Volkswagen (ETR:VOW3) posted a rise in sales revenue and profit on Wednesday.
Shares in the German multinational automotive manufacturing company were up during trading on Wednesday. Volkswagen said that, in the first nine months of the current financial year, it performed well amid a “difficult” market environment. The carmaker said that, between January and September, sales revenue rose by 6.9% year-on-year, amounting to €186.6 billion. Operating profit before special items also increased, jumping 11.2% to €14.8 billion. “Despite the gain in market share, the Volkswagen Group anticipates that vehicle markets will contract faster than previously anticipated in many regions of the world,” the company said. In light of this, the company said that it expects deliveries to customers in 2019 to be on a level with the year prior. It had been expecting a slight increase. “In terms of the Group’s operating profit before special items, an operating return on sales of between 6.5% and 7.5% is predicted. Including special items, the Group projects an operating return on sales at the lower end of the range announced,” Volkswagen said. It expects sales revenue to exceed the prior year figure by as much as 5%, Volkswagen said. “The Volkswagen Group achieves a good performance amid a challenging market environment. The performance in the first nine months of the financial year makes us optimistic that we will achieve our full-year targets for 2019,” Frank Witter, Member of the Board of Management of Volkswagen AG responsible for Finance and IT, said in a company statement. “Continuous improvement in our profitability is key to mastering our ongoing transformation on our own. We will continue to work systematically towards this goal,” Frank Witter continued. Shares in Volkswagen AG (ETR:VOW3) were trading at +0.43% as of 16:32 CET Wednesday.Sports Direct lash out at CMA after publishing of incorrect market data
Sports Direct International Plc (LON: SPD) have lashed out at the Competition and Markets Authority after alleged wrong market data was used in an investigation currently being carried out.
The response from Sports Direct comes as the CMA investigates the potential merger of JD Sports (LON: JD) and Footasylum (LON: FOOT).
The proposed merger between the two competitors of Sport Direct is estimated to be worth £90 million.
In a statement published on the London Stock Exchange this morning, Sports Direct’s Mike Ashley said he disagreed with the CMA’s estimates only months after being reelected into his senior position.
I have been watching this from the side lines to date and now having had the opportunity of considering the CMA decision, I would now welcome the opportunity to provide the CMA with the correct market data,” Ashley said.
Additionally, Ashley added “For example, our market share of Adidas Originals in Sports Direct is virtually zero.”
The statement added: “The CMA has published inaccurate estimates of Sports Direct’s share of the supply of ‘sports-inspired casual apparel and also footwear’, both on an in-store and online basis, which wrongly suggest that Sports Direct would have a comparable share of supply to the merged parties.”
Sports Direct have ‘welcomed’ the CMA’s action to correct these percentages, giving a fair and accurate indication of Sports Direct’s presence in this market.
Sports Direct also said the CMA “does not have a meaningful, if any, presence in these markets”.
Earlier this month, Sports Direct called for an investigation on sports titans Adidas (ETR: ADS) and Nike (NYSE: NKE) following market exploitation and domination claims.
The company said the “must-have” retailers hold a bargaining position which allows them to control the supply and the price of their products.
Adidas has blocked Sports Direct from selling some of its products, Sports Direct said.
Sports Direct said on Wednesday, that in its decision, the CMA acknowledged that Sports Direct had a “differentiated product offering” from JD Sports and Footasylum, and had experienced a “lack of access to SMUs/exclusive and/or high-end/premium products”.
Currently, shares of Sports Direct are trading at 303.6p per share. 30/10/19 15:26BST.
Yum shares sink after third quarter disapointment
Yum! Brands, Inc (NYSE: YUM) released their third quarter trading statement during Wednesday trading, in the statement they missed profit expectations causing share prices to sink.
Yum Brands alluded to failures across a few of their franchised brands, but emphasized a write down in the value of its investment in delivery company GrubHub (NYSE: GRUB) and the collapse of many Pizza Hut stores.
The Louisville, Kentucky-based company also reported same-store sales below Wall Street estimates.
“Following a very strong first half of 2019 and in line with our expectations, third-quarter results were consistent with our long-term growth plan,” CEO Greg Creed said in a statement, who is set to retire.
“We’re rapidly approaching the end of a truly historic year. 2019 will not only mark the completion of our 3-year transformation of Yum!, but will also mark the end of my tenure as Yum! CEO,” he added.
As there appears to be an apparent shift in the market for delivery services, following the expansion of firms such as Just Eat (LON: JE) and Takeaway.com (AMS: TKWY), the Kentucky firm attempted to invest in technological and structural changes in its operations.
To keep up with the changing trend, Yum bought a stake in GrubHub last year, hoping to boost sales at its KFC and Taco Bell restaurants in the United States.
Of course, this transition will undoubtedly lead to some disruption and choppiness in the short term,” outgoing CEO Greg Creed told analysts on the conference call Wednesday.
The recent failure of both Pizza Hut delivery and stores comes as no surprise for Yum seniority, as competitors such as Domino’s (NYSE: DPZ) seize the pizza industry with strong trading figures across 2018/19.
Same-store sales at Pizza Hut were flat in the reported quarter, compared with the growth of 1.46% forecast by analysts.
KFC same-store sales rose 3%, also missing expectations according to data from Reuters.
Edward Jones analyst Brian Yarbrough said “They’ve (Pizza Hut) done a lot of marketing, they’ve launched a lot of value-priced items… it still doesn’t seem to be working. “That was one of the big bull pieces to the story, the big Pizza Hut turnaround… it seems to be falling kind of flat.”
The one bright spot for Yum was the progress of the Taco Bell franchise, with sales at restaurants rising 4%, compared with the estimated growth of 3.5%.
Net income fell 44% to $255 million, which has caused significant worries for shareholders and investors alike.
Yum earned 80 cents per share in the quarter ended Sept. 30, excluding one-time items, 14 cents lower than Wall Street expectations, according to IBES data from Refinitiv.
Shares of Yum are currently trading at $99.21 per share, falling 9.52% after the poor trading update. 30/10/19 14:58BST.
Study finds most expensive areas to sell homes in UK
New data has found that it costs British home sellers an average of £21,721 to sell their home in current market conditions.
The research by the estate agent comparison website GetAgent.co.uk takes a look at the most expensive areas to sell homes.
GetAgent.co.uk examined the current cost of selling across the UK based on the average estate agent fee on the average price achieved in each location. However, as Brexit has caused homeowners to sell their property for below asking price, the research also takes into consideration the depreciation in property values between the asking and sold price due to the prevailing political uncertainty.
Westminster is the most expensive area for current sale as sellers are achieving just 90.9% of asking price, in addition to the average agent fee of 1.8%, costing sellers in this area £334,874 to sell now.
This is followed by Kensington and Chelsea with a cost of £210,521, and Camden at £144,439.
In contrast, Sheffield is the most affordable market costing only £5,385, the research shows.
“Finding a good agent has always been about the optimum balance of achieving a good price and the fee they will charge to do so and one of the hang ups of the online sector in particular, has been that while you pay a low upfront fee, you also secure a far lower price, making it more expensive all in all,” Founder and CEO of GetAgent.co.uk, Colby Short, commented on the research.
“In any market, home sellers always tend to be over optimistic in their asking price expectations and so achieving below this benchmark isn’t just Brexit related, however, at the moment we’re seeing many have to accept as much as an eight to ten percent reduction in order to secure a sale which is far from normal,” the Founder and CEO continued.
“All things considered, selling your home in the current market can be an expensive and drawn out endeavour and ensuring you instruct the best agent, at the best price, is the best way to maximise your property’s profitability.”
Deutsche Bank reports third quarter loss, alarming shareholders
Deutsche Bank (ETR: DBK) have released their interim trading update, which has shown a third quarter loss caused by restructuring costs and weakness in fixed income trading.
The German bank reported an $924 million loss in their third quarter, which has caused shares of the German bank to sink after a streak of poor performance reports.
The bank in July had flagged a loss this year and announced restructuring plans worth $7.4 billion including the elimination of 18,000 jobs.
The third quarter results followed a poor trading update in the second quarter which puts heavy scrutiny on the bank’s operations and management.
The quarterly loss follows one of €3.15 billion in the second quarter and contrasts with a €229 million net profit a year earlier.
CEO Christian Sewing noted the bank’s four core divisions posted a pretax profit. “These quarterly results are just an interim assessment, but they are encouraging,” Sewing wrote to staff.
The bank is attempting to break even in 2020, but market analysts continue to fuel speculation about the German lender’s ability to spark revenue.
“One has to look very hard to find anything positive in Deutsche Bank’s results this quarter,” said Octavio Marenzi, CEO of capital markets management consultancy Opimas.
The loss comes at a poor time for seniority at the Bank after competitors such as Standard Chartered (LON: STAN) and Bank of Ireland (LON: BIRG) announced revenue growth in their respective third quarter trading update.
Additionally, Credit Suisse (NASDAQ: TVIX) reported a rise in third-quarter earnings buoyed by higher revenue in markets and international wealth management.
Revenue fell 15% to €5.3 billion, short of a €5.6 billion expected by analysts, according to Refinitiv Eikon data.
Recent times have dictated the need for a change at the German bank after a stream of losses and scandal
This prompted Deutsche Bank to embark on one of the biggest overhauls to an investment bank since the aftermath of the financial crisis.
The bank said that revenue at its private bank, which focuses on retail clients and Germany and is the bank’s largest division, would be “slightly lower” in 2019, due to lower interest rates. That is a downgrade from earlier expectations for little change from 2018.
Deutsche Bank appear to be in crisis, and have not recovered any ground to compensate shareholder worries.
Expressing the plight of the bank, seniority almost made six weeks of negotiations redundant by calling off the proposed merger with Commerzbank (ETR: CBK).
Shares of Deutsche Bank are trading at €6.66, dropping 7.69% across Wednesday trading. 30/10/19 14:37BST.
GSK raise annual profit forecast
GSK (LON: GSK) have raised their annual profit forecasts after a positive trading update, on the back of increasing sales.
GSK noted that there had been a significant increase in the soaring sales of its Shingles vaccine seeing shares climb during Wednesday trading.
The drugmaker now expects full-year profit to be roughly flat compared to last year at constant currency, up from a previous forecast of a fall of 3% to 5%.
Chief Executive Officer Emma Walmsley set plans in the update to change the public image and operations of GSK, these include the spin off or sale of a number of businesses since she took over in 2017 and greater focus on the company’s pharmaceuticals business.
Walmsley said “GSK has made further good progress in Q3, with sales growth across all three businesses, and we have today upgraded our full-year EPS guidance. This quarter we have continued to strengthen our pipeline and have advanced assets in Respiratory, HIV and, notably, Oncology, where we are on track to file three innovative medicines by year end, following positive pivotal trial data”
Sales of Shingrix, launched in 2017, rose 76% to £535 million, beating analysts’ expectations of £464 million, leading vaccines unit sales to rise 15% to £2.31 billion.
Additionally, turnover rose 11% to £9.39 billion in the three months ended Sept. 30 from a year earlier.
The timing of these results boosts GSK, as competitors such as Pfizer (NYSE: PFE) beat market expectations yesterday and LundBeck (CPH: LUN) announced a new digital marketing campaign.
Analysts on average had expected earnings of 33 pence and sales of £9.02 billion, according to a company-compiled consensus here of 15 analysts.
Walmsley concluded “We also achieved a significant milestone with the completion of our new Consumer Healthcare Joint Venture with Pfizer, to create a new world leading consumer healthcare business.”
Shares of GSK are trading at 1,748p per share, and after today’s positive results shares climbed 0.52%. 30/10/19 14:13BST.
Fiat Chrysler and Peugeot in talks over potential merger
Fiat Chrysler (NYSE: FCAU) and Peugeot (EPA: UG) are in talks to sign a potential $50 million tie up subject to regulatory approval.
The deal could create a new car giant if the two firms do merge, and negotiations have sped up during Wednesday operations. A deal could be announced as early as Thursday morning as long as approval is met.
The two automotive firms discussed intentions to consolidate their market share, and the planned merger will allow the formation of a car titan.
Additionally, the two firms said that the merger would be better placed to tackle a host of costly technological and regulatory challenges facing the global auto industry.
After ditching a proposed merger with Renault (EPA: RNO), the FCA Chairman John Elkann confirmed the group’s bid to pursue an alternative alliance as carmakers face huge investments in electrification, emission reduction and autonomous driving technologies.
The deal also may have been deterred further after Renault cut their full year guidance, causing their shares to plunge earlier this month.
The deal is being confirmed at a time where the global automotive industry seems to be in decline, when the cost of investments into low-emission technologies are rising.
Morningstar senior equity analyst Richard Hilgert said ““We view the combination of these two companies as reasonable given global competition, high capital intensity, and industry disruption from electrified powertrain as well as autonomous technologies,”
Total volumes of Fiat Chrysler and Peugeot totaled 8.7 million vehicles last year, making this the fourth largest producer after Volkswagen (ETR: VOW3), Toyota (NYSE: TM) and Renault/Nissan alliance (TYO: 7201).
Fiat Chrysler had described its bid for Renault as a “transformative” proposal that would create a global automotive leader.
Negotiations are still in the initial phase, however both firms seem very confident on the deal to land, however representatives from both companies have remained tight lipped but if negotiations move swiftly, the deal could be announced in the early hours of Thursday trading.
Next gets boost from October sales
NEXT plc (LON: NXT) have received a boost after sales recovered in October following poor August and September trading.
After a poor start to Autumn trading, shareholders of Next would have been worried about future profits following slow business revenues and a tough market climate.
The statement from the FTSE100 (INDEXFTSE: UKX) listed firm speculated giving caution to shareholders saying that it did not expect growth for the rest of the year to be as strong as this month’s.
The group, which runs nearly 500 stores in the UK and Ireland, about 200 stores in 40 countries overseas, maintained its profit and sales guidance for the full 2019-20 year.
Next added that full price sales including interest income rose 2% in its third quarter to Oct. 26, slightly ahead of a forecast given in September.
In September, reports were issued by Next about slowing sales and a “disappointing” start to autumn trading, attributing it to unusually warm weather in parts of Britain rather than shoppers holding back on buying new clothes due to uncertainty over Brexit.
Next were not the only clothing retailer to face tough conditions and slowing revenues, as brands such as Laura Ashley (LON: ALY) and Superdry (LON: SDRY) have had to adjust their strategies following post Brexit operations.
“We believe the improved sales growth in October recouped some of the lost sales in September and we do not expect sales growth for the rest of the year to be as strong as October,” Next said.
Next’s third-quarter outcome illustrated the clothing industry’s structural shift from stores to online. While sales in Next’s stores were down 6.3%, online sales were up 9.7% showing a potential expansion opportunity in online business.
For 2019-20 Next foresees full-price sales up 3.6% and pretax profit of £725 million, a 0.3% rise on the 2018-19 outcome, with earnings per share growth of 5.2%, reflecting share buybacks.
Analysts at Peel Hunt said a Dec. 12 election date is not a bad one for the industry, “Black Friday (Nov. 29) may be slightly affected by pre-match nerves, but a clear (election) outcome may be enough to give the sector a fillip into Christmas and the key big ticket selling period,” they said.
Next CEO Simon Wolfson, a prominent Conservative “Leave” supporter has said Brexit will only materially affect consumer spending in the event that it triggers inflationary pressure on prices or logistical problems at British ports. Next does not expect its own prices to rise.
Currently, shares of NEXT Plc are trading at 6,632p per share. 30/10/19 12:29BST.
Bank of Ireland trading update meets market expectations
Bank of Ireland Group plc (LON: BIRG) have released their third quarter trading statement this morning, and have said their income totals have meet management and market expectations.
Bank of Ireland commented that the economic growth in its core markets of Ireland and UK remained “positive”, despite the “ongoing uncertainties” related to the UK’s decision to leave the EU.
“The group continues to deliver against its 2021 strategic targets for loan book growth, transformation and cost reduction together with the ambition to grow its wealth and insurance business,” the Irish lender said.
In the nine months leading up to September 30th, the firms seniority said that net interest income and business income was inline with expectations.
In the first half, the lender recorded Net Interest Income of €1.07 billion, which was down slightly on the year before.
“As guided in July, full year NIM is expected to be slightly lower than 2.16%, reflecting the lower interest rate environment,” it added.
The announcement comes timely, after other global banks such as HSBC (LON: HSBA) reported third-quarter pre-tax profits fell 18% from a year ago, and Deutsche Bank AG (ETR: DBK) continue to scale back their operations.
“As guided in July, full year NIM is expected to be slightly lower than 2.16%, reflecting the lower interest rate environment. The group continues to maintain strong commercial pricing discipline with loan asset spreads remaining stable,” the lender added.
Additionally, the Bank of Ireland reported a 3% cut in costs from the year before.
Bank of Ireland recorded €1.5 billion of net lending growth in the nine-month period, which is 800 million higher than in the same period a year ago.
The lender attributed the growth to portfolio acquisitions, which was partially offset by non-performing loan securitisations.
“The extension of the group’s longstanding partnership with the Post Office has further enhanced alignment of both parties, to drive mutual benefits, and is consistent with the group’s strategy to improve returns in our UK business,” the bank said.
“The group’s market share of new mortgage lending in Ireland averaged about 23% in the first 8 months of 2019 with strong positive momentum in market share of mortgage applications during the quarter. While SME lending demand has been impacted by Brexit uncertainty, we continue to deliver good year on year growth in both application and drawdown activity,” the Irish Bank concluded.
Shares of Bank of Ireland are valued at €4.25 per share, rising 0.81%. 30/10/19 12:02BST.
Empresaria shares drop on profit warning
Empresaria Group plc (LON: EMR) have seen their shares sink after they issued a warning to shareholders on profit expectations in comparison to the year before.
For 2019, Empresaria expects adjusted pretax profit to be roughly £9.0 million, a drop from £11.4 million the year before.
As the uncertainty of Britian’s stance with the EU continues to shroud over British business, Empresaria have said that profits may be lower than expectations due to slow market conditions.
Empresaria are one of many firms including De La Rue (LON: DLAR) and Dunelm (LON: DNLM) who have alluded to Brexit complications causing slowing business revenues.
The company’s European operations have been affected by a slowdown in the German automotive sector.
Additionally, the group said that its Engineering business was hurt by challenging market conditions and an adverse impact from Brexit.
With material declines in revenue, Empresaria expects the Engineering business to report an annual adjusted operating loss of £1.5 million, which may pose worries to investors.
“While we are disappointed by the performance of our Engineering sector and the challenging economic environment, we believe we are taking the right actions for the long-term benefit of the group. We have a strong, profitable and cash generative business that is being positioned for further growth in net fee income and profitability,” said Chief Executive Officer Rhona Briggs.
As a result of poor trading and deteriorating trading figures, Empresaria have conducted a material restructuring of the business and operations, which is expected to be completed by January 2020.
Action taken includes aligning the group into core sectors, identifying synergies with brand and markets, and identifying cost synergies, including rationalising back office support.
The firm has said their say commenting “Significant actions have been taken in the impacted businesses in the UK and Germany to right size their cost base with the full benefit of this expected to come through in 2020,”
Currently, share of Empresaria are trading at 44.5p per share, falling 11.89%. 30/10/19 11:45BST.