Low and Bonar shares collapse as losses quadruple on-year

Jamie Gordon
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Low and Bonar shares collapse as losses quadruple on-year
Building materials company Low and Bonar plc (LON: LWB) have seen its share price dive after its losses widened drastically on a year-on-year basis. One positive piece of news is that the Company’s net debt narrowed from £140.3 million to £99.0 million on-year for the first half. However, their revenues shrunk 9.3% to £157.9 million, underlying operating margin narrowed from 5.6% to 1.6% and operating profit dropped from £9.6 million to £2.7 million. More worryingly though, is that statutory operating loss widened from £9.5 million to £38.9 million, stat loss before tax grew from £12.3 million to £41.7 million and the Company’s interim dividend fell from 1.05p per share to nothing during the period.

Low and Bonar comments

Daniel Dayan, Executive Chairman, said:

“The first half of 2019 has been another extremely challenging period for Low & Bonar. As a result of the Group’s poor performance, I was appointed Executive Chairman at the beginning of July 2019, temporarily combining the roles of Chairman and Chief Executive. Our priorities remain unchanged, which are to transform the Group’s operational performance and ensure a strong and sustainable financial position. Progress has been made, notably through the equity raise, the development and implementation of projects to improve facilities at Asheville and at CTT, the resolution of CTT’s quality problems and the disposal of Civil Engineering. Whilst this performance improvement plan is being implemented, the Board remains focused on maximising shareholder value and will consider all strategic options.”

Looking forwards, the Group’s statement read, “2019 is a year of transition as the Group simplifies its portfolio and structure, while also working to resolve legacy issues and improve operational performance against a backdrop of market softness in several segments and geographies. Following a very weak first quarter, performance improved in the second quarter of the year although still behind that of the prior year as a result of both challenging market conditions and manufacturing inefficiencies. It is evident that a number of the Group’s end markets remain difficult and it is likely that heightened levels of uncertainty will persist into the second half. Against this backdrop the Group is focused on delivering the benefits of the ongoing strategic initiatives and further cost saving actions in order to meet the Board’s expectations for the continuing business for the remainder of the year.”

Investor notes

Following the update, the Company’s shares dropped 17.33% or 1.68p to 8.04p a share 30/07/19 15:56 BST. The Group’s p/e ratio is currently -0.67 and their dividend yield (when paid out) is 14.95%. Elsewhere in property development and estate agency news, there have been updates from; LSL Property Services plc (LON: LSL), Countryside Properties PLC (LON: CSP), Ashley House Plc (LON: ASH) and Persimmon plc (LON: PSN).

Nostrum Oil & Gas proposes acquisitions and H1 revenues down

Jamie Gordon
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6
Nostrum Oil & Gas proposes acquisitions and H1 revenues down
Kazakhstan focused oil and gas producer Nostrum Oil and Gas PLC (LON: NOG) posted steady results for the first half of 2019, and notified investors of proposed acquisitions of sites in Kazakhstan. The Company stated that production was in line with expectations and that the first half was financially positive. Despite this, revenues are expected to finish at US $174 million for H1 2019, down from $191 million for H1 2018.

Nostrum Oil & Gas also announced that their cash position was $120 million, extending from $75.7 million on-year. Total debt is expected not to exceed $1,133 million.

Average H1 2019 production after treatment was 31,096 bopd and average sales volume was 29,210 bopd. The Company discussed the acquisition of assets in North West Kazakhstan.

Nostrum Oil & Gas comments

“H1 production was in line with expectations. We haven’t yet finalised the testing of the Northern wells due to some technical issues. We are continuing work on both wells and will be testing the Frasnian section of well 41 next, as this is the horizon from which well 40 produces. The results from the testing of the Vorobyovski horizon in well 41 & 42, which confirmed gas saturation, have led to us now drilling well 361 in the Northern area to target this horizon. Our focus remains on trying to find ways to grow production in the near term and we are working to complete our own analysis alongside the studies with PM Lucas and Schlumberger in the North East and West of the field.”

“GTU 3 continues to progress with hot commissioning now underway and final commissioning targeted for the end of Q3 2019. Financially the first half was positive as production was in line with expectations and product prices were higher than our budget leading to higher than forecast revenue and operating cash flow. On the strategic front we are working towards bringing the acquisition of Positive Invest to shareholders whilst at the same time working on the strategic review of our business.”

Investor notes

The Company’s shares have dipped 0.55% or 0.25p to 45.40p a share 30/07/19 13:55 BST. Peel Hunt reiterated their ‘Add’ rating on Nostrum Oil & Gas stock, while Numis has their stance ‘Under Review’. Neither their p/e ratio nor their dividend yield is currently available, their market cap is £84.10 million. Elsewhere in the oil and gas sector, there have been updates from; Reabold Resources PLC (LON: RBD), Trinity Exploration and Production PLC (LON: TRIN), Union Jack Oil PLC (LON: UJO) and Nu-Oil and Gas PLC (LON: NUOG).

Greencore revenues struggle in challenging quarter for groceries

Jamie Gordon
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5
Greencore revenues struggle in challenging quarter for groceries
Convenience foods manufacturer Greencore Group plc (LON: GNC) has seen its reported revenues decline during the third quarter of its financial year and the year-to-date, following what the company described as a challenging quarter for the UK grocery sector. Group continuing operations revenues dipped 2.9% during Q3 2019 and 4.0% for the year-to-date. The Company’s revenues also dropped in its convenience food categories, down 9.8% during Q3 2019, and down 16.9% for the YTD. However, its Food to Go categories were up 0.6% during the quarter and 4.6% so far for the year.

Greencore Group statement

Looking forwards, the Company’s statement read,

“The Group is performing well against its strategic and financial objectives, despite the soft underlying revenue growth in Q3. The final quarter represents a seasonally important period for Greencore and the Group continues to anticipate growth in Adjusted Operating Profit for the full year supported by underlying revenue growth and a good operational performance.”

“In addition, the Group anticipates that FY19 Net Debt:EBITDA, as measured under financing agreements, will be at the lower end of its medium term target range of between 1.5x to 2.0x.”

Regarding its well-performing Food to Go branch, the Company stated, “In the Group’s food to go categories, reported revenue was £250.6m in Q3, an increase of 0.6% on both a pro forma and reported basis, all driven by underlying product revenue growth. This growth reflected weak market conditions with unseasonal weather, a varied trading performance across the customer portfolio, set against a strong comparative period. Year to date, reported revenue in food to go categories was £697.8m, an increase of 4.6% on both a pro forma and reported basis.”

Investor notes

After a slight recovery, the Company’s shares are currently down 5.02% or 11.30p to 213.80p a share 30/07/19 13:56 BST. Peel Hunt analysts have reiterated their ‘Hold’ stance, while Shore Capital reiterated their ‘Buy’ stance on Greencore Group stock. The Group’s p/e ratio is 14.91 and their dividend ratio stands at 2.61%. Elsewhere, there have been updates from other food and drink retailers; NWF Group plc (LON: NWF), Cranswick plc (LON: CWK), Nestle SA (SWX: NESN) and Fuller, Smith and Turner plc (LON: FSTA).

Luceco shares dive despite ‘solid performance’

Jamie Gordon
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0
Luceco shares dive despite ‘solid performance’
LED light manufacturers Luceco PLC (LON: LUCE) said they saw trading in line with expectations during H1 2019, despite a challenging H2 2018. The Group booked solid performance with 10% year-on-year revenue growth, which is strong especially when compared to what the Company described as ‘a weak comparative’.

Margin improvement during H2 2018 continued into H1 2019 and H1 operating margin is forecast to be 9%, led by product and channel mix and product cost improvements.

Luceco comments

John Hornby, Chief Executive Officer, stated,

“The Group has produced a solid performance in the first half underlining the benefit of the actions taken by the Group. Despite a more challenging second half comparative and continued weakness in UK professional demand due to the uncertain economic and political environment, we are confident of achieving ongoing growth in both revenue and operating profit in line with market expectations.”

“The strength of our brands and customer relationships are driving improved margins which, together with on-going investment in people, infrastructure and processes, will ensure the Group continues to make sustained progress.”

Investor notes

After a slight recovery, the Company’s shares are currently trading down 14.45% or 17.2p at 101.80p a share 30/07/19 13:17 BST. Peel Hunt analysts reiterated their ‘Add’ stance on Luceco stock. The Group’s p/e ratio is 41.03 and their dividend yield is 0.59%. Elsewhere in the tech sector, there were updates from; Biome Technologies plc (LON: BIOM), Midwich Group PLC (LON: MIDW), Boku Inc (LON: BOKU) and Telit Communications Plc (LON: TCM).

NWF Group announces revenue hike and three acquisitions

Jamie Gordon
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3
NWF Group announces revenue hike and three acquisitions
UK food, fuel and feed distributor NWF Group plc (LON: NWF) announced a year of results ahead of expectations but behind the record figures reported for the previous year. The Group reported strong growth in customers in its Food business and delivery on its strategy with three fuel acquisitions. The Company’s dividend also increased 4.8%, reflecting the Board’s confidence in the business. Across all three divisions, profits were up 9.9%. However, operating profits were down 9.4%, profits before tax were down 10.3% and fully diluted earnings per share dropped 12.6%.

NWF Group

Richard Whiting, Chief Executive of the Company, stated,

“NWF has delivered a result ahead of original market expectations and the business is continuing to develop in line with our strategy. The Fuels division has performed well in spite of a mild winter and has completed three acquisitions adding 20% to its volumes. Food has outperformed management’s expectations with new customers and employees working effectively in a business which has been at capacity throughout the year. Feeds has delivered a stable result in spite of variable market conditions. We are proposing an increased dividend and continue to see opportunity for further strategic and operational progress. Trading in the current financial year to date has been in line with our expectations.“

Company Chairman, Philip Acton, continued,

“The benefit of the NWF diversified and service-led business model was clearly demonstrated in the year. The significant improvement in Food more than offset the marginally lower operating profit in Feeds. Fuels performed well, although not at the levels seen in the previous year where it benefited from extreme weather conditions.”

Investor notes

The Company’s shares were up 2.41% or 4.00p to 170.00p a share 30/07/19 11:29 BST. Peel Hunt analysts reiterated their ‘Buy’ stance and Shore Capital reiterated their ‘Hold’ rating. The Group had a p/e ratio of 9.88 and a dividend yield of 3.77%. Elsewhere, there have been updates from other food and drink retailers; Cranswick plc (LON: CWK), Nestle SA (SWX: NESN), Fuller, Smith and Turner plc (LON: FSTA) and Compass Group plc (LON: CPG).

LSL Property Services H1 profit growth in estate agency division

Jamie Gordon
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5
LSL Property Services H1 profit growth in estate agency division
Estate agency and chartered surveyors group LSL Property Services plc (LON: LSL) has seen growth in first half profits year-on-year, despite exceptional costs. For the first half, group revenue was up 1% to £154.1 million and Underlying Operating Profit was up 5% to £12.2 million on-year (from £11.6 million for H1 2018), while Adjusted EBITDA grew 37%.

Underlying Operating profit was up in the Estate Agency from £1.4 million to £4.0 million and the Financial Services grew 20% from £3.6 million to £4.3 million. However, Operating Profits in the Surveying Division were down from £8.6 million to £6.3 million and the Company notified investors of exceptional costs totalling £13.4 million, for the reshaping of Your Move and Reeds Rains.

LSL Property Services comments

Simon Embley, Chairman, said,

“The Group delivered a positive financial performance in the first half of 2019, with positive growth in Revenue and Underlying Operating Profit, despite subdued residential property market conditions.”

“The Board remains confident that the Group will deliver a full year Underlying Operating Profit in line with its prior expectations, as the business is expected to continue to benefit from the range of LSL’s ongoing self-help measures.”

“Whilst we continue to remain cautious on the residential property market outlook for 2019 given the current uncertainty over the UK and global political and economic environment and the potential impact on UK consumer confidence, the Board is confident that the Group, with its market leading brands, broad portfolio of residential property services and the benefits from the proactive self-help measures, remains in a strong position to perform well given a range of potential market conditions, in order to maximise Shareholder value.”

“The Group has a robust balance sheet with relatively low levels of gearing and is highly cash generative at an operational level. The Board remain confident of the opportunities for further positive progress for the Group.”

Investor notes

The Company’s shares are currently not trading but last closed at 200.00p a share 30/07/19 12:02 BST. Peel Hunt analysts reiterated their ‘Hold’ stance on LSL Property Services stock. The Group’s p/e ratio is currently 7.35 and its dividend yield currently stands at 5.45%. Elsewhere in property development and estate agency news, there have been updates from; Countryside Properties PLC (LON: CSP), Ashley House Plc (LON: ASH), Persimmon plc (LON: PSN) and McKay Securities plc (LON: MCKS).

Reckitt Benckiser revises full year net revenue target

Dina Caruso
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1
Reckitt Benckiser revises full year net revenue target
Reckitt Benckiser revised its full year like-for-like net revenue target on Tuesday in its first half results for 2019. The consumer goods company said that its full year like-for-like net revenue target has been revised to +2-3% from +3-4%, in order to reflect the slow start to the year. There have been no changes to its adjusted operating margin expectations. Like-for-like performance in the second quarter was flat, Reckitt Benckiser added. In its health business, second quarter like-for-like sales dropped 1% with a slowdown in China market growth.
“Our like for like performance in H1 was +1%, somewhat below our expectations. Hygiene Home delivered another quarter of consistent top line growth but progress in Health in Q2 was disappointing,” Rakesh Kapoor, Chief Executive Officer of Reckitt Benckiser, commented in a company statement. “We have now been operating in RB 2.0 for 18 months and have made some important achievements. Hygiene Home has been unleashed and is delivering consistently. But on our journey to be a world leader in consumer health, we have work to do to deliver consistent financial performance,” the Chief Executive Officer continued. “However, we believe that much of this is behind us and strong plans are in place to restore growth, including an exciting innovation pipeline such as Mucinex Night Relief and Enfa Grass Fed. We are further stepping up our investment in BEI and medical marketing to drive our growth.” “We therefore expect H2 to be back to our more normal level of growth. Our work to create two structurally independent business units continues to progress well and remains on track for completion around mid-2020.” During the period, Reckitt Benckiser announced the appointment of the PepsiCo Executive Laxman Narasimhan as its new CEO. Company Chairman Chris Sinclair said that the company as made “good progress during the quarter in reducing uncertainty” with the new appointment. Earlier this year, the company posted a 1% rise in first quarter sales, but expected to see “improving growth” during the remainder of the year. Shares in Reckitt Benckiser Group plc (LON:RB) were trading at -2.10% as of 12:05 BST Tuesday.

Campari Group half year results fizz with 8% growth

Dina Caruso
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0
Campari Group half year results fizz with 8% growth
Italian liqueur maker Campari Group posted an organic growth of 8% in its 2019 half year results on Tuesday. Campari Group owns Aperol, as well as Campari Bitter. Both are typically served with prosecco and soda water as a spritz, easily identifiable by their glowing orange and red respective tones. The Italian classics have proven popular lately among millennials after Campari Group’s marketing campaigns. The company said that reported sales for the first half of the year amounted to €848.2 million. It said that its strong organic sales growth was driven by continuous sales mix improvement thanks to the key high-margin brand and market combinations, with a recovery in the emerging markets. Additionally, adjusted earnings before interest and taxes (EBIT) grew to €180.3 million in the first half of the year. The group’s performance in North, Central and Eastern Europe was largely driven by double-digit growth of Aperol across the region, Campari Group said.
“After a very strong start to the year, our positive business momentum continued in the second quarter 2019, the peak season for aperitifs, helped by the late Easter effect, despite the tough comparable base as well as the poor weather in May across Europe,” Bob Kunze-Concewitz, Chief Executive Officer, said in a company statement. “Key underlying profitability indicators grew ahead of organic sales development, thanks to a very positive sales mix, which more than offset the dilutive impact of the emerging markets recovery and the adverse effect of the agave purchase price, whose growing trend is expected to continue throughout the rest of the year,” the Chief Executive Officer continued. “Reinvestments in brand building and sales capabilities initiatives are also expected to continue in the second half. Looking into the full year, the outlook remains fairly balanced in terms of risks and opportunities.” “The positive business momentum is expected to continue, with persisting volatility of emerging markets in their key seasonality period. We remain confident in delivering a positive performance across all key underlying business indicators.” Shares in Davide Campari-Milano SpA (BIT:CPR) were up 4.67% as of 12:14 CEST.

Centrica shares crash on chain of negative announcements

Dina Caruso
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1
Centrica shares crash on chain of negative announcements
Centrica posted a 49% drop in adjusted operating profit in its interim results on Tuesday. The company also cut its dividend, announced its intentions to exit oil and gas production, and revealed that its CEO Iain Conn will step down next year. Shares in the company were trading at a 21-year low following the chain of negative announcements. The owner of British Gas said that adjusted operating profit for the period ended 30 June fell 49% from £782 million recorded in 2018 to £399 million. Centrica also outlined that it had swung to a statutory operating loss of £446 million, compared to the £704 million profit made a year prior. The company’s interim dividend per share of 1.5p is well below the 3.6p from the first half of 2018, with the full year 2019 expected dividend reduced to 5p, Centrica added. Centrica said that the environment has been extremely challenging in the first half of 2019. Its business has been impacted by the implementation of the UK default tariff price cap, low UK natural gas prices and warmer than normal weather both in the UK and North America. At the end of last year, Centrica said it would legally challenge the government’s energy price cap. “Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows. We have also regrettably had to make the decision to rebase the dividend due to our changed circumstances including the UK energy price cap and increased demands on our cash flows, including additional pension contributions,” Iain Conn, group Chief Executive, said in a company statement. “The outlook is more positive for the second half of the year and we expect this momentum to continue into 2020, while we expect to meet our cash flow and net targets for 2019,” the group Chief Executive continued. “Today, we have announced our intention to exit oil and gas production. This will complete our shift towards the customer, as we focus on our distinctive strengths, with an emphasis on helping our customers transition to a lower carbon future.” “This major refocusing of our portfolio will unlock further efficiencies enabling us to be even more cost competitive, as we focus on being a leading Energy Services and Solutions provider.” Shares in Centrica plc (LON:CNA) were trading at -13.97% as of 10:45 BST Tuesday.

BP shares rise as second quarter profits beat expectations

Dina Caruso
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3
BP shares rise as second quarter profits beat expectations
BP said on Tuesday that underlying replacement cost profit amounted to $2.8 billion for the second quarter of 2019. Its underlying replacement cost profit, what BP defines as net income, exceeds the $2.46 billion company forecast and is similar to last year’s figure. Shares in BP were trading over 3% higher on Tuesday following the announcement. The second quarter’s result largely reflects continued good operating performance, offset by oil prices lower than in the second quarter of 2018, the multinational oil and gas company added. Excluding the Gulf of Mexico oil spill payments, operating cash flow was $8.2 billion for the second quarter.
“At the midpoint of our five-year plan, BP is right on target. Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders,” Bob Dudley, group Chief Executive, said in a company statement. “And this is also allowing us to grow businesses that can make a significant contribution in the energy transition, helping deliver the energy the world needs with lower carbon,” the Chief Executive continued.
“We have announced another resilient set of quarterly results, in particular delivering strong underlying cash* of over $8 billion,” Chief Financial Officer Brian Gilvary added. “Following the final acquisition payments to BHP and the scheduled annual payments relating to the Gulf of Mexico oil spill being made in the quarter, we continue to expect gearing to trend down through 2020 in line with disposal proceeds from our $10 billion programme and ongoing operating cash flow delivery.” Earlier this year the oil and gas company posted its first quarter results, outlining a decrease in profits. Shares in BP plc (LON:BP) were trading at +3.36% as of 09:31 BST Tuesday.
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