Unilever (ULVR), Crest Nicholson (CRST), Close Brothers (CBG), Diversified Energy (DEC), DFS (DFS) and Atalaya Mining (ATYM)
Unilever (ULVR) is going to spin off its ice cream business and undertake a new productivity programme in an attempt to streamline operations and drive growth. It argued that the moves would result in “a structurally higher margin”.
The Ben & Jerry’s, Magnum and Cornetto owner said a “demerger of ice cream is the most likely separation route" which will be completed by the end of next year. Revenue at the ice cream unit grew 0.5 per cent to €7.9bn (£6.8bn) in the latest financial year because of price rises, as volumes fell 6 per cent and margins weakened. The Ben & Jerry’s subsidiary in particular has caused difficulties for the business – it took its parent organisation to court because of a disagreement over selling its products in Israel and what it referred to as the “occupied Palestinian territory”.
Analysts at RBC Capital Markets said the separation of ice cream “makes sense given its slower growth profile and lack of cost synergies due to its cold supply chain”.
Meanwhile, the company is also targeting €800mn of cost savings through “additional efficiencies” over the next three years which will lead to 7,500 job losses. It also set out new medium-term guidance for a post-ice cream world of underlying sales growth in the mid-single digits and a “modest” improvement in margins. The shares rose 4 per cent in early trading. CA
Read more: Unilever sales edge up as it focuses on key brands
Crest warns about post-Grenfell costs, again
Crest Nicholson's (CRST) shares sank 6 per cent in early trading after the housebuilder revealed more post-Grenfell safety costs. It told the market this morning it had "become aware of certain build defects predominantly on four sites that were completed prior to 2019", which will cost £15mn to fix over the next three years, marking the fourth time since August the housebuilder has announced additional costs related to legacy sites.
Crest said it was trading in line with analyst guidance. Anthony Codling from RBC Capital Markets said this was "good news" but warned about the additional risk to investors from rising defect costs.
"Unfortunately for investors, Crest keeps seeming to find banana skins on which to slip. The issues identified today do relate to the past, but investors will probably be more concerned about how much confidence they can have in the future." ML
Read more: Six years on, Grenfell still casts a shadow over housebuilders
Diversified Energy slashes dividend from record highs
US gas producer Diversified Energy (DEC) could boast for a time the highest yield on the UK exchange, paying out well over 20 per cent. With a high debt load, it was not to last. The company has now cut its quarterly payout from 87.5¢ (69p) a share to 29¢. Diversified also announced a $410mn acquisition of more mature wells, which will increase production by 15 per cent.
“As we navigate the path forward in this commodity price environment, we are going on offence to be more opportunistic in our strategic approach with a strengthened balance sheet and to capitalise on any periods of near-term weakness,” said chief executive Rusty Hutson Jr. Net debt was down from $1.4bn at the end of 2022 to $1.3bn at the end of 2023.
Diversified’s yield was not just a result of high dividends; the company’s share price has dropped 52 per cent in a year. It was down a further 5 per cent on Tuesday. AH
Read more: Diversified Energy shares fall after US Congress intervention
Atalaya Mining misses profit forecast before building year
Copper company Atalaya Mining (ATYM) reported adjusted Ebitda for 2023 of €73mn (£57.6mn), coming in under broker Peel Hunt’s €78mn forecast. The Spanish miner did increase its full-year payout by a fifth however, taking it to 9¢ a share, on the back of costs and production meeting guidance, at just under 50,000 tonnes.
Atalaya is in the midst of two capex-heavy projects – building a solar plant for its Riotinto mine near Sevilla, and getting a new pit ready at the mine. It is this San Dionisio pit that will take up most of the €70mn spending estimate, with spending on waste stripping, dewatering and moving a road forecast at €42mn-€46mn for this year.
“2024 should be a year of delivery, with [new processing plant] ELIX and the delayed solar farm starting up,” said analysts at Peel Hunt. AH
