UK manufacturing still below long-run average
Manufacturers in the UK saw a rise in orders in November, but remained below the long-run average.
Data from the Confederation of British Industry revealed that 13% of manufacturers reported total order books higher than normal, whilst 40% said that they were below normal.
This gives a balance of -26%, up from the -37% balance recorded the month prior in October, where levels reached the weakest in nine years.
However, the figure remains below the long-run average of -13%, the Confederation of British Industry said.
Export order books also rose to a stronger level than in October, when they were at their weakest level since the 2008 financial crisis.
“While the thick fog of uncertainty from a No Deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy,” Anna Leach, CBI Deputy Chief Economist, commented on the data.
“Order books remain below average, and output volumes continue to fall. When taking into account the deteriorating outlook for manufacturing globally, it’s clear that the outlook for the sector remains precarious,” the Deputy Chief Economist continued.
“The General Election is an opportunity for all parties to explain how they will shore up our economy. Ratifying a Brexit deal and moving on to build a vibrant future relationship with our biggest trading partner, based on frictionless trade, will be vital – both for UK manufacturers, and business as a whole.”
The UK was supposed to depart from the European Union at the end of October, but was granted yet another extension to the deadline, prolonging the uncertain outlook even further.
Parties now prepare for the general election later this year on 12th December.
Trade war slow progress but markets rally on Huawei ban delay
Without actually making much progress towards resolution, the Sino-US trade war debacle was able to eek out a sliver of positivity for indices clamouring for a shred of good news.
With its high position on president Trump’s order paper looking under threat – with domestic political engagements vying for his attention – any substantive movement on trade war amelioration looks a long way off.
Nothing too new there. As markets opened on Tuesday morning, they contented themselves with Trump’s consolation prize: a delay on the Huawei ban, which at the very least acts as a symbol of good will.
Speaking on the comparatively improved sentiment of markets, Spreadex Financial Analyst Connor Campbell commented,
“Despite emergent doubts surrounding ‘phase one’ of the US-China trade deal, the European markets managed to climb higher after the bell.”
“Even though Saturday morning’s phone call was described as ‘constructive’, CNBC claimed on Monday that the mood in Beijing is ‘pessimistic’ according to a government source, with the shift coming after Trump denied he would be rolling back tariffs. And with the ongoing impeachment hearings, and then the election next year, the talks could be significantly dragged out as China stall for a potentially better agreement. Oh, and remember, there’s also the small issue of the fresh tariffs on Chinese goods scheduled for mid-December.”
“The blow of this report was eased, however, by the US government delaying its Huawei (SHE: 002502) ban by another 3 month, a move that, if the European open is anything to go by, has been read as a sign that things are at least still cordial between the two superpowers.”
“Lifted by that move, the FTSE added half a percent, an increase echoed by the DAX; the CAC, meanwhile, wasn’t too far behind with a 0.4% rise. As for the Dow Jones, the US index is looking to strike 28100 for the first time later today, the futures pointing to a 65 point increase.”
Despite deflating updates from the UK house market and Volkswagen (ETR: VOW3) on Monday, the session opened brightly for Europe following the uplifting post-close announcement from Airbus SE (EPA: AIR).
“Following Monday’s Tory-supporting, polls-driven gains, sterling held steady ahead of this evening’s first head-to-head between Boris Johnson and Jeremy Corbyn on ITV (LON: ITV). Cable is sitting unchanged at a one-month(ish) high of $1.2957, while against the euro a 0.1% rise sent the pound to a 6 and a half month high of €1.1713.”
Homeserve shares rally after strong interim update
Homeserve plc (LON: HSV) have seen their shares rally after the firm posted a bullish interim update on Tuesday.
The firm reported that revenue had risen on organic growth and contributions from mergers and acquisitions.
Shares of Homeserve rallied 7.35% to 1,286p. 19/11/19 11:18BST.
The FTSE250 (INDEXFTSE: MCX) listed firm is a home emergency repairs business, which has been trading since 1993.
Homeserve additionally announced the acquisition of a 79% stake in eLocal Holdings LLC for $140 million on debt and cash free terms.
The deal is expected to be formalized on Monday, subject to regulatory and competition clearance.
For Homeserve’s current financial year to the end of March, eLocal is expected to add around $5 million to adjusted operating profit, rising to $16 million in the 20201 financial year further investment.
Through the acquisition, Homeserve will have entry into the Home Experts market in North America, and the group holds the option to acquire the remaining 21% stake.
For the interim period ending September 30, Homeserve reported pretax profit of £19.7 million, showing a 2% climb from the £19.3 million figure one year ago.
On an adjusted basis pretax profit dropped by 10% to £28.6 million from £31.8 million, due to higher interest charges from fixed rate borrowings agreed the prior year.
“I am very pleased with our financial performance and strategic progress in the first half of this year. All of our Membership businesses performed well, with North America continuing to deliver strong growth, and interesting opportunities in all our European businesses to develop new partnerships, harness new technology and continue to improve customer service and efficiency. Our buy-and-build approach to HVAC added five profitable new acquisitions and will become a significant business line for us for the first time this year,” said Chief Executive Richard Harpin.
Certainly, shareholders of Homeserve will be pleased with the update and should be optimistic for future outlook.
In the homebuilding sector, firms have been busy. A merger deal was reported between Galliford Try (LON: GFRD) and Bovis Homes Group plc (LON: BVS).
Additionally, Taylor Wimpey (LON: TW) reported strong second half demand in their most recent update. Homeserve raised its interim dividend 12 per cent to 5.8p per share.Melrose shares spike despite GM strikes
Melrose Industries PLC (LON: MRO) have seen their shares spike after the renewed optimism on planned union strikes.
The London based firm specializes in buying and improving underperforming businesses, and are currently going operational and structural changes.
Shares of the FTSE100 (INDEXFTSE: UKX) listed firm spiked 2.07% to 227p. 19/11/19 11:02BST.
The firm updated shareholders that its performance annually was in line with expectations, which would have appeased shareholders.
By division, the company said Aerospace, part of the acquisition of GKN, has achieved sales growth of over 5% in the four months to the end of October compared to the same period last year, outperforming the expected longer-term average growth rate. Melrose also noted “good margin improvement” in this division.
Melrose acquired GKN in early 2018 in an £8.4 billion deal, which allowed expansion into the aerospace industry.
In the automotive sector, Melrose reported strong profits but sales slumped 5% compared to the figure a year ago.
The firm alluded to strikes at General Motors (NYSE: GM), which hampered trading and led to slumps in both sales and expectations.
In September, almost 50,000 workers went on strike at General Motors, which was part of the biggest labour strike in more than ten years.
The strike ended in October following a forty day walkout, which would have given relief to Melrose.
Other Industrial is trading in line with expectations, Melrose said.
“Some macro conditions could be more helpful, but this has not stopped us continuing to transform the GKN businesses, delivering another trading period in line with expectations, and achieving better trends than seen in the first half of the year,” said Chair Justin Dowley.
“We are excited about what is possible and confident in our ability to unlock significant further shareholder value,” added Dowley.
Melrose are set to update shareholders on March 5th, where annual reports will be scrutinized.
Meggitt win big contract with Defense Logistics Agency
Meggitt plc (LON: MGGT) have won a big contract with the Defense Logistics Agency in Philadeplphia, as it was reported on Tuesday.
Shares in Meggitt rallied 2.73% after the impressive announcement, and currrently trade at 647p. 19/11/19 10:45BST.
Meggitt are a British based engineering firm, who specialize in aerospace and defense equipment, and have their headquarters in Bournemouth.
Megitt will supply fuel bladders to the F/A-18 Super Hornet, V-22 Osprey and the CH/MH-53 Super Stallion to the Defense Logistics Agency in Philadelphia.The fact that Meggitt have won this contract will impress shareholders, considering the size and reputation of the client.
The Defense Logistics Agency is part of the US Department of Defense, and they manage the global supply chain of equipment for the army, navy and air force.
Specifically, Meggitt will supply fuel bladders for the F/A-18 Super Hornet, V-22 Osprey and CH/MH-53 Super Stallion aircraft.
The terms of the contract are yet to be fully released, however it was reported that the contract extension has a potential value of $130 million, which will tease stakeholder appetite.
The deal will last six years and deliveries are set to commence in early 2020.
Last year, the FTSE100 (INDEXFTSE: UKX) listed firm landed an impressive deal for Black Hawk helicopters, with the same client and this deal will only continue to impress both the market and traders.
In a market where competitors have made significant strides, this deal will certain please both seniority and shareholders, with shares surging after the positive announcement was made on Tuesday. Competitors have made gains in the industry, where QinetiQ Group plc (LON: QQ) reported strong gains in their most recent update. Additionally, Ultra Electronics (LON: ULE) met market expectations in their most recent update, however it seems that the domination of firms such as Lockheed Martin (NYSE: LMT) and Boeing (NYSE: BA) is still very evident.Moss Bros hires Ted Baker’s interim CFO
Moss Bros (LON:MOSB) announced on Tuesday that it will appoint Ted Baker’s current interim Chief Financial Officer as its new CFO.
Shares in the suit retailer were up during Tuesday morning trading.
Moss Bros said that the current interim CFO at Ted Baker (LON:TED), Bill Adams, will take over the role from Tony Bennett.
Tony Bennett has decided to step down from the company’s board for “personal reasons” and is due to leave the business early next year in February 2020.
Prior to his role at Ted Baker, Bill Adams was CEO at Ideal Shopping. Bill Adams was also Finance Director at Argos and Finance Director at Homebase before that.
At the end of September, Moss Bros posted a rise in revenue in its half year results, though its loss before tax widened.
The luxury brand Ted Baker revealed a loss at the beginning of October as it battled against “unprecedented” trading conditions.
“I am delighted to welcome Bill to Moss Bros. Bill has considerable experience across a variety of different retail businesses, and will no doubt bring valuable additional insight to the business,” Brian Brick, CEO, commented on the announcement.
“We have recently implemented a clear and comprehensive strategy with clarity, unity and focus in place across the business. Bill will join us at a time where we can leverage the Moss Bros brand further into new channels. I believe Bill’s experience will enable him to make an immediate contribution to our future,” the CEO continued.
“I would like to take this opportunity to thank Tony on behalf of all at Moss Bros for his considerable contribution and support he has given and wish him well for his future endeavours.”
Bill Adams provided a comment on the news of his appointment: “I am very much looking forward to joining Moss Bros and working with Brian and the team. I believe the brand has a great future and I am excited about being part of the future direction of the company.”
Shares in Moss Bros Group plc (LON:MOSB) were up on Tuesday morning, trading at +0.91% as of 10:36 GMT.
Likewise, shares in Ted Baker plc (LON:TED) were also up on Tuesday, trading at +4.87% as of 10:30 GMT.
Halma shares surge following strong interim update
Halma plc (LON: HLMA) have seen their shares surge on Tuesday morning after the firm lifted its payout after strong interim results were reported.
Halma are are a firm which make products for hazard detection and life protection, that provide infrastructure, medical, environmental and analysis products.
Halma updated shareholders positively saying that it had seen “good organic and acquired growth”, which led to the interim payout rise.
Shares in Halma surged 11.51% to 2,119p. 19/11/19 10:31BST.
For the six months to September 30, Halma reported pretax profit of £105.8 million, up 12% from £94.5 million one year prior.
Revenue increased by 12% year-on-year to £653.7 million from £585.5 million.
“We grew revenue in all four major regions, with organic constant currency revenue growth in our four major regions and in all of our business sectors. This was further supported by a positive contribution from acquisitions and by favourable currency translation,” Halma said.
“Since the period end, order intake has continued to be ahead of revenue and order intake last year. Halma remains on track to make further progress in the second half of the year and deliver another good full year performance,” Halma Chief Executive Andrew Williams said.
“Our strong purpose and culture, our portfolio and geographic diversity together with our agile business model are enabling us to deliver a good performance in varied market conditions and to sustain growth and returns over the longer term.” Williams concluded.Additionally, the FTSE100 (INDEXFTSE: UKX) listed firm saw strong growth in the USA, which is its biggest consumer base.
In the US there was a 15% rise in yearly interim revenue to £248.8 million, where as UK and European revenue grew 9% to £105.2 million and £135.5 million respectively.
In the medical and pharmaceuticals industry, the industry titans continue to dominate. Pfizer (NYSE: PFE) and GSK (LON: GSK) have reported strong quarterly updates. Additionally, it was reported on Friday that Roche (LON: GSK) had acquired US based Promedior.Halma has upped its interim dividend payment by 7.0% to 6.54p per share from 6.11p a year ago.
EasyJet full year profits plunge
EasyJet (LON:EZJ) delivered its full year results in line with expectations on Tuesday, though headline profit before tax plunged compared to the year prior.
Shares in the low cost airline were up during Tuesday morning trading.
The airline posted its results “against the background of a difficult year”.
EasyJet revealed that headline profit before tax declined 26% to £427 million.
The airline emphasised, however, that this figure does lie towards the top end of its £420-430 million guidance range.
For the year ending 30 September, passenger numbers grew by 8.6% to 96.1 million.
Total revenue was up by 8.3% amounting to £6.4 billion, compared to the £5.9 billion figure recorded the year prior.
EasyJet said that total revenue per seat declined by 1.8% to £60.81, driven by weak consumer confidence.
However, the low-cost airline said that this was offset by the positive impact from strikes at British Airways (LON:IAG) and Ryanair (LON:RYA).
“More customers than ever are coming to easyJet as their airline of choice, with a record 96.1 million customers flying with us this year,” Johan Lundgren, EasyJet Chief Executive, commented on the results.
“We have also invested in tackling disruption for our customers through our Operational Resilience programme, which has reduced cancellations by 46% and lowered delays of 3 hours or more by 24% year on year,” EasyJet’s Chief Executive continued.
The company also revealed in its full year results that it will be launching a package holidays business, after having identified a “significant opportunity” in this area.
Thomas Cook collapsed just a few months ago.
Johan Lundgren said: “I am really thrilled that with the launch, before Christmas, of our brand new easyJet Holidays business we are bringing flexibility and excellent value to the holiday market. We are now able to offer our customers more than 100 amazing beach and city holiday destinations, pairing Europe’s best short-haul flight network with more than 5,000 of Europe’s best hotels. We believe there is a gap in the market for a modern, relevant and flexible business for today’s consumer.”
Johan Lundgren claimed that EasyJet will be “the world’s first major airline to operate net-zero carbon flights across our whole network”.
“We are doing this by offsetting the carbon emissions from the fuel used for all of our flights,” the Chief Executive explained.
Shares in EasyJet plc (LON:EZJ) were up on Tuesday trading at +4.07% as of 08:59 GMT.
Markets muted by slow trade deal progress
Markets have finally given in to realism and assumed a stance of limited optimism in regard to any potential Sino-US trade deal.
After appearing to happily chase the story in regard to trade war and tariff progress over the last few months, markets now seem ready to concede that any friendly chatter between the two isn’t worth reading into. If we have learned anything from the failed attempts to-date: if Trump’s bravado and ego hold out, do not expect China to come crawling to the POTUS for a deal.
Following the non-news of trade deal progress, US and UK indices were muted as markets closed on Monday.
Speaking on market movements, Spreadex Financial Analyst Connor Campbell commented,
“The Dow Jones paused on Monday, unable to strike the fresh record highs promised pre-open.”
“The US index lurked under 28000 after the bell, news of ‘constructive discussions’ between Washington and Beijing over the phone on Saturday morning failing to impress investors. Given its current levels, the Dow may need something a bit more substantial from the superpowers if it is to level-up once again.”
“The FTSE echoed its American peer, the index sitting pretty much unchanged the wrong side of 7300. That it avoided a serious loss, however, is notable considering sterling’s gains. With the Tories currently on track for a majority after December’s election, the pound added 0.4% against the dollar and 0.2% against the euro.”
“In comparison to the UK and US, the Eurozone was in a real bad mood on Monday. The DAX and CAC fell 0.6% apiece, take the German index to 13150 and the French bourse under 5900.”
On the whole, markets were also left deflated by Saudi Aramco’s decision to revise the ambition on their IPO and the UK property market uncertainty. European indices were also weighed down by Volkswagen (ETR: VOW3) highlighting a gloomy outlook for 2019, despite Airbus SE (EPA: AIR) winning a $30 billion order for 170 aircraft.
