Pan African Resources shares dip in spite of profit boost
Gold ore mining firm Pan African Resources Plc (LON:PAF) have seen their share price dip in morning trading on Wednesday, despite the firm posting a 30% spike in first half profits.
The positive results have been attributed to an increase in gold production at its existing mining operations. Production rose at continuing sites to 81,014 ounces, up 54% on-year.
Pan African Resources booked a total pre-tax profit of £9.3 million for the six month period through December 2018, which it owed to a 47% on-year spike in revenue to £75.3 million.
Chief Executive Cobus Loots, “Pan African Resources is pleased to report a robust operational, financial and safety performance for the six months ended 31 December 2018,”
“The group is now positioned as a low cost and long-life gold producer, in line with our stated strategy and our shareholders’ expectations.”
Kerry Group shares rally on annual profit growth
Irish based food production company Kerry Group Plc (LON:KYGA) have seen their share price rally in morning trading on Wednesday, as the company published a modest annual growth in profits on the back of a sales boost which kept margins healthy.
In spite of challenging conditions, the company posted a pre-tax profit for the year through December of 617.9 million EUR, a slight rise of 0.8% on-year. This however, does not do justice to its noteworthy growth in sales. Headwinds aside, the company booked an impressive spike of 3.1% in revenue on-year, coming to 6.6 billion EUR.
“We are pleased with our performance in 2018, with volume growth well ahead of our markets, underlying margin expansion in line with expectations and adjusted earnings per share growth of 8.6% in constant currency,” said chief executive Edmond Scanlon.
“In 2019 we expect to deliver adjusted earnings per share growth of 6% to 10% on a constant currency basis.”
Kerry Group as a portfolio candidate
The firm announced a final dividend of 49.2c per share which brought total dividends up 12% on-year -with 2018 dividends totalling 70.2c. Further, in spite of currency headwinds, sales grew 3.5% while trading margins were maintained at 12.2%. The company’s shares are trading up 1.8 EUR or 2.01% in morning trading to 91.5 EUR 20/02/19 11:05 GMT.Indivior releases new treatment, shares dip with copycat fears
FTSE 250 specialist pharmaceutical company Indivior Plc (LON:INDV) announced on Wednesday that it has released an authorised generic version of its treatment to combat opioid addiction. The treatment has been released in the US market in an attempt to combat the anticipated impact of rival companies launching ‘copycat’ products.
The decision to launch the treatment followed a decision by the US Supreme Court which denied an appeal from Indivior, which sought to keep in place a preliminary injunction which was previously granted against its rival firm Dr. Reddy’s Laboratories (NSE:DRREDDY), that prevented it from retailing a generic version of the company’s opioid addiction treatment.
The company said in a statement, “This business decision is based on the market impact expected from the anticipated at risk launch of a generic buprenorphine and naloxone sublingual film product in the U.S. by Dr. Reddy’s Laboratories and/or Alvogen.”
Indivior as a portfolio candidate
With ongoing fears about rival copycats and the impact of its previous generic release on material profits, it is little surprise perhaps that markets are being cautious about this company. The firm’s shares are currently trading marginally down – 0.45p or 0.43% – at 104.35p per share 20/02/19 10:47 GMT. Analysts from Jefferies International have downgraded their previous rating to a ‘Hold’ stacne on Indivior stock. Unsurprisingly, larger pharma players will be seen as the smart investment for long-term investors, with larger firms outperforming other sectors in 2018 and enjoying a positive start to 2019 – though some fears surround the longevity of profits as the year goes on.Sainsbury’s-Asda merger thrown into doubt after CMA findings
A proposed Sainsbury’s-Asda supermarket merger has been cast into doubt after the UK competition watchdog released its preliminary verdict.
The Competition and Market Authority (CMA) highlighted “extensive competition concerns” in its findings after conducting an investigation into the merger.
In a statement, Sainsbury’s said:
“We fundamentally disagree with the provisional findings. These misunderstand how people shop in the UK today and the intensity of competition in the grocery market. The CMA has moved the goalposts and its analysis is inconsistent with comparable cases.
It continued: “We are surprised that the CMA would choose to reject the opportunity to put money directly into customers’ pockets, particularly at this time of economic uncertainty.
We will be working to understand the rationale behind these findings and will continue to make our case in the coming weeks.”
Back in October, The CMA announced that it would be examining the £10 billion merger in detail, amid concerns that the deal would reduce choice and lead to higher prices for customers.
If the deal is given the green light, the Sainsbury’s-Asda merger would create the nation’s largest supermarket, surpassing Tesco (LON:TSCO).
As it stands, Sainsbury’s is the second biggest supermarket in the UK, holding a 15.4% market share as of October 2018. Walmart-owned Asda followed closely behind with a 15.3% market share.
Shares in Sainsbury’s (LON:SBRY) are currently down -16.66% as of 11:03AM (GMT).
McBride shares dip on profit warning
British cleaning product manufacturer McBride Plc (LON:MCB) have seen their share price dip in Wednesday morning trade, following a statement from the company that annual profit could fall as much as 15% with fears surrounding increased overheads for raw materials and distribution.
The news ended what was an optimistic period for the company, which enjoyed a profitable end to 2018. The company booked a bumper period in sales, with the six months through December representing a 6% rise on-year.
“However, the group continues to see pressure on its cost base,” McBride said in its statement.
“We continue to expect the overall raw material pricing outlook to show improvements in the second half, but not to the extent anticipated in early January.”
“In addition, distribution costs continue to rise beyond our previous estimates due to market rates and efficiency challenges driven by logistics capacity shortfalls and internal service gaps.”
McBride as a portfolio candidate
The firm have said that despite a positive first half, adjusted pre-tax profits for the full year through June are expected to be approximately 10-15% lower than the previous year. Since markets opened on Wednesday, McBride shares are currently trading down 41p or 31.54% at 89p per share 20/02/19 10:25 GMT. Today, Liberum Capital analysts have reiterated their ‘Buy’ stance on McBride stock, while Peel Hunt have revised their position from earlier in the month, and downgraded the stock to a ‘Hold’ rating.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%.
In a statement, António Horta-Osório, Lloyds Chief Executive said:
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.
“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?
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
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
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
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.