Prudential profits fall on market volatility as Asia lockdowns impact margins

Natasha Doris
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0
Prudential profits fall on market volatility as Asia lockdowns impact margins

Prudential shares fell 1% to 978.6p in early morning trading on Wednesday, after the insurance giant reported a 90% tumble in IFRS post-tax profit from continuing operations to $106 million in HY1 2022 against $1 billion the last year.

The Asia-focused insurer attributed its post-tax profit drop to high market volatility, resulting in lower equity levels, rising government bond yields and widening corporate bond spreads.

Prudential also mentioned a 5% slide in new business from continuing operations to $1 billion from $1.1 billion, with the benefit of higher APE sales offset by higher interest rates, lower Hong Kong sales, where margins have traditionally been higher, and an increase in bancassurance sales.

However, the group confirmed a 12% growth in operating free surplus generated from continuing operations to $1.2 billion compared to $1.1 billion.

Prudential noted an 8% climb in adjusted operating profit from continuing operations to $1.6 billion against $1.5 billion in the previous year, driven by a 6% rise in life and asset management operating profit and a 32% decline in central costs.

FY 2022 guidance

The insurance firm said its major markets were starting to regain stability, however it warned operating conditions would remain challenging over FY 2022.

Prudential confirmed it had sufficient financial resilience to continue its business operations across Asia and Africa.

“Our resilient operational performance demonstrates the strength of our well positioned and well diversified franchise across the Asia region, driven by our multi-channel, digitally enhanced distribution platform,” said Prudential CEO Mark FitzPatrick.

Dividend

The group recommended a HY1 2022 dividend of 5.7c, equating to one-third of Prudential’s FY 2021 payout of 17.2c.

Zotefoams continues recovery

Andrew Hore
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0
Zotefoams continues recovery

Investors reacted positively to better than expected interim figures from foams manufacturer Zotefoams (LON: ZTF) with volumes and revenues growing. This led to an upgrade of pre-tax profit forecasts.
Price increases and an additional 4% of volume meant that interim revenues were 23% ahead at £59m. There was also help from currency movements. Polyolefin foam sales increased by 26%, although this division was held back by limited availability of certain additives for higher margin products. High performance foam sales were 21% higher, with strong growth in footwear, and the main profit improvem...

US President Biden signs CHIPS & Science Act in effort to boost US semiconductor production

Natasha Doris
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0
US President Biden signs CHIPS & Science Act in effort to boost US semiconductor production

US President Joe Biden signed the CHIPS and Science Act into law on Tuesday, providing $52 billion in funding for the country’s semiconductor manufacturing industry in an effort to boost national production.

The Act is set to unlock $280 billion in funding to enhance US technology and manufacturing, as the country seeks to build its sector to compete against China.

The CHIPS and Science Act marked a rare occasion of bipartisan cooperation, with Democrats and Republicans throwing their hats into the ring to support US tech production.

The US has seen its slice of the semiconductor pie shrink dramatically over recent decades, with manufacturing capacity falling from 37% to 12%, according to the Semiconductor Industry Association.

Meanwhile, an estimated 75% of global production capacity is based in Asia.

The funding is set to be spread across five years, starting with $19 billion this year and $5 billion earmarked for 2026.

Biden confirmed the bill had also reserved $200 billion in funding for national security and intelligence sectors, including quantum computing and artificial intelligence.

“Today I’m signing into law the CHIPS and Science Act. A once in a generation investment in America itself. A law that the American people can be proud of,” said Biden.

Coca-Cola HBC to acquire super-premium mixer brand Three Cents for €45m

Natasha Doris
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0
Coca-Cola HBC to acquire super-premium mixer brand Three Cents for €45m

Coca-Cola HBC’s wholly-owned subsidiary CC Beverages Holdings II B.V. announced its agreed acquisition of ESM Effervescent Sodas Management Ltd. for €45 million on Tuesday.

The bottling company is set to acquire the firm from IDEAL Holdings subsidiary S.I.C.C Holding Limited, with the transaction scheduled to close in HY2 2022.

Coca-Cola HBC said its acquisition targeted S.I.C.C-owned super-premium mixer brand Three Cents, which produces artisanal beverages without preservatives or artificial colourings.

The group commented the super-premium sparkling beverage and mixer category represented a significant growth opportunity, and marked an important step in the company’s 24/7 beverage partner strategy.

The acquisition will join Coca-Cola HBC’s existing portfolio brands, including Schweppes and Kinley.

Coca-Cola HBC confirmed the Three Cents founding team, including George Bagos, Dimitris Dafopoulos, George Tsirikos and Vassilis Kalantzis, would remain with the brand to promote the company and provide “leadership and vision.”

Coca-Cola HBC shares fell 0.6% to 1,944 in late afternoon trading on Tuesday.

Energy bills to exceed £4,200 in January

Natasha Doris
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0
Energy bills to exceed £4,200 in January

Energy bills are set to exceed £4,200 in January 2023, according to a report by Cornwall Insight.

The institute said its forecasts for the January Default Tariff Cap had grown by over £650, representing a price tag of approximately £4,266 for the average UK household.

The bone-chilling shift represents a large step from previous estimations of £2,800 for this year.

Prices for October 2022 were also slated to rise by over £300, bringing the new average bill to £3,582.

Oil prices have been driven higher as a result of Russia’s invasion of Ukraine, leading to a mass boycott of Russian gas supplies and high price inflation across the market.

Brent Crude saw heights of almost $130 per barrel in March, and prices have remained high since February, sparking soaring prices and placing crushing pressure on households across the UK.

Cornwall Insight explained the rationale behind its new estimations included an increase in wholesale market forecasts, and an alteration in Ofgem’s calculation methodology.

Ofgem confirmed recently it would be revising prices every three months instead of every six months.

The organisation warned against making any concrete predictions for the coming year at the current time, and said wholesale prices were moving at too fast a speed to be pinned to a reliable forecast.

“We cannot stop others from making predictions but we would ask that extreme caution is applied to any predictions for the price cap in January or beyond,” said Ofgem in a statement.

FTSE 100 heavy weights support index after soft corporate results

Natasha Doris
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0
FTSE 100 heavy weights support index after soft corporate results

The FTSE 100 traded sideways in Tuesday as the impact of soft corporate updates were offset by stronger commodities companies and those with a focus on China.

Standard Chartered, HSBC, BP and Shell gained helping the FTSE 100 outperform European peers on the day.

The market was flat at 7,483.8, despite HY1 2022 updates from Abrdn, Legal & General, and IHG released today.

Abrdn

Abrdn sank to the bottom of the index, falling 5.3% to 163.7p after the firm swung to a £320 million pre-tax loss compared to a £113 million profit in HY1.

The company attributed its poor results to £313 million in losses from the change in value of its significant investments in the interim period.

Abrdn net outflows ballooned to £35.9 billion from £5.6 billion the year before, and its adjusted operating profit fell 28% to £115 million as a result of market movements.

“The half year Group results largely reflect the challenging global economic environment and market turbulence,” said Abrdn CEO Stephen Bird.

IHG

Intercontinental Hotels Group shares fell 1.5% to 4,938.5p despite a soaring 52% climb in revenue to $1.7 billion from $1.1 billion in HY1 2022.

The hotels group announced a 162% operating surge to $361 million against $136 million the last year, with significant improvements in trading across most regions.

However, it confirmed a 39% fall in Greater China revenue to $36 million from $59 million due to Covid-19 travel restrictions and lockdowns.

Intercontinental Hotels Group also announced a $500 million share buyback and a resumed dividend payout of 43.9¢ per share.

Legal & General shares dipped 0.5% to 270p following a report of modest post-tax profit growth to £1.1 billion in HY1 against £1 billion the last year, with an 8% operating profit rise to £1.1 billion compared to £1 billion.

The group confirmed a 5% dividend hike to 5.4p from 5.1p the year before.

Legal & General said all four of its sectors were well-positioned to capitalise on structural market opportunities and to deliver profitable growth across the medium-to-long term, notwithstanding market volatility.

Oil prices rise

Oil prices picked up again after a fall to $93 per barrel on Monday, with Brent Crude rising to $97 and sparking a resurgence in the FTSE 100 oil giants.

Shell shares gained 1.7% to 2,199p and BP shares climbed 1.9% to 424.2p.

Just Group loss widens to £226m on rising interest rates and investment losses

Natasha Doris
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0
Just Group loss widens to £226m on rising interest rates and investment losses

Just Group shares gained 1.6% to 76.2p in early afternoon trading on Tuesday, following a 15% rise in underlying operating profits to £74 million in HY1 2022 compared to £64 million year-on-year.

However, the financial services group reported a widened IFRS post-tax loss of £226 million against £70 million the last year, as a result of economic variances driven by rising interest rates and the loss on the sale of its third LTM portfolio, which led to investment and economic losses of £353 million.

Just Group noted a 3% dip in retirement income sales to £879 million from £909 million, with an underlying organic capital generation of £31 million against £25 million.

The firm highlighted a return on equity of 6.2% from 5% the last year, driven by higher operating profits.

Its solvency II capital coverage ration increased 20% to 184% compared to 164%, and its IFRS net assets dropped 10% to £2.1 billion against £2.4 billion.

Just Group said it currently had a record pipeline of over £5 billion, providing confidence in meeting or exceeding its FY 2022 growth ambitions.

“This is a strong set of results which continues to demonstrate our ability to generate profitable growth within a sustainable capital model,” said Just Group CEO David Richardson.

“Following our strong H1 22 we have increased confidence of delivering 15% growth in underlying operating profit per annum, on average over the medium term.” 

“We have a unique opportunity to build substantial value to shareholders and deliver our purpose to help more people achieve a better later life.”

The firm recommended a reinstated HY1 2022 dividend of 0.5p per share.

IWG shares plummet on missed return to profit, revenue grows on hybrid working demand

Natasha Doris
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0
IWG shares plummet on missed return to profit, revenue grows on hybrid working demand

IWG shares plummeted 10.4% to 172.8p in late morning trading on Tuesday, after the group missed an expected return to profit with a reported post-tax loss of £81.3 million in HY1 2022 against £173 million in HY1 2021.

IWG announced an adjusted operating loss of £2.2 million from £31.8 million, alongside an adjusted pre-tax loss of £70.2 million compared to £163.3 million.

The group noted an adjusted EBITDA of £565.6 million from £528.6 million year-on-year.

However, the company confirmed a 22.3% system-wide revenue growth to £1.4 billion against £1.1 million, driven by strong demand for hybrid working.

“IWG’s latest results indicate progress in the business, with improvements in both occupancy rates and pricing,” said AJ Bell financial analyst Danni Hewson.

“Unfortunately, it cannot escape the cost pressures hurting companies worldwide. Neither can it be relaxed about Covid as certain markets continue to experience lockdowns, which has a negative impact on demand for some of its serviced offices.”

“Before the numbers came out, analysts had forecast IWG returning to profit this year at £48.6 million. Given the ongoing cost pressures and lockdown disruptions, it seems likely this estimate will have to be scaled back.”

IWG mentioned a net debt of £7.1 billion compared to £6.7 billion the last year.

The firm reported an adjusted loss per share of 11.6p against 11.7p the year before.

“We have delivered strong revenue performance with record visibility of the forward order book with occupancy and pricing improvements,” said IWG CEO Mark Dixon.

“We continue to build resilience and cost efficiency into our business, and we have repeatedly demonstrated our ability to address new challenges.”

“These attributes will be important as we continue to navigate the headwinds created by increased geopolitical tensions in Europe, general inflationary pressures, and the ebb and flow of COVID-related restrictions in some markets.”

IWG declined to resume its dividend payouts, and said it was focused on maintaining sufficient company funding due to market volatility.

AIM movers: Cordel on track and Kropz delays

Andrew Hore
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1
AIM movers: Cordel on track and Kropz delays

Rail infrastructure monitoring technology provider Cordel Group (LON: CRDL) has won a five-year contract with Angel Trains to install fully automated monitoring hardware on in-service passenger trains. This enables real-time monitoring of the rail infrastructure. Previously the technology was used on trains specifically used for analysis and maintenance of the track. Angel Trains supplies the trains to Great Western Railways. The share price jumped 23.8% to 6.5p

Corporate finance firm Marechale Capital (LON: MAC) has completed a fundraising for explorer and developer Weardale Lithium, in which it holds a 8.5% stake. The County Durham-based lithium company plans to offer a domestic supply from its lithium brine projects. The Marechale Capital share price rose 19.1% to 2.5p.

Crestchic (LON: LOAD) continues to beat expectations and forecasts have been upgraded for the loadbanks manufacturer and hirer for the third time this year. Trading momentum continues to accelerate and its largest ever loadbank hire contract has recently been secured. The additional capacity is there to grow the business following the factory investment. Demand from datacentres is strong and oil and gas demand is recovering with overall utilisation at record levels. There is visibility into 2023. The 2022 pre-tax profit forecast has been raised from £5.2m to £7.2m and the 2023 figure from £5.8m to £8.1m. There was a 16.9% increase in the share price to 229p.

Northcoders (LON: CODE) has won a £4m contract from the UK government to provide scholarships for software training for individuals. The cash will fund software development and data engineering skills training. The contract stretches into 2023. More than 85% of forecast 2022 revenues of £6.5m, up from £3m, are covered by contracted work, while 30% of the 2023 forecast of £10.5m is covered. Northcoders appears on course to meet the £800,000 pre-tax profit target for 2022 and there will be increasing belief that the expectations of a quadrupled 2023 profit of £3.2m can be achieved. The shares are 12.5% ahead at 270p. That is a 50% increase on Last July’s placing price.

Fusion Antibodies (LON: FAB) has submitted a patent application for the company’s bispecific designs for antigen display. The technology uses a reporter part that can increase the success rate in identifying highly potent antibodies. This sparked a 8.57% increase to 12.75p.

Kropz (LON: KRPZ) says that its Elandsfontein phosphate project has been delayed due to initial ore variability and that made it the worst performer on AIM with a 30.5% decline to 5.25p. This means Kropz immediately requires $4.2m of additional funding. A $7.3m bridge loan facility has been agreed with ARC Fund on top of the existing facility. The bridge loan is payable on demand. Further funding is likely to be required for working capital.

Nexus Infrastructure (LON: NEXS) has reduced its guidance for 2022-23 two months after reporting its interims. Operating profit is expected to be between £3.8m and £4.2m. The consensus forecast had been £5.95m. Management blames delays in the eSmart Networks EV charging business for pushing that division into loss and for the group being set to breakeven rather than make a profit in the second half. The utility connections and civil engineering businesses are trading as expected. The share price fell 13.2% to 145p.

Avast EBITDA drops 7.6%, profits fall on higher costs

Natasha Doris
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0
Avast EBITDA drops 7.6%, profits fall on higher costs

Avast shares dipped 0.1% to 679.8p in late morning trading on Tuesday, following a 7.6% drop in adjusted EBITDA to $249.7 million and a 4.4% fall in adjusted EBITDA margin to 52.9%.

The software company said its EBITA decline was linked to higher investment into its Digital Trust Services sector.

Avast confirmed an operating profit slide to $172.6 million from $226.7 million on the back of higher exceptional costs of $25.3 million and higher additional costs of $27.8 million.

The company highlighted a 0.2% decline in statutory revenue as a result of its Family Safety mobile business disposal in FY 2021.

However, Avast reported a 0.2% rise in adjusted revenue to $472 million, alongside a 0.2% uptick in billings to $483.7 million. Meanwhile, consumer direct revenue climbed 1.4% to $407.1 million.

The group mentioned strong cash generation, with unlevered free cash flow of $217.1 million and levered free cash flow of $204.3 million.

Avast further noted a resilient balance sheet with $378 million in cash and available liquidity.

The company announced a fully diluted EPS of 13c compared to 20c the year before.

Avast/Norton merger

Avast highlighted its recommended merger with NortonLifeLock, after the Competitions and Markets Authority (CMA) approved the transaction, following its conclusion that the merger would not significantly reduce UK competition in the sector.

The current statutory deadline for the CMA’s final report is scheduled for 8 September 2022.

Dividend

Avast recommended a HY1 2022 dividend of 4.8c per share, following its second interim dividend for 2021 of 11.2c paid in February 2022 and a total FY 2021 dividend of 16c per share.

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