This morning's data dump included plenty of third-quarter trading updates as well as news from the British Retail Consortium that prices have been falling on an annualised basis for 30 consecutive months. The Trader Nicole Elliott reports on the latter as the FTSE posts strong mining-led gains in morning trading.
IC TIP UPDATES:
Mortgage lender OneSavings Bank (OSB) added £986m of loans in the nine months to September. Management expects full-year growth slightly above last year's 29 per cent rate. But the shares were off slightly in morning trading. Buy.
Gemfields (Aim:GEM) dug a lot of precious stones out of the ground in the quarter to September, with 7.5 million carats of emerald and beryl mined - up from 6.3 million in the comparable period. The Faberge business also increased its gross profits from sales orders agreed by 61 per cent year on year, partly thanks to stronger margins. Ruby output was much weaker, however, as miners focused on finding new areas to explore. Buy.
Wincanton (WIN) sold its records management business to Restore for an enterprise value of £60m. The business generated cash profits of £5.4m in the year to March. Wincanton will use the proceeds to pay down debt. Buy.
Building products company Epwin (EPWN) acquired a supplier of wood-plastic composite products for an initial consideration of £5.2m in cash and shares, plus up to £3.3m depending on next year's trading. The business made £600,000 of operating profit in 2014, and is expected to start boosting Epwin's profits next year. Buy.
Shares in oil producer Nighthawk Energy (Aim:HAWK) rose 18 per cent on news that its production for the rest of 2015 is hedged at $70.13. It also has 167,000 barrels hedged at $63.63 for next year. These figures were announced alongside news that the company's reserves-based loan facility with Commonwealth Bank of Australia has been reduced from $32m to $27m, in line with the oil price falls. Buy.
KEY NEWS:
Wizz Air (WIZZ), the low-cost Eastern European airline that floated on the UK stock market in March, posted numbers for the profitable summer months showing net profit growth of 34 per cent. But revenues per seat flown were down 1.7 per cent as the company passed fuel-price declines on to customers, and management said the downward pressure on unit revenues would continue. The market seemed disappointed, sending the shares down 5 per cent.
Marks and Spencer (MKS) boasted "good underlying profit growth", but this was due to margin gains and store expansion rather than underlying top-line growth. Like-for-like sales in the UK fell 0.7 per cent in the second quarter after a flat first quarter, and the international business also slipped into reverse. Yet management nudged up guidance for full-year margins in the embattled 'general merchandise' division as sourcing improvements begin to feed through into the numbers. This is probably why the shares rose 7 per cent in morning trading.
Countrywide (CWD) shares fell 10 per cent on a trading statement that laid bare the shortage of stock afflicting UK estate agents. The group has brokered 48,541 house exchanges in the year to date - down 10 per cent on last year's level. Management warned that full-year cash profits would be lower than the £121m level recorded in 2014.
OTHER COMPANY NEWS:
Insurer Legal & General (LGEN) announced net inflows for fund management of £21.7bn in the third quarter (Q3 2014: £8.3bn), taking assets under management to £717bn despite market falls. It is now the 15th largest asset manager globally. Cash generation was up 14 per cent.
Financial services group Old Mutual (OML) reported gross sales for the third quarter up nearly a third at £8.1bn. Wealth management and Africa were particularly strong.
