Shares in London are up marginally in mid morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Ryanair (RYA) will lower the number of flights it operates next summer, as the airline prepares for delays to the delivery of its new Boeing 737 Max jets. Ryanair has 135 of the aircrafts on order, which are currently grounded worldwide after two software-related crashes. While the airline hopes that the jets will be return to service around September, it believes that “it would be prudent to plan for that date to slip by some months, possibly as late as December”. Ryanair expects to use 30 aircraft over summer 2020 now, instead of 58, which will cut its summer growth rate from 7 per cent to 3 per cent and see full year traffic growth for the year to March 2021 will be cut from 162m guests to around 157m. The shortfall in aircraft deliveries will require some base cuts and closures for summer 2020, and also for the winter 2019 schedule. Sell.
In a first-quarter trading update, Burberry (BRBY) said it had seen an excellent consumer response to chief creative officer Riccardo Tisci’s product, with new collections delivering strong double-digit percentage growth against prior-year equivalent collections – in line with its expectations. Retail revenues grew by 4 per cent to £498m. Comparable store sales grew by 4 per cent, with Asia Pacific enjoying high-single-digit percentage growth driven by mainland China. The group has maintained its FY2020 guidance for a broadly stable top line and operating margin at constant exchange rates. It anticipates a more pronounced operating-profit weighting in the second half relative to the first, as previously announced. The shares were up by around 14 per cent at the time of writing. Buy.
CRH (CRH) has agreed the divestment of its European distribution business for €1.64bn to private equity funds managed by Blackstone. The business comprises CRH's entire general builders merchants business in Europe, including its sanitary heating and plumbing. The proceeds from the divestment will be used for general corporate purposes, acquisitions and capital returns to shareholders through the share buyback programme. Buy.
Emis’s (EMIS) trading for the half-year to June 2019 has been in line with management’s expectations, with revenue ahead of the comparative period. The board’s expectations for the full year remain unchanged. Net cash sat at £26.7m as at June, up from £15.6m as at December, with the seasonal first half working capital inflow and proceeds from the disposal of the group’s specialist and care business partly offset by the purchase of £3.6m of shares by Emis’s employee benefit trust. Buy.
Full year results from Gateley Holdings (GYLY) indicate a 20.2 per cent increase in revenue to £103.5m for 2019 with adjusted cash profits rising by 15.7 per cent to £19.1m. Revenue from core legal services grew organically by 9.5 per cent and 10.7 per cent through acquisitions. With continued investment in fee earning staff, average numbers are up 19.8 per cent to 610, with 16 new partner hires. Three acquisitions were completed and integrated during the year including housebuilder specialists GCL Solicitors. Cash generated from operations has remained steady at £15.2m, though net debt has increased from £0.7m to £3.2m. Under review.
Fulham Shore (FUL) shares soared as full-year results saw the owner of the Franco Manca and The Real Greek brands move into profit and declare its intention to ramp up its store opening programme to between eight and ten new restaurants over the coming financial year. Fulham Shore has had to reckon with sales cannibalisation taking place between stores opened in close proximity with one another - it says that this sales erosion has reduced. The group may be benefitting from a decline in customer brand loyalty for now, but in recognising this we must accept that it would be vulnerable to new entrants. Rising costs in the form of good and labour, and soft consumer sentiment, leave us bearish. Sell.
A first quarter trading update from Experian (EXPN) indicates 7 per cent total revenue growth at constant currencies, boosted by a 9 per cent increase in revenues in North and Latin America. The 8 per cent organic growth in the North American business-to-business (B2B) segment reflects strength in credit volumes, mortgage and contributions from new products. A 9 per cent increase in B2B revenue in Latin America has been driven by growth across consumer and business information and Limpa Nome debt resolution services. However, the UK and Ireland saw total and organic revenue remain flat – a 13 per cent decline in organic revenue from decisioning reflects a strong previous quarter when a large number of contracts were secured. Shares are down 2 per cent. Under review.
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Hastings (HTSG) shares were down around 5 per cent in early trading after the insurer announced it would take a £8.4m pre-tax charge in 2019, following the government’s decision to change to the discount rate applicable for personal injury damage awards from -0.75 per cent to -0.25 per cent. The market had anticipated a change n the range of 0 per cent to 1 per cent.
XLMedia (XLM) is posting a circular to its shareholders today about a proposed tender offer at 80p per share, and a notice of an extraordinary general meeting convened for 16 August. The tender price represents a premium of around 10 per cent to the mid-market share price at the close of business yesterday. It will be restricted to around 19.7m shares, representing around 9.51 per cent of the shares in issue. The tender offer opens tomorrow and closes on 14 August. Non-executive chairman Chris Bell said the board “is of the opinion that the full potential of the company is not reflected in the current share price”. The tender offer accelerates XLMedia’s current share buyback programme. First-half trading has been in line with management’s expectations.
A quarterly update from Hays (HAS) indicates group net fees remained flat to 30 June, mirrored in the temp and perm businesses as well. Group consultant headcount declined by 2 per cent. With broad signs of client cost control and slower decision making (particularly in the manufacturing and automotive sectors) net fee growth in Germany came in at 2 per cent. This contrasted Asia where net fees rose by 10 per cent with a 9 per cent increase in Greater China, the largest Asian market. Net cash increased to £130m (versus £122.9m at the same point last year) and an 8 per cent dividend hike is anticipated. Full year operating profit is expected to be in line with consensus expectations of £248m. Shares are down 2 per cent.
The Competition and Markets Authority (CMA) is considering whether the anticipated acquisition of Inmarsat (ISAT) by a consortium including private-equity firms Apax and Warburg Pincus could result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 – and, if so, whether the creation of that situation may be expected to lead to a substantial lessening of competition. The CMA is inviting comments on the transaction from any interested party to assist it with this assessment.
