FTSE 100 rises on back of strong trading updates
The FTSE 100 closed 23.40 points higher on Thursday at 7,140.68.
Eight companies made updates today, including Game Digital (LON:GMD) and Theworks.co.uk (LON:WRKS) and Burberry (LON: BRBY).
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Dyson wins five-year legal battle with European courts
Dyson has won a legal battle with the European courts on Thursday that lasted for five years. The battle concerned the energy labelling of its vacuum cleaners. Though the legal battle was dismissed in 2015, Dyson appealed it in 2016. The case was sent to the General Court for a new assessment and was upheld on Thursday.
In 2013, Dyson began challenging the European Union’s regulations because the vacuum cleaner energy efficiency tests were “flawed” according to the UK engineering company. It considered this aspect of the energy label regulations misleading. It said that EU regulations permit vacuum cleaners to be tested in a laboratory without any efforts made to replicate real world conditions. Therefore, the results are misleading, flawing energy labels in their current form.
Dyson said the energy labelling regulations were often exploited by manufacturers in order to make their products appear more efficient than they actually are.
Bloomberg have said that the legal victory is a “vindication” for the company’s founder and boss James Dyson. This is as a result of his strong support for the UK’s departure of the European Union. A spokeswoman for the company commented: “This is welcome news and a win for consumers across Europe. We have been arguing consistently that the Commission committed two legal violations to the detriment of European consumers and Dyson.” “This benefited traditional, predominantly German, manufacturers who lobbied senior Commission officials. Some manufacturers have actively exploited the regulation by using low motor power when in the test state, but then using technology to increase motor power automatically when the machine fills with dust – thus appearing more efficient.” “This defeat software allows them to circumvent the spirit of the regulation, which the European Court considers to be acceptable because it complies with the letter of the law.” “In these days of Dieselgate, it is essential consumers can trust what manufacturers say about their products. But the Commission endorsed a measure that allowed Dyson competitors to game the system.” “The legal process has been long, distracting and expensive, with the odds stacked against us. Most businesses simply do not have the resources to fight regulations of this nature. It is appalling that this illegal and fundamentally anti-competitive behaviour has been endorsed for so long.” The current labelling regulations will remain in place for 10 weeks to allow time for appeal. Dyson also recently announced that it will manufacture its new electric car in Singapore in 2020, with the first car to be launched in 2021.Sainsbury’s profits rise, market uncertainty looms
The high street crisis has left Sainsbury’s fearing the Christmas trading season in the run up to December. Indeed, with the high street crisis hitting companies following a successful UK summer, the market remains considerably “competitive”. Despite this, Sainsbury’s has reported an increase in half year profits.
Britain’s second largest supermarket chain revealed its interim results for the 28 weeks to 22 September on Thursday.
Group sales are up by 3.5% at £16,884 million with retail sales (excluding fuel) at 1.2%. Like-for-like sales (excluding fuel) have increased by 0.6%. Additionally, underlying profit before tax has jumped by 20.3% from £251 million to £302 million. The group’s underlying earnings per share were reported up by 18% to 10.3p.
Morover, interim dividend of 3.1% per share is in line with the group’s policy of paying 30% of prior full year dividend.
Commenting on the results, Sainsbury’s Group Chief Executive, Mike Coupe, said:
“The market remains very competitive and we are transforming our business to meet rapidly changing customer needs. We have fundamentally changed how our 135,000 Sainsbury’s store managers and colleagues work and I would like to thank them for their ongoing hard work through this period.”
“We have delivered a solid first half performance and profit has increased because we have delivered significant Argos synergies ahead of schedule. Sales of food and general merchandise were boosted by the hot summer, but general merchandise margins remain under pressure.”
“Our strategy of offering customers a distinctive range of high quality and great value food has driven like-for-like sales growth at Sainsbury’s. Where we have invested to lower prices, volumes and transactions have increased.”
“Our proposed combination with Asda will create a dynamic new player in UK retail, with the ability to further lower prices and to reduce the cost of living for millions of UK households. The Competition and Markets Authority is conducting its in-depth Phase Two review into the proposed combination and we continue to engage constructively with the CMA and Panel.”
All 251 Argos stores, including the 60 new stores opened in Sainsbury’s supermarkets, continue to trade well, the group said.
Sainsbury’s is not the only leading retailer to profit from the British summer of scorching weather and football success.
However, retail sales dropped in September by 0.8%, a decrease that was considerably larger than anticipated. Likewise, the drop in food sales reached 1.5% for that sector alone. With the John Lewis Partnership (LON:JLH) reporting a 99% drop in profits, low-budget supermarkets Aldi and Lidl continue to snap up their share of the market. At 11:10 GMT today, shares in Sainsbury’s (LON:SBRY) were trading at +0.34%.Burberry profits grow on back of new collection
Burberry has announced half-year results, revealing a rise in profits.
Following growth in Asia and a new debut collection, the fashion brand like-for-like store sales increased by 3%.
Analysts expected pre-tax profits of £169 million, which the designer was able to beat and post pre-tax profits of £174 million.
The increase in sales was heralded to the chief creative officer Riccardo Tisci’s debut collection called Kingdom.
“We made good progress in the half as we began to transform and reposition Burberry, while maintaining our focus on financial and operational discipline,” said Burberry in a statement.
“While the early signs are encouraging, transitioning the product offer, evolving our distribution, changing wider consumer perception and seeing this translate into positive business performance will take time,” it added.
The company had £33 million in restructuring costs and £28 million costs for the disposal of its beauty business.
Naeem Aslam, from Think Markets said the fashion brand had proved that “hiring the right person for the right job matters a lot”.
“Designer Ricardo is the hope for the company and his collection has received exceptional response despite the fact that most products won’t reach stores until February. The company styled ad campaign resonated with its lovers. This was something which the firm was lacking.”
“What Burberry has realised that it needs to create FOMO among its customers and have more limited lines is the way forward. Communication and delivering a product which the users like is the key to the fashion industry because the competition is as fierce as it can be,” he added.
Burberry has said that the outlook for the full year remains unchanged.
Shares in the group (LON: BRBY) are trading +0.58% at 1.826,50 (1029GMT).
AstraZeneca earnings drop, Brexit plans outlined
New data has emerged on Thursday as AstraZeneca reveals its earnings in the third quarter.
For the three months to 30 September 2018, revenue dropped by 14% totalling $5.34 billion. Additionally, earnings per share dropped by 37% to $0.71 per share in the third quarter.
The revenue drop was driven by a decline in externalisation revenue. Externalisation revenue slid by 81% to $392 million as the company’s partnership with MSD for their Lynparza treatment weighed.
AstraZeneca also released its plans concerning Brexit, outlining the significant preparations to handle different scenarios.
The company is committed to safeguard access to medicines for its patients. It has said it will focus on the reduction of mutual interdependence, replicate critical production processes in both the UK and EU and coordinate variations to licences and thousands of packaging-material changes. Likewise, it is ensuring the supply chain between UK and Swedish factories. It will move additional stock to EU distribution centres, build six weeks’ worth of stock in the UK and four weeks’ worth in the EU. Furthermore, it will reach out to EU and Member State governments, calling on them to accept the UK’s testing standards. The company’s CEO has previously warned of the medicine shortages following Brexit, and the potential dangers this may impose on patients. In the event of a no-deal departure from the European Union, Britain may face widespread medicine shortages. “We have products that go back and forth between the UK and Europe at different stages of manufacturing”, he said. “If drugs are stuck, you have a problem”. The company’s CEO is not the only one to express fear of a no-deal Brexit. Outside of the pharmaceutical sector, S&P have warned that a no-deal will trigger a recession. AstraZeneca’s report did show that product sales increased by 8% to $5.27 billion. This was boosted by its new cancer drugs. Indeed, oncology sales increased by 30% during the third quarter. From the start of 2018, pre-tax profit dropped by 31% to $1.26 billion. This compares to a $1.820 million from a year earlier. At 09:29 GMT today, shares in AstraZeneca plc (LON:AZN) were trading at +1.83%. At the beginning of October, AstraZeneca sold rights to the German company Grunenthal for an acid-reflux medicine.Zopa raises £60 million final funding round
Zopa, one of the UK’s leading peer-to-peer lenders, has raised £60 million from investors on Thursday.
The £60 million sum is the biggest amount of funding it has received in a round so far. However, this will be its last round of funding before it becomes an established bank.
Zopa has not revealed how much the new funding round now values the company.
Jaidev Janardana, Chief Executive and co-founder of Zopa said:
“This new funding takes us a step closer to realizing our vision of being the best place for money in the UK”.
Established in 2005, Zopa has leant over £3.7 billion in unsecured personal loans to customers and in 2016 it applied for a banking licence.
In august it had raised £44 million. An additional £16 million in investments were gained since then closing the final fundraising round at £60 million.
Earlier in September, its competitor Funding Circle announced that it would be listed on the London Stock Exchange. The October listing raised less than initially expected. Shares in Zopa’s competitor, Funding Circle (LON:FCH), are currently trading at +2.82% (08:23 GMT).
Both Zopa and Funding Circle are two market leaders of Financial Technology.
Indeed, they both use new technology to compete with the traditional financial services. In contrast to Funding Circle, Zopa has already made a profit, with £1.5 million recorded in 2017. This figure is up from the loss of £5.8 million the previous year. No investor names have been given as of yet, but Zopa has revealed that both existing and new investors have contributed to the funding. Current investors include Augmentum FinTech, the Spotify investor Northzone and Bessemer Venture Partners. The company’s decision to venture into banking follows as the peer-to-peer industry faces stricter regulations. Zopa and Funding Circle are not the only companies to lead the way in UK FinTech, take a look at some other businesses also prospering.Tesla announces new chair to replace Elon Musk
Tesla has announced a new chair to replace Elon Musk.
Robyn Denholm will leave her role as the CFO and Head of Strategy at Telstra (ASX: TLS) to chair the electric car company’s board.
Following a settlement with the SEC after Musk’s infamous tweets about taking Tesla private, the chief executive had to step down as the group’s chair and find a replacement.
In a statement, the group said: “Tesla’s Board of Directors is pleased to announce that Robyn Denholm has been appointed as Chair of the Tesla Board, effective immediately.”
“So that she will be able to devote her full attention to the Tesla Chair role, Robyn will be leaving her role as CFO and Head of Strategy at Telstra, Australia’s largest telecommunications company, once her six-month notice period with Telstra is complete. Robyn will be serving as Tesla Chair on a full-time basis.”
Denholm has previously worked as CFO and COO at Juniper Networks, as well as various roles at Toyota.
She said: “I believe in this company, I believe in its mission and I look forward to helping Elon and the Tesla team achieve sustainable profitability and drive long-term shareholder value.”
She has served as an independent director of the carmaker’s board since 2014.
Musk said of the appointment: “Robyn has extensive experience in both the tech and auto industries, and she has made significant contributions as a Tesla Board member over the past four years in helping us become a profitable company.”
“I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy,” he added.
The carmaker beat Wall Street analysts’ expectations in the third quarter and delivered 83,500 cars.
Shares in the group (NASDAQ: TSLA) are trading +2.08% at 348,16 (0820GMT).
German exports and imports drop in September 2018
New data has emerged today revealing German exports and imports figures for September 2018. The provisional data has been supplied by the Federal Statistical Office (Destatis).
German exports totalled €109.1 billion for the month, down by 0.8% from in August 2018. Equally, German imports reached the value of €90.7 billion, down by 0.4% from the previous month.
Compared to the same month a year earlier, exports dropped by 1.2% but imports have increased by 5.3% year on year.
Foreign trade balance was positive, showing a surplus of €18.4 billion in September 2018.
A year earlier in September 2017, the surplus amounted to €24.2 billion.
At the start of the year in January 2018, Germany exports were at €107.1 billion and imports totalled €89.9 billion.
Additionally, the provisional results of the Deutsche Bundesbank revealed that the current account of the balance of payments showed a surplus of €21.1 billion in September. This figure takes into account the balances of trade in goods including supplementary trade items (+€19.7 billion), services (-€1.8 billion), primary income (+€6.8 billion) and secondary income (-€3.6 billion). This figure compares to a current account surplus of €26.9 billion in September 2017. Compared to the same month a year earlier, exports to EU countries decreased by 0.4%, whereas imports jumped by 5.8%. Moreover, in September, Germany exported €64.7 billion of goods to the Member States of the European Union. Likewise, it imported €52.1 billion of goods from those countries. German exports of goods to countries outside of the EU totaled €44.4 euros in September and imports from those countries reached €38.6 billion. Compared to September 2017, exports to countries outside of the EU dropped by 2.2% and imports increased by 4.7%. Today, the markets lie in the aftermath of the U.S mid-term elections. With the dust settling from the elections, the DAX Index jumped sharply in the Wednesday session. Trading closed on Wednesday evening with the DAX (INDEXDB:DAX) up by 0.83%. In addition to the DAX Index, the FTSE 100 rallied following the US midterms.Marks & Spencer undergoes “scrutiny and change”
The Marks & Spencer boss has shown optimism at the retailer’s new turnaround plan.
Steve Rowe said that the new overhaul was leaving “no stone unturned” and doing all it could to combat falling food and clothes sales.
“Against the background of profound structural change in our industry, we are leaving no stone unturned,” he said.
“Every aspect of our ranges – how we trade, our supply chain and marketing – is undergoing scrutiny and change. We’re going bloody fast, trust me.”
Marks & Spencer is planning on appealing to younger shoppers, who are currently staying clear from the “ageing” clothing department and expensive food hall.
The chief executive’s comments came as the group reported a 3.1% decline in group sales.
To save costs, Marks & Spencer has closed 24 stores as part of a plan to axe 100 branches by 2022.
Archie Norman, the turnaround expert and chairman of the group said: “A lot of it is behind the scenes, the blocking and tackling, the unglamorous things such as the supply chain … tackling a legacy that goes back decades. If Steve [Rowe] was Donald Trump, he would probably be declaring today’s results a great personal victory, but that is not really quite the way we see it.”
And for the clothing line, he added: “We have some good products this season and the ranges are improving, but we are still in a position where we are buying too many [clothing] lines. The range is too broad and too shallow.”
Tom Stevenson, who is from Fidelity Personal Investing said: “Reading through M&S’s results is like taking a cold shower. The company is ruthlessly honest about the massive challenge it faces. Sales are still declining, in the context of which flat profits is not a bad result.”
Shares in the group (LON: MKS) opened on Thursday -1.54% at 296,28 (0803GMT).