FTSE 100 gains after weak start as Asian markets slide

Natasha Doris
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FTSE 100 gains after weak start as Asian markets slide

The FTSE 100 increased 0.2% to 7,291.1 in early afternoon trading on Monday after a weak start, as optimism in the US markets counterbalanced overnight losses in Asian markets.

The drop in the markets dragged down Asia-focused shares on the FTSE 100, with insurance company Prudential dropping 1.2% to 990.3p and Scottish Mortgage Investment Trust falling 2% to 814.5p as its portfolio holdings including Tencent and Alibaba took a hit.

The Hang Seng fell 0.2% to 20,562.9 and the Shanghai SSE dipped 0.6% to 3,250.3.

“There was a definite summer holiday lull feel to Monday morning trading … following overnight losses in Asia,” said AJ Bell investment director Russ Mould.

US markets gain

Meanwhile, US markets gained ahead of the Federal Reserve’s interest rate decision this week, with the Dow Jones rising 0.4% to 32,014, the S&P 500 gaining 0.4% to 3,981.2 and the NASDAQ increasing 0.4% to 12,476.2 in pre-open trading.

The Fed is currently expected to raise interest rates 0.75% to a range between 2.25% to 2.5%, following the recent spike in US inflation to a record level of 9.4%.

“In macro-economic terms, all the big action comes mid-week as the Federal Reserve serves up its latest decision on interest rates and, a day later, we get the first estimate of US GDP for the second quarter,” said Mould.

Vodafone Q1 delivers mixed bag

Vodafone shares were flat at 129p after the company reported a mixed bag of results for Q1 2023, with its positive news of a 2.5% service revenue growth dented by a 0.5% revenue fall in Germany, the firm’s biggest market.

The telecommunications giant announced it was currently on track to deliver an EBITDaL between €15-€15.5 billion, in line with management guidance.

“We have executed in line with our expectations, delivered another quarter of growth in both Europe and Africa, and seen an acceleration in business growth,” said Vodafone CEO Nick Read.

“Whilst we are not immune to the current macroeconomic challenges, we’re on track to deliver financial results for the year in line with our guidance.

Airtel Africa expands Kenyan 4G capacity

Airtel Africa was among the highest risers on the market today, with a 2.2% increase to 168.4p following the acquisition of 60 MHz of additional spectrum in Kenya by its Airtel Kenya Networks subsidiary for $40 million.

The company said the additional spectrum was in the 2,600 MHz band, and was purchased from the Communications Authority of Kenya. The country is one of the group’s largest markets by revenue.

Airtel Africa confirmed the spectrum licence would be valid from July this year for the next 15 years.

“This additional spectrum will support our 4G network capacity expansion in the market for both mobile data and fixed wireless home broadband capability, and will allow for future 5G rollout, providing significant capacity to accommodate our continued strong data growth in the country,” said Airtel Africa in a statement.

AIM movers: Argos Resources need cash and 7Digital sign deal

Andrew Hore
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AIM movers: Argos Resources need cash and 7Digital sign deal

Oil and gas explorer Argos Resources (LON: ARG) is the worst performer on the day having returned from suspension after publishing its 2021 results. The shares dived 17.1% to 1.45p. There was $304,000 in the bank at the end of 2021, after a $683,000 outflow. The chairman loaned £110,000 in June. Argos Resources needs to raise more cash to finance an extension of its licence in the North Falkland basin, which lasts until the end of 2022.  

Savannah Resources (LON: SAV) has been hit by a legal dispute in Portugal. Covas do Barroso Baldios claims that 1.4% of the land where the Barroso lithium project is sited has been claimed by other landowners. Savannah Resources says that it believes that the eight hectares affected has been purchased from the registered owners. The share price slipped 8.65% to 2.85p

Music streaming technology provider 7Digital (LON: 7DIG) has signed a long-term contract with Utopia Music AG whose users can generate accurate royalties data. This follows a two-year licensing deal with Lomotif, a Singapore-based social media company. It will use 7Digital’s music-as-a-platform to stream licensed music. 7Digital is the largest riser today, up one-third to 0.3p.

Hurricane Energy (LON: HUR) has repaid the outstanding $78.5m convertible bonds and related interest of $1.5m. This leaves the oil and gas producer with net cash. The share price jumped 16.9% to 8.475p.

Consumer healthcare products supplier Venture Life (LON: VLG) says interim revenues will be 36%n ahead at £18.9m – with pro forma growth of 4%. Where possible cost increases are being shared with customers. Net debt was £2.6m at the end of June 2022. There is always a second half weighting to the business. There is plenty of manufacturing capacity to cope with further growth. The share price rose 12.5% to 36p. Chairman Paul Mcgreevy bought 277,151 shares at an average of 35p each -nearly doubling his shareholding.

A positive trading statement from media analytics provider Ebiquity (LON: EBQ) added 6.67% to the share price taking it to 56p. Ebiquity expects interim revenues to be 16% higher at £37m. stripping out acquisitions organic growth is 10%. Underlying operating profit more than doubled to £4.6m.  Sales of higher margin digital productions and improved efficiency helped. Net debt is £12.9m. A small Russian subsidiary is being sold. Scrutiny of the effectiveness of advertising is as important as ever.

Primary Health Properties acquires Strawberry Hill Medical Centre for £7.2m

Natasha Doris
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0
Primary Health Properties acquires Strawberry Hill Medical Centre for £7.2m

Primary Health Properties announced its acquisition of Strawberry Hill Medical Centre in Newbury today for a total consideration of £7.2 million.

The property is currently fully let to two GP practices, providing 100% government-backed income with an unexpired term of 19 years.

Primary Health Properties added the GP practices served substantial patient lists, and benefited from facilities for carrying out broader medical services, including minor operations and blood tests.

Following the agreement, Primary Health Properties will hold a portfolio consisting of 512 assets with a contracted rent roll of £143 million.

“We are delighted to have acquired this medical centre which acts as a hub for the delivery of primary care and broader medical services in the growing town of Newbury,” said Primary Health Properties CEO Harry Hyman.

“The property also provides accommodation for district nurses, a clinical pharmacy and social prescribing services.”

“We have a strong pipeline of opportunities in the UK and Ireland and are well positioned to continue to grow our portfolio selectively and to support the healthcare systems in these markets through the provision of modern, primary care infrastructure.”

Premier Foods acquires The Spice Tailor for £43.8m

Natasha Doris
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0
Premier Foods acquires The Spice Tailor for £43.8m

Premier Foods shares gained 3.3% to 116.8p in late morning trading on Monday following the company’s reported acquisition of Indian and South East Asian meal kits producer The Spice Tailor for £43.8 million.

The company confirmed it would acquire 100% of shares in the meal kits firm on a cash and debt-free basis, with additional consideration dependent on a future performance and an earn out structure over a three year term from FY 2023/2024, pending future growth targets.

“We’re very pleased that The Spice Tailor will become part of Premier Foods and are looking forward to unlocking further growth for the brand which we have nurtured since its inception,” said The Spice Tailor co-founders Adarsh and Anjum Sethia.

“We see Premier with their track record of brand investment and strong commercial relationships, as the perfect fit for The Spice Tailor, driving it onto the next stage of its evolution.”

Premier Foods highlighted The Spice Tailor as a high growth premium brand, with a 20% compound annual growth rate over the last four years and a forecast to deliver high sales and profit growth in the coming years.

The meal kits group is expected to generate £17.3 million in revenue for FY 2022/2023.

The acquisition is set to expand Premier Foods’ footprint in the UK, Australia, Canada and Ireland, and complement its Sharwood’s and Loyd Grossman brands.

“We have greatly admired The Spice Tailor business for some time and we’re very much looking forward to it joining our existing stable of strong brands,” said Premier Foods CEO Alex Whitehouse.

“The acquisition is well aligned to our growth strategy and we see a clear opportunity to build on the excellent track record of The Spice Tailor, by leveraging the elements of our proven branded growth model.”

“This acquisition represents a highly complementary geographical fit, and we see significant potential to expand The Spice Tailor’s distribution in all our target markets. We see this as another important milestone for us following the Group’s strong performance over recent years and The Spice Tailor is an important addition to accelerate our future growth plans.”

Sanne Group returns to double-digit organic revenue growth linked to acquisitions pipeline

Natasha Doris
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0
Sanne Group returns to double-digit organic revenue growth linked to acquisitions pipeline

Sanne Group shares gained 0.5% to 918.9p in late morning trading on Monday after the firm announced strong performance in HY1 2022, including a return to double-digit organic revenue growth of 25.8%.

The company reported record new business wins and continued decent cash generation, with operating cash conversion ahead of the previous 90% management guidance.

Sanne Group reported profit margins within management expectations, including a sharply improved constant currency organic revenue growth rate of 11.2%.

The group added its expansion was also aided by its three acquisitions completed in 2021.

The firm said the annualised value of new business wins in the financial period was up 24.8% to £19.6 million against £15.7 million in HY1 2021, with a healthy business pipeline going forward.

Sanne Group confirmed its technology strategy had been making good progress, with particular success in its data analytics and portal products rolled out to its client base over the last two years.

Meanwhile, the company noted all regulatory clearances for the acquisition by Apex had been cleared, and that the Scheme Sanction Hearing to sanction the scheme has been scheduled to be held in the Royal Court of Jersey on 2 August 2022.

If the Court sanctions the scheme, Sanne Group confirmed it expected it to become effective on 4 August 2022.

“The strong performance in the first half of 2022 is testament to Sanne’s strengths and market reputation as we have seen record levels of new business wins and organic revenue growth return to our targeted double digit levels,” said Sanne Group CEO Martin Schnaier.

“It also reflects the qualities recognised by Apex in acquiring the Group and it should ensure that this transformational combination creates a leading, end-to-end service provider to the alternative assets market, with unmatched capabilities and scale.”

“As we now look forward to joining Apex, we are confident in the benefits that this deal should bring for our clients and our people across the globe.”

Vesuvius exceeds expectations in HY1, projects £127.4m EBITDA

Natasha Doris
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0
Vesuvius exceeds expectations in HY1, projects £127.4m EBITDA

Vesuvius shares rose 7.7% to 348p in late morning trading on Monday following stronger than expected trading in HY1 2022, with a revised EBITDA projection of £127.4 million.

The engineering firm attributed its outperformance to the successful implementation of its pricing strategy to recover input costs, alongside market share gains linked to the company’s technological differentiation.

Vesuvius highlighted a remaining uncertainty concerning the strength of its markets in HY2 due to the ongoing geopolitical volatility and potential macro-economic weakness.

In light of its market uncertainty, Vesuvius confirmed its HY2 expectations remained broadly flat, with a material drop in volume against HY1 and challenging cost inflation providing a level of difficulty for the company in the coming financial term.

Vesuvius said it anticipated a FY EBITDA at the top end of the analyst consensus range.

The company mentioned that while the scale of the potential slow-down remained uncertain, Vesuvius was confident in delivering a resilient performance for the financial year.

Ryanair swings back to €170m profit as customer numbers recover post-Covid

Natasha Doris
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0
Ryanair swings back to €170m profit as customer numbers recover post-Covid

Ryanair shares fell 1.8% to 70.9p in early morning trading on Monday after the budget airline reported a post-tax profit of €170 million in Q1 2023 against a Q1 2022 loss of €273 million, however its profit remained below its Q1 2020 pre-Covid profit of €243 million.

The travel firm announced a 602% surge in revenue to €2.6 billion compared to €370 million year-on-year, linked to its recovery in customer levels, which saw a 461% spike to 45.5 million from 8.1 million as Covid restrictions eased and travel recommenced.

“Ryanair is leading its peers in the recovery from COVID and plans to operate its summer 2022 at a capacity 15% higher than 2019 levels. Our experts estimate revenue for this summer could be 20% higher than in 2019,” said Third Bridge senior analyst Allegra Dawes.

However, Ryanair noted its Easter bookings and fares were badly hit by the Russian invasion of Ukraine in late February this year.

The company’s operating costs rose 253% to €680 million compared to €2.3 billion, and its fuel hedging for FY 2024 increased to 30% compared to 80% for FY 2023.

“The golden age of cheap air travel is over thanks to decade-high oil prices and inflation. However, Ryanair’s fuel hedging policy means they are better positioned to maintain price competitiveness and under less pressure to increase fares over the next 12 months,” said Dawes.

The travel group narrowed its net debt to €400 million from €1.4 billion on 31 March 2022, with a BBB credit rating according to S&P and Fitch. The company mentioned it aimed to reach zero net debt over the next two years.

Ryanair also highlighted the arrival of 73 new B737 ‘Gamechanger’ aircraft, which reportedly include a 4% rise in seats while burning 16% less fuel, with a noise emissions reduction of up to 40%. The travel firm said over 90% of its Gamechanger aircraft were unencumbered.

In terms of operational highlights, Ryanair mentioned the benefits of its decision to cut staff salaries in a move to reduce redundancies over the pandemic, following negotiations with employee unions.

The company have been fully crewed, despite operating at 115% of pre-Covid capacity, and the air firm added it was confident in its ability to operate almost 100% of its scheduled flights.

“The international travel recovery remains fragile due to a worldwide pilot shortage and the problem with labour strikes. However, our experts say that Ryanair has been more successful than others in coping with the crisis because it didn’t significantly reduce its workforce during the pandemic,” said Dawes.

Ryanair confirmed an earnings per share of 16.5 Euro cents against a loss of 24.1 Euro cents the last year.

Vodafone service revenue grows 2.5%, on track to deliver €15bn FY 2023 EBITDAaL

Natasha Doris
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0
Vodafone service revenue grows 2.5%, on track to deliver €15bn FY 2023 EBITDAaL

Vodafone shares were down 0.1% to 128.8p in early morning trading on Monday, after the telecommunications group reported a 2.5% service revenue growth in Q1 2023 from 2% in Q4 2022.

The company announced a service revenue fall of 0.5% in Germany, its largest market, against 0.8% in the previous financial term, reflecting the impact of the new Telecommunications Act.

Vodafone confirmed its European growth was supported by growth acceleration in the UK, with a 0.7% Europe Consumer contract mobile ARPU growth and 215,000 mobile contract customers added against 72,000 broadband customers lost in the period.

The firm highlighted a total service revenue of €9.5 billion from €9.3 in Q4 2022, of which €2.8 billion was linked to German business operations.

The group reported €1.7 billion in other revenue across the period, remaining mostly flat in Q1 2023 compared to Q4 2022.

Vodafone highlighted a total revenue of €11.2 billion over Q1 from €11.1 billion, representing a reported increase of 1.6% and an organic growth of 2.7%.

The telecommunications firm added its 1.7% business service revenue climb was supported by higher roaming and digital services revenue.

Meanwhile, its growth in Africa was supported by data revenue and financial services growth as its M-Pesa customer base rose to almost 50 million over the term.

The company added its service revenue in Turkey soared 35.8% as a result of higher inflation, impacting group service revenue growth by an additional 0.3%.

Vodafone confirmed it was on track to deliver according to its FY 2023 guidance, with its adjusted EBITDAaL anticipated to hit between €15-€15.5 billion, alongside an adjusted FCF of €5.3 billion.

“We have executed in line with our expectations, delivered another quarter of growth in both Europe and Africa, and seen an acceleration in business growth. Whilst we are not immune to the current macroeconomic challenges, we’re on track to deliver financial results for the year in line with our guidance,” said Vodafone CEO Nick Read.

“Our near-term focus on our operational and portfolio priorities remains unchanged. We’ve made good progress towards stabilising our commercial performance in Germany, and we continue to actively pursue opportunities with Vantage Towers and to strengthen our market positions in Europe.”

Choices ahead for Domino’s Pizza

Andrew Hore
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0
Choices ahead for Domino’s Pizza

Domino’s Pizza (LON: DOM) has tough comparatives for this year’s trading and the delivery market is slowing. The pizza company’s interims are due on 2 August. This should provide some indication of how trading is faring.
Domino’s Pizza has been withdrawing from its overseas businesses so that it can concentrate on its core UK business. It is estimated that like-for-like UK sales could be up to 9% lower in the second quarter
Peel Hunt trimmed its 2022 pre-tax profit forecast to £109.7m, down from £113.9m in 2021. This reflects higher costs and the potential slowing of volumes.
By early May, nin...

FTSE 100 closes higher despite retail sales fall

Natasha Doris
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0
FTSE 100 closes higher despite retail sales fall

The FTSE 100 closed 0.2% higher on Friday trading after a 0.1% retail sales fall in June cast a gloomy outlook on consumer-focused groups, while oil and commodities stocks rebounded on higher prices at the week’s close.

“The FTSE 100 eked out some gains on Friday to provide hope it may finish in positive territory for the week,” said AJ Bell investment director Russ Mould.

“A drop in the pound as retail sales disappointed probably helped since it boosted the relative value of the overseas earnings that dominate the stock index.”

The price of benchmark Brent Crude oil rose to $104 per barrel on demand fears after Russia announced it would not supply crude oil to countries that place a price cap on their oil.

Shell shares gained 0.6% to 2,042p, however BP shares dipped 0.2% to 383.1p.

BT Group shares fell 1.8% to 177.6p, despite the Competition and Markets Authority (CMA) granting the green light to the company’s sport joint-venture with Warner Bros’ Eurosport UK.

“It’s great news that the CMA has approved the new JV that we are forming with Warner Bros. Discovery, combining the very best of BT Sport and Eurosport UK, to create an exciting new offer for live sport programming in the UK,” said BT Consumer Division CEO Marc Allera.

“Today is a huge milestone, as we now look toward day one of the new business, which we hope to be in the coming weeks.”

Mining groups picked up after supply fears saw a 0.3% rise in three-month copper on the London Metal Exchange at $7,343.50 per tonne.

Anglo American shares gained 1.4% to 2,665.5p, Antofagasta increased 2.7% to 1,076p, Endeavor rose 1.3% to 1,619p, Glencore saw an uptick of 0.5% to 422.2p and Rio Tinto climbed 1.6% to 4,772p.

Meanwhile, JD Sports defied the gloomy retail sales results after it reported it was on track to reach £1 billion in profits for FY 2022, with sales rising 5% year-on-year.

The company is currently still searching for a new CEO after the departure of Peter Cowgill earlier this month.

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