Empresaria (AIM: EMR) 60p(58-62p) Mkt Cap £30m reported its Interims to June 2022, illustrating the benefits of a diverse business. This specialist global staffing group reported that while offshore services increased 94% this was offset by the expected decline in Healthcare after record 2021. Empresaria (EMR) mentioned macroeconomic uncertainties at the finals since then there have been 21 RNSs reporting the buying-back of 200,000 shares at various higher prices with a director recently paying 67p before the closed period. Today’s Interims reported a 15% improvement in NFI (Net Fee Inco...
Petrofac shares dipped 0.3% to 114.8p in late afternoon trading on Thursday after the energy group reported a 23% HY1 2022 revenue fall to $1.2 billion against $1.6 billion the last year.
The company highlighted 40% dive in its Engineering and Construction sector to $700 million compared to $1.1 billion in HY1 2021, linked to lingering effects from the Covid-19 pandemic.
Petrofac confirmed a EBIT drop to $2 million from $49 million, along with a reported net loss of $14 million.
The firm reported a net debt of $341 million and liquidity of $511 million.
“Our performance in the first half continues to reflect the Covid-19 related industry challenges, as we work towards completion on many of the projects in the legacy E&C portfolio,” said Petrofac CEO Sami Iskander.
“Moving into the second half of 2022, a significant increase in bidding activity has put us firmly on the path to grow backlog over the full year.”
XTB chief market analyst Walid Koudmani added: “While Petrofac continues to be impacted by the lingering effects of the pandemic, the company managed to post a mixed H1 financial performance which was in line with guidance and showed good momentum.”
“Despite this, the company reported net loss of US$(14) million but expects free cash flow in the second half to be broadly neutral as market conditions are likely to be favourable thanks to rising commodity prices and the emphasis on energy security.”
Petrofac declined to issue a dividend in HY1, and said it would reinstate its payments once the company was in a stronger financial position.
McDonald’s announced its reopening of Ukrainian stores after closing their operations in the country almost half a year ago at the start of the Russian invasion.
The Big Mac company said it continued to pay the salaries of over 10,000 employees while regional stores were shut, and “countless members” of the McDonald’s system assisted with refugee local efforts.
McDonald’s commented the decision was made after speaking to employees who wanted to return to work, and would be reopening stores in safe regions in across Ukraine.
The company said it aimed to support the local economy and “support a small but important sense of normalcy.”
The brand added it would institute a “phased plan” to reopen restaurants in Kyiv and western Ukraine, where other businesses have safely resumed business.
McDoland’s confirmed it would be working with suppliers and employees over the next few months to get operations up and running again.
“As we prepare to serve our Ukrainian customers again, we will be guided by our values and our purpose to feed and foster the communities we serve. Thank you for your support.,” said McDonald’s in a statement.
A weaker US dollar dragged on blue-chip companies reliant on the currency as the FTSE 100 dipped 0.3% to 7,479 in early afternoon trading on Thursday.
“[Dollar] weakness [weighed] on the large number of UK stocks which earn revenue in that currency,” said AJ Bell financial analyst Danni Hewson.
“A stronger pound against the dollar creates a headwind for the big dollar earners on the UK market, and there are plenty of them, including miners and oil producers.”
Meanwhile, the FTSE 100 was pulled further down by a slate of companies trading ex-dividend, as Barclays dipped 1.1% to 167.8p, Rio Tinto dropped 4% to 4,799.2 and Astra Zeneca fell 1.5% to 11,064.6p.
Entain
Entain was the big riser on the market today, climbing 6.4% to 1,393.5p after the gambling company announced sparkling results, alongside its new Entain CEE partnership with EMMA Capital to expand across Central and Eastern Europe.
“Entain continues to find new flags to plant across the world, this time making moves on the Croatian market. The London-listed gambling group has found a recipe for success which can be replicated around the world, helping it build scale and market dominance,” said Hewson.
“The key test for Entain will be if a recession strikes in many of its operating territories. On one hand, this could threaten earnings if people are watching the pennies more closely and scaling back on spending.”
“On the other, history suggests a lot of people like to try their luck during hard times, in the hope of winning a big prize.”
Entain partners with EMMA Capital and SuperSport, expands Central and Eastern Europe reachhttps://t.co/aVvLtUrlmh
Entain also unveiled a new dividend policy, including a FY 2022 dividend of £100 million to be split in half, per HY period, representing an 8.5p per share payout for HY1 2022.
“Positive performance and the rebound of retail has paved the way for a fresh and revitalised dividend policy. Starting at £100m over the current year, split between the first and second half, that’s expected to grow from here,” said Hargreavs Lansdown equity analyst Matt Britzman.
GSK shares sank 8.2% to 1,428.9p and Haleon shares fell 5.5% to 263.9p.
“GSK’s demerger hasn’t quite produced the success story it expected. The demerged entity, consumer goods seller Haleon, continues to slip in price,” said Hewson.
“This might be down to GSK investors ditching the Haleon shares they were given for free as they are only interested in pharmaceuticals, rather than the latter’s toothpaste and headache pills. Or it could be investors nervous at Haleon’s growth prospects in a world where cash-strapped consumers can easily shun big name, expensive brands in favour of cheaper, supermarket own-brand products.”
“But perhaps the key reason for share price weakness in Haleon and GSK itself might be market worries over lawsuits concerning Zantac, a heartburn drug made by GSK and withdrawn in 2019 over fears it was contaminated with a chemical linked to cancer.”
US Markets
Across the Atlantic, US markets responded positively to Wednesday’s inflation figures, which came in below analyst expectations at 8.5% as a result of lower gas prices across the country.
The Dow Jones was up 0.4% to 33,424 in pre-open trading, with the NASDAQ rising 0.4% to 13,451.7 and the S&P 500 gaining 0.4% to 13,451.7.
Disney+
Disney+ also reported a banner Q3, with shares rising 8.5% in pre-open trading after it beat streaming giant Netflix for its crown by soaring to 221.1 million subscribers against Netflix’s 220.7 million.
“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers,” said Hewson.
“Admittedly Disney’s 221.1 million subscribers (versus Netflix’s 220.7 million) are based on more than just its Disney+ platform, as they include Hulu and ESPN+.”
“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty.”
More bad news from cosmetics supplier Revolution Beauty (LON: REVB) from its auditors and the share price has nearly halved to 8.73p. The company joined AIM less than 13 months ago at 160p a share, so the share price has slumped by nearly 95%.
Revolution Beauty had already warned on 2 August that its 2021-22 results would be delayed and cut its expectations for 2022-23. Poor retail demand in the US and the loss of £9m of Russian and Ukraine revenues hit the early part of the new financial year. Online demand is switching to store sales and cost increases have hit profitability. That led Zeus to slashing its 2022-23 pre-tax profit forecast by 64% to £6m.
However, the auditors have come up with more problems, which will have a material effect on the 2021-22 results and significantly reduce the estimated pre-tax profit of £9.9m. Revenue recognition, bad debt provisions and stock provisions are involved.
It may be difficult to finish the audit in time to report the results by the end of August as was previously promised.
Management says that net debt at the end of July 2022 will still be £21.2m and the estimates for 2022-23 figures will not be changed.
Netflix awoke to find its streaming crown stolen by former new kid on the block Disney+ after the House of Mouse reported 221.1 million subscribers in Q3 against Netflix’s 220.7 million.
The news comes as the latest blow to the struggling streaming giant, who reported its first loss in subscribers in a decade this year as competing services carved slices out of the web service pie.
Disney+ recorded 14.4 million new customers in the quarter, smashing analyst expectations as the company tore ahead of its competition.
It should be noted that the figures from Disney+ include its Hulu and ESPN+ operations, alongside its original streaming platform.
However, Netflix has found itself struggling to retain subscribers in recent months, despite lucratively expensive offerings such as Bridgerton, Stranger Things and its latest big project, Neil Gaiman’s The Sandman.
Disney+ has a marked edge on Netflix, due to its ownership of massive franchises including Star Wars and the Marvel Cinematic Universe, with the service offering exclusive access to shows linked to the respective universes.
Despite its strong results, Disney announced a plan to launch an ad-funded version of the streaming service at the current price plan of $7.99, while ad-free content will cost customers $10.99.
The ad-supported edition of the platform is scheduled to launch outside the US in 2023, however Disney said it didn’t expect the higher price tag to dissuade consumers.
The company confirmed a $1.1 billion loss in the quarter, with management assuring investors its losses were expected to peak in FY 2022.
“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers,” said AJ Bell financial analyst Danni Hewson.
“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty. However, the high-ticket price for visiting its parks makes it vulnerable to a drop in demand in an economic downturn.”
“And we all know the world of streaming is only as good as the quality of the content, which means consistently spending big bucks to create new shows and films.”
Disney shares rose 8.5% in pre-open trading on Thursday.
MJ Hudson (LON: MJH) announced a £9.22m placing and PrimaryBid offer at 30p a share as the market was closing on Wednesday afternoon. The share price of the asset management services provider declined 8% to 28.75p today. The cash will be invested in the ESG division, help to pay deferred consideration and provide additional regulatory capital for the growing operations. The company wants to change the terms of its LTIP so that there is a 30p floor on the issue price of shares. Cenkos has adjusted its 2022-23 pre-tax profit forecast from £5.7m to £6m, although earnings have been cut from 3.1p a share to 2.8p a share.
Performance optimisation software provider Checkit (LON: CKT) grew annual recurring revenues by 48% to £10.2m. Interim recurring revenues were £4.4m out of total revenues of £5.4m. Non-recurring revenues continue to decline. Net cash is £19.5m and it could fall to £15m by January 2023. Securing deals is taking more time and this is worrying investors. The shares fell 5.17% to 27.5p.
Shares in rail infrastructure monitoring technology provider Cordel (LON: CRDL) rose a further 34.6% to 8.75p following the announcement earlier this week of a five-year contract with Angel Trains to install fully automated monitoring hardware and software on in-service passenger trains. The share price started the week at 5.25p.
Artemis Resources Ltd (LON: ARV) has returned from suspension after reporting additional results for drilling at the Greater Carlow Castle copper gold cobalt project in Australia. A review of the results has been completed. Crosscut zone results have identified an offset mineralised load to the west, while mineralisation is open to the north. Carlow West zone drilling has intersected two areas of mineralisation. A mineral resource calculation is planned. There will be a further announcement of assay results of ARC395 and ARC396 drill holes, but they are not considered material. The share price rose 11.9% to 3.3p having started the week at 1.5632p.
Buying by directors has pushed up the share price of recruitment and training provider Staffline Group (LON: STAF). There have been five director and management purchases since the interims on 2 August, including two today. Finance director Daniel Quint acquired 50,000 shares at 39.7p each, while Martina McKenzie, the managing director of the subsidiary in Ireland, bought 215,543 shares at 41.132p each. Interim revenues and pre-tax profit declined, although full year pre-tax profit is forecast to improve from £7.9m to £8.8m. The share price fell after the interims, but a 15.5% increase to 47.95p has more than recovered that loss.
Cell engineering company MaxCyte (LON: MXCT) increased interim revenues by 56% to $21.2m. The loss rose from $11.5m to $12.3m due to higher staff costs. There is cash of $240.9m. In July, LG Chem licensed the use of MaxCyte’s Flow Electroporation ExPERT platform to advance development of engineered cell-based therapies. Guidance is for a 30% increase in full year revenues. The shares rose 6.74% to 475p.
Electrical retailer Marks Electrical (LON: MRK) increased revenues in the first four months of the financial year by 14% to £27.7m. Marks is growing market share for major domestic appliances and consumer electronics. Televisions, vacuum cleaners, washers and air conditioning were strong categories. Rivals have been discounting prices and marketing costs are increasing, but management believes it can achieve profitable growth. The share price recovered 5.88% to 72p, which is still below the November 2021 placing price of 110p.
Ex-dividends
i3 Energy (LON: I3E) is paying a monthly dividend of 0.14p and the share price has declined by 0.125p to 29.175p.
Iomart Group (LON: IOM) is paying a final dividend of 3.6p a share and the share price has fallen 2p to 192.4p.
Quartix Holdings (LON: QTX) is paying an interim dividend of 1.5p a share and the share price is unchanged at 340p.
Riverfort Global Opportunities (LON: RGO) is paying a final dividend of 0.04p a share and the share price is unchanged at 0.875p.
M&G shares climbed 1.8% to 221.6p in late morning trading on Thursday, despite a widened IFRS post-tax loss to £1 billion in HY1 2022 compared to £248 million the last year.
M&G reported an assets under administration fall to £348.9 million against £370 million, linked to adverse market movements, with net client inflows of £1.2 billion from £2 billion in outflows the year before.
Meanwhile, the group confirmed a total capital generation slide to £24 million from £869 million, alongside a Shareholder Solvency II coverage ration increase to 214% compared to 198% year-on-year on the back of increasing yields and falling equity markets.
“This is an encouraging set of results and provides evidence that M&G is continuing to build momentum. Improved client flows underpinned a resilient operational and financial performance despite a period of volatility when many investors reduced their exposure to markets,” said M&G CEO John Foley.
“The current macro-economic environment is creating uncertainty in the markets in which we operate.”
“However, our diversified sources of earnings and strong shareholder Solvency II coverage ratio protects our ability to invest in the business and, as today’s interim dividend of 6.2 pence per share shows, deliver attractive shareholder returns.”
M&G recommended a 2% dividend hike to 6.2p per share for the financial period.
Spirax-Sarco Engineering shares gained 0.4% to 12,055p in late morning trading on Thursday following a 17% revenue growth to £750.1 million in HY1 2022 against £643.7 million the last year.
Spirax-Sarco Engineering linked its revenue increase to volume growth and price increases.
However, the firm reported a 7% operating profit drop to £142.1 million compared to £153.6 million and a 5% operating margin fall to 18.9% from 23.9%.
Spirax-Sarco Engineering highlighted an 8% pre-tax profit fall to £138.5 million against £150 million, as a result of restructuring its Electric Thermal Solution (ETS) business.
Meanwhile, the company announced an 11% basic EPS decrease to 131.8p from 147.6p in the previous year.
“These strong first half results were achieved against the backdrop of a weakening IP, supply chain and COVID-19 related disruption, as well as rising inflation,” said Spirax-Sarco Engineering CEO Nicholas Anderson.
“I am grateful to all colleagues for their tireless efforts to support our customers in a challenging first half. It is this excellent execution and resilience that underpins our improved full year outlook.”
“Our strong profitability and robust balance sheet support our continued investment in growth, including our sustainability, digital and manufacturing initiatives.”
Spirax-Sarco Engineering hiked its dividend 10% to 42.5p per share compared to 38.5p for HY1 2022.
Entain shares gained 5.1% to 1,375.8p in early morning trading on Thursday, after the gambling company reported a 19% revenue climb to £2.1 billion in HY1 2022, alongside an 18% growth in net gaming revenue.
The gaming firm said its revenue increase was driven by a strong rebound in retail performance after Covid-19 lockdowns last year, which sufficiently offset its fall in online revenue.
“The resurgence of in person betting continued over the first half as a cost-of-living crisis and broader economic uncertainty don’t seem to be deterring players from heading out for a rush of in person gaming,” said Hargreaves Lansdown equity analyst Matt Britzman.
“The flip side of that trend is a drop in online gaming, though importantly activity’s stabilising well ahead of pre-pandemic levels.”
Entain confirmed a 31% growth in operating costs on retail reopening and new acquisitions, which fed into the cost base.
However, the betting group confirmed a 17% EBITDA climb to £471 million.
Entain commented it was on track to deliver on its FY 2022 profit guidance of £925 million to £975 million.
The company also noted its new dividend policy, including a total dividend of £100 million to be paid in FY 2022. The dividend will be split in half, representing an 8.5p per share payout in HY1 2022.
“Positive performance and the rebound of retail has paved the way for a fresh and revitalised dividend policy. Starting at £100m over the current year, split between the first and second half, that’s expected to grow from here,” said Britzman.
“Good news for investors, though that will put added strain of cash that’s already being snapped up in BetMGM and the acquisition led growth strategy.”
“Speaking of BetMGM, the group’s joint venture over the pond, performance remains strong. Profits should start to flow at some point next year and BetMGM management have recently upped their forecast addressable market to around $37bn, there’s a big slice of pie up for grabs.”
