Debenhams report plunging profits in the wake of bad weather
Debenhams (LON:DEB) trading figures plunged in the six weeks to March, after being hit by poor weather and forced store closures.
Underlying profit before tax fell 51.9 percent to £42.2 million during the period, with like-for-like sales declining 2.2 percent. The group attributed the fall to 100 forced store closures due to extreme weather in the last week of trading, as well as a tough High Street climate.
The department store chain cut its dividend and warned that profits for the full year will be towards the lower end of broker forecasts, currently standing at between £50 and £61 million.
The group also reported that its Chief Financial Officer, Matt Smith, had stepped down from his position to join Selfridges.
Sergio Bucher, group CEO, said it had “not been an easy” first half, adding:
“We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth.”
Debenhams (LON:DEB) shares sunk around 10 percent at market open, and are now trading down 8.67 percent at 21.30 (0840GMT).
Sky shares edge up as group reports “excellent” third quarter
Sky (LON:SKY) posted a 14 percent rise in core earnings in the first nine months of the year, applauding an “excellent” performance in a competitive market.
Like-for-like revenue grew by 5 percent, or £441 million, to £10,144 million in the nine months to 31 March, with content revenue up 17 percent to £617 million and advertising revenue growth up 9 percent.
Geographically, revenues increased by 4 percent in the UK, 6 percent in Germany and Austria and 5 percent in Italy. Customer numbers rose by 38,000 in the third quarter, including a 70,000 rise in the UK but a decline of 30,000 in Germany and Austria. Over the last year, customer numbers have risen by 480,000 to 22.9 million.
Jeremy Darroch, group chief executive, said:”It’s been a good quarter for Sky. We’ve delivered excellent financial results.”
“Today’s results not only demonstrate continued strong execution but also extend our position as Europe’s leading direct-to-consumer media business.”
He added: “Looking ahead, we have the right strategy and abilities in place to provide customers with the best content, products and service. Whilst we expect the consumer environment to remain challenging, the business is in good shape and we remain on track for the full year.”
Shares in Sky are currently trading up 0.68 percent at 1,317.34 (0824GMT).
Unilever reports dividend hike and 6bn share buyback
Unilever (LON:ULVR) announced a hefty dividend hike on Thursday alongside a 6 billion euro share buyback, as disagreements between management and shareholders continue.
The group confirmed it had seen “broad-based growth” throughout the quarter, raising its quarterly payout to shareholders by 8 per cent to €0.3872. Management has faced serious shareholder opposition to its decision to move its headquarters to Rotterdam, with investors worried about the likely exclusion of the company from the FTSE 100 on the back of the move.
Unilever also announced plans to start buying back 6 billion worth of shares starting next month, using funds from the sale of its spreads division.
Household goods maker Unilever reported underlying sales growth, excluding spreads, of 3.7 percent in the first quarter, totalling 12.6 billion euros. Volume growth stood at 3.6 percent and price growth at 0.1 percent.
Paul Polman, the group’s chief executive officer, commented: “The first quarter demonstrates another good volume-driven performance across all three divisions. The broad-based growth, including over 4 percent volume growth in emerging markets, shows that the ‘Connected 4 Growth’ programme is working and enhancing our long-term compounding growth model.
“We are further improving the quality and speed of our global and local innovation as a result of a more agile, consumer-facing organisation. At the same time, we are maintaining strong delivery from our savings programmes and expecting to complete the exit from spreads in the middle of the year.”
For the full year, the company expects underlying sales growth in the 3 percent to 5 percent range.
Shares in Unilever are currently trading down 0.23 percent at 3,937.50 (0811GMT).
UK inflation falls to one-year low
UK inflation unexpectedly fell to 2.5 percent in March, marking the lowest in level in a year.
UK inflation fell from 2.7 percent record in February to 2.5, according to the latest figures from the Office of National Statistics (ONS), casting doubts on an interest rate hike from the Bank of England in May.
The ONS cited prices for clothing and footwear rising by less than a year ago, predominately across women’s clothing.
In addition, price changes for alcoholic drinks and tobacco also contributed to the downward change. This was attributed to budget changes, such as tax changes for tobacco being announced in November as opposed to March.
Mike Hardie, head of inflation at the ONS, said:
“Inflation fell to its lowest rate in a year, with women’s clothing prices rising slower than usual for this time of year.
“Alcohol and tobacco also helped ease inflation pressures, with tobacco duty rises linked to the Budget not appearing this March, thanks to its new autumn billing.”
This marks the first time since the Brexit vote that wages are outpacing inflation, with an 2.8 percent increase in wage growth record back in February. The figures caused the pound to fall sharply to $1.4210 on Wednesday morning, down 0.5 per cent on the day. The ease in inflation has prompted investors to re-asses whether the Bank of England will raise rates in May as initially expected. A majority of economists polled by Reuters said the central bank will have lifted rates to 1.0 percent or higher by the end of the first quarter of the following year.Commenting on today’s inflation figures, ONS Head of Inflation Mike Hardie said: https://t.co/g48fqGNXFF pic.twitter.com/5uKbmRAT14
— ONS (@ONS) April 18, 2018
Telford Homes expects record profits on London housing shortage
Telford Homes (LON:TEF) said it expects to deliver record profits for the year in part due to the shortage of housing in London.
The housing builder said it anticipates pre-tax profits to be up by almost a third for the year to March-end, despite a general downturn trend in the housing market across the capital.
Nevertheless, Telford said that the undersupplied London housing market ‘remained robust’ across the period, offsetting concerns.
So far, it has sold over 100 homes in the second phase of the New Garden Quarter in Stratford, with initial interest in the project surpassing expectations.
The company attributed the strong performance to ‘robust market for our homes in London assisted by broad mix of sales between build to rent, individual investors, owner-occupiers and housing associations’
Jon Di-Stefano, Chief Executive of Telford Homes, commented:
“Telford Homes continues to perform well and I expect to once again report record revenue and profit for the year to 31 March 2018. ”
“As we increase the scale of the business, our growth is underpinned by the lack of supply of new homes in London and demand for our product at more affordable price points remains strong.”
“Build to rent is the most exciting part of our business in the near term and I believe our increased focus on this sector will drive the next phase of our growth and bring even greater success”, he added.
The group said it now has just over 2,900 homes under construction, with the view to ‘significantly increase’ this number in the future.
Telford’s optimistic results contrasts the generally subdued figures for the London housing market, with demand falling for the eleventh month in the row, according to the latest UK residential survey by RICS.
Moreover, The capital continues to be affected by economic uncertainty and higher Stamp Duty rates, with prices falling more than 15 per cent in the last 12 months.
Shares in Telford Homes are currently trading +1.65 as of 09.31AM (GMT).
System1 shares slip on profit warning
Shares in System1 (LON:SYS1) slipped in early trading on Wednesday, after “disappointing trading” led to a further profit guidance downgrade.
The London-based marketing and advertising agency said its pre-tax profit for the year was expected to be between £1.6 million and £2.0 million, well below its initial guidance in January of comparing to its most recently downgraded guidance in January of £6.3 million.
Gross profit at the firm has fallen by 18 percent to £22.2 million, despite taking measures to cut overheads by 2 percent in the second half of the year. The group cut share-based payments to executives and cut several jobs.
However, the group insists it still has a ‘healthy’ net cash balance of £5.7 million (as of 31 March) and paid out £4.2 million in dividends to shareholders through the 2017/18 year.
Shares in System1 are currently trading down 0.88 percent at 297.34 (0850GMT).
Hammerson withdraws from Intu acquisition
Shares in shopping centre owner Hammerson (LON:HMSO) rose on Wednesday morning, after announcing it would be urging its shareholders to vote against the proposed merger with rival Intu.
The group made an all-share offer for Intu at the end of last year in a deal with £3.4 million. In a surprise statement this morning Hammerson, who own Birmingham’s Bullring centre, pulled out of the offer citing market weakness.
Giving a nod towards the spate of high street closures of late, it said that “whilst Hammerson has proven its portfolio is well positioned to weather the current environment, the equity market now perceives a heightened level of risk associated with the UK retail property sector as a whole”.
“It is also apparent from extensive engagement with shareholders, in particular in recent weeks, that there is a wide range of views on the merits of the Intu acquisition. As a result, the board of Hammerson has concluded that the heightened risks associated with the Intu acquisition outweigh the long-term rewards that can be expected in comparison to other strategic options open to the company”, it continued.
If shareholders do not approve the purchase when they meet the offer will lapse, equating Hammerson’s statement with a withdrawal of its initial offer.
Hammerson shares are currently trading up 2.71 percent at 507.00 on the news (0834GMT).
Rio Tinto shares edge up as iron ore and copper output rise
Shares in miner Rio Tinto (LON:RIO) edged up on Wednesday morning, after reporting an increase in iron ore and copper output in the first quarter.
Pilbara iron ore volumes increased by 8 percent to 83.1 million tonnes on-year, with copper output up by 65 percent to 139.3k tonnes as operations recover from the strike in Chile.
However hard coking coal production struggled during the quarter, falling 30 percent to around 1.1 million tonnes, negatively affected by maintenance works at the Kestrel mine.
Production of titanium dioxide slag also declined by 12 percent, with annual guidance cut slightly to between 1.1 and 1.3 million.
The company said in a statement: “We delivered a solid operational performance across most commodities in the first quarter of 2018”.
“Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher.
“By continuing to advance our mine-to-market productivity programme, whilst maintaining our focus on the disciplined allocation of cash, we will continue to deliver superior returns to our shareholders.”
Shares in Rio Tinto are currently trading up 2.20 percent at 3,858.00 (0823GMT).
Moneysupermarket shares rise on strong revenue growth
Price comparison service Moneysupermarket.com (LON:MONY) reported a 4 percent growth in revenue in the first quarter, confirming that trading was “on track” for the year.
Revenue in the three months to March rose to £88.3 million, up from £85 million last year, boosted by insurance switching and competitive prices.
Revenues for insurance rose 4 percent to £47.1 million, while its home services division recorded a 15 percent boost to £11.5 million. Money fell by 1 percent to £23.1 million.
“Trading is on track in this year of transformation as we reinvent the business to help people save more money,” chief executive Mark Lewis said.
“We are expanding our product engineering hub in Manchester to improve the customer journeys on our sites and plan to unlock future growth with the agreement to acquire Decision Tech – a leader in home communications price comparison and white label B2B comparison services.”
Going forward the group said it continues to benefit from its diversified portfolio and it remains confident of meeting full-year expectations.
Last month the Ewloe-headquartered company announced the acquisition of rival site Decision Technologies, a comparison site focused on the home communications sector. Its portfolio includes broadbandchoices.co.uk, offering internet service comparison for consumers and businesses.
Decision Technologies and its 40-strong staff will continue to operate from its current offices. The company has a forecasted £3.6 million adjusted EBITDA for the year to 31 March 2018.
Shares in Moneysupermarket.com are currently trading up 14 percent at 283.90 (0812GMT).