Shares in London started the day in a more downbeat mood. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
BAE Systems (BA.) reported increased sales and profits for the first half of 2017, but held its guidance for the full year. On BAE’s preferred measure of profit, underlying earnings increased by 11 per cent to £945m. The FTSE 100 giant generated £9.57bn of revenues, up 4 per cent at constant currencies. More importantly, the order intake increased by £3.6bn to £10.7bn and includes award of a production contract for the initial batch of three Type 26 frigates. A strong set of figures overall. Buy.
Discount chain B&M European Value Retail (BME) has announced a £152m (initial cash consideration of £112m) acquisition of Heron Food Group this morning. Analysts have described the deal as “good value” and reflects ongoing consolidation in the convenience market. Two of the three Heron owners will remain with the business under the B&M umbrella. Last year the company made revenues of £274m and pre-tax profits of £8.6m. Buy.
Wizz Air (WIZZ) passenger numbers were up by a quarter during July to 2.3m customers, pushing the load factor up by 1.8 percentage points to 92.7 per cent. Despite previously citing concerns about the potential for increased capacity to weigh on yields, the airline increased the number of seats available by 21.3 per cent compared to the same time the year before. Revenue passenger kilometres was also up by a quarter during July bringing the rolling 12 month total to £32.9m. Shares were up nearly one per cent in early trading. Buy.
The acquisition of Clarke & Clarke in October last year appears to be paying off for Walker Greenbank (WGB). The interior furnishings company reported in a pre-close trading update that branded sales were up 35.6 per cent in reportable currency compared to the same time last year. Strip out Clarke & Clarke and like-for-like brand sales were up 3.6 per cent, or 0.5 per cent at constant currency. The outperformance of Europe and the US over the UK indicated at the annual general meeting in June has continued through the rest of the year. The income gained from licensing its designs improved by 18 per cent in constant currency, driven by new agreements signed in the prior financial year for blinds in the UK and bedding in the US and Asia. Shares fell almost three per cent, but we’re sticking with a buy.
Shares in Devro (DVO) were up four per cent in early trading after the collagen product manufacturer reported an 11 per cent increase in revenue at the half-year point to £125m. This was primarily driven by volume growth in China, South East Asia, and Russia, which helped to offset declines in Latin America. Chief executive Peter Page said that the Devro 100 cost reduction programme has £progressed well” during the period, and added that new products will be launched during the second half of the year. Buy.
KEY STORIES:
Standard Chartered (STAN) continued to reduce its risk profile during the first six months of the year, reducing its loan impairment losses by almost half to $655m since the same time in 2016. Coupled with an increase in operating income, this pushed pre-tax profits up to $1.8bn. Encouragingly underlying income in its largest market Greater China and North Asia was up 13 per cent to $1.3bn.
Aggreko (AGK) is continuing to struggle with its Argentina business. Repricing and off hires of the group’s business in the country pushed revenue in its power solutions division down 11 per cent in the six months to the end of June 2017. Pre tax profits were down overall, falling to £63m before exceptional items, from £71m for the same period in 2016. However, This was ahead of expectations for the interims, so some analysts are expressing cautious optimism.
Shares in funeral provider Dignity (DTY) rose in early trading despite news of a slightly weaker second quarter. However, interim results as a whole leave the company on track to meet full-year expectations. Profits improved by 20 per cent in the first quarter but fell by 23 per cent in the second period, leading to overall first half operating profits up 7 per cent. Analysts point out, however, that the opening 12 weeks are seasonally more important. At the time of full year results in March Dignity reduced its growth expectations due to increased scale and greater competition.
Ryanair (RYA) chief marketing officer Kenny Jacobs called July a “record month” for the budget airline. It carried 12.6m customers during July, 11 per cent more than it did the year before, with load factor up one percentage point to 97 per cent. Rolling annual traffic grew by 13 per cent to 125.1m customers. In July Ryanair carried its one billionth customer since it first took to the skies in 1985, making it the first EU airline to do so. Shares were up just over 1 per cent in early trading.
Shares in William Hill (WMH) were up 10 per cent after the gambling company reported that group revenue was up 3 per cent during the first half of its financial year. Online performed particularly well with UK sportsbook amounts wagered up 13 per cent and UK gaming net revenue up 9 per cent. In retail locations the amount bet improved by 2 per cent while gaming net revenue increased by 3 per cent. Chief executive Phillip Bowcock said the company is on track to meet its goal of £40m in cost savings by the full-year results.
Half-year earnings for Rio Tinto (RIO) may have been just shy of analyst expectations, but the Anglo-Australian commodities firm has stepped up its returns to shareholders. In addition to an interim dividend of 110c per share, the company used its interim figures to announce a further $1bn of planned share buybacks for 2017, equivalent to 56c per share.
OTHER COMPANY NEWS:
StatPro (SOG), the small-cap provider of portfolio analytics solutions, reported revenue growth of 23 per cent to £21.6m for the first half. The company saw a loss before tax of £2.29m, after the costs of acquisitions (such as UBS Delta) and disposals along with other non-cash adjustments. This compared to a loss of £0.96m the previous year. The interim dividend stayed flat at 0.85p and free cash flow improved. Shares fell 4 per cent in early trading.
