Wizz Air shares fall 5% on lowered profit forecast

Safiya Bashir
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Wizz Air shares fall 5% on lowered profit forecast
Wizz Air has lowered its forecast for full-year profit to between €270 and €300 million. The budget airline reduced forecast from €310-340 million, blaming by air traffic control strikes and higher fuel prices. The price of jet fuel is 23% higher than it was this time 12 months ago. Shares in the group dived 5.2% to 2,527p on Wednesday, despite the group reporting a 2.7% year-on-year increase in underlying earnings and 20% growth in revenues to €1.38 billion. Chief executive, József Váradi, said that an “encouraging revenue environment, robust demand and an improved operational performance” meant that Wizz Air was able to offset half of the disruption and headwind costs but it was not enough to prevent the downgrade. City broker Liberum said that capacity growth at the airline would “eventually improve the industry’s ability to offset higher fuel costs through higher unit revenues”. EasyJet (LON: EZJ) and Ryanair (LON: RYA) have also suffered from the increased fuel prices and airport disruptions. Shares in Wizz Air (LON: WIZZ) are trading -1.27% at 2.633,00 (0919GMT).

Persimmon boss asked to leave over bonus “distraction”

Safiya Bashir
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Persimmon boss asked to leave over bonus “distraction”
Persimmon boss Jeff Fairburn has been asked to leave the group over his £75 million bonus payout. The housebuilder has said that the controversial bonus had become a “distraction” whilst also damaging the group’s reputation. Fairburn’s bonus was reduced from £100 million but the reduced rate was still criticised by politicians, charities and shareholders. “Jeff has been a successful leader of the business since his appointment in 2013, but the board believes that the distraction around his remuneration from the 2012 LTIP (long term incentive plan) scheme continues to have a negative impact on the reputation of the business and consequently on Jeff’s ability to continue in his role,” said the company. The group said that it will not ask for any of Fairburn’s bonus back. “Whilst the company has sought to mitigate the entitlement falling due to Jeff, as Jeff is leaving at the company’s request, legal advice has confirmed that the company does not have any discretion to withhold or seek forfeiture over any of the ‘restricted’ 2012 LTIP shares, although these continue to be required to be held until 6 July 2021.” Fairburn will be replaced by replaced as the interim chief executive by David Jenkinson until a permanent replacement is found. When asked about his bonus in an interview with the BBC last month, the Persimmon boss walked away. “I’d rather not talk about that,” he said. Labour MP Rachel Reeves commented on the walkout, saying it was “unfortunate” that “Mr Fairburn thinks he is above answering questions about his extravagant gains and the cost to the public purse”. Since he took over in 2013, Persimmon’s stock market value had doubled to £7.5 billion. Shares in the group (LON: PSN) are trading +1.15% at 2.383,00 (0849GMT).    

Marks & Spencer sales fall 2.2%

Safiya Bashir
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Marks & Spencer sales fall 2.2%
Sales at Marks & Spencer (LON: MKS) have continued to fall this year. Like-for-like sales fell 2.2% for the six months to the end of September. Clothes sales were down 1.1%, whilst food fell a further 2.9%. “We are expecting little improvement in sales trajectory,” said the retailer, adding that trading conditions for the rest of the year will remain “challenging”. Marks & Spencer has said it will not rule out further closures. So far, the group plans to close 100 stores by 2022, affecting a total of 872 employees. “M&S is repositioning itself for the new retail world,” said Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown. “Having a huge store estate is no longer the powerful retail force that it once was.” The retailer plans to make one-third of the business online. Commenting on the shift to online shopping, Paul Martin, head of UK retail at KPMG, says: “With the overall market not growing, it is all about market share, and 20% of that market is held by online players. If you don’t have the right online offering, again, you will struggle.” The chief executive, Steve Rowe, said the retailer was “re-shaping” its business. “What we are doing is making sure we protect the magic of M&S,” he added.

William Hill shares slide 8% on downgraded profit forecast

Safiya Bashir
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0
William Hill shares slide 8% on downgraded profit forecast
William Hill has warned that the government crackdown on fixed-odds betting terminals (FOBTs) will hit full-year profits. The bookmaker has downgraded its full-year profit forecast to between £225 million and £245 million. Last year, the group made £291.3 million. As well as the crackdown on FOBTs, William Hill has also said profits will be hit following the closure of accounts to combat problem gambling. In addition, the company is struggling to perform as well amid the tough high street conditions. “We are continuing to experience a period of significant change for our industry and have already made important changes over the last two years to transform our digital business, broaden the management team and enhance our financial flexibility ahead of key regulatory changes,” said Philip Bowcock, the group’s chief executive. The government is also cracking down on William Hills attempts to combat money laundering. In February, the group was fined £6.2 million by the Gambling Commission for failing to address money laundering in the previous two years. The group previously made plans to close up to 900 unprofitable betting shops. Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “There’s a pot of gold at the end of the rainbow, and that’s the $5 billion-$19 billion US sports betting market. William’s Hill’s been fast out the stalls, an advantage of already being an established player in Nevada, and has started racking up the bets.” William Hill shares fell by 8% in early trading. Shares in the group (LON: WMH) are currently trading -5.38% at 202,10 (1403GMT).  

Grand Vision Media Holdings targets Chinese middle class with advertising solution

Nicole Jeary
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Grand Vision Media Holdings targets Chinese middle class with advertising solution

Grand Vision Media Holdings (LON:GVMH) is targeting the middle class in China with an innovative advertising solution.

Targeting China’s Middle Classes

The company, which has been listed on the London Stock Exchange as of June 2018, is deploying 3D technology in popular, high-traffic locations, as part of its targeted advertising strategy.

The firm specialises in glasses-free 3D technology, which is utilised as a means of engaging with China’s growing box office audiences, in turn developing a new advertising approach for various brands looking to crack into the Asian market.

Following their debut on the London Stock Exchange, GVMH raised £1.01 million. The market cap of the firm is currently valued at £21.6 million.

Experienced Management Team

At the helm of GVMH is Chief Executive Jonathan Lo. Prior to having founded the company, he started his career at Ernest & Young in London. He later joined Price Waterhouse Management Consultant’s Hong Kong branch.

The firm’s Executive Director is Edward Ng, a professional fund manager.

Back in 2005, Edward founded Primasia Pacific Mid Cap Fund, which has since been re-named as CAP China Fund. He is also a director for various other companies focused upon investment.

Ajay Rajpal holds the title of GVMH’s non-executive director.

A chartered accountant, Rajpal has worked extensively in Europe, the US, the Middle East, as well as the Far East.

His experience lies in particular with financial management and restructuring procedures.

[vc_video link=”https://youtu.be/OPlO-DEFA7c&rel=0″]

A Booming Chinese Cinema Market

Unlike Europe, China’s cinema market continues to expand, with 1,200 new cinemas since 2017. Moreover, last year box office growth across the nation exceeded RMB 55.9 billion.

GVMH have concluded that this burgeoning market is a crucial advertising demographic to tap into, with figures indicating that over 85% of cinema-goers have a degree-level of education.

Targeted Advertising Solutions

In fact, according to statistics from the National Cultural Industry Innovation Experiment Zone of the PRC, a staggering 70.4% of China’s cinema visitors have a Bachelor’s degree, with a further 16% educated to a Master’s level.

What’s more, the same figures reveal that 1/3 of this audience are in high-income employment, earning over 6,000 RMB a month.

The majority of audiences are of a younger age range, with only 11.1% of patrons proving 31 and older.

Consequently, the advertising platform provided by GVMH can provide clients with a targeted advertising solution focused upon China’s burgeoning middle class and the younger generation.

Opportunity for growth

Beyond further growth in China, GVMH is looking to expand internationally, capitalising on its recent listing.

Currently, the company has a less than 5% market share, signalling potential for considerable amplification of its business.

Michelin set to close Dundee plant, 845 jobs cut

Dina Caruso
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Michelin set to close Dundee plant, 845 jobs cut
The tyre manufacturer Michelin has announced it will be closing its Dundee factory, currently employing 845 people. The Tayside plant has been confirmed to close mid-2020. Upon receiving the information last week that this was a possibility, the Scottish government’s economy secretary said: “This will be devastating news not just for those who work at the Michelin plant, but their families and the whole of the city of Dundee.” The plant has had to close as a result of changes in demand and competition from cheaper market alternatives from Asia.

Opened in 1971, Michelin’s Dundee plant only manufacturers 16-inch and smaller tyres for cars.

A statement on the company’s website reads: “Despite the group’s continuous efforts, and the factory employees’ dedication to making the site economically sustainable through the implementation of several action plans – €70m has been invested in recent years to modernise the site – the accelerated market transformation has made the plant unsuitable and its conversion is not financially viable.” Michelin has said it will commence a consultation process with employees in the next two weeks. Moreover, the company has said it will provide a support programme to the employees. Indeed, it hopes to “propose a comprehensive plan to assist the employees concerned to start a new career as quickly as possible”. The closure of the factory is a warning sign that the UK car market is experiencing difficulty. Equally, Britain’s car industry has expressed serious concerns over the impacts of a no-deal Brexit. Factory manager at Michelin Dundee, John Reid, has commented: “I have been part of Michelin Dundee for 26 years and I am very proud of the hard work and dedication shown by the team here.” “This factory has faced incredibly tough challenges before and we have come through thanks to the hard work and flexibility of our people and the union, and the backing of the Michelin Group.” “However, the market for the smaller tyres we make has changed dramatically and permanently, and the company has to address these structural changes.” “The proposals are nothing to do with the UK’s decision to leave the EU, and they are absolutely not a reflection of the performance of the plant or the people who have worked so hard here for so many years.” At 13:31 CET today, shares in Michelin (EPA:ML) were trading at +0.58%.

Primark sales slide because of weather, profits increase

Dina Caruso
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Primark sales slide because of weather, profits increase
The owner of Primark has reported a decline in its annual sales as a result of “unseasonable weather”. The Associated British Foods (ABF) full year results reveal that Primark’s like-for-like sales dropped by 2.1% in the year to 15 September. This decline compares with a 1% increase for the previous year. In the UK, like-for-like sales rose by 1.2%, but European sales dropped by 4.7%. Total revenue increased by 5% to roughly £7.5 billion partly due to new store openings and higher margins. Indeed, Primark has opened 15 new stores in nine countries totalling 900,000 sq ft of trading space and driving sales. Additionally, adjusted operating profits in the retail division were up by 13% at £843 million. This includes 360 stores across the UK, Europe and the US.

However, the Chief Executive of ABF, George Weston, has blamed the European weather for the drop of Primark’s like-for-like sales.

Weston insists that the “unseasonable weather” did not suit the clothes ranges provided by Primark. George Weston commented: “This decline was driven by unseasonable weather during three distinct periods this year, especially in northern Europe, and by soft trading in a weak German market.” The company has also announced it plans to open a temporary Belfast store following a fire over the summer. Sophie Lund-Yates, a Hargreaves Lansdown analyst, said: “ABF continues to open up new stores, which given the challenges other bricks and mortar retailers are facing looks a bold move – but it’s working.” “Overall sales growth is continuing despite declining like-for-like sales, and a popular summer range means margins and profits continue to climb.” Primark has said it will open an additional one million sq ft of retail space in the next financial year. This includes a 160,000 sq ft store in Birmingham that is set to become the brand’s biggest outlet. At 12:11 GMT today, shares in ABF plc (LON:ABF) were trading at +2.68%.

Energy price cap to begin on 01 January 2019

Dina Caruso
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Energy price cap to begin on 01 January 2019
A price cap on default energy tariffs is set to begin on 01 January next year. Moreover, the price cap is expected to save 11 million households as much as £120 each. The industry regulator has announced the price cap is expected to collectively remove roughly £1 billion from customer bills. These customers are said to be overcharged for their energy prices.

Ofgem has announced that the price cap will initially be set at £1,137 per year.

This is for a typical dual fuel customer paying by direct debit. The price cap was first announced by Ofgem at the beginning of September this year. Ofgem commented in a statement: “When the price cap comes into force suppliers will have to cut the price of their default tariffs, including standard variable tariffs, to the level of or below the cap, forcing them to scrap excess charges.” “The cap will save customers who use a typical amount of gas and electricity around £76 per year on average, with a typical customer on the most expensive tariffs saving £120.” Theresa May previously described default tariffs as a “rip-off”. These are the tariffs that energy customers are automatically given once their fixed contracts come to an end. The default tariffs are named standard variable tariffs (SVTs). They have claimed so many customers through their own failure to switch to a better deal or supplier. Ofgem’s Chief Executive, Dermot Nolan, said: “The price cap will ensure that whether energy costs rise or fall suppliers are not feathering their nest and changes in energy prices will reflect the underlying costs to heat and light our homes.” At the beginning of October, we reported that the big six energy companies experienced a fall in profits. The decline in collective profit for the first time in four years was as a result of growing market competition from energy start-ups. British Gas, EDF Energy, npower, E.On, Scottish Power and SSE will also face a difficult winter with the implementation of the new price cap. At 09:48 GMT today, shares in Centrica plc (LON:CNA) were trading at +1.34%. Shares in e.on (ETR:EOAN) were trading at -2.98% at 10:35 CET today. At 09:50 GMT today, shares in SSE (LON:SSE) were trading at +0.65%.

Co-operative Bank reports nine-month loss

Dina Caruso
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1
Co-operative Bank reports nine-month loss
The UK’s Co-operative Bank has reported a nine-month loss before tax of £87 million. The bank has struggled to improve performance following a restructuring and recapitalisation in June last year. As a result of the restructuring and recapitalisation of the bank, a new incorporated holding company was created, which owns 100% of its shares. The bank reported this morning that it made an operating profit of £14.3 million for the year. This is an improvement of £40 million assisted by lower costs. Last year, the Co-operative Bank approved a rescue plan with U.S hedge fund creditors. Indeed, it secured a £700 million rescue deal, allowing the bank to continue as a standalone entity after it abandoned efforts to secure a buyer. This is as a result of its capital base falling to levels unacceptable to regulators as it was hit by restructuring costs and weak income. Chief Executive Andrew Bester commented: “We are looking to build on our strong heritage in the SME market in the year ahead and as part of that we are considering our options regarding the RBS alternative remedies fund.”

Andrew Bester is the newly appointed Chief Executive of the Co-operative Bank.

He was hired early in July following the resignation of Liam Coleman after less than two years in the position. Andrew Bester joined the Co-operative Bank after being director and chief executive of Lloyds Banking Group, leading it since 2012. Additionally, he said that the bank was considering moving into small business banking through an application of a funding scheme. The funding scheme is set to be supported by the Royal Bank of Scotland as a part of the terms of its state bailout. Back in 2013, the Co-operative Bank almost collapsed. It had to list shares on the stock market for the first time in order to raise £1.5 billion shortfall of capital and avoid nationalisation.

Morrisons reports sales growth below forecast

Dina Caruso
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0
Morrisons reports sales growth below forecast
Morrisons has reported a drop in its sales this morning. Indeed, the supermarket group reported that growth has slowed down from the previous quarter. Morrisons is the fourth largest supermarket group in the UK. The drop in growth is below analysts’ forecasts for the group. Total like-for-like sales, excluding fuel, rose by 5.6% in its third quarter. This figure came in lower than analysts’ average forecast of 6.1% growth. Growth in the previous quarter came in at 6.3%, making it the best sales performance in nine years. However, this was driven by the UK’s scorching weather and World Cup success. Morrisons said in a trading statement: “As expected, retail LFL sales growth eased slightly quarter on quarter without the impact of the favorable weather and World Cup which benefitted Q2.” “Sales growth was again strong, with a better and broader offer for customers across the whole store. Morrisons now has almost 1,000 year-round ‘Best’ products, and over 250 exclusively for Christmas.” Additionally, Chief Executive David Potts commented on the results: “After another period of strong growth, and with more customers enjoying shopping at Morrisons, we have now completed three years of positive like for like.” “Our exceptional team of food makers and shopkeepers are providing good quality food at great prices, and building a broader offer in-store, online and for our wholesale customers.”

David Potts joined Morrisons in order to lead a recovery following damage caused by Aldi and Lidl as well as previous management mistakes.

The supermarket group currently has over 500 UK stores. Morrisons’ shares have increased by 18.5% this year as David Potts has overseen a steady trading improvement for the group. This was achieved by offering more competitive prices, improved product ranges and availability and improved customer service. Earlier in October, we reported that retail sales dropped in September following a successful UK summer of hot weather and football. At 08:45 GMT today, shares in Morrison Supermarkets plc (LON:MRW) were trading at -3.83%.
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