Equities have continued in their cautionary mode despite improved manufacturing data from China. Click here for the Trader Nicole Elliott’s latest views on the markets.
IC TIP UPDATES:
Personal goods specialist Unilever (ULVR) has been hit by a slowdown in growth in China as well as continuing weakness in its European markets. Underlying sales growth in the third quarter slowed to 2.1 per cent and that was before currency fluctuations were taken into account. Overall turnover dropped by 2 per cent to €12.2bn after currency movements shaved off 2.6 per cent. Sales in Asia grew by 3.1 per cent, which was half the level some analysts had expected. Our recommendation is under review.
Anglo American (AAL) boosted iron ore production by 37 per cent in the third quarter of the year compared to last year but copper production dipped by 15 per cent, mainly due to declining grades at the Los Bronces mine. Platinum production was 14 per cent below last year but this was due to strike action early in the quarter which has now been resolved with production now running to plan. Diamond output rose by 6 per cent. We keep our buy recommendation.
Simon Thompson recommendation Bloomsbury Publishing (BMY) posted a small reduction in turnover in the six months to August due to slower sales in its adult division. The children’s and educational divisions both posted rising growth. Management has expressed its confidence with an increase in the dividend from 0.98p to 1.02p.
Another Simon Thompson recommendation, retail software specialist Sanderson (SND), has posted solid results according to a trading statement for the year to September. Revenues were in excess of £16m, against £13.8m last week, with operating profits likely to be up more than 20 per cent at more than £2.7m.
Electronics payments specialist Earthport (EPO) boosted revenues by 161 per cent in the year to June to £10.8m, boosted by the acquisition of Baydonhill during that period with underlying like for like revenues up by 67 per cent. Gross profits more than doubled to £8.25m. Buy.
KEY STORIES:
Half year results from Tesco (TSCO) were predictably dire with overall group sales down 4.4 per cent at actual exchange rates, group trading profits off 41 per cent at £937m and statutory profits down almost 92 per cent at £112m. The investigation into overstatement of group profits has concluded that profits have been overstated to the tune of £263m, broken down into £118m this year, £70m in 2013-14 and £75m in the period before that. The files have been passed to the Financial Conduct Authority, meaning Tesco is unwilling to comment further. Meanwhile, chairman Richard Broadbent has indicated that he is preparing to step down from the board.
Full year results from Debenhams (DEB) reflected a tough first half followed by improved operating performance during the second six months of the year. Overall gross transaction values rose by 1.7 per cent to £2.8bn with group like for like sales up 1 per cent and gross margins down 0.6 per cent. Operating profit for the year was down 17.2 per cent, made up of a 22.9 per cent fall in the first half and a 2.9 per cent improvement in the second period.
Trading has improved at Ladbrokes (LAD), helped by strong sports betting results across the industry in recent months. Group net revenues rose by 20 per cent in the third quarter with operating profit almost doubling to £33m. The company has confirmed its intention to pay a dividend of at least 8.9p a share.
London-focused estate agency Foxtons (FOXT) says volumes have reduced sharply in the past three months, resulting in third quarter turnover falling to £39.9m from £41.1m last year. This has led management to warn that full year sales volumes will be below last year’s, resulting in profits coming in below the 2013 figure of £49.6m.
OTHER COMPANY NEWS:
Drinks group Britvic (BVIC) grew full year revenues by 2.4 per cent for the 12 moths to 28 September which means that earnings are likely to come in slightly ahead of forecasts of £148m-£156m.
Tullow Oil (TLW) has reported on a range of drilling activity in Kenya where the Kodos-1 wildcat well has been plugged and abandoned despite finding evidence of an active petroleum system. The Ekosawan-1 exploration well hit a near-900m column of oil and the Ngamia-4 and Twiga-2A appraisal wells also proved successful in the Lochiar basin.
Reed Elsevier (REL) has posted underlying revenue growth of 4 per cent for the first nine months of its financial year, a period during which it has completed 25 acquisitions to the tune of £294m.
International car dealership Inchcape (INCH) enjoyed a 10.6 per cent rise in revenues for the third quarter at £1.7bn with total revenues for the first nine months of the year 9.6 per cent higher at £5bn.
Stobart’s (STOB) half year results for the period to end of August reflected the disposal of its transport business as the company concentrates on its biomass fuel and aviation businesses, which both boasted solid growth in the period. Revenues from continuing businesses rose 17 per cent to £56.2m with underlying profit before tax more than doubling to £4.4m.
