Bellway warns of slowing housing market
Housebuilder Bellway (LON:BWY) today released a trading statement that pointed to record revenue but cautioned a slowing housing market would impact margins.
The group completed on a record 10,307 homes during the year to 31st July as the government Help to Buy scheme drove sales of affordable housing.
The boost in sales figures helped increase revenue by 16% to just under £3 billion but margins fell from 22.3% to 22%.
CEO Jason Honeyman commented on the results:
“Bellway has responded positively to the favourable market conditions, completing the sale of over 10,000 new homes for the first time in its history, whilst retaining a clear focus on quality and customer care. In doing so, the Group has set a new earnings record and yet, having invested significantly in land, has ended the year with a strong net cash position. Trading has been robust and notwithstanding wider political and economic uncertainty in the UK, Bellway has both the financial and operational strength to respond opportunistically to future changes in market conditions”
In reaction to the update, shares in Bellway fell by over 4% in Wednesday morning trade.
Miners help propel FTSE 100 higher
The FTSE 100 jumped on Tuesday as mining shares rallied inline commodity prices.
The move to the upside in commodities and miners followed one of the best days in two years in Chinese stocks as hopes of government stimulus cheered investors.
China is the worlds largest consumer of natural resources and increased activity will likely lead to greater demand for base metals.
Rio Tinto (LON:RIO), BHP Billiton (LON:BLT) and Glencore (LON:GLEN) were all up over 3% in midday trading.
Oil shares were also better bid in the wake of a full reversal on US sanctions on Iran helped buoy oil prices.
Donald Trump has been threatened to rip up the agreement made under the Obama administration since taking power and today delivered and in the process increased concern over a drop in global oil supply.
Elsewhere, Standard Life Aberdeen rose as much as 3.9% after announcing a share buy despite a 12% fall in profits, suggesting the merger was not enough to stem an outflow of assets from the firm. Assets under management fell 2.6%.
Oil shares were also better bid in the wake of a full reversal on US sanctions on Iran helped buoy oil prices.
Donald Trump has been threatened to rip up the agreement made under the Obama administration since taking power and today delivered and in the process increased concern over a drop in global oil supply.
Elsewhere, Standard Life Aberdeen rose as much as 3.9% after announcing a share buy despite a 12% fall in profits, suggesting the merger was not enough to stem an outflow of assets from the firm. Assets under management fell 2.6%.
The FTSE 100 was trading at 7739, up 75 points or 0.99% at 13:27 on Tuesday.Standard Life Aberdeen H1 profits, AUM and fund inflows reports lower on a pro-forma basis for merger, accelerating share buyback programme (first tranche, next few days), dividend +4.2%; Market conditions remain challenging due to macro and political uncertainties.
— Mike van Dulken (@Accendo_Mike) 7 August 2018
PepsiCo chief executive Indra Nooyi to step down
PepsiCo chief executive Indra Nooyi (NASDAQ:PEP) is to step down after 12 years at the helm.
64-year old Nooyi has been with Pepsico for 24 years, and is recognised as one of the most powerful women in business.
During her time at the beverage and snack company, she oversaw the the acquisition of Tropicana back in 1998, as well as a merger between Quaker Oats Company.
In a statement, Nooyi said:
“Growing up in India, I never imagined I’d have the opportunity to lead such an extraordinary company,”
She added: “PepsiCo today is in a strong position for continued growth with its brightest days still ahead.”
Nooyi was born in India, in Madris, which is now known as Chennai.
At the age of 23, she left India to pursue a master’s degree at Yale’s School of Management.
Prior to her time at Pepsi, Nooyi also worked at the Boston Consulting Group as well as Motorola.
She is set be succeeded by PepsiCo executive Ramon Laguarta, who has held various positions at the company in 22 years.
“Ramon Laguarta’s unanimous appointment follows a systematic and thorough succession process by the Board of Directors. Laguarta equally represents continuity and the necessary agility for PepsiCo,” commented Daniel Vasella, chairman of the board’s Nominating and Corporate Governance Committee.
Shares in the beverage company are currently up +1.40 percent in pre-market trading, as the markets react to the announcement.
Pound sterling plunges to 11-month low amid no-deal Brexit concerns
The pound sterling hit further lows on Monday morning, after a UK government minister warned of the likelihood of a no-deal with regards to Brexit negotiations.
Liam Fox MP, the International Trade Secretary said in an interview with the Sunday Times, that the chance of a no-deal now stood at 60-40.
The comments sent the pound sterling down 0.3 per cent to $1.2954, its lowest since July 19, and marking a 11-month low.
The remarks echo comments made by Bank of England Governor, Mark Carney, last week, in which he warned on the “uncomfortably high” odds of a lack of deal with the EU.
Nevertheless, Downing Street attempted to dispel mounting concerns.
A government spokesperson said: “We continue to believe that a deal is the most likely outcome because reaching a good deal is not only in the interests of the UK it is in the interests of the EU and its 27 members.
“But the international trade secretary is right to say there is a risk of the negotiations not succeeding and the government has to prepare for all eventualities.”
Meanwhile, the Shadow Brexit secretary, Keir Starmer took to twitter to express his worry over the lack of discernible progress.
He tweeted:
https://platform.twitter.com/widgets.js Theresa May’s government is under pressure to fulfil its proposed March 2019 deadline of completing the Brexit withdrawal process. As it stands however, EU and UK negotiators have yet to hash out agreements with regards to major issues such as citizens rights, trade and the single market. Prime Minister May is set to face Parliament for PMQ’s on Wednesday afternoon, where she may provide further elucidation on the trajectory of Brexit negotiations.No deal would be a catastrophic failure of government, which no government should survive. The cause: PM’s reckless red lines, Tory divisions & fantasy Brexiteer promises. Parliament has a duty to prevent it. https://t.co/1Pq6S5FtC2
— Keir Starmer (@Keir_Starmer) August 5, 2018
IWG shares dip as takeover talks fall through
IWG Plc (LON:IWG) – formerly Regis – has seen its share price fall sharply in morning trading as the company pulls out of takeover discussions with private equity groups, the company were unable to agree on a price with potential suitors.
The FTSE 250 listed firm is the brainchild of entrepreneur Mark Dixon, and provides modern workspaces for businesses and start-ups around the world. The company have recently suffered due to profits falling short of expectations following rapid expansion.
These set-backs have been compounded by this morning’s news that IWG have rebuffed the advances of a trio of firms – Starwood Capital Group, Terra Firma Capital Partners and TDR Capital – over a proposed takeover.
An IWG spokesperson announced, “After extensive discussions exploring the interest shown by multiple parties over recent months, the Board unanimously believes that none of the interested parties is currently capable of delivering an executable transaction at a recommendable price.”
While IWG’s have announced a dividend hike from 1.75p to 1.95p per share, and seen first half revenues jump 2.9%, pre-tax profits for the first half are down 33%, or £24.5 million, on-year. Similarly, today’s news on the collapse of takeover talks has seen the company’s share price plummet 21.2% in morning trading.
IWG shares are currently trading at 236.4p, down 63.6p. Peel Hunt analysts have reiterated their ‘hold’ stance on IWG stock from July, though this is an upgrade on the ‘under review’ stance from their last assessment.
Ascent Resources shares plunge amid “strategic review”
Shares in Ascent Resources (LON:AST) plunged more than 40 percent on Monday morning, after the company issued an update to investors.
The oil and gas exploration company launched a strategic review back in April to assess its options.
According to the update, Ascent said that the review resulted in the firm holding talks with various potential investors or companies to collaborate with to locate a solution.
Alongside a strategic review, the company noted that it had also come into difficulties as a result of permit delays in Slovenia.
Ascent said it has grown “increasingly frustrated by continued requests” from the Slovenian Environment Agency.
Moreover, production had weakened as the lack of progress with regards to permits which affected plans to re-stimulate its existing wells.
Colin Hutchinson, CEO if Ascent Resources plc, commented on the update:
“We continue to expect a positive outcome from the strategic review but have taken steps to prolong the life of the Company without the need for additional funding in the event this does not produce a positive outcome, or that outcome takes longer than expected to deliver.”
Ascent said it will look to re-assess commercial costs that are non-essential, such as day to day operation of the existing wells in Slovenia or to maintaining the AIM quote for the Company’s shares.
Alongside this, the statement said that non-executive directors had also agreed to reduce their remuneration by 50 percent, as well as a 100 percent deferral of remuneration from August 2018.
Shares in Ascent Resources are currently trading -40.76 percent as of 11.33AM (GMT).
HSBC first-half profits hampered by expenses and settlement
HSBC Holdings Plc (LON:HSBA) have seen their share price dip in morning trading, as first half profits are crimped by investment on expansion and legal settlement costs.
This morning, the bank reported that pre-tax profit for the first half had jumped 4.6% to $10.7 billion on year, and revenue had jumped 4% to $27.3 billion. these figures come after good performance thus far in 2018 for HSBC’s retail banking and wealth management services.
‘Retail Banking and Wealth Management, and Commercial Banking were again our strongest performing businesses. Both continued to gain from a positive interest rate environment, and used the benefits of past investment to grow lending and deposit balances, particularly in Asia and the UK,’ said John Flint, Group Chief Executive.
However, in addition to unadjusted profit figures, the firm’s operating expenses also grew 7% to $17.5 billion. This came as HSBC adjusted their strategy to one based on investment and growth of their global empire, after years of cutting back and shrinking. Such restructuring has so far posed a challenge to the firm, with its share price dipping in the wake of questions rising over the company’s management strategy.
“HSBC is struggling to convince that its current restructuring to pivot the group toward Asia is delivering the hoped for pick-up in growth,” said Steve Clayton, Manager of the Hargreaves Lansdown UK Income Shares fund.
HSBC have plans to continue expansion in China, the US and the UK mortgage market, though they have recently taken another hit after having to pay a $765 million settlement for alleged mishandling of US mortgage securities.
The firm’s shares are currently trading at 712p, down 3.8p or 0.53% since trading began. Analysts from Goldman Sachs have reiterated their ‘neutral’ stance on HSBC stock, while Shore Capital analysts have reiterated their ‘sell’ stance.
House of Fraser to go ahead with closure of 31 stores
House of Fraser announce the closure of 31 stores of its 59 stores, as it looks to settle a legal row with landlords, and find a potential investor.
The struggling department chain reached the settlement with landlords to close over half of its locations, as it looks to strengthen its position to negotiate a rescue deal.
Last week, talks between C.banner, the owner of Hamleys, and House of Fraser collapsed.
Amid a difficult retail trading environment, House of Fraser is seeking £50 million to avoid collapse, which would place approximately 17,000 jobs under threat.
House of Fraser commented that is “focused on concluding discussions with interested investors” and the out-of-court settlement with the landlords had removed “any risk to those discussions”.
In a statement released by their legal team, the landlords said: “Although we will not have our day in court, we are pleased with the outcome and hope that our landmark legal challenge sends a clear message to any other companies considering a CVA, on the importance of transparency and fair treatment for all creditors throughout a CVA process.
“Landlords are always willing to enter into a proper dialogue with companies and their advisers with the aim of rescuing a business. However, the retail CVA process in the UK has become increasingly misused and prejudiced against landlords and needs correcting. CVAs were designed as a means to rescue a business, not simply a tool to shed undesirable leases for the benefit of equity shareholders.”
Currently, House of Fraser has 59 stores across the UK and Ireland, employing 6,000 staff, alongside 11,500 concession staff. In 2014, the high street giant was acquired by Sandpower, which is owned by Chinese businessman Yuan Yafei. House of Fraser is one of many UK high street brands to feel the pinch of economic uncertainty and high inflation hitting the retail sector.Barclays reports 29pc fall in half-year profits
Barclays has announced a dent in half-year profits following a major US settlement and miss-selling provisions.
Profit for the lender fell by 29 percent from £2.3 billion to £1.7 billion for the six months to 30 June.
The lender paid a £400 million PPI fine and a settlement of £1.4 billion with US authorities over its sale of mortgage-backed securities.
“It was the first quarter for some time with no significant litigation or conduct charges, restructuring costs or other exceptional expenses which hit our profitability,” said the chief executive, Jes Staley.
“In effect then, it is the first clear sight of the statutory performance of the business which we have re-engineered over the past two-and-a-half years – Barclays’ transatlantic consumer and wholesale bank – and it is a positive sight.”
Staley said that the bank’s performance showed its “true potential and value”.
“The numbers we have posted strengthen our confidence that Barclays can deliver attractive and sustainable profits, and in our ability to return a greater proportion of those profits to shareholders over time.”
Pre-tax profits for the second quarter were a total of £1.9 billion. This was up from £659 million during the same period in 2017.
Shares in Barclays (LON: BARC) closed down 2.7 percent at 186.5 pence.
IAG shares fall despite profit hike
The British Airways owner, IAG (LON: IAG), has reported a six percent rise in quarterly profit to €835 million (£742 million).
Despite the increase in profits, the group did not meet analyst expectations and shares fell almost five percent on Friday morning.
The airline operator has warned of air traffic control strikes in France and how these are weighing on its finances.
IAG has said that months of industrial action has led to thousands of flight cancellations. Airlines including Ryanair (LON: RYA) and EasyJet (LON: EZJ) have complained to European officials.
The IAG Chief Executive Officer, Willie Walsh, said: “We’re reporting another good set of results in quarter two with an operating profit of €835 million before exceptional items, up from €790 million last year.”
“There was a strong performance in both unit revenue and costs. At constant currency, our passenger unit revenue increased by 2.3 percent while non-fuel unit costs went down 2.0 percent.”
“Unfortunately, French Air Traffic Control strikes continued to challenge our airlines’ operations causing disruption to our customers. Vueling was particularly affected and incurred an additional €20 million of disruption costs in the quarter. These strikes are also having a significant negative impact on the Spanish economy and tourism,” he added.
IAG has said that it expects operating profits to grow in 2018.
The British Airways owner has approached budget airline Norwegian for a merger but Norwegian airline has rejected two offers, saying that IAG “devalued” the company.
George Salmon, equity analyst at Hargreaves Lansdown said: “There’s clear upside to combining the two groups, but as ever, whether it’s a good idea or not will depend on price. IAG has been rebuffed twice before, so it’s unlikely to get Norwegian on the cheap. That heightens the risk of overpaying.”
Shares in IAG are currently trading at 661.20 (1029GMT).