London shares have ticked upwards modestly this morning.
IC TIP UPDATES:
It’s another big day for results ahead of the long weekend, and most of the business headlines are likely to be taken up by discussion of full-year numbers from high street bellwether Marks and Spencer (MKS). A weak fourth quarter has piqued many investors’ interest this morning, particularly as it followed a more bullish third quarter report. But chief executive Steve Rowe is more proud of the company’s success is charging full price for its clothing and home products. According to Mr Rowe, the business will soon log 91 straight days without promotions - the longest stretch in 10 years. We’ll follow up with more today, but for now, we remain buyers.
Mortgage Advice Bureau (MAB1) have announced in line trading for the current financial year, in its annual general meeting statement. Adviser numbers have increased to 990 at May, with organic recruitment in line with management expectations. However, the board expects recruitment to be weighted to the second half of the year. Buy.
Whitbread (WTB) has announced that Sir Ian Cheshire will step down from his role as senior independent director after the board meeting on 21 September. Sir Ian has been with Whitbread for six years, first as chairman of the remuneration committee. He will be replaced by current board member Adam Crozier , who joined Whitbread in April this year. Shares were up just over 1 per cent in early trading. Buy.
Rising costs and a weak sterling have made life difficult for Britvic (BVIC), but disciplined revenue management and cost efficiencies meant the UK drinks maker saw growth in all its units last year with overall revenue up 11.5 per cent to £756m. Its recent acquisition of Brazilian business Bela Ischia is expected to deliver around $10m (£7.7m) of cost synergies. The group also announced changes to its board, which will see John Daly, currently senior independent director and chairman of the remuneration committee, succeed Gerald Corbett as chairman once he retires. Ian McHoul, currently independent non-executive director and chair of the audit committee, will take over the role of senior independent director while Sue Clark, now an independent non-executive director, will become chair of the remuneration committee. Shares were up 2.7 per cent in early trading. Buy.
Waste and water group Pennon (PNN) grew underlying profit before tax 18.3 per cent in the financial year to March 31 2017. This is due to higher customer demand and cost savings at South West Water, growth ahead of target at Viridor and continuing efficiencies, with £9m secured annually, of the £17m overall target. Shares were broadly flat following the announcement. Buy.
Shares in Babcock (BAB) fell 2 per cent following the latest full year results announcement. The group’s order book is down slightly as expected following its exit from the Magnox nuclear decommissioning project earlier this year. However, the group grew both revenues and profit before tax by more than 9 per cent, and cash conversion was 100 per cent. We remain at buy
Hogg Robinson (HRG) has entered an agreement to acquire digital travel company eWings.com, which it believes will give it a “speed to market advantage in the small business space”. Revenues for the group shrank 4 per cent at constant rates, while profit before tax grew 12 per cent. We are reviewing our sell recommendation.
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We doubt that a decent fourth quarter update from electricals retailer Dixons Carphone (DC.) has rivals like Amazon (US:AMZN) quite quaking in their boots just yet, but that’s exactly who chief executive Seb James is trying to take on. The roll out of the group’s Geek Squad and Knowhow services are attempting to add something which customers can’t get from an online shopping experience. It seems to be working: a 4 per cent rise in like-for-like sales for the year as a whole - 2 per cent in the final quarter despite weakness in the UK and Ireland - pushed the shares up more than 3 per cent in early trading.
Bowlers appear to be liking the new openings and refurbished locations at Hollywood Bowl (BOWL), pushing up total game volumes by 8.8 per cent and like-for-like volumes by 2.1 per cent. The UK’s largest 10 pin bowling operator also saw the full effect of its acquisition of Bowlplex, which saw revenues increase by 6.2 per cent. Group spend per game fell by 1 per cent, mainly due to a drag from Bowlplex as like-for-like spend per game at the core estate increased by 2 per cent. Shares were up just over 3 per cent in early trading.
Commodities giant Glencore (GLEN) this morning confirmed it has made an informal approach to acquire US-based agribusiness and food outfit Bunge, following press reports. Though Bunge told the market that it was not in discussions with Glencore, the deal would fulfil Ivan Glasenberg’s long-held plans to expand the agricultural trading business. It would also be a significant outlay: after rising 17 per cent yesterday, Bunge is worth $11.5bn.
Vedanta Resources (VED) returned to profit in the year to March, thanks to strong improvements in commodity prices including zinc and iron ore. However, the company finished the year with a $1.2bn increase in net debt to $8.5bn, and confirmation from well-regarded chief executive Tom Albanese that he will step down when his contract expires in August.
Wood Group (WG.) has offered to sell the majority of Amec Foster Wheeler’s North Sea oil and gas business, in an attempt to head off any competition concerns around its merger with the oil services outfit. Today, the company also announced the $44m acquisition of CEC Controls, a manufacturer of industrial and process control systems in the automotive manufacturing industry.
Shares in Kingfisher (KGF) fell just over 6 per cent in early trading after the home improvements retailer saw like-for-like sales fall by 0.6 per cent during its first quarter, mainly due to a 5.5 per cent fall in France. But 12.6 per cent growth in like-for-like sales at Screwfix in the UK and Ireland and 3.5 per cent growth in Poland helped offset the effects from France. Management remains optimistic about the rest of the year with new launches on the way in France and a revamped IT platform.
