Italy slips into its third recession in a decade
Home to the third-largest Eurozone economy, Italy has slipped back into a recession. New GDP figures demonstrate that its economy has decreased by 0.2% in the last three months of 2018. This follows a 0.1% fall from the third quarter.
Analysts usually define a “technical” recession as two successive quarters of decline.
Given the size of it’s economy, Italy’s recession has hindered the growth of the wider Eurozone. The Eurozone only grew 0.2% in the final three months of 2018, the same increase as the previous quarter.
Last year, the right wing League party formed a coalition with the anti-establishment Five Star Movement. It spent months quarrelling with Brussels over its ambitious budget plans. Rome’s original deficit plans simply breached rules on government borrowing. The 2.4% figure may have been below the EU’s deficit limit of 3%, but it remained far too high for a country whose debt is as big as Italy’s. This seems to have damaged the country’s economic confidence and exacerbated the situation. Given that the country has now entered a recession, the growth targets of the approved 2019 budget appear highly unrealistic.
Unilever’s underlying sales rise despite “volatile” market conditions
Unilever (LON:ULVR) announced its full-year 2018 financial results on Thursday. The company has said it has seen continued profitable growth despite the “volatile” market conditions.
Underlying full-year sales excluding spreads grew 3.1%, in line with expectations, with 2.1% from volume. Full year revenue was €51 billion.
Underlying operating margin increased 90bps. Meanwhile, underlying earnings per share increased 5.2%.
Full year turnover was impacted by an adverse currency impact of 6.7% and the disposal of its spreads business. As a result, turnover decreased 5.1%.
In December, Unilever acquired GSK’s Indian health food and drinks portfolio, including the Horlicks brand, in a €3.3 billion ($3.8 billion) deal.
CEO of Unilever, Alan Jope, commented on the results: “2018 was a solid year for Unilever, with good volume growth and high-quality margin progression.” “Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.” “We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions.” “In 2019 we expect market conditions to remain challenging. We anticipate underlying sales growth will be in the lower half of our multi-year 3–5% range, with continued improvement in underlying operating margin and another year of strong free cash flow. We remain on track for our 2020 goals.” Unilever announced the departure of its CEO Paul Polman in November, replaced by Alan Jope. Additionally, it scrapped plans for a Rotterdam HQ, following criticism from its investors. Top Unilever jobs were put at risk as influential investors planned to revolt at the company’s next AGM due to its handling of plans to scrap its UK headquarters. At 09:43 GMT today, shares in Unilever plc (LON:ULVR) were trading at -2.77%.Yu Group shares surge though pretax loss expected
Gas and electricity supplier to SME businesses, Yu Group Plc (LON:YU), has seen its share price more than double during trading on Wednesday, while the company said that it expected to report a deep pre-tax loss.
Extensive pre-tax losses
The company’s revenue for the financial year was expected to stand at approximately £80 million, with cash as of the 31st of December 2018 standing at £14.6 million, of which £3.5 million was held in short-term deposits. However, pre-tax losses for the year through December were still expected to be between £7.4 and £7.9 million due to the company miscalculating its revenues for the 2018 financial year. As a caveat to this announcement, the company added that the forecast loss for 2018 would not reduce the profitability of previous financial years.Yu Group response
The company have said that the current review of the Yu Group balance sheet would continue until finalisation of its annual accounts and audits, which it aims to complete by Q2 of 2019. The Yu Group board are focused on confirming the veracity of the company’s estimates on the level of bad debt provision, the recoverable status of accrued income and reviewing whether a prior period adjustment would be required. Chief Executive, Bobby Kalar, stated, “In what has been a challenging period we remain focussed and continue to work hard to rectify the issues highlighted last year” “Some significant actions have already been implemented across the organisation.”Growth projected for 2019 – shares soar
The firm have said their focus on customer service in 2018 will be carried forward into the 2019 financial year, in addition to what it described as development of existing teams and recruitment of new staff, which it hopes will attract new customers. In the statement, the company said they have already booked more than £85 million in contracted revenue for 2019, which already exceeds the total revenue accrued for the entirety of 2018 by £5 million. “Whilst we are being more selective and prudent in relation to our growth, we are securing new business at a reasonable margin.” Added the Chief Executive “With a strong balance sheet and a focussed and dedicated workforce, I remain confident in the underlying business, the significant market opportunity available to us, and the long term success of our proposition and I am absolutely driven to put us back on track.” Yu Group shares are currently trading at 148.62p 30/01/19 16:29 GMT, up 81.12p or 120.19% since markets opened on Wednesday. During trading, the company’s shares rallied to as much as 179.38p per share, up from 85p between 08:00 and 10:40 GMT.Ryanair investor rating upgraded with Laudamotion takeover
Irish budget airline Ryanair Holdings Plc (LON:RYA) announced yesterday that it had successfully bought out the final 25% stake of its subsidiary, Laudamotion, from NL Holdings in late December. Following the news, investment bank Raymond James (NYSE:RJF) announced it had upgraded its investment rating for Ryanair Holdings.
Ryanair’s new(ish) acquisition
Shortly after Laudamotion – formerly run by Niki Lauda – announced it had successfully bid for the collapsed assets of Air Berlin unit Niki, Ryanair bought a 75% stake in the company in March 2018. Following the wholesale acquisition, as of December 2018, Laudamotion’s average passenger rollover of four million per annum is expected to be doubled by Ryanair over the course of the next two financial years. Unlike its new owner who operates only Boeing aircraft, Laudamotion were operating a fleet of 19 Airbus aircraft in the summer of 2018, with this expected to increase to 30 aircraft by the summer of 2020 – according to signed letters of intent to lessors.Bright future for Laudamotion
For the financial year ending in March 2021, Laudamotion has announced it expects to have increased its capacity to over 7.5 million passengers. “With the backing of Ryanair, Laudamotion is set to grow strongly over the next three years to carry 10 million passengers per annum,” says Laudamotion chief executive Andreas Gruber. “We will release details of up to 20 new routes for winter 2019 once we have completed our airport and handling negotiations by the end of March.”Laudamotion Deputy Chief Executive, Colin Casey, added, “We are currently negotiating new routes and handling agreements with more than 50 new airports.”
He also discussed the possibility of expanding the company’s base of operations, “In winter 2019 we hope to announce at least one new base, which will be outside of Austria and Germany, and there are a number of new airports both in central and western Europe who are pitching to win this business.”
Ryanair shares and broker stances as things stand
In response to the news, Ryanair shares rallied 0.87% or 0.095 euros during trading today, to 11.01 euros per share 30/01/19 15:02 GMT. Raymond James analysts have upgraded their stance on Ryanair stock from ‘Market Perform’ to ‘Outperform’.Thor Mining hails “positive quarter”, shares bounce
Thor Mining shares (LON:THR) gained during Wednesday trading after the company posted a promising trading update for the quarter.
The mining company updated on the market on the October to December period, noting a ‘sound’ cash position, taking the country through to the latter half of 2019.
Chief Executive Michael Billing welcomed the results as a ‘positive quarter’, with progress made on all major projects as well as strengthened funds.
He also added:
“The appointment of corporate advisors to support and guide our efforts towards off-take & financing for Molyhil is a strategy we believe will improve our prospects of securing the best arrangement possible for our shareholders.”
“A number of potential scenarios are possible with various interested parties, and we hope to be in a position to advise progress shortly.”
“Additionally, the potential of nearby Bonya tenements, hosting tungsten, copper, and vanadium, provides potential upside for Molyhil, and also for other stand-alone development opportunities.”
“The improvement in the Pilot Mountain resource estimate is an additional welcome boost as we advance our technical studies.”
“Proof of Concept for ISR recovery for the Kapunda copper project is a significant critical step in this very exciting project.”
Thor Mining is listed on both the Australian Stock Exchange and the London Stock Exchange AIM market.
The company has projects in Australia as well as Nevada and Arizona in the UK.
Shares in Thor are currently up +6.40% as of 15:21PM (GMT), as the market reacts to the announcement.
Plutus Powergen records H1 loss, sales stagnant
Flexible energy generation and provider company Plutus PowerGen (LON:PPG) have reported a first half loss amid a period of stagnant revenue, which was compounded by operating cost.
Losses with high costs and low revenue
While the company’s earnings were offset by administrative, remuneration and financing expenses. revenue remained flat at £675,000. Consequently, the company’s pre-tax losses for H1, for the six months to October, came to a total of £131,573, which is a direction of positive travel on-year, as losses for H1 the year before amounted to £392,489.Losses decrease – optimistic board
“The company had a robust first half and whilst revenues were flat, the board’s efforts to reduce costs successfully resulted in reduced operating losses,” said Plutus interim chief executive James Longley said. “Furthermore, with the directors concentrating on the operations of the FlexGen portfolio, which are working well, and progressing talks with regard to achieving a suite of equity and debt for its planned ‘gas peaker’ portfolio, we look forward to being able to update the market with progress thereon.”Plutus Shares
Plutus shares are currently trading up 2.4% at 0.51p per share 29/01/19 14:08 GMT. While its share price has gradually declined over the last financial year, the board remain confident as losses decreased even while efforts were being focused on building the company’s portfolio.Kodal rallies with concessions extension
Lithium mining firm Kodal Minerals Plc (LON:KOD) has seen its share price rally today following confirmation of a new deal that gives it exclusive rights to expand its operations at a lithium mining opportunity in Mali
The agreement entails Kodal’s right to a 200km range in the South of the country, with lithium concessions in the Bougouni province. Kodal have said the new project would be close to the existing Bougouni Project and would be carried out using the same geological team and infrastructure.
Bougouni operations expansion
Under the agreed terms, Kodal have been given rights to acquire 80% of concessions via option payments coming to a total of £185,000 cash. Other payments will be made in the form of £195,000 in Kodal shares, to be delivered over three stages. The deal also featured an opportunity for the firm to apply for a mining licence for 100% ownership of all concessions in exchange for £500,000 in cash and a 2% royalty fee to Malian firm Bambara. As is stands, the project could result in the discovery of new areas of lithium mineralisation, with the comapny stating that it would “complement our existing project and further enhance our long-term position in this region.” “These new concessions are immediately adjacent to the Goulamina Project, owned by ASX listed explorer Birimian Limited, where a Mineral Resource of 103Mt at 1.34%Li2O has been defined. Kodal is focusing its initial review and targeting on interpreted extensions of the Goulamina structure and parallel positions in a similar geological setting,’ said Kodal CEO, Bernard Aylward.Kodal shares rally
Kodal have shared the success of other firms mining for metals used for battery cells, and have seen their share price rally 4.22% to 0.19p per share 30/01/19 13:52 GMT.Solid State shares rally on raised guidance
Solid State shares (LON:SOLI) ticked up on Wednesday after the company said its results for the year would “comfortably exceed” expectations.
The electronics manufacturer and distributor said that revenues for the full year to March-end were expected to be significantly above previous guidance.
The company said that gross margin improvements for the first half of the year were maintained into the second half.
This was attributed to ‘significant improvement ahead of management’s expectations’.
Gary Marsh, Chief Executive of Solid State commented on the upcoming results:
“We are delighted with the Group’s strategic progress, delivering significant organic revenue growth within the Value Added Distribution division and increasing the proportion of higher value added projects within the Manufacturing division, which together are driving the improvement in profitability.
“The integration of the Pacer acquisition is progressing well. In addition to current year trading, the order book now gives us confidence in an improved outlook for our financial year ending 31 March 2020.”
Solid State is listed on the AIM-market of the London Stock Exchange.
According to the company’s website, it specialises in ‘industrial and ruggedised computing, battery power solutions, communications including antennas and secure radio systems, electronic components and displays.’
Shares in the firm are currently up +12.33% as of 12:43PM (GMT) on the back of the announcement.
Elsewhere across the markets, Apple shares (NASDAQ:AAPL) fell on Wednesday morning after the tech giant revealed that revenues had fallen 5%
In the aviation industry, Wizz shares (LON:WIZZ) dipped after the company posted a fall in profits, blaming rising fuel and staff costs.
STM announce new COO – shares and profits dip
Financial services provider STM Group Plc (LON:STM) have seen their share price dip on the announcement of a fall in annual profit and the arrival of a new Chief Operating Officer.
Narrower margins
The shortfall for this financial year has been attributed to a £0.5 million technical reserve release from the company’s insurance unit. This has seen revenue for the year through December fall to £21.3 million for the firm, down from £21.5 million. As a result, pre-tax profit also fell from £4 million to £3.9 million on-year.New COO
Following the financial update, STM announced the appointment of Peter Marr as their new Chief Operating Officer, with Marr having served as COO of Mutual Society Police Mutual and Operations Director of Capita Insurance Services. “Whilst 2018 started off as a challenging year for STM, there is no doubt that our management team responded admirably and as a result of the Deloitte review we move into 2019 as a stronger and more robust business,” said incumbent Chief Executive, Alan Kentish. “Notwithstanding the challenges, we are pleased to have delivered a year of growth and been active in making two strategically significant acquisitions.”STM shares as they stand
Shares are currently trading down 5.26% or 3p at 54p per share. Analysts from finnCap have reiterated their ‘Corporate’ stance on STM stock.Wizz Air profit plummets amid rising costs
Wizz Air profits plummeted in the third quarter of 2018, as rising fuel and staff costs impacted earnings.
The Hungarian airline reported a pre-tax profit €1.8 million, compared to €14.6 million a year before.
Despite the fall in revenues, passenger numbers were up 15% to 8.1 million.
Across the period, Wizz Air flying hours fell 6.6% to 11.3 hours per day.
However, the company attributed rising costs to the slowdown in revenues. Cost per available seat kilometre increased by 9.3%, including fuel, whilst it climbed 4.3% without.
Alongside higher fuel prices, there was also a 22% rise in staff-related costs, with rises in pilot salaries during the quarter.
József Váradi, Wizz Air Chief Executive, commented:
“The Company maintains its net profit guidance range of between €270m and €300m for the full year, where we will be within this range will depend on the extent of March yield pressures which will be affected year-on-year given Easter falls after the financial year-end in April and external factors such as Brexit uncertainty.”
Wizz Air is not the only airline that has been struggling as of late.
On Tuesday, Norwegian Airlines announced a share rights issue as it looks to raise £270 million, after talks with IAG over a potential takeover fell through.
Earlier this month, EasyJet (LON:EZJ) revealed that the Gatwick drone chaos cost the low-cost airline £15 million.
Ryanair (LON:RYA) also issued a profit warning, blaming lower-than-expected air fares.
Shares in Wizz Air (LON:WIZZ) are currently down 2.69% as of 10:56AM (GMT).