Halfords shares sink on lowered profit guidance for FY 2023

Natasha Doris
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Halfords shares sink on lowered profit guidance for FY 2023

Halfords shares sank 16.2% to 165.5p in early morning trading on Thursday, after the company warned of lowered profits in FY 2023 in its financial results.

Halfords reported a FY 2022 revenue growth in FY 2022 of 6% to £1.4 billion compared to £1.2 billion in FY 2021.

The company highlighted a 3.7% drop in its retail revenue to £1.001 billion against £1.039 billion year-on-year, however its autocentres revenue climbed 45.7% to £368 million compared to £252 million.

The firm said its motoring business had experienced positive growth while its cycling sector had declined as a result of strong comparators and supply chain disruption.

It credited its autocentre success to improved efficiency as it utilised its Avayler software, along with strong demand for its Halfords Mobile Expert vans proposition with a 44% growth compared to FY 2021 as its fleet grew to 253 vans, 14 hubs and over 230 technicians.

The company also saw an increase in electric vehicle servicing, with the number climbing 140% since the previous year.

“We are continuing to play a key role in helping consumers to choose electric forms of transport and are constantly investing in the training and upskilling of our technicians in this critically important area,” said Halma CEO Graham Stapleton.

“Sales of e-bikes, e-scooters and accessories were up 74% on two years ago, and servicing for electric cars in our garages was up 140% year-on-year.”

“We have also rolled-out free electric bike trials to encourage customers to make the switch and are the first mainstream retailer to offer an end-to-end EV charging solution for the home.”

Halma mentioned a gross margin rise of 10% to £721.7 million from £656.3 million the last year.

The group confirmed an underlying EBITDA decrease of 11.1% to £207.1 million compared to £233 million, alongside an underlying pre-tax profit slide of 9.7% to £89.8 million against £99.5 million the year before.

Halma announced a total pre-tax profit surge of 49.8% to £96.6 million compared to £64.5 million in the previous year.

Lowered Profit Guidance for FY 2023

The group commented that its guidance for FY 2023 included the consideration of challenges such as lowered demand for big-ticket items on the back of a higher cost of living, alongside cost inflation in its supply chain impacting its financial performance.

Halma said it expected a FY 2023 lowered pre-tax profit between £65 million to £75 million, however it caveated its outlook by stating that the current macroeconomic environment made any estimations uncertain in the near-term.

“All eyes today will be fixed on the outlook statements, where management point to lower demand and significant cost inflation as the reason profits are expected to fall 23% next year, and markets have reacted badly,” said Hargreaves Lansdown equity analyst Matt Britzman.

“With a cost-of-living crisis hitting consumer wallets, demand for higher ticket items is heading for trouble and we’re seeing a continued unwind of some of the lockdown tailwinds, such as the cycling boom that helped performance last year.”

The firm also said it would spend FY 2023 investing in its customer proposition and carefully maintaining its cost base. The company stated it currently believed itself to be in a good position to deliver relatively strong growth in the coming year.

“While rising inflation and declining consumer confidence will naturally present short-term challenges for any customer-facing business like ours, we remain confident in Halfords’ long-term growth prospects due to our service-led strategy and the enduring strength of our brand, people, products and services,” said Stapleton.

The company noted an underlying basic EPS drop of 14.9% to 35.5p against 41.7p and a proposed final dividend of 6p per share for the financial year.

BooHoo falls out of fashion with 8% revenue fall to £445.7m

Natasha Doris
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BooHoo falls out of fashion with 8% revenue fall to £445.7m

Boohoo shares were down 12.8% to 56.4p in early morning trading on Thursday, after the fast fashion group announced an 8% fall in group total revenue to £445.7 million in FY 2023 against £486.1 million in Q1 2023.

The company reported falling revenues across most regions, with the USA taking the most significant blow with a 26% drop year-on-year to £95 million compared to £131.9 million.

Boohoo’s UK sales dropped for the first time ever by 1% to £272.1 million from £274.6 million, alongside a 7% decline to £49.6 million against £54.4 million in the rest of Europe.

However, sales grew 15% to £29 million compared to £25.2 million in the rest of the word.

Boohoo revenue was up 75% on Q1 2020, with lockdown habits remaining entrenched as a driver for online sales.

“I am pleased with the progress we are making towards our strategic priorities, which is already having a meaningful impact operationally within the business,” said Boohoo CEO John Lyttle.

“We have seen promising signs from the Group’s sales performance in the UK, which has improved month-on-month in the period and we are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands.”

“Looking forward, we will continue to focus on optimising both our financial and operational performance to ensure the business is well placed to take advantage of future growth opportunities.”

The company reported a tightly controlled inventory over the term, with lower levels of stock compared to year end and improvements across inventory turn and supply chain flexibility.

Boohoo further commented that its overheads continued to be tightly managed despite significant inflation.

The fast fashion company has its work cut out for it as inflation soars to record-breaking heights, with the US at 8.6% CPI and the UK at 9% in May, placing customers on thinner margins as the cost of living continues to devour consumer savings.

The firm said it had made progress on key projects, including the automation of its Sheffield project scheduled to go live in HY2 and a lease for a new distribution centre in Elizabethtown, Pennsylvania signed to support international growth, projected to go live in mid-2023.

Boohoo confirmed its outlook for FY 2023 remained unchanged, with revenue growth expected in the low single-digits with a return to growth in Q2 and improved growth rates in HY2 2023.

The fast fashion brand estimated adjusted EBITDA margins between 4% to 7% in line with guidance, as a result of continued costs within its supply chain, offset to some level by the financial benefits of its strategic priorities and leveraging of overheads.

“The sales challenges are compounded by sky-high freight rates and raw material cost inflation. Boohoo is now faced with the challenge of increasing prices in a promotionally driven and highly competitive market,” said Third Bridge senior analyst Harry Barnick.

“Our experts say Boohoo will have to find creative ways to reduce costs. Improving purchasing costs through fabric consolidation and production locations are key to the success of this cost reduction strategy.”

“Shein could take market share from Boohoo in the UK market given its broad offer and attractive price position.”

Halma reports record £1.5bn revenue, record £304m profits

Natasha Doris
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Halma reports record £1.5bn revenue, record £304m profits

Halma shares were down 1.9% to 1,952p in early morning trading on Thursday, despite a 16% revenue climb to a record level of £1.5 billion in FY 2022 against £1.3 billion in FY 2021.

The life-saving technology firm reported an adjusted pre-tax profit increase of 14% to £316 million compared to £278 million in the previous year, along with a statutory pre-tax profit growth of 20% to £304 million from £252 million, representing the company’s 19th consecutive year of record profit.

Halma noted its statutory pre-tax profit included its £34 million gain on its Texecom disposal.

The technology group completed 13 acquisitions in FY 2022 for a total maximum consideration of £164 million, alongside one additional acquisition since the period end for £37 million. Halma confirmed a healthy acquisition pipeline across all sectors.

Halma announced a 20.7% return on sales from a 21.1% return year-on-year, with a 14.6% return on total invested capital compared to 14.4% the year before.

The group mentioned a slight increase in net debt to £274.8 million against £256.2 million in the last year.

“This was a year of notable achievements for Halma, with revenue exceeding £1.5bn and profit £300m for the first time,” said Halma CEO Andrew Williams.

“Halma’s Sustainable Growth Model enabled our companies to act with agility to address new market opportunities and to respond rapidly to the multiple operational and economic challenges they faced during the year.”

“Our strong performance reflects huge credit on the dedication of our people across the business, and was underpinned by our empowering purpose and culture, our focus on niche markets with long-term, fundamental growth drivers and the high value of the solutions we provide to our customers.”

New CEO

Halma announced the resignation of Andrew Williams as CEO, following 18 years in the position.

Williams is set to be succeeded by CFO Marc Ronchetti, who has been appointed as chief executive designate. Ronchetti has confirmed he will remain in his role as chief executive designate and CFO until his successor has been appointed.

“I am delighted to have been selected as Halma’s next Group Chief Executive. I am excited by the opportunity to lead such a fantastic and talented team, and to continue Halma’s long track record of creating value through our Sustainable Growth Model,” said Ronchetti.

Williams will remain with the company to guide Ronchetti in the role until he takes over for the group on 1 April 2023.

“It is testament to Halma’s long-term approach to succession planning and the quality of the Halma senior leadership team that the next Group Chief Executive comes from within the business,” said Williams.

“Marc is an outstanding leader and I look forward to working with him to ensure a smooth handover.”

FY 2023 Guidance

The group added it had a strong order book going into FY 2023, with order intake in the year-to-date ahead of revenue and in line with its intake in the same term in FY 2022.

The company said it expected single-digit percentage organic constant currency revenue growth and a return on sales similar to HY2 2022.

“We have made a positive start to the new financial year. We are well positioned to make further progress in the full year and in the longer-term,” said Williams.

Dividend

Halma confirmed an adjusted EPS rise of 12% to 65.4p against 58.6p and a statutory EPS growth of 20% to 64.5p compared to 53.6p.

The company reported a dividend per share uptick of 7% to 18.8p compared to 17.6p for the financial year.

Record order book for Severfield

Andrew Hore
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Record order book for Severfield

Structural steel supplier Severfield (LON: SFR) has a record order book worth £486m. There are inflationary pressures, but management expects the business continue to grow.

There are a range of customers. Stadia and leisure, transport and industrial and distribution are areas where the order book has grown over the past year. Nuclear is a potential growth sector and demand from office construction is recovering.

The business is being reorganised into three divisions: commercial and industrial, nuclear and infrastructure and products and processing, which includes the modular product range.

In the year to March 2022, revenues increased from £363.3m to £403.6m, while pre-tax profit improved £24.3m to £27.1m. The final dividend is increased from 1.8p a share to 1.9p a share, taking the total to the year to 3.1p a share.  

Contracts normally include clauses that mean that steel price rises are passed on to the customer at zero margin, although that does affect the operating margin. Increased steel inventories to satisfy contracted demand were part of the reason that the group moved into debt with net borrowings of £18.4m at the end of March 2022. There is a £50m revolving credit facility that lasts until the end of 2026.

The joint venture in India returned to profit and the order book is also at a record high of £158m. A new site will be secured to build a new facility to expand capacity. That may require a cash injection to fund the purchase of the land.

Progressive Equity Research forecasts 2022-23 pre-tax profit of £31.2m on revenues of £460m. the share price rose 2.2p to 62.2p, which means that the prospective multiple is less than eight and the forecast yield is 5.3%.

Eckoh profits rise 5% to £25.4m, expects higher revenues in FY 2023

Natasha Doris
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0
Eckoh profits rise 5% to £25.4m, expects higher revenues in FY 2023

Eckoh shares increased 3.8% to 40.5p in late afternoon trading after the company announced a revenue growth of 4% to £31.8 million in FY 2022 against £30.5 million FY 2021 and a gross profit uptick of 5% to £25.4 million compared to £24.2 million.

Eckoh mentioned a US secure payments ARR surge of 82% to £11.9 million from £6.5 million, with a total ARR rise of 48% to £25.2 million compared to £17 million on the back of market opportunity and an ongoing shift to the cloud.

The company noted an adjusted EBITDA increase of 7% to £6.8 million against £6.4 million, alongside an adjusted operating profit growth of 10% to £5.2 million from £4.7 million following its finalised exit from UK and US support, which added £2 million.

However, Eckoh highlighted a pre-tax profit fall of 34% to £2.3 million compared to £3.5 million linked to £1 million in transactional costs from the acquisition of Syntec, and £900,000 in one-off restructuring costs.

The firm said its current order levels were substantially above its Q1 2022 result, with its business pipeline significantly strengthened in Q1 2023 including significant opportunities with blue-chip companies.

Eckoh commented that its first client was deployed and currently live on its new Azure cloud platform, and signed a new three-year contract valued at $1.4 million for voice security and an additional contract worth £600,000 to secure live chat agents with digital payments.

“Eckoh has made significant progress in the last 12 months. We have shown the resilience of our business model, with growth in revenue and operating profit and improved quality of earnings with the completed exit from our Support activity,” said Eckoh CEO Nik Philpot.

“Our momentum is underpinned by fast-growing recurring revenues, with an excellent performance in our US business and a return to growth in the UK.”

The firm reported an expected FY 2023 revenue and profit at substantially higher levels than FY 2022, driven by strong ARR growth, operational efficiencies and the addition of synergistic benefits of the Syntec integration.

“We have started the year strongly, and looking ahead the Board expects FY23 revenue and profits to be significantly higher than FY22, reflecting our ongoing organic growth, continued momentum in the US market, a sustained recovery in UK trading, and the integration of Syntec,” said Philpot.

“In addition, we expect our progress to be supported by long-term structural growth drivers and increasing cloud adoption, coupled with the benefits of new products and operational gearing.”

Eckoh announced an adjusted EPS uptick of 5% to 1.5p compared to 1.4p and an adjusted diluted EPS drop of 8% to 1.3p against 1.4p year-on-year.

The group reported a proposed final dividend of 0.6p per share against 0.6p in the last year for FY 2022.

Kefi reports progress at Tulu Kapi Gold Mine project

Natasha Doris
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Kefi reports progress at Tulu Kapi Gold Mine project

Gold and copper exploration company Kefi announced an update on its Tulu Kapi Gold Mine Share Company joint-venture project in Ethiopia, reporting advancement on its multi-party project financing activities and early development works.

Kefi confirmed it had maintained the full funding syndicate for the project, and said it intended to sign the funding “Umbrella Agreement” in June 2022 to demonstrate the full funding agreement.

The mining group reported that it would evidence the full funding capacity of each syndicate member to the Ethiopian Ministry of Mines in order to keep its progress on track.

Kefi added that it would clearly set out any outstanding conditions for execution of the underlying definitive agreements between the respective individual counterparties to the Umbrella Agreement.

The company said it planned to trigger full project construction in the Ethiopian dry season from October 2022.

Kefi has undertaken a slate of activities in the last month, including the receipt of a final pricing proposal from the mining contractor which is currently under review, commissioning additional refinements of the process plant construction contract and pricing, and collaborating with the local authorities to implement the first stage of resettlement and compensation under the set protocols according to World Bank IFC Performance Standards.

The mining firm also executed a series of community and local-authority engagement meetings and presented at the Mine Africa Forum in Toronto to promote Ethiopia prospects for mining development.

“We continue to accelerate activities in preparation for signing the financing syndicate Umbrella Agreement this month, then signing individual definitive agreements over the following few months, enabling full Tulu Kapi construction to commence from the end of the wet season in October 2022,” said Kefi executive chairman Harry Anagnostaras-Adams.

“Kefi has significant momentum as we progress our three advanced projects in two countries that are now overtly pro-development.”

“These three projects provide the opportunity for the Company to establish itself as a production leader in the Arabian Nubian Shield, having already established itself as an exploration leader with a now-established Mineral Resources of c.4.7 million ounces gold-equivalent in Ethiopia and Saudi Arabia.”

BP acquires 40.5% stake in ambitious green hydrogen energy project

Natasha Doris
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0
BP acquires 40.5% stake in ambitious green hydrogen energy project

BP announced its acquisition of a 40.5% stake and operatorship of the Asian Renewable Energy Hub (AREH) green hydrogen energy project in Pilbara, Western Australia on Wednesday.

The project is one of the largest renewables and green hydrogen energy hubs in the world, and is set to support the development of up to 26GW of combined solar and wind power generating capacity.

According to BP, AREH could potentially produce 1.6 million tonnes of green hydrogen, or nine million tonnes of green ammonia per year at full scale.

The AREH intends to supply renewable power to local customers in the Pilbara region, which is the largest mining sector in the international market.

The project is also set to supply green hydrogen and green ammonia for the domestic Australian market and export the resources to major international users.

BP confirmed that the operation currently has plans to develop onshore wind and solar power generation in several phases to hit its 26GW goal, representing the equivalent of over 90 terawatt hours per year or one-third of all electricity generated in Australia in 2020.

“AREH is set to be one of the largest renewable and green hydrogen energy hubs in the world and can make a significant contribution to Australia and the wider Asia Pacific region’s energy transition,” said BP executive vice president of gas and low carbon energy Anja-Isabel Dotzenrath.

“It truly reflects what integrated energy is – combining solar and onshore wind power with hydrogen production and using it to help transform sectors and regions. It also reflects our belief that Australia has the potential to be a powerhouse in the global energy transition, benefitting from both its existing infrastructure and abundant renewable energy resources.”

“We believe AREH can be a cornerstone project for us in helping our local and global customers and partners in meeting their net zero and energy commitments.”

https://twitter.com/bp_plc/status/1536982031086788608

The AREH project is estimated to abate approximately 17 million tonnes of carbon in domestic and export markets per year, which equates to around 0.5 gigatons of carbon savings over the lifetime of the operation.

BP is scheduled to assume operatorship from 1 July 2022, with other partner shareholders maintaining a 26.4% stake for InterContinental Energy, 17.8% by CWP Global, and a 15.3% investment held by Macquarie Capital and Macquarie’s Green Investment Group.

“This is an incredibly exciting development, and we are looking forward to working closely with our partners, InterContinental Energy, CWP Global, Macquarie Capital and Macquarie’s Green Investment Group, as well as the Nyangumarta people,” said BP Australia president Frédéric Baudry.

“BP brings a broad range of capabilities to help bring the project to fruition, with extensive experience in constructing and operating facilities of this scale in remote locations in close collaboration with local communities and leveraging our global shipping and trading businesses.”

“We also have the benefit of deep experience in working with customers looking for decarbonization solutions and delivering low-carbon energy to the global market.”

DP Poland acquires new boss

Andrew Hore
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DP Poland acquires new boss

Poland-based pizza stores operator DP Poland (LON: DPP) is acquiring the owner of the Domino’s Croatia franchise for £2.4m in shares at 8p each. That is the same price as last November’s placing. This deal seems more about gaining a new chief executive than buying the business.
The share price reacted favourably, rising 0.9p to 6.15p. That is below the issue price of the shares used to pay for the acquisition. If a higher offer comes along the sellers can repurchase the business before the end of 2022.
All About Pizza gained the Domino’s Croatia franchise in 2019 and has opened two stores in Z...

Vianet Group: Finals Add-up

Jon Levinson
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Vianet Group: Finals Add-up

Vianet Group (AIM: VNET) 85p mkt Cap £24m reported finals for the March 2022 year-end.  The 58% increase in revenue to £13.8m is still 19% short of pre-pandemic levels but it nearly broke-even compared to losses of £2.82m. At the adjusted level before deducting exceptionals etc the profit was £2.4m which is pre-pandemic levels.
Vnet’s has two divisions the longer established Smart Zones provides real time actionable data by connecting data capture terminals to an Internet of Things platform (IOT).  These telemetric services are primarily for the hospitality sector and have  rebo...

WANdisco revenues fall to $7.1m, eyes growth opportunities for FY 2022

Natasha Doris
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0
WANdisco revenues fall to $7.1m, eyes growth opportunities for FY 2022

WANdisco shares gained 5.8% to 270p in early afternoon trading on Wednesday following a drop in revenue to $7.1 million for FY 2021 against $10.5 million in FY 2020.

WANdisco reported an adjusted EBITDA loss of $29.5 million compared to $22.2 million the year before, along with a statutory loss from operations of $27.6 million against $34.3 million.

The group noted a growth in cash overheads to $41.5 million compared to $36.9 million the last year, and cash on 31 December 2021 of $27.8 million from $21 million year-on-year.

The company mentioned a series of operational highlights, such as its announcement of LiveData Migrator for Azure General Availability, which is critical to pipelie conversion.

WANdisco also launched a Commit to Consume contract structure to be issued widely across its future client base, which contracts a customer to move a minimum level of data over a set amount of time.

It signed the first Commit to Consume contract in 2021 with an existing US Telecom customer at a value of £1 million over five years, with a significant opportunity for additional consumption growth.

“Along with the improvements made to the business in H2 2021, we announced that our product developed for Microsoft, Live Data Migrator for Azure was now generally available. Achieving General Availability offers potential, new and existing customers increased confidence in our products and simplifies the ordering process, which is essential to converting on our growing pipeline,” said WANdisco CEO David Richards.

“We also shifted from multi-year subscription contracts to the preferred transacting method for cloud customers with the adoption of Commit to Consume contracts.”

“The Commit to Consume contract structure allows customers to try before adopting our solutions with very little risk, whilst allowing us to capture the growth in consumption that logically stems from the adoption of cloud-based solutions.”

The firm pointed out that its channel partner ecosystem continued to offer revenue opportunities, with its partnership with IBM securing it a three-year $3.3 million contract with a large unnamed North American investment bank for the utilisation of its LiveData Migrator, with a 50% revenue share.

WANdisco noted that its snowflake partnership continued to complement its existing Databricks relationship and consolidated the group’s market position in supporting machine learning applications.

WANdisco commented that its transition to a cloud-centric, consumption-based model over 2021 has helped it deepen its relationships with key partners including Oracle, and allowed the company an improved near-term visibility on revenue and its general pipeline.

The firm said its reorganisation of sales and go-to market functions has started to pay off, with improved H2 2021 results, lower operating costs and expansion into new verticals and use cases for products.

The term of strong trading in Q1 2022 has reportedly continued into Q2 2022, providing the board with confidence that its FY 2022 is set to deliver increased revenues, bookings and Ending RPO for FY 2022.

“We made significant strategic progress in FY21 reorganising our go-to-market operation and cost structure. This has provided us greater revenue visibility, accountability and efficiencies to drive our business forward, and I am confident that we will continue to convert on our strong pipeline of cloud migration opportunities in FY22,” said Richards.

“Our achievements in Q421 provided a springboard for our new business acceleration into Q122 and we are extremely excited about the significant market opportunities that lay ahead of us for the rest of this year.”

“We are well placed to capture significant opportunities as we look to enter new verticals and capitalise on an expected increase in IoT-driven deals.”

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