Fever-Tree revenue up 39%, shares rise
Fever-Tree shares (LON:FEVR) rose on Thursday after the beverage company reported a rise in revenue for the year.
The premium fizzy drink maker said it expects full-year revenue to be around £236 million, a 39% increase on 2017 figures.
This was attributed to strong trading in the UK, particularly across the summer months and the Christmas period, with sales up 52%.
In addition, the group enjoyed strong progress in the US, with full-year revenue up 21% compared to the year before.
Fever-Tree said there was also an increase in sales in Europe during the second half of the year, with full year revenue expected to be up around 24%.
Sales in the rest of the world also proved encouraging, up roughly 48% for the period.
Tim Warrillow, Co-founder and CEO of Fever-Tree said:
“We have seen very strong momentum across the business during 2018. The UK delivered an exceptional performance while Europe has seen positive performance resulting in growth accelerating in the second half. We are particularly encouraged by the progress to date in the USA and the strong platform for further growth this provides.
The progress we have seen during the last 12 months means we enter 2019 very well positioned and remain optimistic about the long-term global opportunity ahead.”
Warrilow also remained confident that the firm was well positioned in light of changing consumer drink tastes. He added:
“Drinking habits are changing. The rise of premium spirits and the advent of premium mixers has reinvigorated and re-established the quality and enjoyment of the long-mixed drink, be it a gin & tonic, vodka & ginger beer or whiskey & ginger ale to name but a few. Fever-Tree is at the forefront of this trend, broadening the appeal of the spirits category, drawing in new consumers and with it providing a genuine alternative to the beer and wine occasion.”
Shares in Fever-Tree are currently +14.35% as of 12:37PM (GMT).
3 reasons why Brexit could lead to a recession
With a mere 64 days to go until Britain is due to leave the EU, the government is no closer to securing a deal that can command support in Parliament.
For many Brexiteers, leaving the EU was seen as a way to take control of the UK’s economic and political destiny.
However, with no discernible plan in place it seems Britain is at present – a rudderless ship.
As many UK-based companies keep on warning, there is nothing businesses hate more than uncertainty, and so far, Brexit seems to denote just that.
Today, Airbus called Brexit ‘a disgrace’ after announcing potential closures to many of its UK factories.
Yesterday, luxury fashion brand Burberry expressed concern over the cost a no-deal could have upon its business.
Whilst many have dismissed economic warnings as scaremongering, many of the UK’s biggest businesses are starting to sound the alarm.
Here we consider three reasons why Brexit – plan or no plan – may very well plunge the UK into a recession.
- A cooling property market
UK retail sector cuts 70,000 jobs at end of 2018
The British Retail Consortium (BRC) has reported that roughly 70,000 jobs in the UK retail sector were slashed in the final months of 2018. Almost a third of retailers plan to make further staff cuts over the next few months.
Chief executive of the BRC, Helen Dickinson, commented on the announcement:
“The retail industry is undergoing a profound change and the latest employment data underpins those trends.
“Technology is changing both the way consumers shop but also the types of jobs that exist in retail.”
“While we expect the number of frontline staff to fall over the next decade, there will be many new jobs created in areas such as digital marketing and AI (artificial intelligence).”
“However, this transformation comes at a cost for retailers, who are already weighed down by the increasing costs of public policy, from sky high business rates to rising minimum wage.”
“To support this investment in the future of retail, Government needs to play its part, reforming the broken business rates system to ensure it is fit for the 21st century.”
It has by no means been kept a secret that retailers struggled over Christmas, the busiest time a year as consumers rush to get their gifts. Perhaps the most shocking announcement during the lead up to Christmas was the highly unexpected profit warning trading update from ASOS (LON:ASC).
Throughout 2018, we have seen retailer after retailer issuing warnings as they battles with the difficult economic climate. Leading department store John Lewis reported a 99% drop in its profits, announcing that it would slash 270 jobs.
Not to mention the Brexit chaos that has fuelled economic uncertainty in the UK, adding to the climate of insecurity.
Even over the post-Christmas sales period, footfall was unable to pick up despite the significant price drops.
It certainly is not all doom and gloom, as some retailers have posted their Christmas results, outlining positive sales growth.
However, an amalgamation of factors beyond Brexit uncertainty is proving to be problematic for the UK retail sector.
Anglo American annual output increases 7%
Anglo American (LON:AAL) released a production report on Thursday for the fourth quarter ended 31 December. Copper and Diamond production are expected to decline in 2019.
Total production on a copper equivalent basis for the fourth-quarter of 2018 increased by 7%. This figure is compared to the same period in 2017 and excludes the effect of the stoppage at Minas-Rio.
Chief Executive of Anglo American, Mark Cutifani, commented on the announcement:
“Our continuing focus on efficiency and productivity improvements across the business resulted in another strong quarter, adding to our consistent track record of delivery. Solid operational performance resulted in a 23% increase in production from our Copper business, more than offsetting the impact of infrastructure constraints at Kumba. We ended this successful quarter with the restart of operations at Minas-Rio and receipt of a key approval relating to the important Step 3 licence area that supports its increase in production towards design capacity.”
Da Beers production increased by 12% to 9.1 million caratas and driven by production increases at Orapa. Additionally, copper production increased by 23% to 183,000 tonnes. Increases occurred across all operations and reflect a strong operational performance.
In July, Anglo American began to develop the “world-class Quellaveco copper project in Peru”.
Platinum and palladium production increased by 3% to 602,300 ounces and 386,000 ounces respectively. However, Kumba’s iron ore production decreased by 13% to 10.2 million tonnes, as a result of infrastructure issues.
Metallurgical coal production increased by 15% to 5.6 million tonnes. But, Thermal coal export production decreased by 9% to 6.9 million tonnes as a result of unfavourable weather.
Minas-Rio recommenced its operations at the end of the quarter.
Anglo American has predicted that diamond, copper and platinum production in 2019 will be below that of the year prior.
Diamond production is expected in the range of 31 million to 33 million carats for 2019. This is below the 35.2 million carats reported the year prior. Equally, copper production was expected to be between 630,000 to 660,000 tones, below the 668,300 seen this year. Platinum production was also reduced to 2.0 million to 2.1 million ounces in 2019, revised from the 2.0 million to 2.2 million ounces previously.
At 09:17 GMT today, shares in Anglo American plc (LON:AAL) were trading at -0.3%.
Daily Mail and General Trust set to maintain full-year outlook
Daily Mail and General Trust (LON:DMGT) released a trading update of Thursday outlining its first-quarter results. Its 2019 outlook remains unchanged and in line with market expectations.
Group revenue increased by 2% on an underlying bias. Reported revenue, however, declined 2% compared to the year prior.
Net cash at 31 December 2018 was reported as £203 million. This compares to £233 million as of 30 September 2018, reflecting seasonal cash flows. In December, £219 million of its bond debt matured and as of the 31 December, the remaining bond debt was £207 million.
The company’s consumer media division saw an underlying revenue growth of 1%, as well as a reported revenue growth of 3%, matching its expectations.
In the trading update, Daily Mail and General Trust said:
“Circulation revenue declined 3%, with volume reductions partly offset by the cover price increase of the weekday editions of the Daily Mail from 65p to 70p in September 2018. Underlying advertising revenue growth of 4% was achieved across dmg media; a 1% decline in print was more than offset by 10% growth from digital. The Mail Newspapers titles grew their market shares and we remain confident in the future growth opportunities at MailOnline, driven by increasing engagement with the direct audience.”
Digital advertising grey 10%, counterbalancing the 1% decline in print advertising as more consumers opt for digital copies.
For its Insurance Risk division, underlying revenue grew 1%. Modest growth in subscriptions was partially offset by an unexpected decrease from one-off projects.
Property and Information also saw a 1% underlying revenue growth. According to the company, this reflects continued growth from the US businesses.
EdTech saw its underlying revenue jump 13%, driven by the strong performances of Naviance, Intersect and Starfish.
Energy Information underlying revenue increased by 1%. This was driven by continued growth from its oil and natural gas businesses. However, this was impacted by the weaker revenues from its power businesses.
Daily Mail and General Trust has business-to-business and consumer media operations.
At 08:48 GMT today, shares in Daily Mail and General Trust plc (LON:DMGT) were trading at +1.21%.
Trouble, Trouble halve then Double: 2 Tips from the OMG newsletter
Below are the second two recommendations for our 2019 10 2 Double Opportunities. Both have been much more than twice the recommended price but have missed expectations. Yet….. we think the business opportunities are well worth a good doubling from here.
________________
CyanConnode (LSE: CYAN)
8.25p (8.1p-8.5p)
Mkt Cap: £15m
Next Results: Finals RNS April
CyanConnode have closed almost $20m of contracts as it commercialises its world leading technology. For the year to December, turnover is expected to be 400% higher and a further significant increase is anticipated for the current year. January’s Trading Statement, for the year-end to December 2018, anticipates revenue of £4.7m with a much-reduced loss. India and Sweden are performing well and have increasing pipelines.
Orders to the value of $18.9m have been received to date for its Omnimesh product with only around $4m delivered so far against these orders. The revenue from its first licensing deal, which was in China, will be recognized over the next two years and further deals seem likely. There are legislative changes in India supporting Smart metering and further orders seem likely in this substantial world market as smart meters reduce payment fraud. There is also a contract to provide its software to the UK Smart Metering Programme and rollout will gain momentum in the first half of 2019.
The business model includes revenues from hardware, software licensing support and maintenance. Additional revenue streams include royalty licensing (white label in own name) and licensing of hardware which would include a one-off upfront payment and ongoing royalty payments. Profit margins range from 30% on hardware sales to over 90% for licensing deals.
In October, £5.6m of equity was raised at 10p in which the management invested £1m. There is no debt and the management’s focus is on converting the sales pipeline into cashflow. The shares at below the placing price seems worth buying.
One Media IP Group (LSE: OMIP)
5p (4.8p -5.4p)
Mkt Cap: £7m
Next Results: Finals March
One Media P Group plc (LSE: OMIP) has around £8m available to pursue an acquisition strategy. The plan is to acquire publishing rights which can generate a robust earnings stream, from the expanding digital music and video streaming market. In December 2017 two heavyweight company directors; Lord Michael Grade and Ivan Dunleavy joined the board and in August 2018 raised £8m, comprising £2m in shares at 6p and a £6m loan facility from the BGF (British Growth Fund).
Ivan Dunleavy is 58 and has been operating in the media industry for more than 35 years, including 17 years as CEO of Pinewood, Europe’s largest provider of stage and studio space, which he and Lord Grade acquired from Rank in 2000 for £62m. Lord Grade of Yarmouth, aged 75, has a distinguished career as a television executive, businessman and Director of Charlton Athletic FC.
OMIP distribute high margin streaming music through over 600 digital stores, as well as through dominant content distributors such as Spotify, Amazon, Deezer and Apple. These big sites prefer to deal with fewer and more diligent suppliers such as OMIP, which is driving consolidation. OMIP have also developed a high quality and robust IT platform and process for content discovery and a new policing software service ‘Technical Copyright Analysis Tool’ (TCAT) for record companies, publishers and law firms searching information of artist and tracks on legitimate digital stores. This can be used to maximise the return from acquired rights
The interims to April reported a 43% increase in PBT to £213k on a mere 5.1% increase in turnover to £1.02m as streaming is higher margin. The directors have confirmed that momentum will have been maintained in the Finals to 31 October 2018, which are due to be reported in March. They recently announced the receipt of a signed contract to recoupable advance against future digital earnings in the amount of US$1m. In the meantime, the team are seeking earnings-enhancing acquisition. Buy at below the placing price and we hope you double your money!
OMG! Opportunity for Massive Gains ! is a Premium Newsletter distributed by ADVFN
WH Smith shares rise on sales increase
Following a focus on its travel arm, WH Smith has reported a rise in sales over the Christmas trading period.
In the 20 weeks to 19 January, the retailer revealed a total growth in sales by 6%, with sales in the travel arm rising 16%.
WH Smith is focusing on growth opportunities within its travel arm, which is performing strongly. The group will shut a number of high street stores.
Despite the fall in high street sales, the WH Smith chief executive Stephen Clarke said that the group enjoyed the third best quarter in the past 15 years.
“The Group has delivered a strong trading performance with total sales up 6% and like-for-like sales flat. Our Travel business continued to grow across all channels. This was driven by our ongoing investment in the business, including the rollout of our new concept stores at Heathrow, and growth in air passenger numbers. InMotion delivered an impressive sales performance over the Christmas period and integration into the Group is progressing well,” he said.
Following the trading update, shares rose almost 2%.
Jonathan Pritchard, who is a retail analyst at Peel Hunt, said: “Trading has remained decidedly solid through the first half. We continue to believe that the InMotion deal in the States is a complete game-changer, opening up a massive new market to WH Smith.”
Shares in the group (LON: SMWH) are currently trading +2.24% (1231GMT).
Burberry warns on the impact of a no-deal Brexit
Burberry (LON:BRBY) has warned on the impact of a no-deal Brexit on the company, as the deadline for the UK’s departure from the EU draws closer.
“The biggest concern is the disruption to the supply chain,” chief operating and financial officer Julie Brown told reporters.
“Burberry imports and exports significant volumes of raw materials, samples and finished goods between the UK and the EU, and it is the logistical delays that would impact design, product development and customer fulfilment.”
Ms Brown’s comments follow Burberry’s third quarter update. The firm reported a 1% rise in sales across the Christmas period, boosted by strong demand in China.
This proved behind analyst expectations of 2%, as a slowdown in US markets weighed down growth.
Burberry is most well-renowned for its infamous check pattern and iconic trench coats.
The luxury British brand is in the midst of an extensive turnaround initiative however, after years of weakened sales.
As part of the brand regeneration, long standing Creative Director Christopher Bailey left Burberry back in 2017.
In a widely celebrated move, Bailey was replaced by former Givenchy designer Ricardo Tisci.
Whilst Tisci’s debut Burberry collection was well received by the fashion set, Burberry are yet to harvest the results of his creative vision, with the collection set to hit stores in late February.
Nevertheless, Burberry said it remained pleased with the ‘brand heat’ generated from through its Christmas campaigns, Vivienne Westwood collaboration and B-Series product drops.
Marco Gobbetti, Chief Executive Officer commented on the third quarter:
“I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry. Excitement is growing ahead of next month’s launch of Riccardo’s debut collection. We will continue to manage the business dynamically as we reposition the brand. We confirm our outlook for the full year.”
Shares in the company are currently trading +1.52% as of 12:32AM (GMT).
Metro Bank shares tumble on missed expectations
Shares in Metro Bank fell on Wednesday morning after underlying profits in 2018 missed analyst expectations.
The lender reported a 138% rise in profits to £50 million in the year to 31 December 2018, however, profits were £9 million lower than expectations.
Following the news, shares in Metro Bank tumbled over 28% to 1,581p – the lowest since the company was listed in 2016.
The chief executive Craig Donaldson said: “2018 was another strong year of growth for Metro Bank as we continued to invest in both new stores and digital capabilities to win customers, deposits, assets and to create fans.”
“Metro Bank remains well positioned to support our growth strategy as we navigate an uncertain period for the UK,” he added.
In the fourth quarter of 2018, the lender saw 100,000 new customers and opened six new branches.
The group said that in the past year, loans grew 48% to £14.2 billion. Assets grew 32% to £21.7 billion and deposits in the bank increased 34% to £15.7 billion.
Shares in Metro Bank (LON: MTRO) are currently trading down 30.59% at 1.528,50 (1135GMT).
AJ Bell blames “negative market movements” as assets fall
AJ Bell (LON:AJB) said assets fell in the three months to December 31, according to a trading update published on Wednesday.
The online investment platform said that ‘negative market movements’ of £2.7 billion led to a 4% decline in assets to £44.2 billion since 30 September 2018.
Meanwhile, platform customer numbers rose by 7,285 to 190,498, marking an increase of 4%. Underlying Platform inflows increased 20% to £1.2 billion, compared to £1.0 billion during the same period a year before.
The update is the first since AJ Bell floated on the London Stock Exchange in December, valuing the firm at £651 million.
Chief executive Andy Bell commented:
“Trading in the first quarter of our financial year continued in line with the growth story we outlined ahead of our IPO and remains on track. We continued to attract new customers and inflows to the platform in the face of volatile investment markets, which demonstrates the strength and resilience of our business model as we approach our busiest period of the year. Our low-cost and easy-to-use investment platform continues to appeal to both retail customers and financial advisers, and providing high quality service to them remains our top priority.”
Looking ahead, Mr Bell said that platforms are set to remain “one of the main beneficiaries of defined pension transfers.”
He added: “Our competitive pricing model and service proposition means we are well positioned to benefit from anticipated developments in these areas.”
AJ Bell is an online investment and broker platform. The firm was founded in 1995 and is headquartered in Manchester.
Shares in AJ Bell remain flat as of 11:00AM (GMT).