
$1,811.39 (-8.26) $
2,000
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1,400Brent crude (6pm)
$86.81 (+0.44)FTSE 100
7,563.55 (-47.68)Dec 15 23 Jan 5 138,000
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