In keeping with their recent volatile nature, equity markets are enjoying a bounce today. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Royal Bank of Scotland (RBS) has reported a £2.7bn operating loss before tax as restructuring and litigation costs shot up. The group also incurred a £498bn goodwill impairment on it private banking business. However, the group did manage to reduce its risk-weighted assets by £113bn. We place our recommendation under review.
Things are ripe over at fruit distributor Fyffes (FFY) as the group posted a 12 per cent rise in revenues to €1.22bn (£945m) although this included a few bunches of bananas from its joint ventures. That said, the core business saw turnover rise nearly 16 per cent to €985m. Unlike many London-listed groups, the company benefited from currency markets as the weaker euro translated positively in terms of its dollar and sterling sales. Management said turnover was driven higher by further organic volume growth in its banana and melon categories. Buy.
KEY STORIES:
Considering operating profits have dropped by more than a fifth, bookie William Hill (WMH) isn’t being pushed back too far in the pack. The stock is only down roughly 2 per cent, thanks no doubt to its planned £200m share buyback announced as part of its results. It has also prepared some other positive PR for the morning - announcing separately that it will be paying the national living wage to to all of its staff over 18. The legislation will mandate a £7.20 per hour rate for those over 25 and over, but the gambling company has decided to go one further.
There has been a curious reaction to International Consolidated Airline Group’s (IAG) results this morning. The stock is down some 4 per cent in spite of a whopping 68 per cent rise in adjusted operating profits to €2.3bn (£1.8bn). There was of course a helping hand from its purchase Aer Lingus but flag carrier British Airways saw unit revenues fall 2.9 per cent after a fall in passenger and cargo sales. Another plus point was the reinstatement of the dividend.
Shares in Pearson (PSON) climbed 3 per cent after the education titan showed good progress in simplifying its business in 2015. It expects to realise cost savings of £350m by the end of 2017. But underlying sales and adjusted operating profits both dipped 2 per cent, and operating cash flow tumbled a third due to tough trading, disposals and more US college textbooks being returned.
The economic slowdown in China and recessionary environment in Brazil continued to punish IMI (IMI) in 2015. With margins under pressure, the engineer announced its intentions to restructure two of its units, in a move that sent the shares up 5 per cent.
2015 represented another good year for Ricardo (RCDO). The engineering and environmental consultancy firm posted a 43 per cent jump in underlying pre-tax profit in the six months to December. The support services group credited robust demand and the impact of acquisitions Lloyd's Register Rail and Cascade for a 31 per cent jump in sales.
Shares in Volex (VLX) tumbled 11 per cent after the power and data cabling provider warned that weak demand for its products had continued into the second half. This tricky environment means the engineer now expects revenue and profit to fall even harder.
They’re saying ‘cheese’ over at photo booth manufacturer Photo-Me International (PHTM) after registering an 11 per cent rise in turnover in the third quarter which pushed profits up 90 per cent compared to the same period last year. The performance is being driven in large part by its business in Japan, a country where new identity cards are being introduced meaning the need for people to have passport-style photos taken has risen strongly. The performance has prompted the board to guide pre-tax profits for the year to 30 April will be in excess of £40m. But if Japan keeps taking its official snaps at the pace it has been recently, “the eventual outturn for the year is likely to be in excess of this updated projection”.
OTHER COMPANY NEWS:
Irish driller Petroceltic (PCI) has received an all share cash offer a full 83 per cent lower than yesterday’s closing price. The bid came from Sunny Hill, a wholly-owned subsidiary of its largest shareholder, Worldview Economic Recovery Fund. The activist investor believes the value of the energy group’s equity is “close to zero”, a statement which – together with the approach – helped to knock more than half off Petroceltic’s share price in early trading.
