Shares in SABMiller (SAB) dipped on Tuesday following its fourth-quarter trading update. Investors opted to take a little bit of money off the table after recent strength in the share price. Of particular importance for the group are the headwinds which it faces in foreign exchange markets, especially the strength of the dollar against various emerging market currencies. Not only does it lower the value of its profits overseas when translated, it also entails higher inflation and lower purchasing power in those emerging markets in which it is present.
The company also had to contend with the change in the timing of Easter and a litany of woes in many of the African countries in which it operates, with sales in both Europe and the United States flat. The stock sells on more than 20 times’ earnings, which looks a full enough valuation, says The Times' Tempus column.
SABMiller and Michael Page (MPI) are not the only companies facing currency headwinds, so too is GKN. The engineering outfit reported a 7 per cent rise in revenues which was almost entirely wiped out by a negative 6 per cent move in currency rates, due a strengthening pound. Yet that is less serious than it might seem given that the firm does not export much from the UK. The company’s margins continue to be strong and sales at its two most relevant divisions, Driveline and Powder Metallurgy, grew by 14 per cent and 8 per cent respectively. That should continue even if general market conditions flatten out.
So despite just a 1 per cent rise in sales, an increase in its trading margins to 8.7 per cent from 7.4 per cent sent trading profits soaring by 19 per cent to hit £166m. The stock sells on a relatively lowly 13.5 times earnings, “which looks good value for the sector", The Times’ Tempus wrote.
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In the early hours of the morning Ukraine began its “anti-terrorist” operation in the northern part of the Donetsk region. The country’s President described it as “phased, responsible and balanced". Ukrainian military units took up positions around the region, setting up checkpoints along key roads. In one incident, soldiers repelled an armed mob from a military air base, The Wall Street Journal Europe reports.
One of the most senior figures in Lloyds Banking Group’s (LLOY) foreign exchange division, Darren Coote, has quit, it has emerged. That follows the regulator’s investigation into the alleged manipulation of the world’s biggest market. Sources familiar with the matter said Coote in fact left the division last week, but was apparently for ‘personal reasons’ and not related to the inquiry. Lloyd’s declined to comment. The above follows the suspension, two months ago, of Martin Chantree, one of its foreign exchange traders, whom Lloyd’s emphasised had not been accused of any wrongdoing, The Times reports.
Yahoo! and Intel rose in after-hours trading following their latest quarterly results. Stock in the former shot up by 6 per cent, with its performance during the period having been buoyed by its stake in Alibaba, which is expected to soon float on the US market. The company managed a rise of 2 per cent in its revenues from display advertising, its main business area. The chipmaker, on the other hand, saw its shares gain 1 per cent. The company is trying to tap into increased demand for wearable computing devices, The Times reports.
Department store chain House of Fraser reported record revenue for last year thanks to booming internet and mobile sales. Turnover grew by 3 per cent on a like-for-like basis to reach £1.2bn, on total revenue that was up by 3.6 per cent. Earnings jumped by 8.3 per cent to £60.2m. E-commerce sales soared 41 per cent and now represent 12.2 per cent of total income, The Scotsman writes.
BSkyB has tied up with Twitter to launch a new offering which the company hopes will encourage the social network’s 15m UK users to consume more of its programming. The new technology will allow viewers to either remotely record shows or stream them through Sky’s TV on-demand software, The Daily Telegraph says.
Following a rough Christmas that saw pre-tax profit contract by 25 per cent to £85.2m Debenhams (DEB) is negotiating with 12 suppliers, including Sports Direct, to increase sales of branded products. As a part of its efforts it is cutting promotions and rejigging space in 40 of its 158 UK shops, with the aim of being able to offer more products from other popular brands. However, the firm’s chief, Michael Sharp, was adamant that the above does not mark a change of strategy from its policy of increasing Designers at Debenhams exclusive ranges, The Daily Express reports.
