Fresnillo see quarterly production rise, but just miss annual targets
Fresnillo Plc (LON:FRES) have seen a quarterly rise in gold output, however annual production has fallen short of expectations.
As a result of the shortcoming, shares of Fresnillo have slipped on Wednesday morning.
Shares in the firm trade at 592p (-3.36%). 29/1/20 11:12BST.
Fresnillo, who were a former FTSE 100 listed firm told the market that they had produced 233,744 ounces of gold in the fourth quarter of 2019, 11% higher on the previous quarter and 0.7% higher year-on-year.
Whilst the firm has seen a production rise across this period, shareholder were not so optimistic as they were told that annual expectations had been missed, which was seen as shares slipped.
Looking on an annualized basis across 2019, Fresnillo saw gold production fall 5.1% to 875,913 ounces. In December, it had set guidance at 885,000 ounces, from previous guidance of 880,000 ounces to 910,000 ounces.
The Mexican gold miner said that fourth quarter results were boosted by better performance as the Herradura mine, offsetting lower throughput and grades at Noche Buena. Notably, production volumes fell due to lower output at Noche Buena and lower grades at San Julian.
Despite the slip in performance, Fresnillo forecasted as they expect total gold production for 2020 to be within the 815,000 ounces and 900,000 ounces range.
In the silver production sector, fourth quarter production was impressive standing at 13.8 million ounces.
Silver production did see a 3.7% climb from third quarter production, however this figure did represent an 11% fall on the figure on year ago. In 2019, the figure was 54.6 million ounces, 12% lower year-on-year.
Fourth-quarter production improved on the third quarter due to higher quarterly grades at San Julian and Saucito, but fell on the prior year due to a year-on-year fall in grades at Saucito and lower volumes at San Julian.
Fresnillo concluded by saying that that they expect silver production to be between 51 million and 56 million ounces.
BA suspends all flights to China as coronavirus fears rise
News broke on Wednesday that British Airways (LON:IAG) has suspended all of its direct flights to and from China.
Shares in International Consolidated Airlines Group were up during trading on Wednesday.
The suspension of flights comes as fears over the coronavirus mount.
The virus outbreak has killed 132 people in China, with almost 6,000 people infected.
The coronavirus was first reported in Wuhan City, China.
The World Health Organisation has warned travellers to avoid coming into close contact with people suffering from acute respiratory infections, as well as avoiding close contact with live or dead farm or wild animals.
Earlier this week on Tuesday, the Foreign & Commonwealth Office advised against all travel to mainland China, unless it is absolutely essential.
It added that British people who currently find themselves in China should make a decision based on their own personal circumstances as to whether or not they should remain.
It warned that travel may become increasingly difficult over the next few days.
Indeed, British Airways’ decision to suspend all direct flights to and from mainland China shows how airlines are trying to contain the spreading of the virus.
“Due to the increasing travel restrictions and the public health situation, we now advise against all but essential travel to China,” Foreign Secretary Dominic Raab commented on the situation.
“We are also working urgently to finalise arrangements for an assisted departure from Hubei Province for British nationals this week, and are in contact with people in Hubei to ensure they register their interest and that we can keep them updated,” Foreign Secretary Dominic Raab continued.
“The UK continues to be guided by the latest medical advice about the coronavirus outbreak. The safety and security of British people will always be our top priority.”
Shares in International Consolidated Airlines Group (LON:IAG) were up on Wednesday, trading at +0.68% as of 11:13 GMT.
Wizz Air soar to a third quarter profit, as annual forecast is lifted
Wizz Air Holdings (LON:WIZZ) have seen their shares in green on Wednesday, as the firm lifted its full year profit guidance.
In the quarterly update, Wizz Air said that they had seen passenger numbers climb across its financial quarter, which led shares to jump 1.58%.
Shares in Wizz Air trade at 4,174p (+1.56%). 29/1/20 10:53BST.
In the three months to December 31, revenue was 25% higher year-on-year at €637.3 million from €511.3 million.
Ticket revenue alone was 16% higher at €336.3 million, which represents significant progress for the budget airline, in an industry which has seen hardship.
Notably, the firm also swung to a quarterly pretax profit of €22.4 million from a €21.2 million loss one year ago.
The swing follows a successive chain of strong results for Wizz Air having seen their passenger numbers rise over the last few months and the resilient nature of the firm should please shareholders.
Passengers carried also climbed 23% year on year and totaled 10 million in the third quarter, whilst load factor edged 1.1 percentage points higher to 92.5%.
József Váradi, Wizz Air Chief Executive said:
“Wizz Air again reports a record financial performance in the third quarter as our low-fare, low-cost business model delivered a net profit of €21.4 million compared to a broadly breakeven operational outcome in the same period last year. We have delivered unit cost reduction ahead of expectations with ex-fuel CASK improving 5.6% year-on-year. Whilst growing passenger volumes by an industry leading 23% in the third quarter, we have achieved both higher load factors and improved yields. In short, it has been another quarter of significant achievement.
Wizz Air is the lowest cost, lowest emission airline in Europe and the largest airline in the growing CEE market, a market that continues to show exciting growth dynamics. We believe that the company is uniquely positioned for long term value creation. We will continue to enhance our market-leading positions with the roll out of the game-changing, attractively priced and financed A321 neo aircraft which will enable Wizz Air to continue widening our cost advantage over our competitors, providing passengers with the reassurance that they are making the right choice to fly with Wizz Air as we have the lowest impact on the environment of any airline.”
The company previously had guided net profit between €335 million and €350 million for the current financial year, however the fact that this has been raised will certainly appease shareholder interest.
Speaking further on the results and future plans, the chief executive further commented:
“In the third quarter, Wizz Air announced its first airline to be established outside of Europe in Abu Dhabi, the capital of the UAE. Wizz Air Abu Dhabi will be an incremental path of growth for Wizz Air, built on our successful ultra-low cost business model, bringing affordable travel to ever more customers. We believe the new airline which is expected to be operational in the second half of 2020 has the potential to be a significant player in the region operating over 50 aircraft within ten years.”
“As previously announced at our H1 results, Wizz Air has reinvested some of its outperformance of the first half in the third quarter, and will grow even faster in the fourth quarter, delivering an industry leading growth rate of 24%. The Company will benefit from this additional growth in the next financial year as new routes will be in place ahead of the all-important summer period. Wizz Air also confirms that the current trading conditions continue to be favourable with a relatively benign competitive environment, stable fuel prices and a positive yield environment. Despite our additional investment in growth in the fourth quarter, the Company is today raising its net profits guidance to a range of between €350m to €355m for the full year.”
Wizz Air see steady growth
In November, the airline reported that it had seen its November passenger figures rise, which was impressive as it managed steady growth across the last few months. Wizz Air reported a November capacity increase of 27% to 3.2 million from 2.6 million, while load factor rose 92.8% to 91.2%. Available seat kilometres was up by 21% to 5.2 million from 4.3 million and revenue passenger kilometres grew by 4.9 million from 3.9 million in November 2018. On a rolling annual basis, capacity is up 15% to 41.8 million, total passengers up by 17% to 39.1 million with load factor up 1.3 percentage points to 93.6%. During November, the Hungarian carrier added 11 new routes, which included 4 in Poland, 2 in Ukraine and 1 in the UK. The form was further continued in December, where passenger numbers further increased. The budget airline saw a capacity increase of 24% to 3.7 million from 3.0 million a year before, while passengers increased by 25% to 3.3 million from 2.7 million. On a rolling annual factor, Wizz Air saw their capacity ruse by 16% to 42.5 million, passengers 18% to 39.8 million and load factor from 93.6% to 92.4%. Additionally, the available seat kilometres grew by 18% to 69.4 million, and revenue passenger kilometres by 20% to 65.2 million. The results from today’s update are impressive, as this has been reflected in Wizz Air’s stock price movement.Ovo Energy fined £8.9 million
Ovo Energy has been fined £8.9 million for giving customers inaccurate information and overcharging them due to IT issues.
The industry regulator Ofgem said on Wednesday that these breaches happened because the energy supplier did not ensure its processes and governance were capable of complying with Ofgem’s rules.
Over 500,000 customers received inaccurate annual statements between July 2015 to February 2018, Ofgem’s investigation revealed, and many customers didn’t even receive an annual statement in the first place.
Customers were under or overcharged because Ovo Energy underestimated consumption over one winter.
Additionally, roughly 10,000 customers were not given statements of renewal terms when their tariffs were coming to an end or were not moved to new tariffs when their existing tariff ended, Ofgem said.
Ofgem said that Ovo Energy has now put in place measures to make sure something like this does not happen again. It has invested in technology and implemented the correct compliance procedures.
“Ovo Energy billed a number of its customers incorrectly and issued them with inaccurate information,” Anthony Pygram, Director of Conduct and Enforcement at Ofgem, provided a comment.
“The supplier did not prioritise putting these issues right whilst its business was expanding,” the Director of Conduct and Enforcement at Ofgem continued.
“Our enforcement action sends a strong message that suppliers must get basic services right for all their customers. Ovo Energy has accepted the breaches and put processes in place to comply with the rules in future.”
Elsewhere on Wednesday, Hurricane Energy (LON:HUR) shares jumped on strong production figures. Shares were trading over 14% during Wednesday morning trading.
Hurricane Energy shares jump on strong production
Hurricane Energy (LON:HUR) shares jumped over 14% in early trade in Wednesday as the company released production figures that significantly beat prior guidance.
In Q3 2019 Hurricane produced 15,400 barrels of oil per day, beating guidance of 9,000 barrels of oil per day. Q4 2019 wasn’t as strong as the prior quarter due to commissioning activity, but they still produced 11,800 barrels of oil per day versus guidance of 11,000 barrels per day.
The higher levels of production has helped Hurricane Energy generate revenues of $170 million in the year to 31st December which will contribute to further developments of their fields.
In addition to strong production, Hurricane gave an update on the ongoing flow tests which had so far been relatively positive.
“The 6 well has flowed at an average rate of 12,500bopd during its test period. Further data is needed and more detailed information on the results of the well tests,” said Carlos Gomes of Edison Group.
“The start-up of the Lancaster EPS has gone very well, with 2019 production exceeding the guidance that we provided when we announced first oil. We’ve also had a strong start to 2020 with the 6 Well test continuing on Lancaster, delivering steady production. A return to two-well production is imminent,” Dr Robert Trice, Chief Executive of Hurricane, said.
“Work continues on the analysis of the results of the 2019 drilling campaign, planning of future wells, and obtaining the relevant approvals. I look forward to presenting on what we have learnt and what we expect from this reservoir at our Capital Markets Day in March.”
He also touched on the recent share price performance, saying:
“We note the recent weakness in the Company’s share price and I can confirm that we are not aware of any subsurface, operational or commercial reasons that would have caused such decline. The production performance of the Lancaster EPS wells is above our base case expectations and we remain on target to provide an update at the Capital Markets Day in March whilst continuing to make progress towards the next operational steps for our portfolio.
“Hurricane remains focussed on delivering operational progress, on budget and on schedule, and, in so doing, delivering returns to shareholders. We look forward to continuing to update the market with quarterly production figures, and will announce any material variations to expectations as required.”
Shares in Hurricane Energy (LON:HUR) were up 14.91% at 24.9p in early Wednesday morning trade.
Hurricane Energy are set to hold a capital markets day 25th March 2020.
Property Franchise Group shares rally over 8% on modest progress
Property Franchise Group (LON:TPFG) saw its shares rally during the Tuesday session, after posting modest progress for the financial year ended 31 December 2019.
The company’s statement to its shareholders read,
“The Group has successfully navigated a difficult year for UK residential property and performed in line with market expectations, delivering growth in both revenues and management service fees. Our franchisees successfully mitigated much of the impact of the tenant fee ban and achieved a record performance for lettings revenue. The Group’s hybrid brand, EweMove, is also anticipated to show another significant improvement in profit over the prior year.”
Property Franchise Group said the challenging conditions owed somewhat to the impact of the Tenant Fee Ban, which was passed in June 2019, alongside wider macroeconomic forces. Despite the difficult backdrop, the group reported year-on-year growth in overall revenue, from £11.2 million, to £11.4 million. Alongside this, the company’s Management Service Fees rose from £9.4 million to £9.6 million, and the number of tenanted managed properties serviced increased from 55,000 to 58,000 during the same period.The company added that during FY19, its assisted acquisitions programme supported 24 acquisitions by franchisees and added 2,381 managed properties. It continued, saying that it had continued to invest in technology, and that its pay-per-click campaign via the traditional high street brands’ customer websites, had seen a 54% increase in leads, up to 47,000.
It appears TPFG have managed to place themselves among the ranks of the successful, in spite of the adverse conditions which have unsettled some of their equally established counterparts. AFI Development (LON: AFRB), for instance, pointed to “challenging market conditions” as the reason for their underwhelming performance. The Russia-focused company said its fall in profits and residential sales could be attributed to the state of the domestic economy. Likewise, Schroder Real Estate Investment Trust (LON: SREI) also complained about the backdrop of a ‘challenging market’, which saw its NAV contract and prompted it to adjust its strategy.Property Franchise Group comments
The company’s Chief Executive, Ian Wilson, responded to the update:
“Our ability to deliver revenue growth and continued operational progress over the year, notwithstanding the market headwinds, is testament to the strength of our business and the franchise model.”
“Looking ahead, there are numerous opportunities for us to now build further momentum across the business, as we continue to invest in our traditional brands and EweMove remains robust. In parallel we will focus our attention on growing a national mortgage brokerage network under our newly created financial services division.”
“This is my last year with TPFG and I’m delighted that we have continued the journey that we started with our IPO in December 2013, having materially increased the dividend every year. We are dedicated to continuing to create value for all our stakeholders and are confident we will continue to do so in the year ahead.”
Investor notes
Property Franchise Group shares rallied 8.37% or 18.00p, to 233.00p per share at the end of the Tuesday session 28/01/19 17:08 GMT.Looking ahead, the company said,
“Early indications of improving market conditions underpin our expectation that the volume of house sales should increase in 2020. The lettings market is also anticipated to remain healthy, with rising rents and increased confidence leading to more opportunities for the Group’s franchisees to acquire competitors’ books than were available in 2019.”
“Post period end, the Group announced the launch of its “buy and build” Financial Services division and the appointment of Mark Graves to the new role of Financial Services Director.”
No broker forecasts were available for this stock, but the group’s p/e ratio stands at 16.17, and their dividend yield is agreeable at 3.61%.Coronavirus can’t halt the inexplicable rebound of European equity markets
Despite the continued spread of the index-ailing Coronavirus, European indices began trading on Tuesday with an unexpected rally.
Its early success was in jeopardy with developments on the virus’s spread in Europe, before being given a leg-up by a strong start from the Dow Jones.
The CAC, DAX and FTSE rallied to 5900, 13300 and 7470 points respectively, with the latter buoyed by Sterling’s weakness.
The big news, of course, was the UK’s policy on Huawei‘s (SHE:002502) involvement in its 5G network. The government has said the company‘s equipment will be excluded from its network’s ‘core’, but the US is worried that the fading boundary between core and periphery services will pose a threat to the UK’s intelligence-sharing potential.
Speaking on market movements during the Tuesday session, Spreadex Financial Analyst Connor Campbell commented,
“At one point in danger of fading, Europe’s rebound strengthened after the US open, buoyed by a solid jump from the Dow Jones.”
“The Dow climbed 125 points as the bell rang on Wall Street, lifting the index back towards 28700 having hit a low of 28450 on Monday. It was helped out by a better than forecast CB consumer confidence reading, which came in at 131.6 against the estimated 128.2.”
“This prompted the CAC to rise 0.9%, smashing through 5900, while the DAX reclaimed 80 points to tickle 13300. The FTSE increased by 65 points, just about touching 7470 in the process.”
“It’s not like there has been a wealth of good news regarding the Wuhan coronavirus outbreak – if anything, the opposite, with Germany confirming the first human-to-human transmission in Europe. However, the fact Hong Kong has slashed border travel with China, could be read as a step in the right direction in regards to containing the illness.”
“Or, more likely, investors are just using yesterday’s plunge as an opportunity to buy up shares on the (relative) cheap – the wisdom of which will no doubt be tested by coronavirus headlines over the coming days and weeks.”
“Adding fuel to the FTSE’s rebound was the pound’s unravelling. Against the dollar it was down 0.4%, with a 0.3% drop against the euro. This as the direction of Thursday’s Bank of England meeting remain unclear – namely, will Mark Carney sign off with a rate cut, or will that decision be delayed until after Andrew Bailey takes the reins?”
“If investors can look beyond the coronavirus for a second, there’s a juicy Q1 update from Apple (NADAQ:AAPL) to look forward to this evening. Having roughly doubled its market value in the last year, now worth nearly $1.4 trillion, the tech giant will be looking to start 2020 with a bang.”
“Any indication of how successful Apple TV+ has been will grab headlines, but the real market moving numbers will be the classic. Earnings are expected at $4.59 per share against $4.18 for the same period the year previous, while sales are estimated at $88.42 billion, a near 5% increase year-on-year.”
UK excludes Huawei from its 5G core
Despite pressure from US firms and government, the UK has given Huawei (SHE:002502) the green light to access the majority of its incoming 5G network.
In accordance with the new policy, the National Cyber Security Centre published a document which gave UK networks three years to comply with the new terms of usage of Huawei’s equipment.
The company’s UK Chief Victor Zhang then issued a statement:
“Huawei is reassured by the UK government’s confirmation that we can continue working with our customers to keep the 5G rollout on track,”
“It gives the UK access to world-leading technology and ensures a competitive market.”
The notable caveat of this agreement is that Huawei will be able to use its infrastructure and equipment on all ‘non-core’ areas of the system; such as base stations and antennas. In practice, this will mean that it loses access to the ‘brain’ of the network – the core is where all data is routed across sub-networks and computer servers in order to help it reach its required destination.
It will be limited to the periphery, or Random Access Network, which has been dubbed the ‘innovative but dumb’ part of the system. By itself, it doesn’t grant a user privileges over the management and direction of data. However, its new traffic management software means that users such as Huawei will be able to manage a far greater volume of traffic than before, without having to apply for planning permission for 5G masts or pay for the new core infrastructure to be put in place. In theory at least, this arrangement will allow Huawei to roll out 5G more quickly than its counterparts, but will also allow the UK government to mitigate some of the risks of Chinese involvement within its critical tech infrastructure. Additional conditions include the fact that Huawei will only be able to account for a maximum of 35% of the kit in any network’s periphery, and it will be excluded from providing services near sensitive areas, such as military bases and nuclear sites.Huawei and the US issue
This move likely comes in response to US Secretary of State’s comments, who said the equipment increased the risk of spying, and added that, “we won’t be able to share information” with nations that put it into their “critical information systems”. During his speech in Commons, British Foreign Secretary Dominic Raab claimed the decision wouldn’t affect the UK’s intelligence-sharing relationship with any of its allies. “Nothing in this review affects this country’s ability to share highly-sensitive intelligence data over highly-secure networks both within the UK and our partners, including the Five Eyes,”Secretary for digital, culture, media and sport, Nicky Morgan, added,
“This is a U.K.-specific solution for U.K.-specific reasons and the decision deals with the challenges we face right now,”
“It not only paves the way for secure and resilient networks, with our sovereignty over data protected, but it also builds on our strategy to develop a diversity of suppliers,”
All problems solved?
The UK’s approach appears to be something of a halfway house between the lax approach it usually takes to overseas influence in strategically significant infrastructure, and the attitude of the US and Australia, which seeks to lock out that kind of external involvement. The lingering criticism of the new 5G policy is that while it may somewhat limit Huawei’s – and by extension the Chinese state’s – position on the UK’s tech chessboard, the capabilities of new infrastructure mean that traditional boundaries and the structure of our networks are changing. Trump’s cyber-security chiefs, among others, fear that over time the ‘edge’ (the boundary between core and periphery kit) will continue to erode as functions are carried out further from centralised nodes and increasingly moved to individual exchanges and base stations. The issue here is that sensitive operations will be carried out closer to users, and it will be a more challenging task to keep everybody out of the system’s most sensitive components. Responding to these concerns, UK network operators stated they can design the architecture of their networks to keep them distinct from the periphery, but they acknowledged the claim that more services will become decentralised over time. Before closing for Chinese New Year, Huawei’s shares were down 0.99% to 2.99 CNY 23/01/19 16:29 GMT.Just Eat revenues hit around £1bn and inks deal with McDonalds
Just Eat today released a trading update for the year to 31st December in which the takeaway delivery company said results were inline with the board’s expectations.
The firm said they expected uEBITDA to be around £200 million driven by revenues of £1 billion.
Peter Duffy, Just Eat’s Interim CEO, commented:
“We are pleased to confirm uEBITDA towards the top end and revenue broadly in line with the guidance range we provided at the start of 2019, notwithstanding the significant developments during the year.”
“We are delighted to announce that we have agreed to partner in the UK and Ireland with McDonald’s. This partnership, along with our recently announced relationship with Greggs, will require significant investment but will accelerate our growth ambitions and enhance our market position by offering our customers the widest choice available.”
The update comes shortly after the group agreed an all-share merger with Takeaway.com.
In addition to updating the market on their performance, Just Eat announced an agreement with McDonalds to become their second exclusive delivery service in the UK.
Blow to Uber
Uber Eats had previously been the only exclusive partner to McDonalds in the UK which had been heavily advertised by the taxi app company. However, there have been a number of failings at Uber recently which have led to issues over their licenses in London and Birmingham. Although there has been no comment from Just Eat or McDonalds regarding Uber, it is logical to think McDonalds want to secure a reliable delivery partner and alternative to Uber Eats.Nearly 10,000 retail jobs lost since start of 2020
The Centre for Retail Research (CRR) has published its findings that a total of 9,949 retail jobs were lost since the start of the year, predicting a further 1,200 could go as both Beales and Hawkin’s Bazaar collapse into administration.
January is a notoriously tough month for retailers, facing caution from customers following the inevitable overspending that often comes with the Christmas period as well as the fast-approaching deadline for quarterly rent at the end of the month.
A number of big brands, including ASDA, Card Factory (LON:CARD) and Mothercare (LON:MTC), have faced a slump in sales in the last year, with retailers increasingly closing stores and cutting jobs as the UK market contracts in response to Brexit wariness.
Last week, the British Retail Consortium (BRC) revealed that nearly 60,000 jobs in the retail sector were lost in 2019. The industry analyst blamed the uncertainty fostered by the imminent Brexit deadline and the December general election, but also acknowledged the continuing trend towards online shopping.
With UK retail employing around 3 million people, the CRR’s findings indicate as many as 1 in 300 jobs have been lost so far in 2020.
Despite the recent slump, according to Altus Group’s annual Commercial Real Estate Innovation Report, 77% of top British executives expect the introduction of 5G to help boost and streamline the high street. The hope is that augmented reality will help to enrich the customer experience while also cutting back on checkout queues.
The report acknowledges the risk that further jobs could be lost in the short-term, but Altus Group executive director, Scott Morey, emphasises the possibility of more meaningful jobs opening up in the future.
“5G presents a great opportunity for retailers to further improve the underlying performance of their physical stores,” Morey explained, “by transforming the customer experience and shifting the role of their store personnel towards higher value tasks. Shoppers fundamentally rely on stores during various stages of their shopping journey and 5G has the potential to further improve that interaction.”
However, it has yet to be seen if the sector will be able to offset 2019’s legacy as the worst year for retail sales on record. The high street will also have to reconcile the threat from online retailers and the potential for more efficient delivery and postage infrastructure moving forwards.
Credit: Written by Freelance Writer, Bronte R. Carvalho