Domino’s shares slide as lower profit is expected
Domino’s Pizza (LON:DOM) announced on Tuesday that it expects its annual pre-tax profit to be at the lower end of its guidance. Despite the strong UK performance, its international sales have been weak. Shares in the food outlet slid 7% following the announcement.
UK system sales were up 6% and UK like-for-like sales increased by 4.5%. The company has said that it experienced its busiest ever week in the run-up to Christmas. On the Friday before Christmas, Domino’s sold over 535,000 pizzas in the UK. This is equivalent to 12 a second across a 122-hour trading day.
Domino’s also had a strong digital performance as online sales grew 10.8%.
Ryanair cabin crew in Spain vote for recognition agreement
99% of Ryanair (LON:RYA) cabin crew in Spain have voted for a recognition agreement with local trade unions, the airline announced in Tuesday.
The recognition agreement with SITCPLA and USO aims to cover all of Ryanair’s directly employed cabin crew in Spain.
The airline and SITCPLA and USO are now progressing a collective labour agreement. The agreement hopes to be concluded by 30 April 2019.
Spain is the company’s third largest market. It currently has 13 of its 89 bases in the country, according to the Independent.
At the beginning of January, the airline’s cabin crew called off a strike that was planned for 10 January and 13 January.
Ryanair suffered a turbulent 2018, with a number of strikes occurring last year by pilots and cabin crew alike. These strikes caused significant flight disruption.
Moreover, the airline faced legal action over its refusal to offer compensation to thousands of its customers. The Civil Aviation Authority (CAA) said that the customers who had their flights cancelled over the summer period are entitled to compensation under EU regulations. Thousands of customers were affected by the cancelations and delay of flights over the summer. However, Ryanair has said that it does not owe its passengers compensation because the strikes were as a result of “extraordinary circumsances”.
In November, the budget airline announced that it would not alter its plans to close its base in the Netherlands. It was reported that Ryanair had been attempting to limit the power of staff unions by claiming to close bases and relocate staff. Since last August, two staged walkouts had taken place in Portugal, Germany, Spain, Belgium and the Netherlands.
In addition to the employee turmoil, the airline made significant changes to its hand luggage policy last year. The new rules allow a ‘medium’ sized bag, with passengers being given some 25% leeway to the maximum dimensions.
At 10:02 GMT today, shares in Ryanair Holdings plc (LON:RYA) were trading at +0.19%.
Crest Nicholson profits decline 15%, Brexit uncertainty prevails
House-builder Crest Nicholson Holdings plc (LON:CRST) posted its final year results on Tuesday. Profits dropped 15% as current market uncertainty caused by Britain’s departure from the European Union prevails.
Chief Executive Patrick Bergin commented on the results:
“The business has had a good year operationally, with an increase in the number of new homes delivered. However, we have faced some challenges in London and with sales at higher price points where political and economic uncertainty has adversely impacted customer demand and this is likely to continue pending Brexit resolution.”
“Our forward sales are strong, boosted by our strategic partnerships and our new channels to market. Pricing is stable, build cost inflation has moderated and we have implemented plans to mitigate margin pressure, which will take effect progressively over the next few years.”
“Our revised business strategy and focus on cash generation underpins our confidence in generating sustainable shareholder returns.”
Sales, including those from joint ventures, were up 7% to £1,136.6 million.
Pre-tax profit was recorded as £176.4 million, a 15% drop compared to £207 million in 2017.
Total dividend was maintained at 33.0p.
Net cash by the end of the financial year was £14.1 million. This is significantly less than the £33.2 million recorded in 2017.
Drawing upon the impacts of Brexit, Patrick Bergin outlined the future of Crest Nicholson:
“In the context of an unresolved Brexit, I expect the first half of 2019 to be difficult. However, I believe our new strategy will ensure the business is fighting fit and equipped to deal with any challenges it faces.”
“Current market uncertainty is making it hard to look too far ahead, so while we are optimistic about the longer term prospects of the sector, we continue to remain vigilant and responsive. Our focus on the south of England housing markets remains a long-term strength, land remains in good supply and we have strong plans in place to meet the demand for affordable housing.”
“Overall, Crest Nicholson presents a resilient financial proposition and I am excited about our future. We have made good progress this year and I look forward to working with the dedicated and talented people we have across the organisation as we strengthen the business further in 2019.”
London house prices fell 1.2% month-on-month in November, according to the ONS. Given the difficult climate caused by Brexit, the recovery of house prices in 2019 remains uncertain. In fact, a report from the Royal Institution of Chartered Surveyors has outlined that house prices are expected to continue stagnating in 2019.
At 09:19 GMT today, shares in Crest Nicholson Holdings plc (LON:CRST) were trading at +5.26%.
Shield Therapeutics shares rise on iron-deficiency study developments
Shield Therapeutics (LON:STX) announced on Tuesday that it has reported positive results from a study of an iron deficiency treatment in adults suffering from inflammatory bowel disease. Shares in the company were trading almost 11.5% higher following the announcement.
The results are part of a “pivotal” study of Feraccru, a new ferric iron therapy that is approved and marketed within the EU for the treatment of iron deficiency in adults. It is also marketed in Switzerland for the treatment of iron deficiency anaemia in adults with inflammatory bowel disease.
Feraccru is currently undergoing a process of US approval and a decision is expected in July 2019.
In December, the company announced that it was set to expand its iron deficiency treatment for children, with child trials being introduced in 2019.
Chief Medical Officer of Shield Therapeutics, Dr Mark Sampson, commented on the announcement:
“Iron deficiency is a significant and progressive issue in patients with chronic renal disease which has been challenging to treat due to poor compliance with traditional oral iron salts. These results suggest that Feraccru offers a well-tolerated and effective treatment option which can benefit patients over the long-term.”
Additionally, CEO and founder of Shield Therapeutics, Carl Sterritt, said:
“Such positive long-term treatment data for Feraccru in complex patients with chronic diseases like CKD provides a very promising signal for the future commercial success of Feraccru. Having previously seen similar positive long-term effects in IBD patients with IDA this further clinical trial data provides additional evidence that Feraccru is well-tolerated by a majority of treated patients and is effective at correcting IDA. We hope that this positive data provides the necessary evidence to both prescribers and patients with iron deficiency with or without anaemia that Feraccru offers a simple to administer, well tolerated and efficacious treatment alternative that does not require hospital-based administration.”
Shield Therapeutics appointed a new chairman earlier in January, after the former chairman, Andrew Heath, stood down from his position at the company’s AGM.
At 08:58 GMT today, shares in Shield Therapeutics plc (LON:STX) were trading at +11.44%.
Royal Mail lowers letter volumes guidance, shares slide
Royal Mail (LON:RMG) released a trading update for the nine months to 23 December 2018 on Tuesday. Its recent trading performance remains “broadly” in line with its expectations. However, it has downgraded its letter volume guidance. Shares in the company slid by almost 10% on the back of the announcement.
Group revenue increased by 2%.
The group is now expected to deliver an adjusted group operating profit before transformation costs of £500-£530 million for the 2018-2019 year.
Over the period, Royal Mail revealed a 25% drop in its first-half profits. This is following the announcement of a profit warning in October, whereby shares crashed 18%. It also purchased the Canadian parcel delivery firm, Dicom Canada.
Royal Mail has downgraded its letter volume guidance, however, blaming the new GDPR and business uncertainty.
Group Chief Executive Officer of Royal Mail, Rico Back commented on the announcement: “We have had a busy Christmas season. In the UK we recruited 23,000 seasonal workers and opened six temporary parcel sorting centres to make sure we had the capacity to handle the high volumes of parcels and cards through our network. In the December trading period alone we handled 164m parcels, up 10% compared with last year. Our people delivered a great Christmas. I thank them for all their efforts.” “Overall, our recent trading performance was broadly in line with our expectations. We now confirm that we expect to deliver adjusted Group operating profit before transformation costs of £500-530m for 2018-19.” “In the UK, our parcels business continued to perform well, with volumes and revenue in the nine months both up 6%. Addressed letter volumes, excluding the impact of elections, were down 8%, with total letter revenue down 6%, largely reflecting the continuing impact of GDPR and a relatively strong prior year comparative period.” “GLS delivered another good performance with revenue up 13% including acquisitions. Whilst GLS continues to see cost pressures, we confirm that we are targeting adjusted operating profit margins of over 6% for the full year. We will continue to focus on margin protection and as a result we expect to see a slowing in the rate of GLS volume growth next year.” “Due to our letters performance to date, we expect addressed letter volume declines, excluding elections, to be in the range of 7-8% for 2018-19. While the rate of e-substitution remains in line with our expectations, business uncertainty is impacting letter volumes. As a result, addressed letter volume declines, excluding elections, are likely to be outside our forecast medium-term range next year. Otherwise, we are reconfirming the outlook and other guidance for 2018-19 provided in our half year results.” At 08:38 GMT today, shares in Royal Mail plc (LON:RMG) were trading at -9.64%.UK shares stall as FTSE 100 dips beneath 6,800 hit by strong sterling
UK shares fell on Monday with the FTSE 100 dropping beneath 6,800 as investors reduced positions a head of a potentially turbulent week.
UK parliament is set to reignite the Brexit debate with vigour on Tuesday as MPs remain bitterly opposed on the best way forward.
With the 29th March leave date fast approaching, Theresa May is yet to secure a consensus from MPs on how the UK will leave the EU.
Theresa May faced a crushing defeat in early January and is working towards aligning MPs for a potential second parliamentary vote.
While the process is pushing the UK economy towards the cliff edge of a no-deal Brexit, financial markets have reacted by pushing the pound higher against the dollar.
Analyst attribute this to the increased chance of a softer form of Brexit that is likely to win parliamentary approval.
“We would read the developments over the last week as pointing toward a later, softer Brexit or potentially no Brexit at all.” said Zach Pandl of Goldman Sachs in an interview on Bloomberg television.
Highlighting the banks bullishness on sterling Pandl said Goldmans thought the pound would be the “highest-performing G-10 exchange rate this year.”
While this would be good for the UK’s importers, it has caused a negative impact on the FTSE 100.
There has been a significant inverse relationship between sterling and the FTSE 100 since the vote to leave the EU with the FTSE 100 reaching all time highs as sterling plummeted.
This relationship has been turned on its head during a Westminster impasse that has made a ‘no-deal’ or ‘hard Brexit’ the city’s outside bet.
Shares in mainland Europe were also weaker on Monday as the reopening of the US government failed to inspire a global relief rally in equities.
Looking towards the US and the interest rate decision later this week, investors will get the first major instalment of insight from the Federal Reserve on whether they still though two or three interest hikes were appropriate for the US economy in 2019.
Sirius woes could spell long-term opportunity
Sirius Minerals Plc (LON:SXX) have been in a state of flux since last August, with the company agreeing a potash supply deal with Brazilian company Cibra, and this week’s announcement that the company are to implement a financial restructure of its potash project in Yorkshire.
Sirius’ involvement in Cibra
The deal with Cibra outlines a take-or-pay potash supply arrangement with Brazil’s Cibrafertil Companhia Brasileira de Fertilizantes, for supply and resale of POLY4 in Brazil and certain South American countries. Chris Fraser, Sirius Minerals chief executive, has said, “We are delighted to have signed these supply and investment agreements with a leading player in the South American fertilizer market with a proven track record and ambitious growth plans,” Cibra chief executive Santiago Franco, meanwhile, added, “We are excited to be entering into this long-term partnership with Sirius to deliver POLY4 into Brazil and other key markets of South America.” “POLY4 will change the shape of the fertilizer market in South America and Cibra will be at the heart of driving the growth and adoption of this innovative sustainable product across the region.”The Sirius trading update and financial restructuring
Following the trading update, Sirius Minerals agreed to revise the basis of a $3 billion funding round for its fertiliser project in Yorkshire. The crux of this restructure is that the UK government’s role in financing the new project will be smaller than originally planned. Chris Fraser commented on the trading update, “2018 was a year of significant progress for the Company. Completion of procurement to support the stage 2 financing and the signing of an additional 4.8 Mtpa of take-or-pay supply agreements, have been substantial achievements. Considerable progress has been made across all our construction sites and development activities are advancing at pace. More than 800 people are now employed on the Project, demonstrating the transformational potential for jobs and growth in the local area. “Executing our stage 2 financing plan remains our priority. We continue to make progress towards obtaining stage 2 financing commitments and are working constructively with all relevant parties to achieve this. The process with the lenders is continuing this quarter as we work through the due diligence reports with the lending group and progress discussions on the revised debt structure.”What can Sirius investors expect in coming months?
With a plethora of updates, ongoing talks and targets yet to be realised, future prospects currently look shaky for the firm. Ultimately, since last August, Sirius has suffered from a vicious cycle of having limited financial prospects and in turn uncertainty among investors, with each factor exacerbating the other. The firm have seen their share price fall 50 percent since August 2018, with the cost of their Yorkshire project increasing, commodities prices working inversely against a climbing dollar and expectations that the first POLY4 fertiliser isn’t going to be delivered until 2021. Overall, one should expect these factors to weigh on investor confidence in coming months and assume that share prices will remain volatile as 2019 continues. In the long-run however, Sirius could represent an exciting opportunity, with shares currently trading 60 percent below all-time highs of around 45p per share and ongoing discussions with lenders – to-date – being described as largely positive. Sirius Minerals shares are currently trading up 0.73p or 3.81% since markets opened on Friday, at 19.87p per share. Liberum Capital analysts have reiterated their ‘Buy’ stance on Sirius stock.Vodafone sales drop as foreign exchange and a change in reporting standards bite
Vodafone (LON:VOD) shares fell on Friday after the telecommunications group released sales figures that pointed to a drop in group revenue.
In the three months to 31st December, Vodafone’s reported revenue fell 6.8% to €10.99 billion from €11.79 billion.
The group attributed the decline in sales to a number of factors including the sales of the Qatari business, changing reporting standards and the negative impact of foreign exchange.
Vodafone reported sales figures broken down into Europe and Rest of the World with both areas falling 5.6% and 11.1% respectively.
Weakness in Europe was found in Italy and Spain where increased price competition hurt sales.
Nick Read, Group Chief Executive, commented on the trading update:
“We have executed at pace this quarter and have improved the consistency of our commercial performance. Lower mobile contract churn across our markets and improved customer trends in Italy and Spain are encouraging, however these have not yet translated into our financial results, with a similar revenue trend in Europe to Q2. We enjoyed good growth across our emerging markets with the exception of South Africa, which was impacted by our pricing transformation initiatives and a challenging macroeconomic environment. Overall, this performance underpins our confidence in our full year guidance.
“We are moving to implement a radically simpler operating model and to accelerate our digital transformation, as demonstrated by the organisational changes we have announced in Spain and the UK.”
“We are also assessing opportunities across our markets to improve asset utilisation through partnering. This week we announced the intention to extend our existing network sharing agreement with Telefonica O2 in the UK to include 5G services. This will enable us to deploy 5G services to more customers over a wider geographic area, and to do so at a lower cost. After these arrangements have been finalised, we also intend to explore opportunities to monetise our UK tower assets”.
Shares in Vodafone (LON:VOD) were down over 2% in early Friday morning trade.
Ford: hard Brexit will cost us £615 million in 2019 alone
Carmaker Ford (NYSE:F) has warned that a hard Brexit might cost it up to £615 million in 2019 alone in an exclusive statement to Sky News.
Ford issued a statement to Sky on Thursday, where a spokesperson outlined:
“Our planning assumptions for Brexit include a negotiated exit as the most likely outcome, with a transition period during 2019 and 2020 if the withdrawal package is approved by UK parliament.”
“However, we recognise that the situation is highly uncertain, and are monitoring events closely. In the event of a no-deal scenario the resulting border friction, deteriorating economic outlook, coupled with likely further sterling devaluation, and introduction of WTO tariffs would severely impact Ford’s operations in the UK and across Europe and could potentially result in an $800m headwind in 2019.”
According to information obtained by Sky News, the carmaker has privately calculated the economic risk that a hard Brexit may cause for its business.
In October last year, the group’s European boss, Steven Armstrong, warned that a no-deal Brexit could be “pretty disastrous” for its UK operations. Today we have learnt just how much that disaster will cost for the first year alone of a hard exit from the European Union.
With significant parliamentary chaos unravelling in the first four weeks of the year alone, a departure from the European Union without a deal that can command support in Parliament is looking ever more likely. In fact, it is highly probable that Brexit could lead to another recession.
Ford isn’t the only car manufacturer to warn against a hard Brexit. Jaguar Land Rover’s boss, Ralf Speth, warned Theresa May that UK factories risk huge job cuts if she does not “get the right deal” prior to the nation’s departure.
The motor vehicle sector is not alone in expressing its concerns. Just yesterday luxury fashion brand Burberry (LON:BRBY) warned that “the biggest concern is the disruption to the supply chain”, chief operating and financial officer Julie Brown commented.
Tower Resources announce £1.7m capital raise for Cameroon project
Tower Resources (LON:TWR) announced on Thursday plans to raise £1.7 million in capital to fund its Cameroon project.
The oil and gas company said it plans to raise the funds through the placing of 170 million new ordinary shares at 1p each.
Admission of the shares on the AIM market is set to take place at 8am on the 30th January 2019.
Back in December, Tower Resources updated the market on progress at NJOM-3 well in Cameroon.
In the statement, the company announced the signing of a contract with Vantage Drilling International for the Topaz Driller to continue its operations in the region.
Jeremy Asher, Chairman and CEO commented at the time of the news release:
“We are very pleased to have secured the Topaz Driller, the same rig which our well management team at Bedrock Drilling used to drill the two recent Etinde wells. We see the NJOM-3 well, in Q2 2019, as just the beginning of our drilling activity on the Thali license, as we explained in our Corporate Presentation of last month. The rig timing remains consistent with that schedule, including its target of first oil by the end of 2019.”
The company was first admitted to the junior AIM market on the London Stock Exchange in 2005. It focuses its operations in Africa, with projects in Cameroon, Namibia, South Africa and Western Sahara. Shares in Tower Resources are currently trading -25.63% on the back of the announcement. Elsewhere across the markets, shares in premium fizzy drink-maker Fever-Tree (LON:FEVR) rallied after the company revealed a 39% rise in revenue. Meanwhile, Daily Mail and General Trust (LON:DGMT) ticked up after the media company maintained its full-year outlook.