Honeywell cut full year revenue target after slow quarterly revenue
Manufacturer Honeywell International Inc (NYSE: HON) fell short of estimates by analysts in its latest update, as a result cutting their annual targets.
Customers have remained cautious about capital spending following tough economic and political conditions.
Honeywell own a variety of different business, and operate within many different sectors.
The prolonged trade war between the United States and China tied with Britains stance in the EU have contributed to a slump in the third quarter. This has also put downward pressure on business confidence and slow capital spending.
As a result, Honeywell cut the top end of its annual sales forecast to $36.9 billion.
The company also forecast fourth quarter earnings per share between $2 and $2.05, which was marginally below the $2.06 target.
Gordon Haskett analyst John “While the slightly lower fourth-quarter guide versus consensus is likely to be viewed as mildly disappointing – but likely also relatively resilient against the backdrop of the tough economy,”Inch said “Overall, we believe the quarter was generally in-line with expectations (better margin performance and weaker core growth)”
On a more positive note, sales in the aerospace sector surged by 10%. This was a boost for Honeywell, where they provide repair and overhaul services.
Honeywell also make brakes for Boeing Co (NYSE: BA) and Airbus SE (EPA: AIR), henceforth Honeywell can take this forward.
Honeywell International Inc (NYSE: HON) shares are trading at $163.63 seeing a 0.098% fall. 17/11/2019 14:12BST
CEO Darius Adamczyk said “Overall, we had a strong third quarter, which was a continuation of very strong performance year-to-date. We are well positioned in attractive end markets with multiple levers for value creation heading into 2020. We remain committed to delivering outstanding returns for our customers, shareowners, and employees over the long-term.”
Following the news that Honeywell cut their annual targets, the stock price did not fall as drastically.
This may come from renewed hope from traders that the US and China will reach a mutually beneficial trade deal.
Shanta Gold digs away at its debt during productive Q3
East Africa-focused gold producer, developer and explorer Shanta Gold Limited began “rapidly paying down its debt” during a productive third quarter, which saw the Group’s production volumes and sales expand.
The Company booked an impressive reduction in net debt, dropping 23% during the quarter to US $20.7 million. Further, the Group’s net debt narrowed 15% during the same period, to $25.7 million.
This progress was led by improved production volumes, with 22,726 oz produced during Q3, up from 19,856 oz the previous quarter. Shanta Gold added that the average head grade of this output was also superior, at 4.5 g/t compared to 3.9 g/t for the previous period.
Further, while the Group reported that forward sales had dipped by 2,000 oz to 43,000 oz, their operating costs narrowed by $90 per oz to $474 per oz and adjusted EBITDA spiked from $10.5 million to $16.5 million.The Company said they remained on track to meet their target of 80,000-84,000 oz.
Regarding the Company’s social responsibility ventures, they said enrolment of sesame farmers onto their alternative livelihood programme had increased by 168% during the year-to-date, they built two deep water boreholes for nearby villages and distributed 500kg of sports equipment donated by Eton College, among other activities.Shanta Gold comments
Eric Zurrin, Chief Executive Officer, stated,
“As we rapidly pay down our debt and improve our financial position, New Luika Gold Mine continues to perform operationally. This quarter has seen us produce over 22,000 oz of gold and positions the Company on track to again meet our guidance for the year. Net debt at US$20.7 m is now the lowest it has been in over six years and has decreased by over 50% since the same period two years ago.”
“Our recent exploration results are encouraging as we look to add more ounces to the New Luika mine plan. Key to our current exploration targets is the close proximity to both the existing sources of high-grade ore and the processing plant. We plan to announce a new resource update shortly which will highlight how we can add low cost gold ounces to our future production and extend the mine life of New Luika.”
Investor notes
After a slight dip, the Company’s shares are up 4.88% or 0.39p to 8.39p per share 17/10/19 13:58 BST. The Group’s p/e ratio is 9.96, their dividend yield is unavailable. Elsewhere in the mining and minerals sector, recent updates have come from; Capital Mining Ltd (LON: CAPD), Griffin Mining Ltd (LON: GFM), Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU) and Resolute Mining Limited (LON: RSG).Amid tension with the US, Turkey bans short selling in top banks
Earlier this week, Turkey launched a cross-border offensive in Syria in order to establish a safe zone in the region. Following the cross-border offensive, Donald Trump sent a letter to President Erdogan urging him to make a deal with Kurdish fighters in Syria.
In his controversial letter to President Erdogan, Donald Trump threatened to destroy the Turkish economy if Turkey didn’t reach an agreement with the Kurdish fighters in Syria.
Donald Trump’s threat to destroy Turkey’s economy was not unfounded. The United States took strict economic measures against Turkey including a 50% increase in tariffs on Turkish steel.
President Erdogan threw Donald Trump’s letter in the bin as he ordered to continue operations in Syria. As a result, economic tension between the United States and Turkey followed.
Subsequently, the Turkish government took measures to prevent market fallout by banning short selling, and squeezing liquidity in offshore money markets. The immediate implication of the ban was a limit on Turkish lira liquidity sources for international investors.
The Istanbul Stock Exchange ruled that shareholders would not be able to sell unless shares were visible in the broker’s custody account. The decision to ban short selling in seven of Turkey’s biggest banks was a part of a greater attempt to make Turkish banks T+O settlement.
International shareholders were concerned as making Turkish banks T+O settlement would make it difficult for them to sell their shares. Additionally, the United States’ decision to file criminal charges against one of Turkey’s biggest banks for violating United States sanctions on Iran raised concerns about the possibility of further sanctions.
Both the Republican and the Democratic Party pushed for strict economic measures against Turkey. Consequently, the Turkish Lira weakened more than 4% against the USD in October.
The tension between Turkey and the United States increased the risk of investing in Turkish capital.
Nestle savours the flavour of the first three quarters
Food and confectionery conglomerate Nestle SA (LON: NESN) posted steady but positive sales fundamentals as it reflected upon the first nine months of full-year 2019.
The Company reported that its total sales during the period had risen 2.9% on a year-on-year comparison, up to CHF 68.4 billion. It also stated its organic growth of 3.7% – 3.0% from real internal growth and 0.7% from pricing – had been bolstered by strong performance in the US market and progress from its Purina PetCare brand. The Group added that net acquisitions made a positive impact of 0.7% while foreign exchange weighed sales down by 1.5%
Operationally, Nestle restated the sale of its Nestle Skin Health offering on October 1, for CHF 10.2 billion, and said its strategic review of Herta charcuterie business will conclude before the year’s end.
Looking forwards, the Company said it planned to distribute around CHF 20 billion to its shareholders between 2020 and 2022, which would be largely comprised of share buybacks. For the FY19, the Group forecast organic sales growth of 3.5%, alongside an operating profit margin of at least 17.5% and an ‘increase’ in underlying EPS.
Nestle comments
Mark Schneider, CEO, commented,
“We are pleased with our nine-month results and have made further progress towards our 2020 financial goals. We continue to see good momentum in our largest market, the United States and very strong growth for Purina PetCare globally. Nestlé’s growth was supported by investment behind our brands, rapid innovation and disciplined execution. During the third quarter, the roll-out of Starbucks products continued, now reaching 34 countries. Our portfolio transformation is fully on track, as shown by the timely completion of the Nestlé Skin Health disposal. With prudent investments and a disciplined approach to acquisitions our value creation model is generating profitable growth and attractive cash returns for our shareholders.”
Investor notes
The Company’s shares dipped 1.00% or 1.06p to 105.00p per share 17/10/19 14:02 CEST. Nestle SA’s market cap is 315.63 billion CHF, their dividend yield is 2.31%. Elsewhere in food and beverage news, there have been updates from; The City Pub Group PLC (LON: CPC), Bakkavor Group Plc (LON: BAKK), Avangardco Investments Public Limited (LON: AVGR), Loungers PLC (LON: LGRS), The Coca-Cola Co (NYSE: KO), Devro plc (LON: DVO), Greencore Group plc, (LON: GNC) and NWF Group plc (LON: NWF).Rathbone Brothers warn on low profits, sinking stock price
Rathbone Brothers plc (LON: RAT) have announced lower profit expectations in the next 2-3 years, causing share prices to fall.
Underlying operations income amounted to £86.3 million for the first quarter of 2019, with £76.7 million arising from investment management dealings.
In the report published this morning, Rathbone Brothers had increased funds under management and administration by 4.5 per cent to £49.4 billion.
Plans for the next 2-3 years were also unveiled. With plans outlined to invest heavily to enhance organic growth, which will hopefully drive down operating margins in the short term.
In 2018, operating margins reported at 29.4%, and plans are set to lower this by 2022.
Paul Stockton, Chief Executive of Rathbone Brothers Plc, said ““Our funds under management and administration increased marginally in the quarter to £49.4 billion. In difficult markets we continue to focus on providing a quality service to our clients, navigating through ongoing market uncertainty but also selectively investing to pursue organic growth opportunities and develop our business.”
As a result, shares in Rathbone Brothers plc dipped 8.61%, trading at 2,175p 17/11/2019 13:05 BST.
Analysts at Shore Capital said “During an extended multi-year period where Rathbones has grown at a slower (organic) rate than many of its listed DFM peers, we have struggled to see a positive investment case, especially as its rating has generally remained at a premium to such peers.”
Rathbone saw total net fund inflows of £100 million, in the third quarter versus £7 billion, but this was down to the acquisition of Speirs & Jeffrey.
Rathbone said “”This reflected ongoing weak investor sentiment and investment manager departures. Both factors, together with anticipated outflows from short term discretionary mandates, are expected to continue to weigh on net growth in funds under management & administration into 2020,”
Although the stock price has dipped from this company announcement, this could be a short term fall as other firms in the industry have experienced volatility, both positive and negative. These include Augean plc (LON: AUG), Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN).
With the plans to cut operating costs by 2022, this will present a new challenge for Rathbone Brother Plc.
EVR Holdings stocks rise as partnership with O2 UK agreed
EVR holdings (LON: EVRH) has seen a surge in its share price after a partnership agreement was reached with O2 (NASDAQ: OIIM) .
Today, the launch of MelodyVR, as the exclusive partner at O2’s UK 5G launch.
When customers agree a plan with O2, this will give them access to a 12 month subscription to the MelodyVR platform.
The agreement plan gives O2 customers unrestricted access to the MelodyVR platform, via a smartphone app or VR devices when any customer upgrades to a 5G plan.
O2 have been competitors such as Vodafone (NSE: IDEA) to combine virtual reality and 5G.
Additionally, if O2 customers take a premium tariff, the enabled plan will be inclusive of an Oculus Go device, complementing MelodyVR.
As a result, shares in EVR Holdings Plc have climbed 21.43% during Thursday. They are currently trading at 6.38p per stock, 17/11/2019 12:35BST.
This comes as no surprise from seniority at O2. The mobile giant has committed money and time to ensure long term partnership success.
These changes include, prime placement and promotion across the six biggest O2 stores nationally, allowing MelodyVR to engage with a variety of audiences.
Anthony Matchett, CEO and Executive Chairman of EVR Holdings PLC said “”We’re thrilled to announce our exclusive partnership with Telefonica UK, that will see O2’s new 5G consumers across the United Kingdom gain unrestricted access to the MelodyVR service for a minimum period of 12 months. 5G networks have the power to enable an entirely new-suite of technological advances and experiences, that will soon revolutionise how consumers fundamentally engage with technology. I am very pleased that O2 have chosen MelodyVR as a key partner for the rollout of 5G, and have recognised the MelodyVR service as a perfect-fit for their high-speed 5 th generation network”
Nina Bibby, CMO at O2 added “”Partnering with companies like MelodyVR creates a perfect way for O2 customers to enjoy virtual reality like never before – experiencing legendary gigs from around the world, reliving ones they’ve been to and seeing performances they can’t get to. At O2, we’ve always been a customer led business, with a rich heritage in live music, so the opportunity to create unique experiences like this with MelodyVR, that bring customers closer to the things they love, is fantastic”
Both parties seem excited about the new partnership, and this will give MelodyVR wide exposure to millions of O2 customers. This is one of many mergers in the tech industry as seen with Amazon.com Inc (NASDAQ: AMZN),
With the partnership including MelodyVR for 5G customers, shareholders will be keen to watch shares soar as sales increase if O2 promote the product in the right fashion.
Grafton Group speculate low profits, leaving stocks in red
Grafton Group Plc (LON: GFTU) have issued a statement warning shareholders that profits may be significantly lower than expected.
Grafton Group plc is an international distributor of building materials to trade customers and has leading regional or national positions in the merchanting markets in the UK, Ireland and the Netherlands.
In this mornings press release, Grafton announced they would miss annual profit expectations as the UK construction sector comes to grips with Brexit uncertainties.
The report from Grafton follows a similar line from others in the industry.
Last week, SIG plc (LON: SHI) a smaller operator said profit targets would be missed, as a battle of weak demand and weak economic outlook troubles the industry.
Shares of Grafton have been trading have dropped 9.75%, trading at 784.2p per share. Additionally, market competitors such as Travis Perkins Plc (LON: TPK), Howden Joinery Group Plc (LON: HWDN) and Kingfisher Plc (LON: KGF) all saw their shares slide.
The Irish company added that trading had been slow despite a good performance in the home market.
Gavin Slark, CEO of Grafton Group Plc commented “Recent trading conditions are more reflective of market sentiment than business fundamentals. Grafton remains well placed to continue to benefit from our strong market positions in Ireland and the Netherlands and from a recovery in the UK merchanting market. The Group continues to focus on optimising trading opportunities in its markets, on cost control and cash generation and has a strong balance sheet to support value enhancing acquisition opportunities.”
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.
In other shares news, updates have been provided for Moneysupermarket.com Group Plc (LON: MONY), Serabi Gold Plc (LON: SRB) and Blue Star Capital PLC (LON: BLU).
Brexit deal agreed, busy weekend ahead
In what amounted to a short but sweet discussion, the prime minister Boris Johnson has come away from a meeting with the EU negotiating team stating that a deal has been struck.
European Commission president Jean-Claude Juncker echoed the sentiment, lauding the progress made at the Friday morning summit meeting.We’ve got a great new deal that takes back control — now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment #GetBrexitDone #TakeBackControl
— Boris Johnson (@BorisJohnson) October 17, 2019
He followed the meeting with a letter of recommendation to European Council President, Donald Tusk, where he wrote, “It is high time to complete the withdrawal process and move on, as swiftly as possible, to the negotiation on the European Union’s future partnership with the United Kingdom.” EU Chief Negotiator Michel Barnier added, “We have arrived at an agreement with the British government on an ordered withdrawal of the United Kingdom and the European Union and also on the framework for our future relationship. He said, “the legal certainty in every area where Brexit, like any separation, creates uncertainty and in particular, and first and foremost, for citizens”. Boris Johnson now faces the challenge of getting the deal through Parliament. Members of Commons won’t take kindly to having to vote on a deal without having had the opportunity to read the legal text in full. Further, Jeremy Corbyn will be among the first protesting over how workers’ rights have been protected and in what capacity, as it has not yet been made clear whether the formation of the new deal was contingent on the EU’s ‘level playing field’ initiative. The prime minister’s seemingly insurmountable elephant in the room, however, remains the issue of the Irish border. Despite claims that the new deal abolishes the ‘undemocratic backstop’, and claims that border plans and the political declaration had been revised, it is understood that Northern Ireland will still be treated differently from the rest of the UK. It would appear Boris Johnson’s task remains a difficult one at best. Getting this deal through parliament will already be a challenge, and a combination of a working minority in government, and the ailing support of an unconvinced DUP, could make getting a deal through the house all-the-more difficult. Without hoping to fan the stereotype of being the regular, inflammatory media, this weekend’s entertainment is guaranteed to be tense. Labour will likely make any deal-passing conditional, and on the basis that it is put before the public in a confirmatory vote. On the other hand, if Boris can convince the public that his new deal delivers something viable, and continues to weaponise the word ‘democratic’ with the same degree of potency, he will hope to galvanise a chorus of support into bullying Labour into submission. Elsewhere in political and macro economic news, there have been updates from; Michel Barnier saying a deal is still possible, UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court rules against Boris, the collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).🇪🇺🤝🇬🇧 Where there is a will, there is a #deal – we have one! It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that #EUCO endorses this deal. pic.twitter.com/7AfKyCZ6k9
— Jean-Claude Juncker (@JunckerEU) October 17, 2019
Moneysupermarket shares fall after slow sales report
Moneysupermarket Group Plc (LON: MONY) have sunk during Thursday trading after slowed growth in the third quarter.
In the second quarter, the price comparison firm showed steady progress with 4% higher revenues of £100.9 million in the three months leading into September, but this was modest compared to 15% and 19% growth in Q1 and Q2 respectively.
The decrease was seen in its Money division, representing a fifth of the firms total revenues.
Money Division revenues fell by 5% to £20.6 million.
“Insurance grew in a subdued premium environment despite some volatility in our natural search rankings,” Moneysupermarket said.
In the trading update, Moneysupermarket have warned shareholders that profits may stagnate in the last quarter, taking a pessimistic attitude.
The energy saving division gave solid returns, due to the variety of retailers and large customer savings.
Moneysupermarket’s chief executive Mark Lewis said: “The group continued to grow in the quarter, with strong trading in energy showing that there are still big savings to be made by customers even though the price cap is lower.”
Liberum commented on the report, “hat the group’s weaker performance in money and insurance should be attributed to “subdued market conditions as opposed to moneysupermarket’s competitive position within price comparison. While the board is confident in meeting full year expectations, they have flagged that the money segment is expected to weaken for the remainder of the year,”
Moneysupermarket are in the development stages of a subsidiary called Reinvent, aiming to personalize deals for customers as well as expanding into the mortgage market.
On this, Lewis added ““Even better, our Reinvent strategy continues to do more for our customers – the new MoneySuperMarket Energy Monitor service means our customers need never overpay for energy ever again.”
The share price of Moneysupermarket is currently trading at 350.4p seeing a drop off 9.46% 17/11/2019 11:50BST.
In the retail market there have been updates to Angling Direct Plc (LON: ANG), Laura Ashley Holdings plc (LON: ALY), Dunelm Group plc (LON: DNLM), WH Smith (LON: SMWH).
WH Smith shares rocket with latest acquisition
UK Retailer WH Smith (LON: SMWH) has agreed to buy US based Marshall Retail for a reported $400 million.
This takeover will strengthen WH Smith’s presence in the international travel sector and its status in the $3 billion US Airport market.
A staple firm on the UK High Street, WH Smith has made its money through sales of stationary equipment along with book sales.
The takeover will double the size of WH Smiths’s international travel business.
The deal will be financed by a combination of new debt and equity, with £155 million being raised from equity placing.
Additionally, a £200 million term loan facility will help fund the move with completion expected in the first quarter of 2020.
Donald Brown, senior investment manager at Brewin Dolphin, added: “WH Smith continues to be a tale of two businesses. Despite the challenging retail backdrop, the group is delivering strong growth at its travel division, where its 1,019 units delivered a 22 per cent rise in sales.”
As a result of this move, shares in the UK retailer have risen by 8.43% trading at 2,264p per share 17/11/2019 11:25BST.
The rise in share price brought the price to its highest since January 2018 as they look set to close in on an all time high.
Carl Cowling is set to become Chief Executive on November 1st commented “This acquisition will accelerate the growth of our international travel business and, combined with InMotion, the market-leading digital accessories airport retailer that we acquired last year, will significantly enhance our scale and growth opportunities in the US, a large and fast-growing travel retail market,”
A year ago, WH Smith paid £155 million for InMotion, a technology retailer aimed at strengthening market share and diversifying US travel operations.
Michael Wilkins Marshall Retail Group CEO was optimistic about the move saying “I feel very proud to announce that we have reached an agreement with UK based retailer, WH Smith, to acquire Marshall Retail Group. WH Smith is one of the world’s oldest retailers with close to 1,600 stores across the world.This is an incredible milestone for our business and is testament to the outstanding team at MRG. We are proud of our success, particularly our recent growth in airports, and I’m especially excited about the potential this unlocks for MRG in the years to come”
Wilkins added “We very much look forward to working with such an established and successful global business, with strong heritage, as we continue on our journey together to drive both businesses forward.“
WH Smith will benefit greatly from this move, adding 170 new locations including 59 at airports and looks to be an acqusition of consolidation for the UK Stationary Retailer. The move by WH Smith looks set to drive its international operations and expand international brand awareness. If successful WH Smith will capture some of the US travel market.In the retail market there have been updates to Angling Direct Plc (LON: ANG), Laura Ashley Holdings plc (LON: ALY), Dunelm Group plc (LON: DNLM), Amazon (NASDAQ: AMZN).