Lloyds share price up after 24% profit boost

Nicole Jeary
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Lloyds share price up after 24% profit boost
Lloyds share price (LON:LLOY) ticked up after the bank reported 24% rise in profits for 2018. Lloyds said profits after tax for the year were up £4.4 billion. Nevertheless, this proved below expectations. In addition, the bank announced a total ordinary dividend of 3.21p per share, an increase of 5% on 2017. Lloyds also proposed a buy-back of £1.75 billion, marking a total capital return of up to £4.0 billion. This was an rise of up to 26%.
Net income climbed to £17.8 billion, a rise of 2%. Operating costs are also down on the previous year, despite increased investment. Nevertheless, the bank also said that it had allocated £750 million in 2018 relating to payment protection insurance (PPI) claims.
In a statement, António Horta-Osório, Lloyds Chief Executive said:
“2018 has been a year of strong strategic and financial delivery, as we build on our unique capabilities to transform the Group to succeed in a digital world. We have made significant progress against the priorities we set out at the start of the year when we launched the third stage of our strategic plan, which is supported by investment of more than £3 billion over the plan period. We have also delivered another year of increased statutory profits and returns along with strong capital build and, as a result, have been able to recommend an increased dividend and share buyback to our investors.” Earlier this month, Lloyds announced the appointment of William Chalmers as its new CFO. The former Morgan Stanley banker is set to take up the role in June of this year. Lloyds share price is currently trading +2.98% as of 10:33AM (GMT).

What could The Independent Group mean for the FTSE 100?

Nicole Jeary
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What could The Independent Group mean for the FTSE 100?
The formation of the Independent Group has raised serious questions about the future of the British Politics, and not least, the Labour party itself. Whilst many smaller fringe parties already exist in Parliament, political debate has been historically dominated by the two major players – the Conservatives and Labour. However, with a stalemate over Brexit raging on, it seems change is stirring in Westminster – and beyond. What has happened? The group was created after a set of Labour MPs resigned from the party, in opposition to its handling of allegations of antisemitism alongside the leadership’s approach to Brexit. The seven rebel MPs include 2015 leadership candidate Chuka Umunna, the former Shadow Minister for Public Health, Luciana Berger, and former Shadow Chancellor of the Exchequer, Chris Leslie. This isn’t the first time party splintering has occurred in British politics, so perhaps its implications should accordingly not be prematurely overstated. Famously, the Liberal Democrats were formed after the Liberal Party and Social Democratic Party merged back in 1988. Nevertheless, this most recent act of party rebellion could have serious ramifications for the future of Jeremy Corbyn’s leadership. Corbyn may have survived a leadership challenge back in 2016, however, this latest tremor does not bode well for his already tenuous authority within the party. The resignation of several high profile names looks set to plunge the party into further disarray, perhaps signalling the end of the road for Corbyn. However, with only a handful of deflectors on side at present, it still proves early to write his political obituary just yet. Who else could be on board? So far the breakaway group has only affected the membership of the Labour party, however, there are suggestions that as many as three Conservative MPs may very well be preparing to join the ranks. There is speculation that Sarah Wollaston, Heidi Allen and Nick Boles may be among those considering jumping ship. In fact, Chuka Umunna has already called for cross-party alliances, urging centrist Conservatives to join the cause. “We’re inviting anybody who shares our values to join us,” Mr Umunna said in comments to BBC Radio 4’s Today programme. “There are clearly a lot of Labour MPs wrestling with their conscience, and Conservatives who are demoralised for the Ukip-isation, if you like, of the party.” So, what could this mean for the FTSE? The immediate reaction to London’s leading index was muted – and so it should be, with just 7 MPs defecting. However, if this is the beginning of a broader move from Labour MPs, this could well be a positive for the FTSE 100. This is not because there is a high chance of the Independent Group getting into power and promoting business-friendly policies, but more the chances of Labour getting into power are dramatically reduced. This brings with it the alleviation of fears over mass nationalisation, schemes that allow customers to have a say in boardroom pay for large companies and increased tax on large multi-nationals.

Nestle well positioned in confectionery following KitKat success

Dina Caruso
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Nestle well positioned in confectionery following KitKat success
Nestle (SWX:NESN) has said that the success of its KitKat chocolate means it does not need to add any new businesses to its portfolio. Nestle sold its U.S confectionary business to Italy’s Ferrero in a $2.8 billion deal last year. The sale was made to push Nestle closer towards more health-conscious products. Shares in the company were trading slightly lower on Tuesday at almost -1%. Today Nestle’s global head of confectionary, Alexander Von Maillot, told journalists on a call that the company “is very well positioned with our portfolio.” “At 9% (organic sales growth in 2018) KitKat is strongly outperforming the market. We are convinced we can continue this,” he said. KitKat is the biggest brand in Nestle’s confectionary portfolio, bringing in over one billion Swiss francs in sales. The company expects the high sales to keep growing. As a result of the strong performance of its KitKat brand, the company does not need to fill the confectionary-shaped gap that was left following the sale of its U.S candy business. Last year, Nestle announced that it was set to make additional cuts to sugar, salt and saturated fat quantities in its products. This was decision was made in an attempt to draw in health-conscious customers. It said that it aimed to reduce sugar by a further 5%, in addition to the over 34% reduction made in 2000. Additionally, it said that it aimed to cut salt by a further 10% following the 20% reduction made in 2005. Nestle is not the only company seeking to align itself with the health industry. Pepsi also announced last year that it would buy the drink-machine maker SodaStream for $3.2 billion to compete against rival Coca-Cola for healthy beverages. As more consumers are pursuing a healthier lifestyle, food, beverage and confectionary companies have had to shift their products to meet this growing demand. At 13:27 CET, shares in Nestle SA (SWX:NESN) were trading at -0.58%.

Honda to close Swindon factory in 2021

Nicole Jeary
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Honda to close Swindon factory in 2021
Honda confirmed it is set to close its Swindon factory in 2021, placing as many as 7,000 jobs at risk. The Japanese car manufacturer blamed challenges in the car industry for the move. Ian Howells, senior vice-president for Honda in Europe, said in comments to the BBC: “We’re seeing unprecedented change in the industry on a global scale. We have to move very swiftly to electrification of our vehicles because of demand of our customers and legislation. Honda’s Swindon plant is the car makers only location in the EU. However, it said the decision was unrelated to ongoing Brexit negotiations. Howells said: “This is not a Brexit-related issue for us, it’s being made on the global-related changes I’ve spoken about. “We’ve always seen Brexit as something we’ll get through, but these changes globally are something we will have to respond to. We deeply regret the impact it will have on the Swindon community.” In response to the announcement, Business Secretary Greg Clark MP said this was a “devastating decision for Swindon and the UK”. He continued: “This news is a particularly bitter blow to the thousands of skilled and dedicated staff who work at the factory, their families and all of those employed in the supply chain. I will convene a taskforce in Swindon with local MPs, civic and business leaders as well as trade union representatives to ensure that the skills and expertise of the workforce is retained, and these highly valued employees move into new skilled employment.” Shares in Honda (TYO: 7267) are currently trading +0.37% as of 11:37AM (GMT).  

HSBC annual profits hit by China, shares fall

Nicole Jeary
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HSBC annual profits hit by China, shares fall
HSBC (LON:HSBA) reported a fall in profits for 2018, in part due to the economic downturn in China. The bank posted profits of $19.9 billion (£15.4 billion) for the year, compared to $17.2 billion in 2017. Whilst an increase, this proved behind expectations, sending shares lower during Tuesday trading. The bank was particularly affected by turbulence in the global markets, as well as fears over global trade and Brexit. Moreover, as most of the Bank’s revenues come from Asian markets, its results were impacted by the economic slowdown in China. HSBC Chief Executive John Flint commented on the results: “These are good results that demonstrate progress against the plan that I outlined in June 2018. Profits and revenue were both up despite a challenging fourth quarter, and our return on tangible equity is significantly higher than in 2017. This is an encouraging first step towards meeting our return on tangible equity target of more than 11% by 2020.” In addition, Mark E Tucker, the group’s chairman said in a statement: “Our ability to meet our targets depends on being able to help our customers manage the present uncertainty and capture the opportunities that unquestionably exist.” He added: “HSBC is in a strong position. Our performance in 2018 demonstrated the underlying health of the business and the potential of the strategy that John Flint, our Group Chief Executive, announced in June.” Shares are currently trading down -3.89% as of 11:09AM (GMT) on the back of the announcement.

Greggs sales boosted by Vegan sausage roll

Nicole Jeary
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1
Greggs sales boosted by Vegan sausage roll
Greggs (LON:GRG) said it expects higher profits for the year in a trading update on Tuesday, after a better-than expected opening few weeks of 2019. The bakery chain said it had enjoyed an “exceptionally strong start” to the year. In the seven weeks to 16 February, sales rose by 14.1%, compared to 6.2% in the opening months of 2018. Meanwhile, like-for-like sales in company-managed shops rose by 9.6%, a significant increase from 2.9% during the same period a year before. The firm already upped its profit guidance for the second time in two months in January, after enjoying strong trading over the festive period. Greggs attributed the strong performance to “extensive publicity” surrounding the launch of its popular Vegan sausage roll at the start of January. The company launched the roll to coincide with “Veganuary”, with veganism growing in popularity in the UK. According to the Veganuary campaign, a record 250,000 participated in eating a solely plant-based diet for the whole of January. Many consumers have shifted away from red meat consumption amid ethical concerns regarding the environment as well as concerns over their health. As a result many of the nation’s supermarkets have upped their vegan offerings in stores, as well as food chains such as Greggs have looked to capitalise on shifting consumer tastes. Greggs shares are currently trading +7.18% as of 10:16PM (GMT).    

Anglo African O&G partially reimbursed on Tilapia Licence costs

Dina Caruso
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Anglo African O&G partially reimbursed on Tilapia Licence costs
Anglo African Oil & Gas has been partially reimbursed by the Congolese national oil company Société Nationale des Pétroles du Congo for costs relating to the Tilapia Licence. The oil and gas developer said that the Société Nationale des Pétroles du Congo owes it roughly $10 million in respect for its share of the total costs. Anglo African Oil & Gas had proposed to the Congolese national oil company that it would accept that transfer of a large portion of its 44% interest in the licence. However, the Congolese national oil company made an initial cash payment of $663,000 to Anglo African Oil & Gas. It also informed Anglo African Oil & Gas that it would propose a short-term payment plan in order to repay the remaining debt, which roughly stands at $9.5 million. David Sefton, Executive Chairman od Anglo African Oil & Gas, commented on the announcement: “We are pleased to receive this payment from SNPC although our preference remains to increase the size of our holding in the Licence, as we had recently proposed to SNPC. However, SNPC is entitled to repay the overdue debt in cash, and we have emphasised to SNPC that this needs to be done in a timely manner. We also recognise that SNPC takes a similar view to us as to the value of the field and therefore why it would prefer to meet the debt in cash.” “As previously stated, we are working towards bringing TLP-103C into production in April. The extra cash that we have now received plus the substantial further funds to come from SNPC, reinforces the cash position of the Company and therefore its ability to meet the costs associated with this work.” In January, Anglo African Oil & Gas announced that it would raise £6 million for expansion. Earlier in November, shares in Anglo African Agriculture surged following a trading update. `At 09:52 GMT Monday, shares in Namibian Resources plc (LON:AAOG) were trading at +0.9%.

Coca-Cola HBC acquires Bambi in €260 million deal

Dina Caruso
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1
Coca-Cola HBC acquires Bambi in €260 million deal
Coca-Cola HBC (LON:CCH) announced on Monday that it has acquired Bambi, Serbia’s leading confectionary business. The business was acquired from Mid Europa Partners in a €260 million deal. Coca-Cola HBC is the world’s third-largest Coca-Cola bottler. The company, listed on the London Stock Exchange, has a secondary listing on the Athens Stock Exchange as it was founded in Greece in 1969. Bambi was established in 1967 in Serbia and is a leading confectionary business in the region. It manufactures a range of products such as biscuits, wafers and savoury snacks. Under its portfolio, its brands include Bambi, Plazma, Wellness, Zlatni Pek, and Josh. Among these, its main biscuit brand Plazma is ranked first in brand recognition in Serbia, Coca-Cola HBC said. Bambi’s 2018 revenue was €80 million. Over two thirds was generated in Serbia, with the rest being predominantly generated in the Western Balkans. Its EBIT margin is almost three times higher than Coca-Cola HBC. Last week, Coca-Cola HBC’s full-year results were at the top of guidance, driven by strong volume growth. Volume growth accelerated to 4.2%, with all segments experiencing a rise, particularly sparkling beverages. However, it did forecast 2019 economic growth to slow down in a variety of its markets, whilst still expecting volume to grow across all three segments.

The acquisition adds iconic brands to the Coca-Cola HBC portfolio in Serbia and in the Western Balkans.

The company has said that these two territories are among its fastest growing. Soran Bogdanovic, CEO of Coca-Cola HBC, commented on the acquisition: “This acquisition represents an excellent opportunity to create additional value for Coca‑Cola HBC, its customers and shareholders. It adds iconic, complementary consumer brands to our portfolio of leading beverage brands, as well as consumer-focused innovation capabilities. It further strengthens our relevance with customers and allows us to increase our presence in key consumption occasions, such as the start of the day, on the go and at home snacking and refreshment.” Last year, The Coca-Cola company set its eyes on the cannabis market, closely watching the cannabis-infused drinks market. Additionally, it purchased the Costa Coffee chain from Whitbread in a £3.9 billion deal, following the announcement from Whitbread earlier in the year that it wanted to spin off its Costa Coffee branch. At 09:40 GMT Monday, shares in Coca-Cola HBC AG (LON:CCH) were trading at -0.59%. Though trading is yet to begin in the US, shares in The Coca-Cola company (NYSE:KO) closed trading at -0.77% Friday evening.

McColl’s Retail profit more than halves, shares remain up

Dina Caruso
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1
McColl’s Retail profit more than halves, shares remain up
UK convenience retailer, McColl’s Retail Group plc (LON:MCLS), announced on Monday its preliminary results for the year ended 25 November 2018. Profit more than halved and its dividend has been cut having suffered from supply chain disruptions. Shares in the company remained strong during early trading up almost 13%. Pre-tax profit for the period decreased to £7.9 million, more than half of the £18.4 million figure from the year prior. Total revenue was up 8.1% to £1.24 billion. The company has said that this reflects the annualisation of an acquisition in 2017. However, total like-for-like sales decreased 1.4%, having been impacted by supply chain disruptions. McColl’s Retail has posted a final dividend of 0.6%, which drags the total yearly dividends down to 4.0p, a decrease compared to the 10.3p on-year figure. The company has emphasised that, though Brexit fosters a climate of uncertainty for both businesses and consumers alike, food and grocery retail has “a history of resilience during economic downturn”. Jonathan Miller, Chief Executive of McColl’s Retail, commented on the results: “2018 was undoubtedly a challenging year, marked by supply chain disruption following Palmer & Harvey’s entry into administration and the accelerated transition to our new supply partner Morrisons.” “Despite this disruption, we continued to make progress against a number of our key strategic plans. We completed the rollout of 1,300 stores to Morrisons supply in less than nine months, which represents a considerable achievement and provides us with a more secure supply chain and a higher quality chilled and fresh offer. We also continued to invest in our estate, with 59 convenience store refreshes completed in the year and 11 new stores acquired.” “We are a profitable and cash generative business, and our priority for the year ahead is to rebuild operational momentum and we remain confident in delivering our strategic plans.” In December, McColl’s lowered its profit forecast for 2018 from £44 million to roughly £35 million. It blamed the collapse of wholesaler Palmer & Harvey for the downgraded profit forecast. At 09:14 GMT Monday, shares in McColl’s Retail Group plc (LON:MCLS) were trading at +12.69%.

Anglo American Platinum raises dividend as balance sheet strengthens

Dina Caruso
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2
Anglo American Platinum raises dividend as balance sheet strengthens
Anglo American Platinum (JSE:EMS) revealed its financial results on Monday following another “strong” financial and operational performance. The company has raised its dividend following the sharp growth in annual earnings and cash last year. Dividend pay-out ratio increased from 30% to 40% of headline earnings. This is a result of the company’s “strong” balance sheet and the management’s confidence in its underlying cash-generating capability. Earnings (EBITDA) grew 21% to R14.5 billion over the financial year. Moreover, Anglo American Platinum saw a record production from Mogalakwena, Unki and Kroondal, contributing to a 4% increase in total production. Free cash flow from operations grew 60% to R5.6 billion. Net cash was reported as R2.9 billion. Looking ahead, the company has said that is is “well positioned” to deliver its next phase of value, remaining in line with a clear strategy. The company has also announced the tragic death of two colleagues. It has, however, reported a 34% improvement in its injury rates. Anglo American Platinum CEO Chris Griffith commented on the results: “The fact that two of our colleagues died at work in 2018 is deeply tragic and felt by every one of us. Notwithstanding the significant improvement in the number of fatalities and injury rates, these tragic deaths have heightened our resolve and efforts to eliminate fatalities.” “Operationally and financially, we had a very strong year. Record production performances from Mogalakwena, Unki and Kroondal saw total platinum group metal production increasing by 4%. We increased our free cash flow by 60% and reduced net debt by R4.7 billion turning to a net cash position of R2.9bn at the end of 2018. I am pleased to report that, given this performance and the improving market outlook for PGMs, Anglo American Platinum was the best-performing share on the JSE All Share Index in 2018 delivering a total shareholder return of 55%.” “Whilst the platinum price remained subdued, the price of our basket of metals increased by 13%, with our diversified PGM proposition delivering significant value for shareholders.” Earlier in January, Anglo American’s annual output increased 7%. Additionally, it reported strong production figures last July across both copper and platinum. Its shares remained strong in July despite its Glencore controversy. At 10:37 GMT+2 Monday, shares in Anglo American Platinum Ltd (JSE:AMS) were trading at +0.43%.
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