Jan. PPI Up, BP Scraps Carbon Emissions Target, & Most M&A and LBO Miss Early EBITDA Targets
- 01 mins 29 secs
The Bureau of Labor and Statistics' January PPI print was the highest since June 2023; BP reported a company record $27.7 billion in profits in 2022 and also said it would be lowering it’s carbon reduction goals; and a S&P Global Ratings study found that 80% of companies that are part of a M&A or LBO transaction miss their EBITDA targets in their first year.Channel: Markets
Topics: Markets, Inflation, Equities, M&A, Markets Minute,
This is your Markets Minute!
The Labor Department reported that the Producer Price Index for January 2023 is up .7% percent month over month, the largest increase since June last year and higher than expectations, which were closer to .4% percent. The Year over Year PPI was 6% percent. The recent peak PPI came in March of 2022, at 11.6% percent.
In a move that made green investors a little blue, BP signalled a shift in its fossil fuel strategy. In its quarterly update to investors, BP shared that it had registered $27.7 billion dollars in profits in 2022, a record high for the company and double what it saw in 2021. The company also announced it’s reducing their carbon emissions target to 20-30% by 2050, citing the market demand for oil and gas requiring their continued investment in fossil fuels.
A new S&P Global Ratings Study Found That 80% of Companies that are part of a M&A or LBO transaction miss their EBITDA Targets by At Least 25%. The study reviewed M&A and LBO transactions from 2019 and found that management teams and equity sponsors miss their EBITDA targets by 80% in the first year and 60% in their second year.
According to the findings, the shortfalls were largely driven by under projecting leverage actually used and over estimating revenue, which was the main driver of the missed EBITDA targets.