Companies
UK retail sales fall at Tesco as cost of living bites
Tesco (TSCO) said that its guidance for the year is unchanged despite rising cost pressures, as the supermarket retailer revealed a fall in UK retail sales in its first-quarter trading update.
Chief executive Ken Murphy said that “we are seeing some early indications of changing consumer behaviour as a result of the inflationary environment” and “the market environment remains incredibly challenging”.
While Tesco posted market share growth of 37 basis points in the UK (by far its largest market), on a like-for-like (LFL) basis retail sales fell by 1.5 per cent to £9.9bn. Including fuel sales, which soared by 44 per cent, UK revenue grew by 4.2 per cent.
Total LFL retail revenue of £13.6bn was up by 2 per cent on last year and by 10 per cent against pre-pandemic. As well as in the UK, sales were also down in Ireland. But revenue was up by a fifth at wholesaler Booker and by 9 per cent in central Europe. Tesco’s shares were flat in morning trading. CA
Another twist to the Saatchi takeover tale
The takeover saga at ad agency M&C Saatchi (SAA) has taken another twist after the board decided to withdraw its support for rival Next 15 Communications’ (NFC) cash and shares offer after a sharp fall in its suitor’s share price. Next 15’s share price has shed almost a third of its value since its offer was made in May, making the 40p cash plus 0.167 shares per Saatchi share offer less compelling.
Could this reopen the door to recently deposed director and biggest shareholder Vin Murria after her competing offer was rejected by the board for being too low? Maybe not, according to Saatchi’s board, who think both her offer and that of Next 15 are ‘inferior to M&C Saatchi’s standalone prospects’.
AJ Bell’s Andy Bell to step down after 27 years
Andy Bell, founder of the eponymous investment platform AJ Bell (AJB) is stepping down as chief executive in October following 27 years at the firm.
He will be replaced by his deputy and longtime chief financial officer Michael Summersgill, who had been identified as the potential successor several years ago having joined the firm in 2007.
Bell has grown AJ Bell into one of the UK’s largest online brokerages for private investors and financial advisers, managing £74.1bn in client assets and a member of the FTSE 250 Index.
The transition comes as AJ Bell’s share price has suffered in unfavourable market conditions, falling by over a third in the past 12 months. Bell will remain close to the company assuming the role of deputy chair of the board.
Helena Morrissey, Chair at AJ Bell, commented: "Michael's appointment as CEO of AJ Bell is the culmination of a long-term succession process that the Board has been running for a number of years. The Board concluded that Michael was the standout candidate given his experience of the business and the market.”
Coal boost Glencore’s goals
Glencore (GLEN) shares rose to near-record highs as it reported improved prospects for its coal business and soaring profits at its marketing arm.
Although government royalty payments and its own costs have increased an expected $75-78 (£61-£63) per tonne, compared with $59.30 in February, and its discounted price relative to the benchmark (due partly to where its coal is based) has widened to $82-86 per tonne from $32.80, coal prices have soared. The average price of a Newcastle thermal coal forward contract has risen to $318 per tonne so far this year, compared with the $175 per tonne expected in February.
RBC Capital Markets analysts said that based on production of 58 million tonnes of coal, it expects Glencore's coal arm to generate a cash profit of $7.9bn for the six-month period (H1 2021: £912mn).
Glencore’s marketing arm is also benefitting from "heightened to extreme levels of market volatility" and supply disruption, particularly in energy markets.
The company said its marketing segment's adjusted earnings before interest and tax is expected to exceed $3.2bn - at the top end of its previous guidance and 78 per cent higher than the first half of last year.
Glencore shares rose 3 per cent in early trading and are up 57 per cent over the past 12 months. MF
James Fisher nets new leader
Marine services business James Fisher and Sons (FSJ) is appointing Jean Vernet as its chief executive from September. He will replace Eoghan O'Lionaird, who has been in the role since October 2019.
Vernet most recently ran John Crane, a manufacturer of seals that is the biggest division within Smiths Group (SMIN). He has also previously worked at energy services businesses Schlumberger (US:SLB) and Expro (US:XPRO).
James Fisher has endured a torrid couple of years, as declining sales and a series of impairments relating to failed investments led to two years of losses. Despite O'Lionaird unveiling a three-year turnaround strategy at a capital markets day in June last year, its share price has continued to plummet – down 66 per cent over the past 12 months and 85 per cent since the beginning of 2020.
Chair Angus Cockburn said Vernet is "ideally suited to turning the business around and leading it through the current challenging backdrop". MF