Toshiba set to disclose 10 billion yen loss
Japanese electronics firm Toshiba (TYO:6502) may disclose a net loss of about 10 billion yen (54.24 million pounds) later this week when it reports its financial earnings for the year, according to the Yomiuri daily.
Toshiba has been at the centre of an accounting scandal for a number of months, after an independent probe discovered it had overstated profits for $1.2 billion over the course of several years.
On Monday Toshiba postponed its annual results for a second time, but the company is due to announce earnings by September 7 or face being delisted. Shares in Toshiba were up 2.5 percent on Thursday morning.
Elesewhere in Japan, activity in the country’s services sector expanded at the fastest pace in almost two years in August, a survey showed on Thursday.
The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 53.7 from 51.2 in July to reach the highest since October 2013, meaning that the index has remained above the 50 threshold that separates expansion from contraction for the fifth consecutive month.
Easyjet up 7 percent on strong August figures
Budget airline EasyJet (LON:EZJ) raised their full year profit forecast to between £675m and £700m, after seeing a record number of passengers in August. In comparison, their full-year profit for 2014 was £581 million.
The airline said that it carried 7.06 million passengers in August – the second consecutive month above the seven million mark.
The load factor was a record 94.4% – up 0.2 percentage points from August last year. Ryanair (LON:RYA) yesterday disclosed a load factor of 95 percent.
Shares in Easyjet have risen 25% over the past 12 months and closed at £16.72 on Wednesday. This morning they are trading up nearly 7 percent on the news.
Carolyn McCall, easyJet Chief Executive, commented:
“These figures demonstrate the strength of easyJet – with its strong customer focus and its unique and winning combination of the best route network connecting Europe’s primary airports, with great value fares, friendly service and industry leading digital innovations.
“This platform meant that easyJet was best placed to maximise the strong late summer demand from UK passengers to get away to beach and city destinations across Europe and will enable the airline to set new records for full year revenue and profit.”
Simply Wall St: making stocks simple
For the co-founders of Sydney-based start up Simply Wall St, investing in the stock market was a little too complicated. Undoubtedly, there are plenty of people who would say the same; however Simply Wall St’s goal is to change that, and the company have created software that can provide everybody with the knowledge and information to be a successful investor. Its founders, Al Bentley and Nick van den Berg, firmly believe that investing in the stock market can, and should, be simple and enjoyable for everyone.
Simply Wall St turns complicated financial data into easy to understand visuals. On a daily basis, the company produce over 9,000 detailed infographics and visual analyses on all the companies listed on primary US, UK and Australian stock exchanges, with financial data provided by Standard & Poor’s Capital IQ. Investors can log in online and create a personalised portfolio of stocks they are following, and their brilliantly designed site enables you to easily see the stocks previous and present performance, potential and value. Their free service uses a unique method to analyse stocks, creating a ‘snowflake’ for each company, generated from 30 financial checks in 5 different core areas of a company: Value, Past Performance, Future Performance, Health and Income. The larger and greener the snowflake becomes, the more checks the company has passed and the healthier investment it is.
The company have just raised $600k in one of the biggest Australian seed rounds this year, with Michael Quinn from Innovation Capital leading the oversubscribed opportunity and involvement from Sydney Angels and the Sidecar Fund. The amount they have managed to raise from investors is impressive; Bentley and van den Berg have clearly got fundraising down to a fine art. But what exactly is their secret?
When looking for seed funding, Bentley believes that finding the right lead investor is key.
“You really need to focus on finding the right one as the rest will follow after this. When we were looking to raise Simply Wall St’s seed round of $600,000 we selected Mike Quinn and reached out with a cold email – yes those do work!
“After getting to know him we decided we wanted him as he really understood what we were doing and most importantly liked working with us.”
It’s also important to select the right type of investment. Whilst many start ups are now going down the crowdfunding route, it may be worth considering other options before ‘leaping on the bandwagon’.
“We chose the angel route rather than crowdfunding mainly because of the non-monetary benefits, such as advice and connections. Our investors provide insight and mentoring that we just wouldn’t get with crowdfunding. They will be there to support us in further rounds and assist with those big company level decisions about the direction of growth.”
The funds will be used to take the startup out of Beta, start monetization and expand in the UK and US markets, which currently account for more than 75% of users.
“This funding will further our mission to empower casual investors to make profitable long term investment and actually understand the stock market,” Bentley said.
As shown by the response to their request for investment, Simply Wall St has a unique and clever business idea; one that will hopefully drive their business to greater success. However, perhaps the most important piece of advice Bentley has to give is that starting a company is anything but easy; he spent three months living underground in his van in order to get started.
“I had to move to Sydney and I was bootstrapping, so I spent 3 months living in my van parked in an underground lot at the co-working space. It was tough, but it was worth it.”
For more information and to sign up to Simply Wall St’s free service, visit simplywallst.st.
Miranda Wadham on 02/09/2015
Ryanair up after record August traffic figures
Budget airline Ryanair (LON:RYA) were up nearly 2.5 percent at open this morning after releasing record traffic figures for August.
Ryanair’s August traffic grew 10 percent to 10.4 million customers, with load factor rising to 95 percent.
Ryanair’s Kenny Jacobs said in a statement:
“These record monthly numbers and load factors are due to our lower fares, our stronger forward bookings and the continuing success of our “Always Getting Better” customer experience programme, which continues to deliver stronger than expected traffic and load factors on our biggest ever summer schedule.
Ryanair customers can look forward to more service enhancements in the autumn, as we continue Year 2 of our AGB programme, which include our new car hire service, a new website, new appnew cabin interiors, new crew uniforms, and improved inflight menus, as Ryanair continues to deliver so much more than just the lowest fares in Europe.”
Ryanair are currently up 1.40 percent at 12.29 pence per share.
Halfords shares fall on disappointing bike sales
Shares in automotive retailer Halfords (LON:HFD) are down nearly 8 percent this morning after releasing a trading statement showing slower than expected sales.
The slowdown was led by sales of cycling equipment, which were down 11 percent. The company cited greater levels of discounting as well as poor weather deterring casual cyclists for this drop, and are planning “a complete refresh of children’s bikes and accessories alongside a series of compelling offers for customers” to stoke up growth in the long term.
However, management anticipates Retail gross margin to be at the better end of the previous full year guidance range – between -25 to -75 basis points year-on-year decline – and full year Group profit before tax to be broadly in line with prevailing market consensus.
Jill McDonald, Chief Executive, commented:
“In my first three months at Halfords I have reviewed all aspects of the Group and it is clear to me that Halfords is a strong business with a well-balanced portfolio of product and service categories, talented colleagues and considerable growth potential. This recent weakness in our Cycling sales is disappointing, but it comes after two years of very strong growth in the category and has been partly offset by strong growth in both Car Maintenance and Car Enhancement sales, which is a testament to the balanced nature of the business.”
“Looking ahead, we remain confident in the long term growth opportunities in Cycling and I will talk more about our plans for Cycling and across the broader Group at our interim results in November.”
Oil prices drop after three day winning streak
Oil prices fell 2 percent in Asian trade on Wednesday, as a worries in China continue to hit commodities.
Brent and U.S. crude finished around 8 percent lower on Tuesday after finishing up 25 percent in the three days to Monday, the largest three-day gain since 1990.
Ric Spooner, chief market analyst at Sydney’s CMC Markets told Reuters the volatility in oil is likely to continue:
“Any change in sentiment tends to be amplified. Any change in direction in the oil markets has the potential to be risk driven by what’s going on in the equity markets,” he said.
Crude is currently down 8.35 percent at $45.41 a barrel, with Brent at $49.56, down 9.26 percent.
US factory growth slows, auto sales grow
US factory growth is at its slowest for two years, according to figures released by the Institute for Supply Management (ISM) this morning. National factory activity index fell to 51.1 last month, the lowest reading since May 2013, from 52.7 in July.
However, strong auto sales hint that the economy is still on track for growth overall. US auto sales were at their strongest since July 2005, with the annualized selling rate in August well above expectations of 17.3 million, at 17.8 million vehicles.
The sharp slowdown in manufacturing is expected to be caused by the recent volatility in global stock markets, combined with a strong dollar and cutbacks in the energy sector.
Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters:
“It suggests that the recent eruption in uncertainty toward Chinese and global growth is beginning to affect U.S. business decisions. We look for the Fed to take a pass on raising rates this month as they continue to assess the incoming economic data for any evidence of fallout.”
UK mortgage approvals at 18 month high
The Bank of England has released data that shows the UK housing market is refreshingly robust as mortgage approvals hit the highest level since March 2014.
The data supports finding from the British banker Association who last week said mortgage approvals were the strongest since April 2014.
Not only were new mortgage approvals, but remortgage activity also strong, research conducted on high street bank lending showed remortgages were made at the highest level in four years.
“This was a 29% surge on 12 months before and the highest figure we’ve seen for four years. Savvy homeowners are snapping up competitive deals before an expected increase in interest rates,” said Richard Woolhouse, Chief Economist at the BBA.
Will the ECB increase their stimulus package?
The Governing Council of the European Central Bank will meet this Thursday and Mario Draghi will present his first press conference since the market turmoil which dragged US stocks into correction and the German DAX into a bear market.
Whilst the Bank of England and Federal Reserve are discussing their first move to tighten policy by increasing interest rates, the ECB is the last hope for investors seeking liquidity injections to boost economic activity.
This Thursday’s meeting will be of particular importance for market participants as they attempt to gauge the ECB’s willingness to increase their bond buying program, a move which will likely be cheered by markets who are seeking a continuation of easy monetary stimulus from a major central bank.
The announcement of the European Central Bank’s bond buying program in January led to a significant rally in European shares as investors priced in future economic growth.
This is yet to materialise.
The main subject of discussion for the Governing Council will be the growing possibility of deflation and whether a deflationary environment will be classed as ‘good’ or ‘bad’ deflation.
Measures of inflation are coming under pressure from drops in the price of oil and food – both have a positive impact on households as consumers benefit from lower fuel prices and cheaper everyday food items, some would argue this is ‘good’ deflation. If forthcoming deflation is classed as ‘good’, the impetus to ease further will be reduced.
The sharp drop in oil has driven low inflation levels, however as we move into the last quarter, this factor will diminish and inflation levels are expected to continue their stabilisation and may even rise further around the end of the year.
The Harmonised Index of Consumer Price (HICP), the chief measure of inflation used by the ECB, has increased from -0.6% in January to 0.2% in July. This rise in the headline inflation rate gives justification to the ECB’s program and will support an expansion to the program.
However, the influence of oil may constrain this argument due the cyclical nature of the oil price.
As the ECB’s primary mandate is the control of inflation and meet a 2% target, Mario Draghi will be well aware of oil’s capability to rally sharply, lifting inflation with it – this maybe the reason why he holds back from giving liquidity craving investors what they so badly want.
Mario Draghi will deliver his press conference this Thursday at 1.30 pm London.
UK factory growth slows, minor job losses sustained in August
UK factory growth slowed in August for the first time in two years, according to PMI figures released today.
The Markit/CIPS Uk manufacturing PMI index figure fell from 51.9 in July, to 51.5 in August. Whilst the number is still above the 50 mark that indicates overall growth, a downward trend in manufacturing suggests that the sector will contribute less to the economy this quarter.
The PMI’s jobs index fell below 50 for the first time since April 2013, adding to signs that Britain’s labour market is beginning to slow.
However, more new orders came in in August than the last five months. Rob Dobson, senior economist at Markit, told Reuters:
“The UK manufacturing sector remains in a holding pattern, with production growth hovering around the stagnation mark and marginal jobs losses reported.
“On this basis, the sect looks unlikely to make much of a contribution to the solid gain in broader GDP growth this quarter.”