A slide in the pound following a ruling from the Supreme Court that the UK government must seek parliamentary approval to trigger Brexit negotiations has buoyed the FTSE100. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Dixons Carphone (DC.) has announced a fifth consecutive year of Christmas growth - this time marking a 6 per cent improvement in underlying sales in the UK over the 10 weeks ended 7 January 2017. Chief executive Seb James said that, as a result of “the group’s scale” the company was able to offer extremely attractive prices over the Black Friday promotional period. As such, he now expects “a meaningful uplift” in profitability year-on-year, with earnings expected to fall between £475m-£495m. That hasn’t, however, stopped him from pointing out that we live in times of “significant political uncertainty” - which probably hasn’t much helped the share price this morning. Buy.
The turbulence of 2016 has failed to let up for budget carrier easyJet (EZJ) with the shares nearly leading the market down this morning after dropping more than 8 per cent. While passenger numbers rose to 17.4m seats, the airline now has 19.3m seats thanks to is continued expansion. This means load factors, an expression of how full its planes are on average, dropped 0.3 percentage points to 90 per cent. This meant revenue per seat dropped 8.2 per cent on a constant currency basis to £51.64. Costs per seat only dropped 2.1 per cent on a constant currency basis when fuel is included - but remove fuel and costs actually rose 1.1 per cent. Management is trying to balance the load and made £14m of savings in the three months to 31 December. Chief executive Carolyn McCall said the impact of the fall in sterling and the rise in the oil price was £35m worse than previously expected. Revenue per seat is expected to decline in the first half of its financial year but improve in the second. Buy.
There’s growth at public house owner Marston’s (MARS) but it isn’t as strong as the same period the prior year. Its destination and premium division registered like-for-like sales of 1.5 per cent for the 16 weeks to 21 January - which is exactly half the rate of growth for the same period the prior year. Management did note there were strong comparatives to aim for this term, but the shares are off slightly this morning suggesting there’s a little drowning of sorrows that the growth numbers weren’t closer together. Like-for-like food and drink sales growth also fell below that of the prior period, as did its taverns and leased divisions. But management is not altering its full-year expectations and is going ahead with growth plans which include 20 new restaurants and pubs and five lodges. Buy.
Amerisur Resources (AMER) has announced that, following testing, its Platanillo 24 well has been placed on commercial production at a rate of around 420 barrels a day in natural flow. Alongside this, the Colombia-focused producer said OBA volumes are currently 3,100 barrels a day. The shares are flat today, but we re-iterate our buy rating.
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At the end of 2016, BT (BT.A) announced that it had conducted an investigation into the accounting practices of its Italian business and was expecting to have to book a £145m write down on its balance sheet. Now, following an external investigation by KPMG, it has become clear that the company had grossly underestimated the accounting anomalies. The adjustments due to be reported in upcoming interim results total around £530m, a cost which is expected to take a big chunk out of third quarter adjusted cash profits and cash flow. The Italian business executives have already paid the price for their shoddy accounting with their jobs and BT expected the financial repercussions to stretch into the 2018 financial year. Shares are currently down almost a fifth.
Electronic components group Laird (LRD) has had a better morning. The group’s year end trading update was not spectacular, but investors seemed relieved that there were no more profit warnings after two disappointing updates in 2016 wiped off over half of the group’s value. Laird has also managed to renegotiate its covenants with its debt providers in a one-off extension “as a precaution”.
Some might dismiss it as just posh tonic but naysayers would likely spit out their G&T in shock at Fevertree’s (FEVR) sales figures this morning. Sales at the back end of 2016 suggest there was a lot of festive spirit given second-half sales are expected to be 75 per cent ahead of the same period in 2015. This means sales for 2016 as a whole should be £102.2m - or 73 per cent ahead of the prior year. UK sales are expected to be 118 per cent ahead of 2015’s numbers with Christmas sales being a key driver. Crucially, its overseas expansion seems to be fizzing along nicely too, with sales in Europe up 39 per cent on 2015 and 55 per cent ahead of last year’s numbers in the US. And as if that wasn’t enough, rest of world sales have jumped 88 per cent, albeit from a small base. The results, set to be published on 21 March, are expected to be “materially ahead of expectations”.
Robotics specialists Blue Prism (PRSM) has leapt into our company's coverage in style. After joining Aim in March last year with a market cap of £49m, it’s now worth over £300m having attracted an enormous level of investor interest. Momentum is also in the numbers in todays primary results announcement, with total contracted revenue up 205 per cent. What’s more exciting for the shareholders who have already jumped onboard is the fact that 85 per cent of that revenue is recurring, giving excellent visibility for the next few years.
IG Group (IGG) have ceased selling its Sprints binary option product to new clients with immediate effect, judging it to no longer fit with “the strategic balance towards sophisticated trading and investment”. The product generates around £15m in revenue. Management made the announcement while unveiling results for the six months to the end of November. Pre-tax profits rose 7 per cent during the period as new client numbers increased by more than half on the same time in 2015. The spread-betting specialist also acquired Daily FX, a global retail currency and education portal, for $40m (£32m).
The market responded favourably to two coal-related announcements this morning from Rio Tinto (RIO). The first was the sale of its Australian subsidiary Coal & Allied Industries Limited to Yancoal Australia Limited for up to $2.45bn; the second an increase in its mineral resources at Mount Thorley and Warkworth Mineral Resources, by 182 and 58 per cent respectively.
Fellow mining giant Anglo American (AAL) is also up strongly this morning, on a set of very positive numbers from De Beers. Its first diamond sales cycle of 2017 took $720m (£578m), considerably up on the first and final sales of 2016, though chief executive Bruce Cleaver said the group was maintaining “a cautious outlook for these categories as the Indian industry continues to adjust to the post-demonetisation environment”.
G4S (GFS) was back in the headlines this morning. The Financial Times, our sister title, reported that the FTSE 250 security company had asked the British government to intervene over criticism from the Israeli government of the company’s decision to sell its security business in the country. The company insists that the decision was purely commercial.
OTHER COMPANY NEWS:
Shares in EnQuest (ENQ) are up two per cent today after the North Sea oil producer announced the acquisition of a 25 per cent stake in BP’s Magnus oil field. The deal gives the junior company around 15.9 MMboe of additional net 2P reserves, as well as a number of minor stakes in various supply facilities and pipeline systems. EnQuest also published a trading update for 2016, detailing an 8.7 per cent rise in production, final reported unit operating expenditure of $25 per barrel, and year-end net debt of $1.8bn.
Document management and relocation provider Restore (RST) barely bothered the market today with an in-line trading statement for the 2016 calendar year. Most of its profit comes from the first of those two divisions, which continues to “perform steadily”, while the integration of recent acquisitions - of Wincanton Records Management and PHS Data Solutions - is on track. Relocation services grew year-on-year, with a strong final quarter.
