Companies roundup: Balfour Beatty & Metro Bank

News and updates on your investments

March 13, 2024

Balfour Beatty's (BBY), Metro Bank (MRTO), Supermarket Income Reit (SUPR), Gym Group (GYM) and Victoria (VCP)

Balfour Beatty's (BBY) share price climbed 9 per cent in early trading after the construction company results smashed analysts' forecasts.

In the last calendar year, revenue rose 7 per cent to £9.6bn, easily beating consensus forecasts for 2023 and 2024 of £9.3bn and £9.38bn, respectively. The dividend grew to 11.5p per share from 10.5p and remains fully covered by earnings per share.

The company pinned its surprising growth on its "operationally diversified portfolio" as increasing infrastructure projects offset a slowdown in commercial property projects. ML

Metro Bank's recovery delayed

Signs of a recovery at troubled lender Metro Bank (MRTO) were hard to spot after the company revealed underlying losses of £17mn for 2023 and announced a cost-cutting programme that will hopefully deliver £50mn of annual savings in the first quarter this year. This will come at the cost of 1,000 jobs, or 22 per cent of the workforce, with a further £30mn of savings expected for the year as whole. The company also intends to restrict the opening hours of its branches.

Metro Bank, which is 53 per cent owned by Spaldy Investments, controlled by Colombian billionaire Jaime Gilinski Bacal, offered no profit guidance for this year and only low single digit return on tangible equity (RoTE) target for 2025. The net interest margin was just 1.98 per cent, well below consensus forecasts. Broker Peel Hunt said that higher deposit costs should flow through by 2026 as the bank rebuilds its net interest margin. However, the price to tangible net asset value of just 0.25 reflects concerns over the viability of the business, the broker said. JH

Supermarket Income expects dividend 'fully covered by year-end'

Supermarket Income Reit (SUPR) expects its dividend to be "fully covered by year-end" after the supermarket landlord posted another financial period of uncovered payments.

In its results for the six months to the end of last year, pre-tax loss narrowed as interest rate stabilisation meant values did not fall as much as in 2022. Meanwhile, net rental income rose to £52.6mn from £45.9mn, but neither IFRS earnings per share (EPS), EPRA EPS, or adjusted EPS rose enough to cover its dividend, which remained flat at 3p.

The company told Investors' Chronicle that acquisitions and rental increases would mean the dividend is covered by the end of the year, adding that the board was "very conscious" of the issue. ML

Gym Group revenue surge helps narrow losses

Budget gym operator Gym Group (GYM) grew its annual revenue by 18 per cent to £204mn as its chief executive Will Orr argued that “demand for health and fitness has never been stronger”. While the company fell to a statutory loss before tax of £8.3mn for the year to 31 December, this was a significant improvement on the £19.4mn negative posted in the previous year. The company’s average membership was up 8 per cent, with average revenue per member per month climbing 9 per cent. The shares rose 3 per cent in early trading. CA

Victoria guides for lower revenue and profits

Victoria (VCP) continues to struggle with subdued demand for flooring products. It warned in an update that its financial year 2024 revenue would come in lower than last year, and that underlying cash profits would fall by around £36mn to £160mn. However, management added that as demand normalises and productivity gains flow through, it expects operating margins to rise by 250-350 basis points.

As part of a deleveraging effort, the company is aiming to repurchase €25mn of its bonds and expects to bank a further €50mn through selling real estate. Victoria also confirmed it plans to proceed with a £25mn share buyback programme. The market didn’t take the update well, with the shares down 4 per cent in early trading. CA