Royal Mail, Rio Tinto (RIO), Entain (ENT), Asos (ASC), Just Eat Takeaway (JET), Severfield (SFR) and De La Rue (DLAR)
The largest shareholder in Royal Mail-owner International Distribution Services (IDS) will launch a buyout attempt, the Financial Times has reported. Czech billionaire Daniel Křetínský already owns 27.5 per cent of IDS through his Vesa Equity Investment vehicle. The government has previously scrutinised his holding in the company but accepted an increase in the stake from 22 per cent to 27 per cent in 2022. IDS shares jumped 20 per cent on the report. The company had fallen 17 per cent year-to-date before the bid news.
Křetínský also owns 29.9 per cent of PostNL in the Netherlands and a 10 per cent stake in J Sainsbury (SBRY). Royal Mail is in the midst of a reform push, which would allow it to cut down letter deliveries to three of six days a week for non-first class mail, diverting more resources to parcels. AH
Rio reports lower production but maintain guidance
Rio Tinto (RIO) reported lower iron ore and copper production in the first quarter, although has held onto full-year guidance. Iron ore, its largest profit generator, saw a 10 per cent drop compared to the fourth quarter, to 78mn tonnes, while copper production fell 3 per cent. The red metal was up on a year ago, however, due to higher grades at Escondida. There was a one-third drop at the Kennecott mine in the US due to an “unplanned conveyor downtime”.
RBC analyst Srivathsan Manoharan said the production levels would likely lead to “small negative consensus revisions” for 2024, although higher metals prices recently should support earnings.
Meanwhile, fellow copper miner Antofagasta (ANTO) reported Q1 production of 129,400 tonnes, against the consensus forecast of 157,700 tonnes, because of lower grades and maintenance at its two main operations. Antofagasta has been a top performer in the resources space this year, its share price up 36 per cent. It climbed 2 per cent on the Q1 update. AH
Read more: Prepare for lower dividends from Rio Tinto
Asos reliant on big markdowns to shift stock
Shares in struggling online retailer Asos (ASC) were up more than 4 per cent this morning – despite the group reporting an 18 per cent drop in interim revenue and greater adjusted pre-tax losses. Investors’ buoyant mood is perhaps related to the company’s progress with crucial stock reductions.
It had £593mn of unsold merchandise at the close of the first half, with a full-year objective of £600mn. This was achieved through heavy discounting – and the adjusted gross margin was down 260 basis points as a result. Management has reiterated guidance for a sales decline of 5 to 15 per cent for the full financial year. It is planning further clearance activity in the second half. JJ
Find out why we’re bearish on Asos
Severfield surges on buyback news
Shares in structural steel specialist Severfield (SFR) jumped by 13 per cent after the company said results in its March year end would come in “slightly ahead” of expectations. A lower year-end net debt figure than expected also gave it the confidence to announce a £10mn share buyback.
The order book for Severfield’s core UK & Europe arm stood at £511mn at the end of April, up £22mn over the past six months, with £397mn of this due for delivery in its current financial year. Market conditions are also improving, it said.
Severfield appointed ex-Manchester Airports Group chief Charlie Cornish as its new chair, as incumbent Kevin Whiteman’s nine-year term is due to end in July. MF
