Consumer goods giant Reckitt Benckiser's (RB.) first quarter results may have satisfied market expectations and its consumer health business – its main engine for growth - is doing well enough, with revenues growing by 11 per cent during the most recent reporting period. As well, the firm is aiming to float its pharmaceutical side. No less important, and under-appreciated by investors, one must also factor in its putative offer for Merck & Co.’s over-the-counter (OTC) health products unit, which would transform its own growing healthcare division.
On the negative side of things, the latest numbers showed how like-for-like revenue growth, if one excludes the pharmaceuticals side of things, of four per cent, was nearly completely wiped out by fluctuations in foreign exchange markets. The shares are trading on about 19 and a half times this year’s earnings for the core business. That does not suggest much to go for, The Times' Tempus writes.
Shares in Tesco (TSCO) rose yesterday despite reporting another drop in both sales and profits. Yet despite that, and the dividend yield which it offers – approaching five per cent plus – it is too soon to call a bottom in the shares. The outfit continues to be bedevilled by multiple headwinds, including competition from discounters and falling real incomes across the nation.
As well, the strategy does not appear to have changed materially. For now, the grocer seems to be concentrating on cutting its prices sharply – as the company itself describes it - and cutting back significantly on its investments in Europe. Those reductions, however, do not really sound like enough. In fact, if it wanted to the firm could re-invest up to £1.5bn in price cuts. Not to be missed either, the value of the dividend is being eroded by inflation. Tesco needs to go back to its roots. As its founder jack Cohen used to say “pile it high, sell it cheap”. Given the lack of a change in strategy the shares continue to be a ‘sell’, says The Daily Telegraph’s Questor column.
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In a clash overnight with Ukrainian authorities, three pro-Russian protesters were killed and 13 wounded. The incident took place at a military installation in the southeastern city of Mariupol. It marked the bloodiest day yet since Kiev began its anti-terrorist operations to drive out the pro-Russian militants who had seized control of 10 cities in the east of the country, The Wall Street Journal Europe reports.
Warnings from corporate lobbyists against tough sanctions on Russia are cracking Europe’s resolve to impose them. Companies, with BP (BP.) at the forefront, are worried that any retaliation from the Kremlin could cost them dearly; hence the sustained pressure on ministers. City lobbyists are telling them that Russian investment into London’s financial services might be at risk, The Financial Times says.
Consumer goods giant Reckitt Benckiser is studying the possibility of a separate stock market listing for its pharmaceuticals business, the company said as it reported in-line first-quarter results. That follows a strategic review of its businesses as it is at odds with the rest of its core brands. “A capital markets solution is emerging as a strong option,” the company said, according to The Daily Telegraph.
The UK economic recovery is gathering pace, as evidenced by the latest employment report. For one, the unemployment rate fell sharply, to below the 7 per cent threshold which the Bank of England had previously set and growth in wages managed to slightly outpace rising inflation. That sent sterling up towards a four-year high against the US dollar, The Times says.
Come 2030 the average fare for a return flight could increase by as much as £320 if a third runway is not built at Heathrow airport, as demand will outstrip supply. Frontier Economics claims in an independent report that political inaction is already a factor pushing prices higher. In fact, passengers are already paying £95 more per return flight than if a third airstrip already existed, according to The Times.
Six years after the financial crisis Bank of America showed that banks Stateside are still paying a hefty price for mistakes made during the past financial crisis. Thus, a huge $6bn legal bill largely wiped out its profits in the last reporting period. That was the lender’s first quarterly loss in nearly three years. Markets, which were taken by surprise, duly sent the shares lower, writes The Times.
