London equities are holding on to recent gains and then some. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
It’s a big day for retail as new Marks and Spencer (MKS) boss Steve Rowe steers his first set of annual results as chief executive. Group revenue stayed fairly flat last year, while underlying pre-tax profits managed to squeak out a 3.5 per cent rise. Reported pre-tax profits however, which include various impairment charges and write-offs, slumped by nearly a fifth. We’ll be reviewing our advice today, although given Mr Rowe’s reputation and life-long ties to the company, we suspect this is a serious opportunity to buy on weakness.
A fourth quarter update from Dixons Carphone (DC.) is out this morning, with bosses saying full-year pre-tax profits will fall somewhere between £445m and £450m - the upper end of previous guidance. This wasn’t enough to ignite the share price however, which only inched up 1 per cent on the back of the news. With like-for-like revenues up 5 per cent in this quarter alone, however, we remain buyers.
The market reacted positively to news that 2016 profits for Serco (SRP) were ahead of current market forecasts after a number of contracts ran longer than and were more profitable than expected. The outsourcing group now expects underlying trading profit to be at least £65m ahead of its previous forecast of £50m. Buy.
Intertek Group (ITRK) reported a rise in revenue for the first four months of the year although its resource-related business continues to suffer from challenging markets. The FTSE 100 testing and certification group reported revenues of £774m, a 10.6 per cent rise at constant currencies. But the shares pulled back by 3.3 per cent on early trading. Sell.
KEY STORIES:
Meat packaging company Hilton Food Group (HFG) has reported a growth in volumes in the UK, Ireland and Holland but said Swedish volumes had been flat even though turnover is up reflecting the availability and price of pork in the Scandinavian country. In Denmark, management said conditions remain challenging while in central Europe, where it sells products in seven countries, volume growth has been steady. And thanks to the joint venture in Australia, which led to the commissioning of a new plant, stores are now being supplied in Victoria, Southern Australia and Tasmania. The company said it was still on the look out for acquisition targets at home and overseas.
The huge ructions caused in the travel industry by terror-related events have hit low-cost airline Wizz Air (WIZZ) slightly less hard than some of its larger peers. This is mainly because it focuses on central and eastern Europe and does not fly to the likes of Turkey and Egypt. The company saw passenger growth rise by a fifth to 20m helping push load factors up 1.5 percentage points to 88.2 per cent. Both ticket and ancillary (baggage and food) rose helping net profit hit a record €224m. The business, which listed last year, is clearly in growth mode too given it added 62 new routes in the period including to three new central and eastern European destinations and 12 western European ones.
Investors in Royal Mail (RMG) breathed a collective sigh of relief, after Ofcom decided not to implement new wholesale and retail price controls in the so-called “access” market. The regulator launched the review of the UK’s largest postal operator after rival Whist pulled out of several markets a year ago, fearing a lack of competitive pressure on Royal Mail would impact its pricing and commitment to universal service. The shares lifted 2.5 per cent on the news.
Shares in HSS Hire Group (HSS) were on the slide despite a first quarter trading update that was in line with expectations, with revenues for the 14 weeks to 2 April up 16 per cent. Utilisation improvements were achieved across the group with core utilisation up 2 per cent to 49 per cent. Separately, the group announced the appointment of Paul Quested as chief financial officer. He will join the group and become an executive member of the board with effect from 22 August.
