Royal Mail post 30 percent drop in profit, but shares rise on cost saving measures
Royal Mail (LON:RMG) have reported a 30 percent drop in half-year profits, after extensive cost-saving programmes hit the company in the short term.
Adjusted pretax profit fell 16 percent to £240 million, but shares rose over 5 percent on the news that the company expects operating costs to fall 1 percent this year overall.
The recently privatised company’s profits depends strongly on the christmas season, for which chief executive Moya Greene said the group had put in “extensive preparations”.
“Everything that can be operationally, we have done … At Christmas, we know it’s our time to shine,” she said.
Royal Mail has recently cut 3000 jobs, around 2 percent of the workforce, which now stands at 140,000. Transformation costs doubled in the lat six months to £94 million, and pushed pretax profits down to £116 million from £167 million.
Royal Mail are currently trading up 5.81 percent at 480.80 pence per share. (1004GMT)
Government propose to close remaining coal stations by 2025
Energy Secretary Amber Rudd has announced a proposal to close the UK’s remaining coal-fired power plants, in a bid to move towards more environmentally friendly forms of energy.
Tightening EU legislation on emissions and an uneconomical energy prices means that, although a third of Britain’s electricity is currently provided by coal, all remaining coal power plants willl be closed by 2025.
Rudd said in a statement today:
“Frankly, it cannot be satisfactory for an advanced economy like the UK to be relying on polluting, carbon-intensive 50-year-old coal-fired power stations. Let me be clear: this is not the future.
“We need to build a new energy infrastructure, fit for the 21st century.”
Despite the controversy surrounding nuclear energy, the government’s preferred direction for energy policy is nuclear energy and lower-carbon gas power plants; which will enable it to meet EU emissions targets by 2050. Gas plants emit almost half the amount of carbon dioxide per megawatt produced as coal plants.
18/11/2015
UK Mail shares fall 10 percent on Ryton move
Shares in private courier service UK Mail Group (LON:UKM) dropped more than 10 percent today, as company restructuring and movement of its head office to a new location takes its toll on finances.
The group disclosed revenues of £237.6 million, up 4.5% on the previous year, but profit before tax fell 55.5 percent to £4.9 million.
The company are in the midst of a period of major investment and transition, after competing the movement of their head office to a new space in Ryton in July this year. In a statement the group said that the move will “deliver significant long term opportunities but was always expected to be challenging in the short-term.”
Guy Buswell, chief executive officer of UK Mail, commented:
“It has become clear that the near-term challenges associated with the transition have been more significant than first anticipated.
“Trading in the initial weeks of the second half, and overall trends within our individual businesses, have been in line with our revised expectations. Our expectations for the current year therefore remain in line with previous guidance. However, due to the timescales required to fully resolve the challenges, our expectations for the next financial year have softened slightly.”
UK Mail are currently trading down 10.19 pence at 326.90 pence per share, after hitting a 52 week low of 300 pence earlier today.
18/11/2015
Asda sees another set of poor results, struggling in challenging market
Walmart-owned Asda have seen a 4.5 percent decline in same-store sales for the three months to November, recovering only slightly from the worst performance in its 50 year history earlier this year.
These latest results make Asda the worst performing of the Big Four supermarkets, including Morrisons – who have had an exceptionally tough year.
Similarly, data from Kantar Worldpanel shows Asda’s position as second largest supermarket by market share has been overtaken by Sainsbury’s in the last quarter, whose shares were up yesterday on unexpectedly positive results.
Asda chief executive Andy Clarke admitted that the supermarket sector remained “challenging”, but added that Asda’s “financial strength and clear plan will sustain us through this period, while we take appropriate and considered action to further strengthen our competitive position”.
Asda’s US parent company Walmart also released poor results, with net profit falling $0.4 billion to $3.3 billion for the three months to the end of October. Its total also revenues fell 1.3%.18/11/2015
Easyjet post strong results, denying terrorist attacks will impact trade
Budget airline Easyjet (LON:EZJ) reported an 18 percent rise in pretax profit for the 2015 financial year, with chief executive Carolyn McCall saying she does not expect the recent terrorist attacks to have a lasting impact on profit.
The company’s revenues rose 3.5 percent to £4.68 billion, with passenger numbers up 6 percent to £68.6 million and their load factor rising to 91.5 percent.
“Our outlook for the longer term is positive. We expect demand in our markets to be sustained and for Easyjet to continue to be a winner in its markets. We will see passenger growth of 7% a year”, McCall commented.
Easyjet have been strongly affected by the recent bombing of a Russian aircraft over Egypt last month, which killed 224 people and caused the government to suspend flights from popular tourist resort Sharm el-Sheik. Easyjet passengers have since been stranded in Egypt, awaiting a flight home. Equally, in the light of the tragic events in Paris last Friday, travel to and from France has also fallen. However, McCall said she did not expect any lasting impact on trading:
“There’s always a cooling off after tragic events, but it does resume after a period of time, and I think that we will see this here.”
Easyjet are currently trading down 3.25 percent, despite their strong results, as the impact of the terrorism on travel companies begins to have an effect.
CPI remains in the red for October, according to ONS figures
Consumer price inflation was down for a second month in a row in October, according to official figures released today by the Office for National Statistics.
Consumer price inflation stayed in the red at -0.1 percent, making a rate rise in the near future look increasingly unlikely. The Bank of England said in a statement earlier this month that the global economy was weakening, and inflation was not likely to rise above 1 percent until the second half of next year. This is the ninth month in a row that CPI has been at, or very close to, zero.
ONS statistician Richard Campbell commented: “CPI remained steady at -0.1 percent in October, with stronger clothing price growth being offset by food and alcohol and tobacco, as well as a smaller impact from rising tuition fees”.
Retail price inflation also fell by 0.1 percent in October, down from 0.8 percent in September – the weakest RPI reading since November 2009.
17/11/2015
Aldi and Lidl smash expectations – but supermarket sector remains slow
Discount supermarkets Aldi and Lidl have continued to go from strength to strength in the third quarter but other major supermarkets saw another set of poor results, according to new figures from Kantar Worldpanel.
In the 12 weeks to 8 November Aldi and Lidl reached a combined share of 10% of the British grocery market for the first time – doubling their market share over the last two years. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, says:
“In the last 12 weeks the two retailers have attracted another additional million shoppers compared with last year while average spend per trip has increased by 4% to £18.85, which is 78p ahead of the total retailer average. The discounters show no sign of stopping and with plans to open hundreds of stores between them, they’ll noticeably widen their reach to the British population.”
Sainsbury’s also had a positive quarter, winning the first share gain among any of the ‘big four’ retailers since October 2014. Its market share increased by 0.2 percentage points to 16.6 percent.
“Sainsbury’s has seen its fourth consecutive period of growth, flying in the face of tough market conditions. It’s 1.5% increase in sales was sufficiently ahead of the market for the retailer to increase its share by 0.2 percentage points – the first share gain registered by any of the ‘big four’ retailers since October 2014”, McKevitt comments.
However, the rest of the troubled supermarket sector remains slow. Sales at Tesco fell 2.5 percent and Morrisons fell by 1.7 percent on the year before. Sales across the sector overall were only up by 0.5%, held back by persistently falling prices.
17/11/2015
Constellation to buy Ballast Point
Maker of Svedka voda and Robert Mondavi wines, Constellation Brands Inc (STZ.N) has announced it will buy Ballast Point Brewing & Spirits in a $1 billion deal in order to compete in the craft beer market.
This deal, which is expected to close towards the end of the year, is expected to add between 5-6 cents per share to Constellation’s earnings at the end of February 2017.
Chief executive of Constellation, Rob Sands, has said;
“Along with imports, craft beer is a key driver of growth and premiumization within the beer industry, with craft doubling its share of the U.S. beer market in the last five years.”
The company is on track to sell over 4 million cases of beer this year, which more than double its sales volume from 2014.
November shows dip in UK house prices
Despite acceleration of British house prices in October, fuelled by the shortage of new houses on the market, this month has seen a 1.3% fall on prices, bringing the average house price down to £292,572.
This dip in prices is not expected to last, with Rightmove director Miles Shipside stating;
“New-to-the-market sellers have dropped their asking prices at this time of year for the last eight years, with an average drop of 1.9 per cent over the last five years.”
“Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focused on seasonal Christmas trimmings.”
Whilst house prices are set to increase in 2016, a reuters poll of analysts have predicted they will rise more slowly than rates in 2015.
Matthew Pointon from Capital Economics has said;
“An acute shortage of homes for sale, coupled with a recovery in housing demand as the labour market continues to strengthen, is putting upwards pressure on house prices. However, with interest rates set to rise gradually from next year, and house prices already at very high levels, gains in 2016 and 2017 will be far more modest.”
Marriott to buy Starwood Hotels in $12.2bn deal
The US hotel giant behind Westin will be bought in a $12.2bn deal by Marriott International Inc (MAR.O) to create the world’s largest hotel chain.
The combined company made up of Marriot and Starwood Hotels & Resorts Worldwide Inc (HOT.N) will together own over 5,500 hotels; 1,400 more than Hilton Worldwide, the second largest hotel chain.
The chairman of the board of directors for Starwood Hotels & Resorts Worldwide, Bruce Duncan, has said;
“During our comprehensive review of strategic and financial alternatives, it was clear that our talented people, world-class brands, global leadership and spirit of innovation were much admired and key drivers of our value. Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company. Starwood shareholders will benefit from ownership in one of the world’s most respected companies, with vast growth potential further enhanced by cost synergies.”
In premarket trading on Monday, Starwood shares were down 3.3 percent at $72.50 while Marriott shares were up 1.7 percent at $74.01. Shareholders of Starwood will receive 0.92 Marriott Class A shares and $2 in cash for each Starwood share.
The boards of both companies approved the acquisition unanimously, but now must be approved by investors in both hotel chains.
The deal is expected to end mid-2016.
Safiya Bashir on 16/11/2015