IWG’s pretax profit triples across 2019, as revenues also surge
IWG PLC (LON:IWG) have given shareholders a strong update on Tuesday, which has given shares a boost.
The office space provider noted that it had also increased its share buyback program to £100 million following the rise in profits.
The FTSE 250 listed firm added that pretax profit had tripled across 2019 to £430.1 million from £138.7 million in 2018.
Revenue also surged 10% to £2.65 billion from £2.4 billion, however on a constant currency basis revenue increased slightly lower at 9.2%.
IWG noted that its pretax profit figures did include profit from the signing of master franchise agreements during the year, however these have been reported under discontinued operations.
Looking at pretax profit from existing operations, this measure slipped to £55.9 million from £109.6 million – the firm said that this was due to changes in accounting standards.
Notably, without the change to IFRS16 – IWG said that pretax profit rose by 9% year on year.
Following the confidence results, IWG lifted its final dividend by 10% to 4.8p – giving an annual payout of 6.95p.
Mark Dixon, Chief Executive commented: “2019 has been a transformational year for IWG. We made significant progress in our pivot towards becoming a franchised organisation and delivered strong revenue growth and record profits. We continue to see strong demand globally and to welcome more great partners to the business. As organisations increasingly seek ways to address the challenges of climate change, we believe that more and more are recognising the role to be played by remote, distributed and flexible working strategies.
The outbreak of COVID-19 has led to brief closures of our centres in China and we are closely reviewing the ongoing developments worldwide. Whilst we cannot be certain how long this situation will last; we continue to monitor the situation and will act swiftly where necessary to help ensure the safety and wellbeing of our customers and employees. We are extremely grateful for the incredible effort of our teams in dealing with this global health emergency.
We will continue to work closely with our partners, develop our network and invest in our people, our brands and our services, to ensure that we remain the leading player in our industry. Even in this period of global, political and economic uncertainty, we are confident that the Group will continue to deliver strong returns for all our stakeholders, and this is reflected in the increased proposed dividend and new £100m share repurchase programme.”
Can ‘Boris bounce’ in construction PMIs withstand Brexit & the Coronavirus crunch?
The UK’s construction PMIs recovered from a slow start to 2020, with its best monthly performance since 2015.
The ‘Boris bounce’ describes an influx of demand for housebuilding and commercial building work since the breaking of the political deadlock last December, with the highest rate of new construction orders since 2015.
This brought about the headline PMI figure of 52.6 for february, up from 48.8 for the previous month. The research, carried out by IHS Markit and the Chartered Institute of Procurement & Supply, showed the first growth in new orders in nine months, with scores over 50 representing growth. It was also said that new infrastructure projects, such as HS2, have had a positive impact on housebuilding sentiment and could potentially increase demand in areas outside of London.
Speaking on February’s positive construction PMIs, Kate Kirby, Construction & Infrastructure Partner at global legal business, DWF, commented,
“Following a nine-month period of decline, UK construction companies indicated a return to business activity growth during February, the sharpest rise in new orders since December 2015 and the strongest growth since end of 2018. This is likely due to the anticipated post general election ‘bounce’ and is a welcome boost for the sector.”
The Coronavirus fear pandemic
According to most, the main downside weighing on sentiment the world over, will likely be Coronavirus. It has already been documented that the world’s over-dependence on Chinese manufactured goods has been laid bare by the outbreak of the illness, and the disruption caused to supply chains looks likely to affect the flow of construction materials. This could mean that the current, fragile turnaround in property sector sentiment could be undone sooner rather than later, as companies look to put plans on hold.Echoing this solemn outlook, Kate Kirby continued,
“The question now is around the impact the coronavirus outbreak will have on the global supply chain of construction materials and workforce, which is likely to result in significant delays to projects. With investors speculating the global economy could grow at its slowest rate since 2019 due to the coronavirus outbreak, are we likely to see the same growth reported in the coming months? Probably not.”Brexit bullishness in construction?
According the the IHS Markit survey, building firms said activity began to pick up following the completion of Brexit, which was seen as a source of uncertainty. The greatest rebound came from residential construction, which saw its best performance since July 2018. To me this seems entirely counter-intuitive. Granted, the symbolic Brexit deadline has been passed and we’re one step closer to closing this political chapter, but surely the worst uncertainty is yet to come? Analysis of a potential trade deal with the US has yielded little but a pessimistic outlook for British growth, and with other deals on economic alignments yet to be dreamt up – as well as discussions about the movements of people and goods – I can’t see how there won’t be a dip on the horizon. At the very least, it seems intuitive to me that the time to buy isn’t now. Brexit hasn’t yet thrown its final blow to market sentiment, and I believe it doesn’t take much to say there will be more struggles for the UK in the not-too-distant future, and that’ll be the time to take advantage of shaky sentiment. That being said, we can enjoy these construction PMIs while they last, and encourage buyers to fill their boots.Market recovery hangs in the balance despite Dow Jones mega rally
After inklings of monetary policy responses began trickling out of central banks over the weekend, in an effort to fight the effects of the Coronavirus threat, the huge rallies enjoyed during the Monday session were somewhat hampered by the best efforts of international organisations.
The WHO fulfilled its usual obligation – remind everyone the situation is bad – and the effect this had was to snap equities back to reality, with all but the FTSE somewhat revising their early session exuberance.
The British market continued its rally not because of any particular virtue other than the fact it had dipped to its lowest level in 4 years during the last week of February, which was already a slow month for the index – and thus it took its chance to catch up.
Not to be outdone, the Dow Jones recorded its greatest ever rally on Monday night, which acted as the catalyst for a positive start to Tuesday trading across global equities.
This positive start will likely be revised as the G7 publishes what Reuters (TSE:TRI) expects to be an unambitious plan of ‘attack’ on Coronavirus, which will only redouble fears the virus and its supply-side implications, are here to stay for a while.
Speaking on market opening movements during the Tuesday session, Spreadex Financial Analyst Connor Campbell stated,
“There are rallies, and there are rallies – and boy did the Dow Jones RALLY on Monday night, posting its greatest ever points gain on the hopes that the world’s central banks can muster a co-ordinated response to the coronavirus this Tuesday.”
“It is a sign of just how bad the final week of February was that the Dow’s 1,297 point – or 5.1% – increase still leaves it almost 3,000 points off of where it was on Valentine’s Day.”
“Nevertheless, after a weekend full of stimulus-suggesting statements, news that the central bank chiefs and finance ministers of the G7 would be having a conference call to discuss an action plan – like a fiscal version of the Avengers – designed to combat the coronavirus crisis was enough to point the markets in the right direction.”
“It helped that the Reserve Bank of Australia has already given the G7 an example of what they can do, cutting its cash rate by 25 bps to a record low of 0.5%.”
“Following a thoroughly mixed Monday, the European indices shared in the Dow’s optimism, without getting quite as excited – after all, any enthusiasm will have been tempered by the WHO warning the world is in ‘uncharted territory’.”
“The FTSE, which was the best performer in Europe on Monday, added another 2.2%, pushing it back towards 6800. After missing out on yesterday rebound, the DAX rose 270 points to cross 12100, while the CAC added 2% as it neared 5450.”
“The danger, of course, is that if the world’s financial bigwigs fail to announce a coherent, co-ordinated plan of attack – and Reuters is reporting that the draft statement currently being worked on doesn’t call for such action – these gains could unravel double-quick.”
Intertek see higher profits in 2019, but speculate over coronavirus impact
Intertek Group plc (LON:ITRK) have seen their shares in green, following a steady set of final results.
Shares in Intertek Group trade at 5,434p (+2.07%). 3/3/20 12:16BST.
The firm noted that its’ profit was higher in 2019, as divisional growth proved strong and the profits were boosted by an acquisition late in 2019.
The quality assurance firm posted a pretax profit figure of £445.1 million across 2019 – notably this saw a 10% climb from the 2018 figure of £404.5 million.
On a better note, revenues also rose 6.8% to £2.99 billion from £2.8 billion.
Looking at organic revenue, the firm told the market that this increased by 3.3% at constant rates, whilst revenue also rose following the acquisition of Check Safety First Ltd in December 2019 for a £17.1 million consideration.
Breaking down the performance by division, the firm also added that Products, Trade, and Resources all reported higher revenue.
Products revenue jumped 7.1% from £1.68 billion to £1.80 billion, whereas Trade revenue rose 5.8% to £679.4 million compared to the 2018 figure of £642.1 million.
Finally, Resources saw their revenues spike 6.7% to £510.9 million from £478.9 million. On the back of these strong results, the firm lifted its annual dividend to 105.8p from 99.1p – representing a 6.8% climb.
Andre Lacroix, Chief Executive Officer commented: “2019 is the fifth consecutive year of revenue, EPS and cash progression which is a testament to our strong operating platform enabling the group to deliver sustainable value creation for all stakeholders. In the last five years we have made significant progress both on strategy and performance and we are extremely well positioned to seize the exciting growth opportunities ahead capitalising on the core strengths of Intertek: Our Total Quality Assurance (TQA) superior customer service, our powerful portfolio, our high margin and highly cash generative earnings model, our passionate customer-centric organisation and our disciplined performance management.
Our purpose to bring quality, safety and sustainability to life is truly meaningful to our clients given the increased complexity in their operations. We are benefiting from higher demand from our customers for our industry-leading TQA solutions that provides leading Assurance, Testing, Inspection and Certification (ATIC) services that are mission-critical to our customers across multiple industries through our global network of subject-matter experts and over 1,000 state-of-the-art facilities in over 100 countries.”
The firm also speculated going forward about the coronavirus epidemic, where may businesses have suffered.
We are entering the third month where the coronavirus has been haunting global trade, however Intertek remained confident but realized that the firm may face some hardship going forward.
The CEO added: “Prior to the outbreak of the Novel Coronavirus, we were targeting the Group to deliver continuous progress in 2020 with broad based good organic revenue growth at constant currency, good organic growth in Products and Trade and robust growth in Resources, moderate margin progression and strong cash conversion. However, Intertek is not immune to the impact of the Novel Coronavirus and our 2020 performance will be affected by the temporary disruption to the supply chains of our clients in China and any impact it might have on global trade activities. It is too early to quantify the impact of the Novel Coronavirus.
Moving forward, we are well positioned to seize these attractive growth opportunities, underpinned by the increased complexities of corporate supply chains and the associated challenges of maintaining a high level of quality assurance end-to-end.
We are on track on our ‘good-to-great’ journey, making progress on both performance and strategy and I am excited about the Group’s growth prospects ahead, both organically and inorganically.”
Oil prices extend gains on Tuesday as OPEC+ plan further cuts
Oil prices have extended their gains across the Tuesday session, following a busy week for commodities and global markets.
There have been expectations that central banks could inject a fiscal stimulus to offset the recent impact of the coronavirus, which led to the FTSE 100 dropping to a twelve month low last week.
Global ministers at the G7 are set to discuss what the best plan is to tackle the ongoing coronavirus epidemic.
Following the outbreak back in December, the situation seemed under control. European markets and commodities had seen spooks due to the coronavirus, but following reports that it had reached Italy – markets and oil prices have remained volatile.
Following concerns about how long the coronavirus scares may last, OPEC+ are panning bigger output cuts of oil in order to stabilize prices.
OPEC+ have said that oil cuts off possibly one million barrels per day could be made, and this represents a larger rise than the initial guidance of 600,000 barrels per day.
The planned cuts to supply are expected to be announce on the 5th or 6th March, as OPEC+ meet in Vienna this week.
There was previous agreement that output would be slashed by 1.7 million barrels per day in a deal with would end in March.
Leonid Fedun, vice-president of Russia’s second-biggest oil producer Lukoil (MCX:LKOH) noted that the cuts proposed by OPEC could allow the market to balance and lift oil prices back up to $60 per barrel.
Currently, WTI Crude is priced at $48.08 (+2.84%), whilst Brent Crude is slightly higher costing $53.08 (+2.27%).
There is still much recovery to be made for global markets and commodities, however until the coronavirus continues to weigh down on global business – oil prices may still some shaky movement.
Oil stockpiles are expected to rise for a sixth consecutive week, however markets still seem spooked by the coronavirus which never seems to be under full management.
Boku unaffected by coronavirus and start 2020 in strong fashion
Shareholders of Boku Inc (LON:BOKU) have seen their shares in green, following an impressive trading update from the firm on Tuesday.
The firm said that it had performed marginally ahead of forecast across the first two months of 2020, despite the spread of the coronavirus.
The coronavirus has continued to put a bleak sentiment onto global markets and businesses across 2020, however Boku have seem unaffected by the epidemic and have produced some impressive statistics today.
The mobile payments firm said that total payment volumes in January and February had totaled $966 million, which showed a 30% rise on a year on year basis.
Notably, Boku said that this was ‘slightly’ ahead of expectations, and shareholders seem to have reacted optimistically to the update today.
The firm noted that monthly active users are rising each month, as it reported 18.2 million users in February. This figure shows a 36% spike compared to the 2018 figure.
Average total payment volumes per day also rose 2.5% in February, and daily average users grew 4% compared to the January figure.
Jon Prideaux, CEO of Boku, commented: “Naturally we are concerned about the spread of Coronavirus and feel for those people affected. The recent growth we have seen in those countries that are most affected has been higher than in those where the virus has had a more limited impact so far*. This could be correlation rather than causation, but, in general, the more time people spend indoors, the more our platform is utilised. If large numbers of people are forced to self isolate we would predict that, as already seen in China#, this would lead to an increase in the usage of online games and streaming services.
“We look forward to providing further updates at the time of the release of our audited 2019 results at the end of March 2020 and remain confident of meeting market expectations for the current year.”
Boku’s confidence gets rewards
In January, the firm told the market that they expect a rise in annual revenue and earnings. The firm said that it had largely seen an increase in payments and strong progress made by its identity fraud prevention solution, called Boku Identity. Boku outlined to shareholders that it expects revenues for 2019 to be in the range of $50.0 million to $50.5 million, up around 42% from $35.3 million reported for 2018. Group earnings before interest, taxes, depreciation and amortisation is expected to be in the range of $10.0 million to $10.5 million, up 59% from $6.3 million in 2018. The total processed value was $5 billion, which showed a steady climb from the $3.6 billion figure reported one year ago. Interestingly for shareholders, the firm reported a higher number of active users of the Boku platform in December increasing to 17.8 million 4.4 million higher than 2018. With regards to their Identity division, billable transactions rose 45% to 253 million. Revenue increased 26% to $6.7 million from $5.3 million in 2018, and losses decreased to $5.0 million versus 2018’s $6.4 million as Boku continued to expand the service outside of the US and the UK to over 60 countries worldwide. Shares in Boku trade at 63p (+8.97%). 3/3/20 11:48BST.Cairn Homes report successful 2019 with double digit earnings rise
Cairn Homes PLC (LON:CRN) have seen a successful 2019, as the firm reported a double digit earnings rise on Tuesday.
Following the positive update, shares in Cairn Homes have been boosted.
Shares in Cairn Homes trade at €1.26 (+2.44%). 3/3/20 11:32BST.
The homebuilding firm told the market that revenues across 2019 had surged 29% year on year to €435.3 million from €337.0 million. Notably, pretax profit also rose 41% from €41.5 million to €58.6 million.
Across 2019, Cairn noted that there was a rise in closed sales and average selling price.
Breaking this down, closed sales rose 34% to 1,080 from 804 whilst average sales prices saw a 1.6% boost from €366,000 to €372,000.
Cairn added that its forward sales pipeline currently amounts to €266.1 million, which sees an increase from €201.4 million on an annualized basis.
Going forward, the homebuilder added that it expects completions to be between 1,250 and 1,300 across 2020 – with a gross margin of around 20%.
Cairn noted: ‘The Company has witnessed a positive start to the Spring 2020 selling season with strong levels of demand across our selling sites. The Company’s year to date closed sales and current forward sales pipeline has a sales value of €266.1 million (853 units) as at 2 March 2020. This compares to €201.4 million (471 units) as at 6 March 2019.’
‘With strong market demand for our product and delivery pipeline, the Company looks forward to the full year with confidence.’
The firm paid a full year dividend off 5.25 euro cents, following no payout in 2018.
Commenting on the results, Michael Stanley, Co-Founder and CEO, said:
“As Ireland’s most active homebuilder, 2019 has proved to be another very successful year for Cairn with strong growth in revenues. In just over four years, 3,250 customers have chosen a Cairn home reflecting the strong demand for high-quality, competitively priced new homes in places where communities can prosper.”
“This momentum has carried through to 2020. We confidently expect to continue our growth trajectory and this is reflected in the increased medium term guidance indicated today.”
Aggreko shares bounce 6% following 9% annual rise in profit
Aggreko PLC (LON:AGK) have seen their shares jump following an impressive annual update from the firm.
Aggreko plc is a supplier of temporary power generation equipment and of temperature control equipment.
The FTSE 250 listed firm said that it had seen a 9% rise in annual profit, which had been driven by strong performance in its Rental Solutions sector.
Across 2019, Aggreko reported pretax profit of £199 million. This figure showed a rise from the £182 million figure recorded in 2018 – which will come as good reading for shareholders.
On an even better note, operating profit rose 10% to £241 million across 2019.
Looking at divisional figures, the Glasgow based firm praised the success of its Rental Solutions unit. This division recored 22% growth in annual underlying operating profit, while Power Solutions Industrial saw a 7% fall.
However, Power Solutions Utility reported that operating profit was up by 21%.
Annual revenue slipped 8% to £1.61 billion from £1.76 billion – however profit margins did see a rise from 12.5% to 14.9% following improved underlying margins in both Rental Solutions and Power Solutions Utility businesses.
Aggreko did also note that the firm is working with he Tokyo 2020 Olympic and Paralympic Games Organising Committees – and preparations are commencing on schedule.
“Our underlying performance during 2019 provides good momentum into 2020 and our preparations for the Tokyo 2020 Olympic and Paralympic Games are progressing well. Notwithstanding this, we are monitoring closely the development and potential impact of the coronavirus outbreak, both in terms of the Tokyo Olympics and the Group more widely. At this point, however, we currently expect to deliver results in-line with expectations for 2020.”
The firm added that it will assess the impact of the coronavirus on the Tokyo Olympic Games and the firm more generally.
Chris Weston, Chief Executive Officer, commented:
“Our 2019 results demonstrate the significant progress we have made to improve the Group’s financial performance. We delivered underlying profit growth of 13%, driven by a strong performance in Rental Solutions, and a significant working capital improvement. We are proposing a 3% increase in the final dividend, reflecting the Board’s confidence in the sustainability of our performance. We are well-positioned to meet our customers’ evolving needs in the changing energy market, with 185 MW of hybrid work secured and 30 Y.Cubes now under contract, reflecting the growing interest in lower-carbon technology and our new battery storage product. Going forward we believe that a continued focus on the four strategic priorities first set out in 2015 will underpin the achievement of our mid-teens ROCE target in 2020 and beyond.”
Aggreko sign power supply agreement with Resolute Mining
In December, Resolute Mining (LON:RSG) updated the market about a deal with Aggreko to supply power. Resolute announced the plans at the end of November, when it saw announced heads of terms being signed with Aggreko. The plans come into action following an ensured effort to lower operating costs for Resolute, and the new plans will help reduce power costs by around 40%. Resolute Chief Executive John Welborn said: “Aggreko is the right partner to support our power ambitions at Syama. I am delighted work has commenced and that we will deliver the power cost savings we have promised at Syama”. The initial phase of the power station is expected to be worked on and completed in 2020. Stage two is dependent on when existing tailing storage facilities at Syama is decommissioned which could take up to three or four years. Shares in Aggreko plc trade at 721p (+6.99%). 3/3/20 11:25BST.Kantar: sales growth at Sainsbury’s, hand sanitiser sales surge 255%
Data revealed on Tuesday that year-on-year supermarket sales have risen by the quickest rate over the past 12 weeks since last November.
However, the Kantar data showed that some supermarkets have benefited more than others.
Out of the big four grocers, Sainsbury’s (LON: SBRY) was the only retailer to increase its year-on-year sales, rising by 0.3%.
Meanwhile, sales at Tesco (LON:TSCO) declined by 0.8%, Asda (NYSE:WMT) by 1.2% and Morrisons (LON:MRW) recorded a sales drop of 2%.
Kantar’s data also revealed a 255% increase in hand sanitiser sales in February as fears concerning the outbreak of the coronavirus mount.
“Across the market, recent news reports around coronavirus saw consumers take steps to ward off colds and flu, accelerating sales of hygiene and health products,” Kantar said in a statement.
“Given the media focus around the outbreak of COVID-19 in February, it’s unsurprising to see shoppers prudently protecting themselves from illness,” Kantar continued.
Additionally, Kantar said that sales of other types of liquid soaps rose by 7%.
Whilst many businesses have warned that the virus will hit their results, it seems that retailers are benefitting from the public’s efforts to protect themselves.
Valentines Day occurred during the month of February, and Kantar’s data revealed that 45% of consumers celebrated the holiday.
Among the gifts given to loved ones, chocolates were the most popular, followed by flowers and alcohol.
Shares in J Sainsbury plc (LON:SBRY) were up on Tuesday, trading at +3.52% as of 10:55 GMT.
Meanwhile, shares in Tesco plc (LON:TSCO) were trading at +2.76% as of 10:56 GMT and WM Morrison Supermarkets plc (LON:MRW) shares were up by 0.72% as of 10:56 GMT.
Ashtead perform well in North America as third quarter remains steady
Ashtead Group plc (LON:AHT) have seen a strong performance in North America within a solid third quarter update.
The equipment provider told the market that organic growth within North American markets led to a 8% growth in rental revenue.
The Chief Executive commented:
“We have enjoyed another quarter of industry-leading rental revenue growth, resulting in an increase in rental revenue of 12% in the nine months and an increase in underlying earnings per share of 11%, excluding the impact of IFRS 16, both at constant exchange rates.”
The FTSE 100 listed firm said that revenue was £1.12 billion across the three month period which ended on January 31. Notably, the figure increased from £1.05 billion on a like for like basis. This growth led to a 11% rise in total revenue to £1.25 billion.
Rental revenue also rose 12% to £3.57 billion whilst total revenue spiked 13% totaling £3.93 billion.
Ashtead noted that subsidiaries Sunbelt US and Sunbelt Canada delivered 13% and 29% rental only revenue growth – whilst the UK market division saw revenues decrease by 1%.
On an overall basis, third quarter pretax profit fell 1% to £225 million, whilst operating profit saw a 6% boos to £297 million.
Chief executive, Brendan Horgan, concluded:
“Our North American end markets remain supportive and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions in a moderating growth environment. This strategy reflects the structural growth opportunity we see in the business as we broaden our product offering, geographic reach and end markets. In contrast, the UK market remains challenging and we are therefore refocusing A-Plant on leveraging its platform to deliver long-term sustainable results, while generating strong cash flow.
We remain focused on responsible growth. Our increasing scale and strong margins are delivering growing earnings and significant free cash flow. This provides significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders, while maintaining leverage within our target range of 1.5 to 2.0 times net debt to EBITDA excluding IFRS 16.
In North America our business continues to perform well in supportive end markets, while in the UK we have taken decisive strategic action to refocus the business in the challenging market conditions. Although construction markets are moderating, we expect results to be in line with expectations and the Board continues to look to the medium term with confidence.”
Shares in Ashtead trade at 2,372p (-1.45%). 3/3/20 10:59BST.