Bovis Homes profit drops 30%
Bovis Homes shares soared on Thursday despite reporting a 30% drop in profit before tax and a 6% drop in completions.
In addition, Bovis reduced growth forecasts for the coming year and acknowledged that there was work to be done to appease angry customers, which will come at a cost.
Greg Fitzgerald, CEO of Bovis Homes commented on the results:
“The first half of 2017 has been a period of stabilisation and strategic reorganisation for Bovis Homes Group. Since joining the business in April 2017 I have visited all our offices and the vast majority of our developments, and have been hugely impressed by the desire of our dedicated staff to address and rectify the challenges faced by the business. As a result I am confident that our new strategy will set the Group on the path to sustainable, profitable growth.”
“The new strategy of disciplined volume growth, allied with a renewed focus on customer satisfaction and build quality, will deliver the homes that are required in the locations where people want to live. The Group’s strong balance sheet and valuable land bank mean we are well set to provide the stable returns to shareholders that their patience and support have deserved.”
Despite the downbeat headline figures, shares pushed higher by over 7% as investors digested the news.
Zoopla owner continues shopping spree, acquires money.co.uk
Zoopla owner ZPG has continued on an acquisition spree as it announces they had conditionally agreed to acquire Dot Zinc Limited, the owner of money.co.uk.
ZPG recently acquired property marketing firm Ravensworth and today’s announcement further highlights ZPG’s aspirations to grow in the digital media sector by acquiring complimentary companies and competitors.
Money.co.uk was established in 2008 and generated £24.7m and £8m EBITDA in the year to 31st October 2016.
Alex Chesterman, CEO of ZPG said of the acquisition:
“We are delighted to announce this transaction. Adding Money, one of the UK’s leading financial services comparison websites, to our existing brand portfolio will further enhance our product capabilities and consumer engagement across both our comparison and property platforms.”
“Broadening our financial services offering has long been a key part of our strategy and I look forward to welcoming Chris and his team to the ZPG family.”
CEO of Money.co.uk, Chris Morling added:
“I am very proud of what we have achieved over the last nine years. We have developed a strong brand and loyal following and are looking forward to the next phase of our growth.”
“ZPG has led the way as an innovative digital consumer champion and we are looking forward to helping even more consumers make better-informed decisions as part of ZPG.”
The St Leger Day adage: true or false?
“Sell in May and go away, don’t come back ‘til St Leger Day”: a well-known old adage indicating that investors should lay off stocks and shares for the summer, long touted as a way to help improve your investment returns.
However, analysis from Fidelity International debunks this stock market maxim and suggests that placing your bets on the adage could have left you out of pocket.
With the famous St Leger Day race taking place on Saturday 16th September this year, Fidelity analysed the returns for the FTSE All Share between 1st May and 1st September over the past three decades. It found that the index produced positive returns over these months in 18 of the past 30 years.
This means that you would have lost out on the majority of occasions had you backed out of the market in May, debunking the St Leger Day adage.
Tom Stevenson, investment director for Personal Investing at Fidelity International, said: “The St Leger Day stock market adage has been doing the rounds amongst investors for decades but perhaps it’s time to retire this old maxim as our analysis shows that it’s a bit of a lame horse. Had you followed the adage over the past 30 years, you would have been worse off 60 per cent of the time.
“While the summer has seen its fair share of geopolitical risks, including rising tension between North Korea and the US, as well as stalling Brexit negotiations, the FTSE All share has still gone on to deliver a positive return between May and September. As such, anyone who followed this stock market adage this summer would have lost out.
“Trying to predict the best time to be in and out of the market is a fool’s errand and getting it wrong can severely dent your long term investment returns. If there is one adage that investors should abide by it is ‘time in the market matters more than timing the market’.”
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United Technologies and Rockwell Collins confirm $30bn deal
Jet engine maker United Technologies Corp (UTC) has agreed to buy airline parts maker Rockwell Collins in a deal worth $30 billion, the group announced early on Tuesday.
UTC is the maker of Pratt & Whitney jet engines, with Rockwell Collins one of the leading developers of aviation systems and cabin equipment. The cash-and-stock offer values Rockwell shares at $140, with shareholders being offered $93.33 in cash and $46.67 in UTC stock under the terms of the deal.
The tie-up is expected to be one of the biggest deals in aviation history and should, after its completion towards the end of next year, give UTC more negotiating power against industry giants Boeing and Airbus. UTC chief executive Greg Hayes, who will remain as CEO of the combined company, commented: “This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems. “Together, Rockwell Collins and UTC Aerospace Systems will enhance customer value in a rapidly evolving aerospace industry by making aircraft more intelligent and more connected.” Rockwell Collins shares are currently trading down 0.34 percent on the news, at 130.61. United Technologies shares are also trading down1.50 percent at 117.92 (1023GMT).German Manufacturing PMI rebounds in August
German Manufacturing PMI rebounded in August to hit 59.3, the third highest reading since 2011.
A reading above 50 signifies expansion and a reading below 50 points to deterioration in the sector. 59.3 is a bumper reading from Germany, far outpacing Manufacturing PMI in China which came in at 51.4 and the Eurozone which saw a respectable reading of 57.4.
The latest instalment of manufacturing data will further fuel the argument the ECB’s stimulus program has done its job in supporting the economy and it will soon be time to start tapering bond purchases.
Mario Draghi has been in the spotlight recently as the market tries to gain an insight to his thinking the nature of the bond purchases wind-down. Draghi has been careful in his approach however as he has gained a reputation of talking markets up or down and any comments could cause unintended market moves countering his real intensions.
“While forward guidance is a useful instrument, recent research has highlighted that its effectiveness can be improved if combined with other non-standard monetary policies,” Draghi said last week at the Jackson Hole symposium
The ECB is due to meet next week but many analysts don’t see any confirmation of changes to bond purchases until October.
Zoopla acquires property marketing firm Ravensworth
Zoopla owner ZPG has acquired property marketing company Ravensworth in push to create a one-stop shop for their property partners.
Ravensworth provides print and digital marketing campaigns to property companies offering services such as brochure design and printing, property guides and mail campaigns.
“We are delighted to announce the acquisition of Ravensworth, which gives us a market-leading position in the provision of on-demand print and creative marketing services to UK estate and letting agents. In keeping with our strategy, by combining Ravensworth’s products with our sales and marketing capabilities we will be able to offer our partners a fully integrated, best-in-class print solution and once again confirms our position as the most effective partner for UK property professionals,” said Alex Chesterman, CEO of ZPG.
ZPG also owns uSwitch, PrimeLocation and Hometrack. The acquisition of Ravensworth will strengthen ZPG as a multichannel media company covering the housing market and household bills.
Shares in ZPG PLC rose 2.3% to touch 361.8p in the initial reaction to the deal.
ZPG is up around 20% over the past year but still 8% off highs of 394p printed in March of this year.
EUR/USD retreats from highs after ECB warning
The Euro has fallen over 200 pips from highs helped lower by a Reuters report suggesting ECB officials were unhappy with the strength of the single currency.
The ECB is due to meet next week in a highly anticipated meeting which could set the path of QE tapering. Today’s report implies there is a preference for a slower shallower reduction in bond purchases than the market has been pricing in.
Dollar bounce
The dollar has also strengthen after weeks of decline helping to push EUR/USD back from multi-month highs. Some analysts think that we have already seen a short-term top and EUR/USD is likely to drift lower. “We expect several more rate hikes by the Fed this year and the next. A softer message from the European Central Bank (ECB) aimed at avoiding further euro strength is not that unlikely at the next meeting. We think this has the chance to re-establish relative monetary policy expectations as the dominant driver of EUR/USD and support the dollar in the coming months, especially considering the potential for a reversal of current positioning among speculative accounts,” said Richard Falkenhäll, Senior FX Srategist at SEB who has a year end target of 1.14.Sterling drops as Brexit talks remain in stalemate
Sterling sank against the dollar on Thursday as Barnier said there had been ‘no decisive progress’ in Brexit negotiations.
The lack of progress will unnerve markets who are looking for any semblance of cooperation that could avoid a so called ‘hard-Brexit’.
“The risk of no transitionary agreement seems to have increased today given the strong word’s from Barnier, the EU chief Brexit negotiator. His not unexpected comments has led to a modest weakening in Sterling, however it also increases the chance of the UK exiting the EU in a disorderly fashion,” said Shilen Shah, Bond Strategist at Investec Wealth & Investment.
“The key hazard for markets is that today’s disagreement is an indicator of where future negotiations are heading, with the danger that the risk-premium on UK assets will widen if the talks implode with no agreement.”
GBP/USD has been resilient throughout August as the UK government holidays and the dollar weakens in the face of unconventional behaviour in Washington DC.
Chinese manufacturing activity jumps
The Chinese manufacturing sector expanded faster than economists expected in August.
Official Chinese PMI came in at 51.7, higher than the 51.3 consensus of analysts polled by Reuters.
The reading was also higher than July’s reading of 51.4.
There has been concern that high levels of debt and efforts to control a rampant property market would begin to curtail growth in the world’s second largest economy.