International Distributions Services (IDS), Burberry (BRBY), Young’s & Co’s Brewery (YNGA), Ocado (OCDO), Spirax-Sarco Engineering (SPX), Melrose Industries (MRO), Great Portland Estate (GPE), Assura (AGR) and Premier Foods (PFD)
Royal Mail has called for “urgent reform” of its universal service obligation, after banking an adjusted operating loss of £319mn in the six months to September. The courier said it is “simply not sustainable to maintain a network built for 20 billion letters when we're now only delivering 7 billion”.
Parent company International Distributions Services (IDS), which includes profitable European delivery business GLS, reported flat revenue and an adjusted operating loss of £169mn, down from a loss of £57mn last year. Statutory numbers were even worse due to a £130mn one-off payment for UK employees and a £5.6mn Ofcom fine which the group decided to settle early.
Management has downgraded its outlook for the full-year, saying its adjusted operating performance – excluding voluntary redundancy costs – will be “around breakeven”. It was previously targeting a profit. JS
Read more: Royal Mail: is it time to be optimistic?
Burberry feels the impact of luxury slowdown
Burberry (BRBY) has warned that it is “unlikely” to achieve its previously stated revenue guidance for FY24 amid difficult trading conditions in the luxury retail market. The group’s interim guidance revealed that total store sales were up just 1 per cent on last year. While revenue in Europe, the Middle East and Africa grew by a respectable 10 per cent, sales in the Americas fell by the same figure.
Management now expects the group’s full-year adjusted operating profit to come in at the “lower end” of the current consensus range (£552mn-£668mn). Investors have retreated following the downgrade, with shares falling almost 9 per cent in the first hours of trading this morning. JJ
Read more: Finding value in luxury stocks
Ocado sells tech to healthcare business
Ocado (OCDO) is branching out from the grocery retail sector, after it announced yesterday afternoon that it had agreed a deal to provide its warehouse fulfilment tech to healthcare business McKesson Canada. Management said the deal would be “cash and Ebitda positive” in 2025, with Ocado taking upfront and ongoing annual fees. The shares were down by 5 per cent in early trading to 564p, after rising to 596p yesterday on the back of the announcement. CA
Read more: Ocado is still a 'jam tomorrow' business
Melrose expects profit uplift
Melrose Industries (MRO) lifted earnings expectations for 2023 by 7 per cent, saying that it expects to deliver an underlying profit that would be more than double the one achieved last year.
The ongoing recovery in the aerospace sector meant its engines business increased revenue by 18 per cent in the four months since its half-year results and made an adjusted operating margin that was “comfortably in excess” of 25 per cent. It attributed this to a shift in its business mix, with more high-margin aftermarket work being completed.
Full-year revenue will be between £3.3bn-£3.4bn, while its “aerospace adjusted operating profit” will be between £400-£410mn. Analysts at UBS said the upgraded margin guidance was ahead of the current consensus but the shares were flat in early trading. MF
Read more: Melrose abandons 'buy, improve and sell' model
Assura shares down as it swings to loss
Assura's (AGR) shares were down 3 per cent in early trading after the GP landlord and developer swung to a pre-tax loss in its results for the six months to 30 September. It suffered a harder valuation hit than last year as high interest rates continue to put off buyers and drag down property values. However, net rental income increased 1.1 per cent as the landlord's main tenant, the NHS, agreed to rent increases.
The company said demand for its offer was high "with one-third of the UK's current GP estate in need of replacement, an ageing population and growing pressures on the health system". ML
