Centamin and Endeavour end talks over merger prospect
Endeavour Mining have told the market on Tuesday afternoon that they have ended merger talks with Centamin (LON:CEY).
Endeavour said Centamin has not sought an extension to the offer deadline of Tuesday. Given the lack of information received, Endeavour said, it has now decided against bidding for Centamin.
“We remain convinced about the strategic rationale of combining Endeavour and Centamin to create a diversified gold producer with a high-quality portfolio of assets,” said Endeavour Chief Executive Sebastien de Montessus.
“The quality of information received during the accelerated due diligence process has been insufficient to allow us to be confident that proceeding with a firm offer would have been in the best interests of Endeavour shareholders.”
The two parties have been locked in a battle of wills, having criticized each other’s behavior publicly with regards to talks discussing details of the merger deal.
However, it seems that the initial reluctance from Centamin to give into Endeavour Mining has now paid off as the deal has reached a stalemate.
In another update, posted by Centamin the firm said that it was “highly confident” in its strategy, and boosted its dividend, as Endeavour Mining Corp dropped its interest in the gold miner.
Centamin also gave shareholders an operational update and declared a 6 cent final dividend for 2019.
Shareholders can be impressed with this, as Centamin paid a 4 cent dividend for the first half, giving a total of 10 cent for the year.
The dividend pay out shows progress for Centamin, as the firm paid a 5.5 cent payout in 2018.
Centamin said the higher dividend comes after improved performance from the Sukari mine in Egypt, which has been experiencing operational problems.
“Centamin has taken significant steps to reshape its leadership team to improve operational performance. Our robust operating performance in fourth-quarter 2019 and the work this new team has undertaken in a short period of time gives us great confidence in our direction, underlined by an increased final dividend for 2019,” said deputy Non-Executive Chair Jim Rutherford, who was appointed in December.
“After a period of constructive engagement, Centamin and Endeavour have not reached agreement on value and have therefore terminated discussions. We are highly confident in our growth strategy, which includes but is not limited to value-accretive diversification. The company continues to assess opportunities and we look forward to continued proactive engagement with our stakeholders,” he added.
Boku give confident expectations of revenue and earnings growth
Boku Inc (LON:BOKU) have told shareholders on Tuesday 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.
Boku impressed with recent trading
Jon Prideaux, Boku’s CEO, commented: “Our merchants hire us to help them acquire new paying users: during 2019 nearly 19 million end-users made their first transaction through Boku, helping our customers to drive their growth. Collectively our merchants generated more than $5.0bn of TPV through the Boku platform. “Platform businesses have wonderful gearing. It took us a decade and more than $100m to build the Boku payments platform which now connects more than 190 carriers worldwide and most of the world’s largest digital merchants. We continue to make new connections — this year we concentrated our efforts on plugging in the new carriers demanded by lower margin, higher volume, transaction model merchants; in 2020 and beyond these connections will be reused for other, higher margin settlement model merchants. A revenue increase of 42% has translated into a more than doubling of payments EBITDA: a fabulous result. “We are excited at the potential of e-wallets. In Asia, the leading m-commerce region, e-wallets are the dominant payment mechanism, eclipsing card-based payments. On the supply side we have made significant progress: further to the announcements about our partnerships with the GrabPay and GoPay wallets, we now have signed agreements with ten wallets with more than 1.4 billion customers in nine countries. By the end of 2020 we expect to have all the major wallets connected. Demand from our existing merchants is strong. As a competitively priced payment mechanism, wallets have the potential to materially expand our Total Addressable Market at modest cost, with extra margin generated flowing through to EBITDA. The early signs from GrabPay on small merchants are encouraging. The exact timing and quantum of these revenues is difficult to quantify and so have not been built into any forecasts. Nevertheless, we are confident that we will see a material revenue impact from e-wallets over the medium term. “We made steady progress in 2019 with Boku Identity, with revenues increasing 26% and losses reducing. This US based revenue increase was achieved despite some headwinds from restructuring of the Identity management team and some supply side issues in the US. Demand from global companies for a secure and simple worldwide way of verifying users on mobile is plentiful, with six potentially transformative deals in the pipeline. Realising this potential needs global supply from non-US carriers on which we are expecting to make further progress in 2020. “We look forward to reporting on progress with both divisions, along with our audited results, at the end of March 2020.”Boku grow impressively
The firm reported reported growth in revenues alongside spikes in payment volumes and active usership in July. The Group stated that their Total Payment Volume was up 49% on a year-on-year basis for H1, up from $1.5 billion to $2.3 billion. Further, Monthly Active Users of the Boku platform in June 2019 were 48% higher than in June 2018, at 15.3 million compared to 10.3 million. Regarding Boku Identity, monitoring activity increased more than sixfold during the quarter, with 74 million numberrs monitored in June 2019, compared to 12 million monitored in June 2018. Processed transactions were also doubled on-year on a proforma basis, up from 70.6 million in H1 2018, to 140.9 during H1 2019. As a result, Group Revenue for H1 was expected to finish at between $22.5 million and $23 million, up by over 33% from $16.9 million for H1 2018.Wirecard and Yeepay enter international payments partnership
In the same market, fintech company Wirecard AG (ETR:WDI) announced that it had secured a partnership with Chinese e-payment service provider Yeepay, to provide payment processing services to clients outside of China in November. Wirecard said it will assist all Yeepay customers in the airline industry to ‘internationalise’ their businesses and transactions. The two companies will leverage their payment tech and licences to provide Yeepay customers with a ‘convenient and regulatory’ checkout process. Wirecard claims that travel agencies, airlines and consumers outside of China will all benefit from their new offering.Santander invests into Ebury
At the start of November, banking titan Santander (LON:BNC) reported that it had invested into Ebury. The bank said that they had invested £350 million into the start up. Ebury currently operate within 19 countries, handling over 140 currencies. The firm has seen annual consistent revenue gains of 40% in the last three years. UK-based Ebury operates on a worldwide distribution platform underpinned by a data driven business model and offers best-in-class customer experience and product capabilities. The partnership will be a huge boost for Ebury, allowing them to improve their value proposition, supported by a big market player. Additionally, this will give much exposure to Ebury and the access into new markets for for currency trading. Under the terms of the transaction, Santander will acquire 50.1% of Ebury for £350m, of which £70m will be new primary equity to support Ebury’s plans to enter new markets in Latin America and Asia. Shareholders of Boku can be pleased with todays, update however the share price has dropped. Shares in Boku trade at 80p, falling 16.67% on Tuesday. 14/1/20 13:03BST.McBride’s shares collapse over 17% following financial 2020 profit warning
McBride PLC (LON:MCB) have seen their shares collapse on Tuesday as the firm issued a profit warning for this year.
The firm posted a 4.4% fall in group revenue on a year-on-year basis, which was caused by weak trading activity in its core Household division.
Additionally, the firm noted that it had exited from the UK Aerosol manufacturing in financial 20.
The firm saw their shares collapse and now trade at 66p (-17.38%). 14/1/20 12:39BST.
McBride told shareholders that it has commenced a review of its strategy and operations following the appointment of Ludwig de Mot as chief executive on November 1, 2019.
The firm said that it expects financial 2020 adjusted pretax profit to be 15% lower than current market expectations of £22.1 million due to lower revenue generation.
Adjusted pretax profit amounted to £24.5 million and revenue stood at £721.3 million in financial 2019.
For the first half to December-end, the company recorded a 1.4% year-on-year drop in revenue due to slowdown in last two months of the period, particularly in the UK.
The firm commented:
“During the first half year, raw material and packaging costs remained largely stable and in line with our expectations. Logistics costs as a percentage of revenues continued to increase, reflecting the higher distribution costs associated with our growing business in Germany. Cost improvement initiatives continue across the Group and these are expected to show increased benefits in the second half year. In the absence of significant raw material cost changes, the Board now expects full year adjusted PBT to be approximately 15% lower than current market expectations reflecting the impact of lower revenues.”
“H1 UK revenues were 8.0% lower year-on-year, reflecting weaker Private Label activity in the period. Our South, East and Asian geographies performed well in the half year, reporting growth versus the prior year of 15.7%, 1.6% and 10.7% respectively. France and North continued to see declines versus the prior year, consistent with the second half of the last financial year,” McBride said.
The Group’s interim results will be announced on 20 February 2020.
McBride in the same position as a year ago
In February 2019, the firm saw itself in a similar position. The announcement followed a statement from the company that annual profit could fall as much as 15% with fears surrounding increased overheads for raw materials and distribution. The news ended what was an optimistic period for the company, which enjoyed a profitable end to 2018. The company booked a bumper period in sales, with the six months through December representing a 6% rise on-year. “However, the group continues to see pressure on its cost base,” McBride said in its statement. “We continue to expect the overall raw material pricing outlook to show improvements in the second half, but not to the extent anticipated in early January.” “In addition, distribution costs continue to rise beyond our previous estimates due to market rates and efficiency challenges driven by logistics capacity shortfalls and internal service gaps.”Competitors see struggles
In October, rival Reckitt Benckiser (LON:RB) reduced its full year outlook. The owner of Nurofen and Dettol added that it expects full year 2019 adjusted operating margins to experience a “modest” decline. Laxman Narasimhan, who was named Reckitt Benckiser’s new Chief Executive Officer earlier in June, said the company’s performance in the third quarter was “disappointing”. Narasimhan previously held a senior role at PepsiCo (NASDAQ:PEP). “We delivered another quarter of consistent growth in Hygiene Home. Our Health business, despite good market growth and stable consumer offtake, delivered a weak net revenue performance. This was primarily due to issues in the US and China. In the US, we saw more cautious retailer seasonal purchasing patterns. In China, IFCN continues to face challenging market conditions,” the Chief Executive Officer said. Certainly, McBride have to look at the results of their strategic review and make a decision about how the company can forward. The last few months have been turbulent for the firm, and shareholders will be keen to hopefully see some new fortunes in the new year.Anglo Asian set to reach record annual revenue in impressive Tuesday update
Anglo Asian Mining PLC (LON:AAZ) have given shareholders an impressive updated on Tuesday.
The firm said that it is looking at record annual revenue, due to solid production and a rise in commodity prices.
Anglo Asian’s 2019 production was 82,795 gold equivalent ounces, 1.1% lower than the year before. Copper was up 34% to 2,210 tonnes, with gold down 4% to 70,098 ounces.
The firm however did note that silver production had declined by 24% in the period, to 159,356 ounces.
In the fourth quarter, gold ounce production fell 3% year on year to 21,284 ounces. Gold fell 1.7%, silver by 37% however copper rose 24%.
The firm had accounted for $1,250 per ounce gold price in 2019, however the price rose over 18% across the year which contributed to the impressive performance highlighted in the update.
Copper prices rose 3.5% over the year, and were ahead of budget, with silver climbing 15% and easily topping Anglo Asian’s budgeted price.
Anglo Asian CEO Reza Vaziri commented:
“We have had another strong year, delivering production in line with expectations and also making good progress with our exploration programme. We report our production in gold equivalent ounces which have reduced due to the increase in the market price of gold relative to the market price of copper during the year. Our production calculated as gold equivalent ounces using our budgeted metal prices was 82,795 ounces and within our original production forecast.
“The Company’s financial performance continues to be exceptional. We have increased net cash in 2019 by $15.1 million, notwithstanding paying dividends of $8.7 million and corporation taxes of $7.5 million in the year. The Company will achieve the significant milestone of becoming debt free early next month when the final installment of the refinancing loan is repaid. This strong cash generation will allow the Company to continue to enhance our announced dividend policy.
“The Company is in a strong operational position and robust financial health as we move into 2020. I look forward to updating you on the progress of our exploration programme which we anticipate releasing within quarter one and other activities which the Company will be carrying out during the rest of the year.”
Anglo Asian recover from setback in July
The firm announced in July that copper production volumes had dipped between Q1 and Q2 2019. In its summary, the Company noted that quarterly production dipped between Q1 and Q2, which Anglo Asian attributed to a comparative reduction in copper production by 63 tonnes. This was due to planned mining of lower grade copper ore; the Company expects copper grades to increase for the remainder of the year. Despite this, the Company booked improved production expressed as gold equivalent ounces (GEOs). Q2 production was up 3% year on year, rising to 19,618 GEOs. H1 production was up even further on-year, growing 7% to 39,905 GEOs. The Company added that they posted strong results on cash generation, with $4.6 million in Q2 and $9.3 million for H1 2019. Further, net cash increase from $10.8 million on March 31 2019 to $15.4 million June 30 2019. The update today shows that the firm is keen to develop and hungry to increase their capacities of production. Shareholders of Anglo Asian can be optimistic for what 2020 if the firm can deliver their expectations. Shares in the firm trade at 147p (+1.73%). 14/1/20 12:31BST.Savannah Resources win licence with Rio Tinto for Mozambique operations
Savannah Resources (LON:SAV) have told the market that they have received a grant in Mozambique for a licence.
Shares in Savannah trade at 2p (+5.43%). 14/1/20 12:02BST.
The firm saw its shares jump as it won a licence to operate for the Mutamba heavy mineral sands project.
Savannah operates the Mutamba project in a joint venture with titan Rio Tinto PLC (LON:RIO). The firm has a flagship asset of he Mina do Barroso lithium project in Portugal.
Mozambique has now granted a licence for Mutamba which lasts until September 2044, with an option to extend for another 25 years.
The Mutamba project has shown a lot of potential for both firms as it has indicated and inferred mineral resource of 4.4 billion tonnes of ore at 3.9% total heavy minerals.
Additionally, the firm hopes that it will commence production this year initially at a rate of 456,000 tonnes of ilmenite and 118,000 tonnes of non-magnetic concentrate.
David Archer, Savannah’s Chief Executive Officer said:
“The issue of Licence 9228C by the Government of Mozambique completes the licensing process for the three core Mutamba concessions. The process has been rigorous and demanding but we have now achieved one of the most important milestones in the orderly progression towards mine development. In the short term, our focus will be to continue to progress the Mutamba Pre-Feasibility Study (‘PFS’) towards completion, which, upon delivery, will trigger the increase in our interest in the Project from 20% to 35%. With an Indicated and Inferred Mineral Resource off 4.4Bt at 3.9% total heavy minerals, the global significance of the opportunity is clear and compelling.”
Savannah Resources – full of potential
The firm has seen a very successful period of trading, as it has made progress on its operations in Mozambique.
In an update in December, the firm said the minister of Mineral Resources & Energy has issued Mining Licence 9735C to its subsidiary Matilda Minerals Lda. The licence covers 11,948 hectares. It is valid to April 2044 and includes a 25-year extension option.
Savannah have said that they have won a new mining licence award for the Mutamba mineral sands project in Mozambique.
The 16,126 hectare licence is valid until May 2044, with the possibility of an extension for another 25 years, said Savannah. The first mining concession award at Mutamba was announced on Monday by Savannah.
“We are delighted with progress thus far at Mutamba, which we’re developing in partnership with Rio Tinto PLC. We believe this is one of the most attractive undeveloped mineral sands deposits in the world,” said Savannah’s Chief Executive David Archer.
Further expansion for Rio Tinto
Rio Tinto have been busy looking at expanding their operations, and have done so successfully.
At the start of December, it was confirmed that Apple Inc (NASDAQ:AAPL) had bought the first batch of carbon-free aluminum, in an attempt to expand its environmental strategy policies.
The metal has been provided by Elyis, a Montreal based firm composing of Alcoa Corp (NYSE:AA) and Rio Tinto.
Apple announced that the aluminum will be shipped this month from an an Alcoa research facility in Pittsburgh and used in Apple products, although the technology company did not say which ones.
The Alcoa-Rio partnership want to commercialize a technology that uses ceramic anode to make aluminum which only emits oxygen by 2024.
Alcoa has already produced test metal with the process and joined with Rio Tinto to bring it up to commercial scale. Elysis plans to licence the technology and says that existing smelting facilities can be retrofitted to use it.
Savannah have once again given shareholders an impressive update, and should make headways in developing their operations in Mozambique with the support of Rio Tinto.
Serabi Gold finished 2019 with its highest quarterly production
Brazil-focused mining company Serabi Gold (LON: SRB) topped off a record year of gold production with a fourth quarter to match.
Production in Q4 was up to 10,223 ounces, which topped off annual production at 40,101 ounces, which represented a 7% improvement year-on-year, from 37,108 ounces during 2018.
The company added that during the quarter, it mined a total of 44,092 tonnes of gold at 6.69 g/t of gold, as well as completing 2,908 metres of horizontal development.
Operationally, it stated that it had undertaken electrical and mechanical testing of an ore sorter, which was in the ‘final stages’ of installation between the Group’s crushing and milling sections.
It added that it has a public hearing for permitting at Corringa timetabled for 6 February, with this being the final step for receipt of a preliminary licence. It finished by saying that its step out drilling campaign at Sao Chico ‘significantly extends’ resource beyond current mine limits .
Serabi’s year-end cash holdings stood at US $14.3 million, it anticipates full-year production in the region of 45,000 and 46,000 ounces.
Serabi Gold Comments
Lauding today’s update, CEO Mike Hodgson stated,“This was another excellent quarter, with over 10,000 ounces produced and resulting in the Company having annual production in excess of 40,000 ounces of gold for the first time in our operational history. We have now produced more than 10,000 ounces in five of the last six quarters, demonstrating strong operational consistency.”
“Mining and plant throughput rates and grades have remained consistent throughout the year, but the respective eight per cent and five per cent improvements, compared with 2018, have allowed the operation to exceed 40,000 ounces of gold for the first time. With the plant operating at full capacity the increased production and the operational consistency throughout the year is extremely satisfying. The year on year production improvement was helped by the processing of approximately 30,000 tonnes of stockpiled gold bearing flotation tailings, with this material have gold grades averaging over 4.5g/t.”
“With the operation being plant constrained, every hour counts, hence we focus strongly on the quality of the ore feed and maximising plant availability. With the process plant running so well, we look forward to the commissioning of the ore sorter during this quarter. This will ‘screen out’ waste rock ahead of the milling section and liberate much needed capacity, allowing us to achieve improved levels of gold production in 2020 without needing to expand the milling capacity.”
“Development and production from the Palito orebody continued to focus on the Chico da Santa sector, which hosts the narrow but very high grade Jatoba, Mogno and Ipe veins, though during the fourth quarter the Company recommenced the development of the G3 vein. This is being developed on the 130mRLl, to access an area successfully drilled from surface during 2019. The G3 vein was very much the ‘backbone’ of Palito historical production between 2004 and 2008 and again between 2013 and 2016. The G3 vein is generally wider than many of the others within the Palito ore body and exhibits exceptional copper and gold grades. I therefore have high expectations of this development and anticipate the contribution that the G3 vein will make to production in 2020.”
Investor notes
Elsewhere in mining, AMG Advanced Metallurgical Group N.V. (AMS: AMG) announced a new appointment, ARC Minerals Ltd (LON: ARCM) uncovered high-grade copper assays, Lucara Diamond Corp (TSE: LUC) was pessimistic in its revenue guidance and MC Mining (LON: MCM) was granted a coal mining right in South Africa.
The Company’s shares are currently trading at 76.00p, Peel Hunt analysts reiterated their ‘Buy’ stance on Serabi Gold stock. Neither a p/e ratio nor a dividend yield are available, its market cap is £45.36 million.
DFS Furniture sales fall, however remain optimistic regardless of political complications
DFS Furniture (LON:DFS) have seen their shares in red as the firm gave shareholders a modest update which saw their sales fall.
Shares in DFS dipped 0.36% on Tuesday morning to 279p. 14/1/20 11:45BST.
The firm said that interim sales fell, however they reiterated the fact that they expect full year results to be in line with expectations.
The optimism provided was due to a recent uptick in order intake momentum, which will drive results.
In the 26 weeks period, which ended on December 19 the firm saw gross sales fall 26% from a comparative figure in a similar period.
The firm blamed the decline on a challenging consumer environment, which saw slumps in both August and September.
DFS did not update the market which actual sales figure for the periods mentioned, however they did report a fall which will concern shareholders.
The company said forecast profit before tax and brand amortisation for the financial year ending June 28 remains in line with market expectations at £51.2 million, up from £50.2 million in financial 2019.
DFS alluded to the wider economic and political complications which are currently haunting British retail, joining firms such as Asda who are owned by Walmart (NYSE:WMT).
DFS said “We are mindful of the broader political and economic uncertainty that still exists. However, we have made good progress on our strategic initiatives, driving showroom conversion and online growth. Furthermore, we have appropriate cost saving actions in place to help mitigate continued market weakness.”
“It is worth reiterating that the Group has historically capitalized on adverse trading conditions to buildmarket position and we continue to believe that our cash generation and long-term growth prospects will drive attractive returns for our shareholders.”
The Group will announce its interim results for the period ending 29 December 2019 on 10 March 2020.
Competitors see mixed results
London listed Dunelm (LON:DNLM) have reported sales and margin growth in the second half of its financial year. The firm alluded to strong growth across the total retail system, as such total sales growth including new stores was 6.2% higher in the second quarter. The company also impressively noted that gross margin improve by 110 basis points in the second quarter, mainly due to sourcing gains and lower product markdowns. Margin improvements were made across all product categories, Dunelm said. The FTSE 250 constituent expects pretax profit for the first half to total £83 million after adjusting for the impact of the new accounting standard IFRS 16. In the first half of financial 2019, Dunelm’s pretax profit was £70 million. The company added that the regulation of IFRS 16 reduced pretax profit by £1.3 million in the first half of financial 20. Another competitor in Laura Ashley (LON:ALY) who also provide homeware have struggled over the last few months. The homeware and clothing retailer said that, for the 52 weeks to 30 June, statutory loss before tax amounted to £14.3 million. The primary causes for the year-on-year drop in profit are the underperformance of Home Furnishing and its website after a re-platforming exercise last November. Total like-for-like retail sales were down 3.5%, whilst total group sales reached £232.5 million, down from the £257.2 million figure recorded for 2018. DFS are not the only firm that have been hit by a slipping retail market, however shareholders will hope that the firm can come to a resolution to fight market slumps and make 2020 a successful trading year.Games Workshop continue the fine form as shares jump over 4%
Games Workshop Group PLC (LON:GAW) have seen their shares jump on Tuesday as the firm saw a strong period of trading.
The firm said that it was pleased with its interim performance as it recorded a record rise in revenue and profits.
For the six months to December 1, the war-games manufacturer and retailer posted revenue of £148.4 million, up 19% from £125.2 million the previous year.
Pretax profit increased 44% year-on-year to £58.6 million from £40.8 million.
The firm saw impressive growth in its trade unit, with a 24% rise in first half sales to £76.1 million, as retail rose 6.3% to £45.3 million.
The shift to online retailing was also impressive for Games Workshop as online sales rose 14% to £24.2 million.
The firm also opened 19 stores including relocations, and closed seven stores.
The firms total portfolio remains at 529 stores.
On a good note for shareholders, the company declared a dividend of 45 pence per share which is payable on March 2.
Kevin Rountree, CEO of Games Workshop, said: “Our business and the Warhammer Hobby continue to be in great shape.
We are pleased to once again report record sales and profit levels in the period. The global team have worked their socks off to deliver these great results. My thanks go out to them all. Sales for the month of December are in line with our expectations.”
“We are also announcing that the Board has today declared a dividend of 45 pence per share, in line with the Company’s policy of distributing truly surplus cash.”
Shares of Games Workshop jumped 4.31% to 6,679p. 14/1/20 11:30BST.
Games Workshop see a strong period of trading
In November, the firm once again saw their shares surge amidst strong profit speculations.
For the six months trading period ending December 2, Games Workshop expects pretax profit to be no less than £55 million, and sales to be at least £140 million.
This shows a 34% rise from £40.8 million pretax profit, and an 11% climb from £125.2 million in revenue the year before.
The update arrived on the back of ongoing momentum in recent months, with royalty growth driven by the ‘timing of guarantee income on signing new licences,’ Games Workshop said.
The statement said: “Following on from the group’s update in September, trading to 3 November 2019 has continued well.
Grafton see better trading in November and December in “subdued” market
Grafton Group Plc (LON:GFTU) have said that their trading in November and December has been better than expected in an update on Tuesday.
Grafton said that the home building and property market still remains “subdued”.
The building materials supplier expects to report adjusted operating profit of about £202 million for 2019, compared to £194.5 million in 2018.
The firm added that it expects 2019 revenue from continuing operations to be £2.67 billion, a stat which will please shareholders.
In the first half, Grafton totaled revenues of £1.44 billion from current operations, however the firm noted the sale of its specialist UK plumbing and heating business Plumbase and its Belgian Merchanting unit.
Daily like for like revenue is expected to climb 1.9% higher in 2019, compared to one year ago. However fourth quarter like for like revenue did slip 1.8%.
In the UK Grafton remained cautious in a property market which had been hit by both political and economic shocks.
The weak markets of September and October continued into November and December but did not deteriorate further, Grafton noted.
Grafton’s Merchanting unit in Ireland saw volumes recover in November, with its Chadwicks business ended the year on a “firm note”.
Gavin Slark, Chief Executive Officer of Grafton Group plc commented today:
“2019 was a year of significant strategic progress with the acquisition of Polvo in July which increased our scale and consolidated our market leading position in the Netherlands. We also reshaped our portfolio of businesses with the successful disposal of Plumbase and the Belgian Merchanting business in October. “
“While we remain cautious about the timing of any recovery in the UK merchanting market at this very early stage in the New Year, our expectations for 2020 are positive for the overall Group and we are optimistic about growth opportunities. We are well placed to continue to successfully implement our development strategy supported by very cash generative businesses and a strong balance sheet.”
Progress from October update
In October, the firm issued a statement warning shareholders that profits may be significantly lower than expected.
Grafton announced they would miss annual profit expectations as the UK construction sector comes to grips with Brexit uncertainties.
The Irish company added that trading had been slow despite a good performance in the home market.
Additionally, Grafton said that demand for materials has been hit by legislation in the Netherlands, with limits Nitrogen emissions. This has delayed the granting of permits for new construction periods.
Grafton operate across the the merchanting, retailing and manufacturing sectors have speculated full year profits of £193.5 million, significantly lower than expected.
The FTSE250 company concluded, that there was signs of recovery with an encouraging start, but trading towards the end of the quarter had been impacted by sombre activity.
How are competitors performing?
B&Q who are owned by Kingfisher plc (LON:KGF) have also seen a tough time of trading over the last few months.
The FTSE 100 listed firm said trading in the three months to October was “disappointing”, with sales falling 3.7% to £2.96 billion.
Like-for-like revenue slipped 3.7%. Kingfisher said this “reflects continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France, and softer market conditions in our main markets”.
B&Q sales sank 3.5% year on year to £820 million, slightly offset by an eight per cent rise in Screwfix sales to £477 million.
Additonally, Barratt Developments (LON:BDEV) reported lower sales and a fall in the value of homes sold in their October trading update.
Barratt have said they expect the volume of house sales to grow toward the end of the of their medium-long term target range of 3-5% annually.
Total sales rose to 12,963 units from 12,903 earlier this year.
However, this was offset by a fall in the value of these homes by 2.4% to £3.07 billion.
Interest rates are still low by historical standards, giving an opportunity for new homeowners to pounce on this opportunity.
Looking at the state of the property market, Grafton have performed relatively well and shareholders should not be too worried as political uncertainties continue to hit the property market.
Shares in Grafton trade at 899p (+4.84%). 14/1/20 11:16BST.
AnaCap invests in Parisian redevelopment project
French private equity firm AnaCap Financial Partners announced on Tuesday that it had invested in a newbuild Grade A office in Paris.
The acquisition is being made through an off-plan forward contract of the 16,300 square metre asset in Bobigny. This allows the company to add a presence within the active Paris property market, which currently has a vacancy rate of 1.8%.
The building was designed by Leclercq Associés and developed by BNP Paribas Immobilier Promotion (ENP: BNP) and GA Smart Building. It serves as part of a wider redevelopment project in Bobigny, with plans for 140,000 square metres of office, 1,380 new residential units, 8,000 square meters of public services and 20,000 square metres of public space as ‘tenants seek larger scale, affordable properties close to the centre of Paris’.
It is located near Bobigny metro, and is expected to enjoy access to three further transportation lines by 2025.