Shares in Fever Tree up 15pc on record results
Shares in Fever Tree soared 15 percent to an all-time high of £39.87, following strong sales for the first six months of 2018.
The jump in shares and smashed forecasts led to the up-market drinks maker being valued at £4.5 billion on Tuesday.
“Whilst this is a notable achievement, there remains a significant opportunity in front of us across all our regions as Fever Tree continues to drive the evolution of the mixer category,” said Tim Warrillow, the group’s co-founder and chief executive.
Sales in the tonic water have soared in the past year on the back of the growing popularity of gin, in which sales have doubled over the past six years.
Profits for the first six months of 2018 increase by a third to £34 million. Sales were up 45 percent to £104 million.
Fever Tree has signed two new distribution arrangements this year, with Southern Glazer based in the US and with Spain’s Grupo Damm, the maker of Estrella Damm beer.
Rolls has gained over £150 million through share sales since the company’s stock market floatation in 2014.
Shares (LON: FEVR) are trading up 5.64 percent at 3650 pence (1713GMT).
Hammerson to sell off £1.1bn of properties
The owner of Birmingham’s Bullring, Hammerson, has announced plans to sell its portfolio of out-of-town retail parks to focus on “flagship retail destinations”.
The UK shopping centre operator hopes to offload £1.1 billion of properties by the end of 2019, including the sale of Bristol’s Imperial retail park.
“Through increasing the level of disposals, including exiting the retail parks sector, we will now focus solely on winning destinations of the highest quality: flagship retail destinations and premium outlets,” said David Atkins, the Hammerson chief executive on Tuesday.
“These are the venues we believe will maintain relevance and outperform against the shifting retail backdrop,” he added.
The group also made the decision the to abandon the £3.4 billion buyout of rival Intu in April after investors expressed concern over the health of UK retailers.
Directors of the group said they believed that the £3.4 billion deal with Intu was “no longer in the best interests of shareholders.”
“It is clear that the heightened risks to the Intu acquisition now outweigh the longer-term benefits. We have a clear strategy that has delivered consistent, strong returns on a standalone basis,” said Atkins in April.
Speaking about the decision to offload properties, Atkins said it was important in the group’s new strategy to address the shift in the wider retail market.
The decision comes amid Britain’s department store chains and other high street retailers struggling against high costs and competition with online retailers.
Debenhams (LON: DEB) has issued three profit warnings since December and House of Fraser has announced plans to close 31 UK stores.
Shares (LON: HMSO) rose 1.6 percent to 534p.
Alphabet’s ad sales beat forecasts, shares surge
Alphabet reported better than expected ad sales, sending shares up five percent in after-hours trading.
Google’s parent company earned a total of $32.7 billion in revenue in the three months to the end of June. This is an increase of 26 percent compared to the same period last year.
The EU fine over Google’s Android mobile operating system made a $5 billion dent in the profits this year.
The group’s net income would have been $8.3 billion without the record fine, which was given to Google after the EU found the tech-giant had been using the mobile operating system to illegally “cement its dominant position” in web searches.
“Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine,” said Commissioner Margrethe Vestager, in charge of competition policy.
“In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”
Alphabet is appealing the decision.
Despite the record fine, the group reported strong results and the share price surged six percent in after-hours trading as investors shrugged off the long-term impact of the fine.
Ruth Porat, the chief financial officer of Alphabet and Google, said the company had delivered “another quarter of very strong performance”.
Shares in Alphabet (NASDAQ: GOOG) are currently trading up 1.74 percent at 1205,50 (1049GMT).
Tesla shares plunge 5pc following memo leaks
Shares in Tesla fell five percent on Monday after the electric car maker was found to have asked some US suppliers to return payments.
In a memo obtained by the Wall Street Journal, a global supply manager was asked to return a “meaningful amount of money of its payments since 2016.”
The news comes after the group have announced plans to cut several thousand jobs in an effort to reduce costs.
In a statement released on Monday, Tesla said: “Negotiation is a standard part of the procurement process, and now that we’re in a stronger position with Model 3 production ramping, it is a good time to improve our competitive advantage in this area.”
“We’re focused on reaching a more sustainable long term cost basis, not just finding one-time reductions for this quarter, and that’s good for Tesla, our shareholders, and our suppliers who will also benefit from our increasing production volume and future growth opportunities.”
“We asked fewer than 10 suppliers for a reduction in total capex project spend for long-term projects that began in 2016 but are still not complete, and any changes with these suppliers would improve our future cash flows, but not impact our ability to achieve profitability in Q3. The remainder of our discussions with suppliers are entirely focused on future parts price and design or process changes that will help us lower fundamental costs rather than prior period adjustments of capex projects. This is the right thing to do,” the statement finished.
In May, Tesla said the group expected a positive GAAP net income by its third and fourth quarters. Data compiled by Bloomberg has shown the company has been blowing through $7,430 every minute – equating to about $1 billion a quarter.
Shares in the group have been volatile, falling from a high of $370 in mid-June to around $301 on Monday.
Shares recently took a plunge after Elon Musk launched a personal attack on the rescue worker who offered to rescue the team of Thai soccer players from a system of flooded caves.
Shares in the group also plunged in early May after Musk responded to analyst questions by saying they were “so dry. They’re killing me.”
The comment led to Tesla’s stock decline by six percent in about a 20-minute period.
Shares in the group (NASDAQ: TSLA) are currently trading down 3.31 percent at 30320 (0939GMT).
Fiat-Chrysler shares dip as CEO steps down
Fiat-Chrysler (LON:FCA) saw its share price dip by 3.6% within the fifteen minutes of trading this morning, following news that CEO Sergio Marchionne had become seriously ill over the weekend and had stood down from his post with immediate effect.
The sixty-six year-old had flown to Zurich for surgery, only to suffer complications that have meant he has had to hand over command of Fiat-Chrysler to Jeep chief Mike Manley, while John Elkann will take over the helm at Ferrari.
Being described as one of the most charismatic leaders in the automotive industry, Mercedes CEO Detler Zetsche described Marchionne as a friend and “great person”.
“In our view, Mr. Marchionne’s industry thinking cannot be overstated,” said Phillipe Houchois, Fiat Analyst for the Jeffries Financial Group.
In a letter to Fiat’s 236,000 employees, Agnelli heir and new Ferrari CEO, Mr. Elkann, called Marchionne a, “true, rare kind of leader”, and stated that “It was his intellect, perseverance and leadership that saved Fiat”.
During his tenure, Marchionne oversaw the $2 billion severing deal with GM, which was a vital step that allowed the once lame duck of a company to invest and ascend. Later, he headed the negotiations with President Obama over a merger deal with failing firm Chrysler. After merging with Chrysler for no cost, FCA have since gone on to acquire Ferrari and truck and tractor maker CGH.
Since his arrival in 2004, Marchionne saw Fiat’s worth soar from $6 to $60 billion. His departure will no doubt be a blow to the firm, especially because he was set to announce his five-year plan for Ferrari in September. Fiat-Chrysler shares are currently trading at 15.96 EUR, down 0.45 EUR or 2.75% since markets opened this morning.
Petra Diamonds shares stagnate at eight-year lows
Petra Diamonds Ltd (LON:PDL) have seen their shares hit an eight-year low following their profit warning in January.
Revenue has increased 21% on-year for the firm, to $576.4 million, as production grew to 4.6 million carats. However, this came alongside operation costs which remained in line but came under pressure from below-target throughput, additional security measures for their KEM joint venture, and a strong Rand, which had adverse effects on the firm’s US dollar-based operating costs.
“As outlined in the recent rights issue prospectus in May, financial year 2019 and financial year 2020 production guidance was stated to be at the lower end of the guidance issued in July 2017”, a Petra spokesperson said.
“This will be accompanied by an ongoing focus on delivering the most effective capital and operational cost profiles for its portfolio in order to protect overall profit margins.”
The firm reported that its projected output is expected to be down by over half a million carats in 2019, once it has stripped out its operations at its KEM JV asset. Its on-mine cash costs are expected to be “largely flat” versus 2018, whilst it reports that the diamond market is “stable”.
While the diamond market may be stable, Petra’s debt level rose alarmingly for the year, and incurred a five-for-eight $170 million rights issue. The firm’s shares are currently trading at 46.56p, down 6.88% or 3.44p since trading began this morning. Analysts from Barclays Capital have reiterated their ‘Overweight’ stance on Petra stock, while Panmure Gordon have upgraded their stance from ‘Hold’ to ‘Buy’.
Ikea plans to open high street stores in city centres
Home wares retailer Ikea are planning to open down-sized high street stores across city centres in the UK, following a takeover by Javier Quinones as retail manager.
Quinones has stated that the new stores will open as part of a modernization programme, which will also involves expansion of the company’s online services.
Online shopping is the “new world for retailers” and “Ikea are not outside of this”, Mr Quiñones said.
“It’s not that we have to change because otherwise we will not exist tomorrow, but . . . I’m convinced that if we do not do the transformation then in the long-run we will not exist,” he added.
The new developments come after Ikea enjoyed its sixth consecutive year of sales growth, though sales were down 40 percent last year – on-year – due to a weak pound. The firm are also on the cusp of opening their twenty-second mega store in the UK, in Greenwich, with the first of the smaller high street branches expected to open on Tottenham Court Road this Autumn.
The launch follows a study of consumer habits, and a note of how customers like to interact several times with staff before purchasing a product. Order and collection trials were carried out in locations around Birmingham and London, and within the next six months, over ten thousand of Ikea’s products will be available to order online, with a 24-hour delivery service.
“I think it’s the first time we really looked into the DNA of who we have been. We were born from the store and the typical way of retailing. It’s not unique to Ikea. Every retailer needs to adapt to the new digital era.” Said Mr Quinones.
These new adaptations are vital, as without restructuring, Mr Quinones said the firm would cease to exist. Indeed, the larger outlets take three to four years to fully open and plans to open a new store in Preston were recently scrapped.
The new high street outlets will focus on customer engagement and will offer Ikea’s trademark meatballs.
Ryanair reports 20pc drop in quarterly profits
Ryanair (LON: RYA) has reported a 20 percent drop in first quarter profits.
The airline blamed oil prices and a fall in fares for the fall in profits, which fell to €319 million (£285 million).
The group is also amid strike action by staff over pay and conditions.
“While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model,” said Ryanair.
Wednesday and Thursday will see the cancellation of 600 flights due to strikes by cabin crew based in Spain, Portugal and Belgium. Over 100,000 passengers have been affected by this week’s strike.
“If these unnecessary strikes continue to damage customer confidence and forward prices/yields in certain country markets then we will have to review our winter schedule,” said Ryanair, warning that it might cut jobs at bases where industrial action has taken place.
The group also expressed concerns over a hard Brexit.
“While there is a view that a 21-month transition agreement from March 2019 to December 2020 will be implemented (and extended), recent events in the UK political sphere have added to this uncertainty, and we believe that the risk of a hard Brexit is being underestimated.”
“It is likely that in the event of a hard Brexit our UK shareholders will be treated as non-EU. We may be forced to restrict the voting rights of all non-EU shareholders in the event of a hard Brexit, to ensure that Ryanair remains majority owned and controlled by EU shareholders.”
Despite the fall in profits for the quarter between April and June, the airline has said that it expects to meet profit forecasts of €1.25 billion-€1.35 billion for the full year.
Quorn to invest £7m in R&D on growth in sales
Quorn is making a multi-million-pound investment in research and development, following a boom in vegan food.
The seven million pound investment at its North Yorkshire headquarters in an attempt to capitalise on the vegan boom, whilst keeping new rivals at bay.
“Nobody can yet produce the array of products available at such high quality and we want to keep that advantage,” said Quorn’s chief executive, Kevin Brennan.
“All over the world we have seen a real step-change in the way people are eating. Young consumers are really starting to have concerns around meat from a health and sustainability point of view. It’s not that younger consumers are all turning vegan or vegetarian but they are eating substantially less meat,” he added.
Whilst all Quorn products are vegetarian, many of the products contain some egg.
The group revealed a 12 percent rise in sales to £112 million in the first six months of 2018.
Quorn is aiming to reach $1 billion (£760 million) of annual sales by 2027 and is on target.
“We are already seeing amazing growth internationally: Australian sales are up 50 percent and US sales are up 23 percent. In the US supermarket giant Kroger, we now have the fastest selling product in the [meat alternative] category. With continued investment we believe we can continue this level of performance,” said Brennan.
“I think the irony is that the product was almost developed ahead of its time. We’ve been around for 30 years but the demand for this kind of product 30 years ago was quite small. It has come into its own in the last five years in the UK and the world,” he added.
The UK is Quorn’s biggest market, rising by 12 percent this year due to the popularity of snacks such as vegan scotch eggs and cocktail sausages.
The drive for vegan and vegetarian food is partly being driven by Netflix, who are releasing documentaries addressing the environmental and health effects of eating meat such as Cowspiracy.
Tesco discount chain to launch this year
Tesco (LON: TSCO) could launch its very own discount chain, Jack’s, as early as September this year.
The supermarket giant is advertising for new staff, whilst confirming a Tesco Metro in Merseyside will reopen under a new name.
“If Tesco puts some proper welly behind it in terms of infrastructure and store openings it could stand a decent chance of success,” said Bryan Roberts, an analyst at the retail marketing firm TCC Global.
The group is hoping to launch a supermarket to rival discounters Aldi and Lidl.
Aldi became the UK’s fifth-largest grocer in 2017, overtaking the Co-op. The group already surpassed Waitrose in 2015.
Figures from Kantar Worldpanel show that Aldi’s market share reached 6.9 percent in the 12 weeks to 28 January. Lidl increased its share to 5 percent, whilst Tesco, Sainsbury’s (LON: SBRY), Asda and Morrisons (LON: MRW) all lost market share over the past year.
Aldi and Lidl account for £1 in every £8 spent in UK supermarkets, it emerged last year.
It is not just Aldi and Lidl who have been taking customers from Tesco. B&M, Wilko and Poundland have increased the range of food sold in their stores, attracting more shoppers.
In February, Tesco promised that it would “develop new formats to better serve customers.”
There have been several rumours about this new format but the supermarket has declined to comment. The new format is a key part of its acquisition of Booker.
Charles Wilson, the chief executive of Booker, became the boss of the Tesco’s core UK and Ireland retail operations in March.
“He brings substantial commercial and retail experience and has an exceptional track record of increasing performance and driving growth in customer-focused businesses,” said the group chief executive, Dave Lewis.