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News & tips: DS Smith, Tesco, Cobham & more

Morning trading was relatively muted as people around the nation cast their ballots
June 23, 2016

World markets were relatively quiet this morning, perhaps waiting with bated breath as Brits head to the polling booths to decide the nation's future. Read The Trader Nicole Elliott's morning update here.

IC TIP UPDATES

Shares in DS Smith (SMDS) climbed 4 per cent after the provider of top-notch recycled packaging for consumer goods revealed constant-currency sales growth of 9 per cent in the year to 30 April. Combined with acquisitions, that drove adjusted operating profits up 16 per cent to £379m. One particular highlight was organic growth of 3.1 per cent in corrugated box volumes. Under review.

A trading update from energy specialist Flowgroup (FLOW) was pretty mixed. While the energy supply business is steaming, the group seems to be struggling to get the boiler business off the ground. Having anticipated 100 installations of the Flow mCHP boiler - which generates electricity as it heats water - by the end of June, the group has so far only installed 20. We still like the look of this innovative group and continue to rate these shares a buy.

KEY STORIES:

It might be jumping the gun to call two quarters of like-for-like sales growth a trend, but management at Tesco (TSCO) will no doubt be pleased with the performance. In its first-quarter trading update, the grocer registered a 0.9 per cent growth in group like-for-likes - down from the 1.5 per cent reading in Q4 but positive given the three quarters preceding that one showed declines in turnover. Chief executive Dave Lewis said the group's new fresh-food brands were performing well with two-thirds of customers having bought such items. The international division showed 3 per cent growth in like-for-like sales. Elsewhere, disposals have been a key feature of the period; management agreed the sales of Kipa in Turkey, Giraffe, Dobbies and Harris + Hoole.

The usual good results from Aim stalwart James Latham (LTHM) sent the share price up 5 per cent this morning. An increase in volume of timber products sold in both the warehouse and the direct sales businesses helped to boost turnover by 6.3 per cent, while improved margins saw operating profits up by almost a third.

OTHER COMPANY NEWS

Shares in Cobham (COB) climbed 2 per cent after the engineer landed a contract with Airbus to supply safety systems for its single aisle and long-range aircraft. Management thinks the deal could be worth around $200m (£135m).