The news machine at Harland & Wolff (LON:HARL) is certainly getting into gear.

Just a month ago the maritime and offshore industry fabrication group announced a significant win with the Fleet Solid Support Programme Subcontract with Navantia UK, to cover delivering works to that company worth between £700m to £800m to H&W over a seven-year period. This contract could prove to be a ‘game changer’ as its progresses.

In the middle of last month, it reported that it had completed the first hull for the Cory Barges fabrication contract.

The next day the group updated investors that it was switching its four barges contract work from its Belfast facility over to its recently acquired Methil site in Scotland.

On 20^th February it announced that the group had secured six new smaller contracts within the defence, cruise and ferry and commercial fabrication markets, worth over £10m and taking 18 months to complete.

At that time Group CEO John Wood stated that:

“Since the commencement of 2023, we are seeing an uptick in the level of enquiries flowing through all the yards for multiple projects. Whilst securing the longer-term FSS Programme as part of team Resolute was a major milestone for the Company, the Company must continue to rely on securing and executing smaller projects across its yards, adding to the experience and skills of the workforce. I am delighted that we have significant traction across all our markets and are moving forward to consolidate our position as a partner of choice in each market.”

The next day the group reported that it had submitted plans to extend its fabrication halls at its Belfast facility, as part of its £77m Recapitalisation Plan for the FSS Programme, which will involve upgrades on its automated and robotic machinery. 

The extension to the halls is expected to give substantially improved production flow, enabling the group to be more efficient and cost effective.

Business Update and Outlook statement

The group has now produced a Business Update and Management Outlook report for 2023 and 2024.

It has a backlog of confirmed contract revenue of some £900m, extending over the next seven years.

It also has a weighted pipeline of new business reckoned to be in excess of £3.6bn in revenues over the next five years.

The company has reported a contract win ratio of 34%, suggesting that it would have a Backlog figure of some £1.24bn.

That would take the Backlog up to around £2.14bn, helping to deliver the group’s medium-term targets.

Accordingly, the company has upped its guidance levels expecting its target revenues to be between £100m to £115m this year and then £200m to £230m next year.

Importantly it expects its cashflow to be breakeven in 2024.

The group’s Management considers there to be a continuing improvement in market conditions across the five markets in which the company is engaged. 

Higher charge-out rates are working their way through the contracts (new and existing) to reflect the inflationary environment and preserve a blended gross margins target range of between 24% and 27% in the medium term.

CEO John Wood commented that:

“It is gratifying to see the levels of activity that are already present in all of our yards, with the knowledge that this is only going to increase steadily – and materially – from this point.

The Harland and Wolff machine is really starting to hum and our ability to operate flexibly across multiple facilities will become increasingly important as an industry differentiator as our workload expands. 

We look forward to the future with increasing confidence.”

The Business

The group operates through five markets: commercial, cruise and ferry, defence, energy and renewables and six services: technical services, fabrication and construction, decommissioning, repair and maintenance, in-service support and conversion.

Its Belfast yard is one of Europe’s largest heavy engineering facilities, with deep water access, two of Europe’s largest drydocks, ample quayside and vast fabrication halls. 

The group also has two Scottish-based yards, focused upon work for the renewables, energy and defence sectors.

In addition, it also has a sizeable undercover drydock at Appledore.

The group also owns the Islandmagee gas storage project which is expected to provide 25% of the UK’s natural gas storage capacity.

Analyst Opinion – reiterating the Buy recommendation

Analyst Peter Renton at the group’s NOMAD and Joint Broker Cenkos Securities has a Buy recommendation out on the company’s shares.

His estimates for the current year to end December look for a 350% rise in group revenues to £100m and then for 2024 a doubling of that figure to £200m.

On the basis of those figures, he looks for a pre-tax loss this year of £34.1m falling to £20.0m next year.

Conclusion – shares could easily double

If all this was not good enough to excite investor interest, it is well worth noting that the group’s management estimates that the sale of 100% of the Islandmagee gas storage development project could generate between £35m to £50m – that is more than the group’s current market capitalisation of £30m, with its shares at 17.15p.

They have trebled in price since last November and have peaked at 29p within the last year.

At the current price medium-term investors could easily see the shares double.

Lawrence Stroll, boss of the iconic car brand, has declared that the group ended 2022 with its strongest order book in years and that he is highly confident that it will achieve the target to deliver 10,000 wholesales over the coming years, and with it, a significantly enhanced financial performance.

Aston Martin Lagonda Global Holdings (LON:AML) has reported a 26% improvement in revenue in the year to end December 2022 to £1.38bn (£1.09bn), while its adjusted operating loss was 59% higher at £117.9m (£74.3m).

The Group Operations

Tracing its roots back to 1913 this group, which was founded by Lionel Martin and Robert Bamford, and from 1947 was led by David Brown. Over the years it has endured seven bankruptcies and transformed its operations substantially.

Today the company designs, creates, and exports cars.

The group manufactures its sports cars range in Gaydon, Warwickshire while its luxury DBX SUV range is manufactured in St. Athan, Wales.

The company’s activities take in the design, development, manufacture, and marketing of vehicles, as well as the sale of parts, servicing, and automotive brand activities.

The group’s products in the ultra-luxury automotive space, include GT, Sport, Super GT, SUV, mid-engine supercar, mid-engine hyper car, and sedan.

Its current models include the Vantage, DB11, DBS, DBX, the Aston Martin Valkyrie, and Valhalla.

Outlook – year on year growth sought

Group CEO Amedeo Felisa stated that:

“We remain on our way to achieving our target of c.10,000 wholesales, aligned with our ultra-luxury strategy.  In addition, we are well on track to deliver our medium-term financial targets of circa.£2bn revenue and circa £500m adjusted EBITDA in 2024/25.

For 2023 we expect to deliver significant growth in profitability compared to 2022, primarily driven by an increase in volumes and higher gross margin in both Core and Special vehicles. More specifically, we expect significant year-on-year growth and positive free cash flow in the second half of the year.”

Conclusion – profitability to improve this year

The scars of this group’s corporate history should be healing by now, especially after the additional funding given last year.

A year ago the company’s shares were trading at over 1050p each, since when various mishaps have helped them collapse to a low of 85p, that was at the start of November last year.

Ahead of the latest figures they were looking a lot steadier at around the 200p level before the results.

On the results news they have leapt 9% to 218p in reaction.

Persimmon’s full year results cast a shadow over their performance in the coming year despite an increased number of completions and higher average sales prices in 2022.

Persimmon shares were down over 8% following an update punctuated with warnings over the outlook for 2023 as the housebuilder battles higher mortgage rates and the cost of living crisis.

Commenting on the outlook for 2023, Persimmon CEO Dean Finch said “the sales rates seen over the last five months mean completions will be down markedly this year and as a consequence, so will margin and profits.”

The company said their forward sales rates fell to 0.3 in the fourth quarter of 2022 but had rebounded to 0.52 in the first eigth weeks of 2023.

“Persimmon, like its peers, has seen a slight pickup in sales since the start of the year. But overall, the outlook for the year ahead remains downbeat,” said Charlie Huggins, Head of Equities at Wealth Club.

“New home buyers are clearly exercising greater caution, and frankly who can blame them. Mortgage payments for first time buyers have significantly increased over the past year. When combined with the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England, it’s no surprise that the housing market has seen a marked slowdown.”

Persimmon 2022 results

Although the market rightly focused on the outlook for the year ahead, 2022 wasn’t a complete disaster for Persimmon.

New home completions rose to 14,868 from 14,551 and the average sales price rose to £248,616 from £237,078.

Operating profit for 2022 increased to £1,006.5m on an underlying new housing margin gross margin of 30.9%.

A stronger pound sent the FTSE 100 lower on Tuesday as the Brexit deal on Northern Ireland helped lift sterling against the dollar.

The breakthrough agreement saw GBP/USD rise 0.5% to 1.2131 and FTSE 100 slip back beneath 7,900.

While the agreement is good news for the UK economy and UK companies, it is not favourable for London’s leading index packed full of companies earning their revenue overseas. The FTSE 100’s overseas earners suffer in periods of sterling strength, and are supported by a weaker pound.

The FTSE 100’s inverse relationship with the pound has become prevalent in periods of market volatility related to Brexit negotiations ever since the vote to leave in 2016. Today’s deal between the UK and EU was no exception.

FTSE 100 sectors exposed to the UK including financials, banks and housebuilders rallied on the agreement, but their support was not enough to offset losses in overseas earners. Kingfisher was a notable riser, gaining 4%.

Heavyweights including AstraZeneca, Diageo, Unilever and British American Tobacco were all weaker on the day and dragged on the index.

Ocado

A disappointing update from Ocado meant the premium online retailer was the FTSE 100’s worst performer, falling as much as 10%.

Ocado’s 2022 revenue edged fractionally higher but the cost of living crisis was blamed for lower average basket sizes and there was little improvement in their solutions business EBITDA.

“Ocado: so much promise and so little joy. Three years ago, it was on the cusp on a significant shift in consumer behaviour. The pandemic forced people to buy their groceries online, meaning any company that didn’t have a robust set-up to pack and deliver food and drink to households had to think fast to gain this capability,” said Russ Mould, investment director at AJ Bell.

“Ocado had the best moment in its existence to sell its technology platform to grocers around the world. Sadly, the deals have been few and far between, leaving investors wondering when it will ever make a sustainable profit.”

abrdn

Investors were pleased with abrdn’s robust 2022 full report and confirmation their strategic plan was beginning to bear fruit. A focus on their Adviser and Personal business, which includes the acquisition of Interactive Investor, helped offset weaker revenue from their Investments unit due to poor market conditions.

“We are building a stronger abrdn. As we exit year two of our three-year strategic plan, the structure of our group is now broadly set. We are increasingly well positioned for growth,” said Stephen Bird, Chief Executive Officer of abrdn.

“In one of the toughest investing years in living memory, the resilience we have created in our business model helped us to deliver adjusted operating profit of £263m.”

abrdn shares were 4% higher at the time of writing.

FTSE 250 company Videndum (LON:VID) is certainly growing at a very good pace.

The international provider of premium branded hardware products and software solutions to the growing content creation market, has reported excellent results for its 2022 Trading Year.

With 90% of its revenue coming from professional content creators, the group showed an impressive 14% growth in sales to £451m (£394m), with a 27% advance in pre-tax profits to £54.0m (£42.4m), taking earnings up 29% to 90.1p (69.9p), enabling an increase of 14% in its dividend to 40p (35p) per share.

CEO Stephen Bird stated that:

“Videndum delivered another record performance, despite a challenging H2 2022 macroeconomic environment. This is testament to the quality of our people, operational excellence and our leading, premium brands which allow us to manage pricing to more than offset inflationary headwinds. We executed well on our strategy, delivering organic growth, margin improvement, good cash generation and growth through M&A.”

The Business

Uniquely positioned at the heart of the content creation market, the group which used to be called The Vitec Group, has been transformed over the last decade.

Videndum’s customers include broadcasters, film studios, production and rental companies, photographers, independent content creators, vloggers, influencers, gamers, professional sound crews and enterprises.

The group’s product portfolio includes camera supports, video transmission systems and monitors, live streaming solutions, smartphone accessories, robotic camera systems, prompters, LED lighting, mobile power, carrying solutions, backgrounds and motion control, audio capture and noise reduction equipment.

Employing some 2,000 people across the world in 11 different countries, the business is organised into three Divisions: Media Solutions, Production Solutions and Creative Solutions.

The fundamental growth drivers of the business have remained very positive, underpinned by technology change driving shorter product replacement cycles.

The group’s market-leading, premium brands allow it to manage inflationary headwinds with pricing actions and to manage its supply chain challenges.

Conclusion – market price estimates of 1500p for the shares

The £423m capitalised group has shown a very impressive trading year in 2022, hopefully it will continue to do so in 2023.

The company’s shares fell 20p to 910p on the results, but there are currently market estimates suggesting a Target Price of over 1500p in the due course.

We all know this group’s household and personal care products and it sells over 1bn of them a year.

It is the leading European manufacturer and supplier of private label and contract manufactured products for the domestic and professional cleaning/hygiene markets,

However, over the last couple of years its trading has been tough.

The pace of cost inflation and price increase negotiation time lags helped to push the group into significant losses.

But it is now becoming apparent that measures taken by the group’s Management have been effective and will take it back into profitability in its next year to end June 2024.

For the six months to end December from its continuing operations the group had a turnover of £426.3m (£323.4m).

The half-year adjusted operating loss of £7.9m (£16.9m) was due primarily to exceptional raw material, packaging, logistics, energy and labour cost rises, which were unable to be fully recovered by price increases in the first half. 

 CEO Chris Smith stated that:

“The first half year required continued high levels of attention to margin recovery in light of ongoing inflationary pressures. Whilst there are some early signs of stabilisation in certain input costs, many raw material costs remain historically high. Energy and employment costs continue to apply further inflationary pressure, and accordingly, we continue to action mitigations including price increases, product engineering and cost control.

It is pleasing to have returned to positive adjusted operating profit in the last two months of the period, with momentum improving into the second half as a result of higher volumes from new business wins, better customer service levels and pricing actions fully annualising. All of this is supported by consumer behaviour creating a more favourable environment for private label products.

Group Operations

Established way back in 1927, the Manchester-based McBride (LON:MCB), manufactures and sells private label household and personal care products to retailers and brand owners in the UK, Germany, France, Australia, the rest of Europe, the rest of Asia-Pacific, and otherwise internationally.

The company operates through five segments: Liquids, Powders, Unit dosing, Aerosols, and Asia Pacific.

It employs 3,400 people across 18 locations in 12 countries.

The group develops, manufactures and distributes products for both Private Label clients in the retail segment and Contract Manufacturing for established brands. 

In addition, it also has a growing portfolio of its own successful brands within the household category.

Analyst Opinion – estimates of profits in the next year

The consensus view is that the group will this year, to end June, see sales up £200m to £874m, while the massive £35.3m loss of 2022 will be sliced back by £10.0m to £25.3m.

For the coming 2024 June figures some £911m sales are estimated, with a bounce back to £3.55m of pre-tax profits.

Conclusion – shares could move forward again

Five years ago this group’s shares were trading at around 160p, a year ago they were down to 50p.

They are now 24p, at which level the whole group is only valued at £42.5m.

With the hopes of a recovery into profits over the next year or so the shares could well start to move forward again.