Renishaw shares fall on lowered FY2022 profit guidance

Natasha Doris
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Renishaw shares fall on lowered FY2022 profit guidance

Renishaw shares were down 0.4% to 4,170p in early morning trading on Tuesday after the group cut its adjusted pre-tax profit forecast for 2022 to £155 to £170 million from £157 to £181 million as a result of growing uncertainty linked to lockdowns in China.

The engineering firm reported a 21% increase in total revenue to £492.4 million compared to £407.4 million for the nine months to 31 March.

The company saw a 22% growth in manufacturing technologies to £467.4 million compared to £382.1 million, and a 1% slide in analytical instruments and medical devices to £25 million from £25.3 million.

The firm attributed its uptick in manufacturing sector revenue to strong demand for its encoder product lines driven by increased investment in industrial automation and the semiconductor and electronics capital equipment markets, alongside a rise in demand for machine tool and co-ordinate measuring machine product lines.

Renishaw highlighted a 47% rise in adjusted pre-tax profit to £124 million against £84.4 million, alongside a statutory pre-tax profit growth of 13% to £120.2 million from £106.3 million.

Renishaw confirmed a balance sheet with cash and bank deposit balances of £241.1 million compared to £222 million on 31 December 2021.

The group also announced an interim dividend of 16p per share, which was paid on 11 April 2022 and amounted to a total of £11.6 million.

The company confirmed its withdrawal from Russia, and noted that it was currently in the process of suspending its trading operations in the region.

Renishaw said its Russia and Belarus operations accounted for approximately 1% of total group revenue, with £2 million of impairments linked to its withdrawal noted in its interim results.

However, the group clarified that it expected no further impairments or costs related to its decision in the coming term.

Renishaw added that it recorded strong demand for its product lines, alongside a promising order book, with the firm confident in its long-term prospects due to its positive financial position, innovative pipeline and relevance to high-value manufacturing.

Wizz Air eyes Saudi Arabia expansion

Natasha Doris
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Wizz Air eyes Saudi Arabia expansion

Wizz Air shares were up 1.9% to 2,959p in early morning trading on Tuesday, following the firm’s announcement that it was eyeing a potential expansion into Saudi Arabia.

The budget airline met signed a Memorandum of Understanding (MoU) with the Ministry of Investment of the Kingdom of Saudi Arabia (KSA) in a meeting on Tuesday.

The venture was supported by the Saudi National Air Connectivity Programme, a Ministry of Tourism initiative started in 2021 to support the development of the tourism sector in Saudi Arabia.

Wizz Air commented that the MoU was developed to explore the airline market expansion potential of the Saudi Arabia region.

Saudi Arabia has been working towards its goal to triple passenger traffic in the country by 2030 as part of the country’s Vision 2030 programme, which is set to provide a vast selection of opportunities to the airline and aviation supply chain.

The airline confirmed that it would be working with the Kingdom to enable potential investment and operating models to boost the Saudi Arabian aviation environment, with the intended impact of boosting its tourism industry and facilitating expanded connectivity.

The move follows Wizz Air’s recent initiative to hire 20,000 new employees by 2030, including 6,600 pilots and the addition of 500 aircraft to the firm.

The announcement was delivered at the Pilot Expo 2022 in early May, and confirmed that 6,600 of the new employees would take on the role of flight crew members, with the remaining 13,400 slots intended for new flight attendants.

Wizz Air said it aimed to generate €15 billion per year by 2030, according to crew resources head Ewa Danecka-Latka.

“The plan is to grow three times in just nine years and it is not just a dream, this is one of the KPIs that we have to deliver,” said Danecka-Latka.

“For our recruitment team it means that we have to recruit one person every hour, which represents our goal of 2,000 new hires per year.”

“As we need a lot of new pilots and a lot of new cabin crew members joining our operations, this is what we are preparing ourselves for.”

Melrose Industries: Trading in line with expectations

Anshula Kumar
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Melrose Industries: Trading in line with expectations

Melrose Industries announced in its trading update for Q1 that its trading is in line with expectations which helped shares gain 4.4% to 112p in early morning trade on Tuesday.

Melrose Industries buys and sells engineering companies. The group said that its trading has been consistent with the year’s forecasts in its latest trading update for Q1.

In line with industry patterns, the Aerospace division continues to develop, with like-for-like sales up 6%, while the Automotive and Powder Metallurgy divisions are still hampered by supply, with combined like-for-like sales down 4%, well below underlying consumer demand levels.

As supply restrictions ease, the Melrose Board is optimistic that the well-advanced restructuring steps will position all of the company’s businesses to realise their full potential.

Furthermore, significant progress has been made in regaining inflation. The financial performance will be second-half weighted due to the time lag effect, but Melrose is confident that the impact of inflation can be compensated by the steps adopted.

Melrose will host an Investor Day on GKN Aerospace on June 8th at 2.30 pm to discuss the company’s entire potential, including growth and improvement prospects, strong long-term cash flow dynamics, and innovative sustainable technologies.

Simon Peckham, CEO of Melrose Industries stated, “Your Group continues to make good progress whilst dealing with the broader world challenges.”

“We are increasingly seeing growth return to our Aerospace business, which is being rapidly well positioned for its future, and are confident of demonstrating the full quality of our largely restructured automotive businesses. We are well set to realise shareholder value as conditions improve.”

Spectris buys Dytran Instruments for £66m

Anshula Kumar
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Spectris buys Dytran Instruments for £66m

Spectris said on Tuesday that it signed a purchase agreement for the acquisition of Dytran Instruments for £66m, subject to regulatory approval, and expected to complete the deal by Q4 2022.

Spectris, a maker of precise instruments, announced that it has agreed to buy Dytran Instruments for £66 million, valuing the company at 15.8 times EBITDA for the year ending March 2022, which sent shares to gain 3% to 2,928p.

The transaction is expected to be finalised in the fourth quarter, pending regulatory approval.

Dytran, situated in California, is a major inventor and manufacturer of piezoelectric and MEMS-based accelerometers and sensors for detecting dynamic force, pressure, and vibration, with the majority of its business in North America.

Product development evaluation and integrated surveillance systems are used in a broad array of applications in the space, aerospace, industrial, and automotive industries.

Dytran will be merged into HBK, a well-known brand in the accelerometer market, and will benefit from HBK’s global sales and service network.

The deal boosts HBK’s piezoelectric offering, adds additional MEMS capabilities, and expands sales into North America.

Both companies will be able to use their complementary strengths to give increased client products and solutions, allowing for faster product development.

“Dytran is an excellent addition to HBK, bringing complementary technology and strengthening our sensor offering to customers in the fast-growing accelerometer market,” said Andrew Heath, Chief Executive Officer, Spectris.

“The combination will strengthen HBK’s position in the US aerospace, space and defence industries, as well as accelerate Dytran’s revenue by leveraging HBK’s existing global sales channels.”

“We look forward to welcoming the Dytran team to HBK and providing our customers with a wider portfolio of accelerometers and solutions, helping to enhance their products and development programmes.”

3i Infrastructure surpasses target with 17.2% return

Natasha Doris
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3i Infrastructure surpasses target with 17.2% return

3i shares were up 0.6% to 1,243.5p in early morning trading on Tuesday, after the company reported a 17.2% return for 2022.

The positive result exceeded the group’s 8-10% per year goal for the eighth consecutive year, which the company highlighted as “demonstrating the attractiveness of [its] portfolio.”

The investment firm announced a FY2022 dividend of 10.45p, alongside a 6.7% increase in its target dividend for FY2023 to 11.15p per share.

“I am delighted to report that we achieved a return of 17.2% in the year ended 31 March 2022, well ahead of our target and demonstrating the attractiveness of our portfolio,” said 3i Infrastructure chair Richard Lang.

“This is the eighth consecutive year that we have met or exceeded our return target; and we have increased the dividend per share in every year of the Company’s existence.”

3i Infrastructure reported that its portfolio consistently met or exceeded target returns, and noted a £404 million total return for the year, along with a 303.3p NAV per share.

The group confirmed £980 million in new investments or commitments and highlighted its positive realisation of Oystercatcher’s European terminals and the European Projects portfolio, with a 14% and 20% IRR, respectively.

3i Infrastructure said it successfully completed the sale of Oystercatcher’s four European terminals in October 2021, resulting in a distribution of €55 million to the firm after the repayment of Oystercatcher’s debt facilities.

The company sold its European Projects portfolio to 3i European Operational Projects Fund for £103 million, with the transaction scheduled to close by June 2022.

3i Infrastructure said its outlook for the future was positive, with the company in a position to grow on the back of selective investments and asset sales which could generate strong shareholder returns.

“It was a very good year for the Company – a high level of new investment, excellent realisations, and a strong portfolio performance,” said 3i Infrastructure managing partner Phil White.

Future acquires WhoWhatWear

Anshula Kumar
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Future acquires WhoWhatWear

Future is a specialised media platform which has announced on Tuesday the acquisition of WhoWhatWear, a leading digital-only women’s lifestyle publisher based in the United States, from Clique Brands.

With a strong online footprint and a variety of revenue streams spanning from digital advertising to eCommerce, WhoWhatWear is a brand that is well-liked by both marketers and customers.

According to GoogleAnalytics, the publisher has 12m online users and 10m of social followers, with 90%of its revenue coming from the United States.

Future’s presence in the Women’s Lifestyle segment is strengthened by the acquisition, which gives the company additional size and reach in North America, allowing it to better monetise its audience.

According to ComScore, Future will become the sixth-largest Beauty and Fashion publisher in the United States when combined with the group’s existing company. 

The deal will boost Future’s scale and income prospects in the US, as its content already reaches 1 in 3 adults online.

WhoWhatWear’s strong direct advertising sales abilities will assist the group’s current Women’s Lifestyle brands, while WhoWhatWear will strengthen from Future’s patented technology stack and operating model to generate the platform impact.

The purchase will be financed through the company’s existing debt facilities. Leverage is estimated to stay under 2x EBITDA following the transaction said Future.

The acquisition is subject to the expiry of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, among other factors.

Additional financial information will be released during the Future’s interim results on May 18, 2022.

Zillah Byng-Thorne, CEO of Future, said: “We are delighted to welcome the WhoWhatWear team to Future. We look forward to working with them to further bolster our Women’s Lifestyle scale and reach, notably in the US, and are excited about leveraging its scale with our proprietary technology and operating model.”

“Since our launch in 2006, Who What Wear has been and will continue to be a pioneer in every form of digital content, from website and social media to live stream shopping, podcasts, and more. We have created a sustainable brand and are excited about the next stage in our growth trajectory as we build our scale and presence as part of Future,” added Hillary Kerr, co-founder and Chief Content Officer of WhoWhatWear.

Future shares gained 2.4% to 1,988p after the group announced the acquisition of WhoWhatWear on Tuesday.

Centrica sees FY EPS near top end of forecasts

Anshula Kumar
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0
Centrica sees FY EPS near top end of forecasts

Centrica announced that it has delivered a “strong operational performance” in its Q1 trading update for 2022 and anticipates EPS for the full year to be around the top end of analyst expectations said the group on Tuesday.

The range of 2022 adjusted profits per share from 8 sell-side analyst projections issued since Centrica’s 2021 preliminary results announcement on February 24, 2022, is 6.7p to 10.8p as of 9 May 2022.

Centrica says supply chain disruption and rising inflation have had an impact on both the cost base and consumer demand at British Gas Services & Solutions.

For the length of this time of increased inflation, Centrica expects such challenges to continue to at least somewhat offset underlying operational progress.

However, volumes from its nuclear and gas production assets in the UK have been strong, and the Energy Marketing & Trading business has both managed to secure larger volumes of gas and renewable energy to enhance the UK and Europe’s security of supply while also managing increased commodity price volatility well, helping British Gas Energy to perform well.

Considerable uncertainties persist for the rest of the year, including weather effects, commodity price fluctuations, asset performance, and the possibility of additional bad debt costs due to current inflationary pressures in the UK.

Centrica is spending more than £50m on its customers, including 500 new customer care positions in British Gas Energy, 1,000 new engineering apprenticeships in the UK, and the British Gas Energy Support Fund, which offers subsidies of up to £750 to help consumers pay their energy bills.

Subject to Norwegian regulatory approvals, the sale of Spirit Energy Norway is expected to close in the second quarter of 2022. The group has begun to consider longer-term options for repurposing Spirit Energy’s UK assets to help with the energy transition.

Centrica is still exploring alternatives for converting its Rough and Easington facilities to meet the UK’s hydrogen goals.

The company’s 2022 Interim Results are set for July 28, 2022, and Centrica plans to offer an update on its corporate objectives and financial structure at that time.

Centrica shares rose 3.3% to 74.3p after announcing the optimistic update for 2022 in its Q1 trading update.

Bitcoin sinks to lowest level in over 3 months

Anshula Kumar
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Bitcoin sinks to lowest level in over 3 months

Bitcoin lost 3% to $33,256.3 on Monday in line with major equity indices across the globe, as the impact of monetary and fiscal policies invoke caution in investors.

In addition, the war between Russia and Ukraine along with the growing pandemic in China have been hurting investor sentiments worldwide. As a result of investors fleeing from equities, and risky assets, bitcoin, also faced the brunt of the negative reaction.

Bitcoin has maintained its downward trend, and it is now trading at $33,256, its lowest level since mid-January. Bitcoin has been dipping and crypto analysts predicted that price charts were indicating a bearish market as the cryptocurrency lost 17% over the last 5 days.

As is typical, this feeling has spread to the bulk of other cryptos, with Ethereum down 4.9% today, and more than 10% in the last week. Other large altcoins are also experiencing difficulties.

Bitcoin has remained between $35,000 to $45,000 for the past couple of months, however, the latest decline may be the start of a new trend for the alternative asset. Price indicators of Bitcoin pointed towards a bearish market over the last week said Coindesk.

If the price of Bitcoin falls below $32,951, it would hit a record low in July 2021 compared to all-time highs of $69,000 in late 2021.

A continuation of the current trend might have a domino effect across the industry, therefore it will be critical for the main cryptocurrency to rebound from this significant level, which previously served as a response region.

According to a report released by the US Labor Department on Friday, employment growth was strong last month, at a pace that should continue to worry the Federal Reserve about an overly tight labour market.

Wages may begin to rise as more firms fight for labour, adding to inflationary pressures and pressuring the Fed to tighten monetary conditions more quickly.

Bitcoin has recently reacted badly along with equities to the Federal Reserve’s more aggressive activities.

El Salvador and the Central African Republic have made Bitcoin legal tender in the last year. However, the International Monetary Fund has encouraged El Salvador to rethink its decision to allow consumers to use cryptocurrency alongside the US dollar in all transactions.

Walid Koudmani, Chief Market Analyst at financial brokerage XTB stated, “The majority of stock markets are trading lower in anticipation of upcoming monetary and fiscal policy changes from central banks across the world and as the pandemic situation continues to worsen in China, an event which has led to an escalation in lockdowns in several key areas throughout the country including the financial hub of Shanghai.”

“As a result, we are seeing a negative reaction across several asset classes including crypto currencies, which themselves have been struggling as of late. Bitcoin continued its downward move and after dropping over 15% is now trading at the lowest level since mid January as it hovers in the $33,600 area.”

“As is usually the case, we can notice this sentiment extending to the majority of other cryptos with Ethereum down 4% today and other major altcoins facing difficulty as well. It will be essential for the main cryptocurrency to rebound from this key level, which acted as a reaction area in the past, as a continuation of the downward move could cause a domino effect across the sector.”

“However, as we have been noticing a closer correlation with traditional assets like tech stocks, which themselves have been in a tough situation, it could require a recovery of the general sentiment before we see an improvement in the performance of a particularly volatile asset like Bitcoin.”

Cora Gold: corrr…Hot Drilling Results

Jon Levinson
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Cora Gold: corrr…Hot Drilling Results

CORA GOLD (AIM: Cora) 7.25p Mkt Cap £21m after some frustrating waiting  drill results have been announced from its flagship Sanankoro Gold project in the Yanfolila Gold Belt, Southern Mali.  This is the primary focus and where Cora hopes to commence construction of an open pit oxide focussed gold mine in 2022. 
After a further 11 shallow holes adding 898m of drilling  it seems that  all deposits remain open at depth as well as new surface gold discoveries being made.  Results are increasing the size of the deposit and will contribute to the fully funded definitive feasibility study (DFS) tha...

Barclays shares: What’s next after the BoE’s interest rates hike?

Natasha Doris
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Barclays shares: What’s next after the BoE’s interest rates hike?

Barclays is one of the highest-performing stocks on the FTSE 100 since the Bank of England hiked interest rates to 1% in early May. As inflation looks set to hit double-digits in October this year, where are Barclays shares likely to go?

Barclays shares have fallen 20.8% year-to-date, however with the rise in interest rates and a steady mortgage and loans demand for the group, now may a good time to watch the Barclays share price after the drop?

Interest Rate Hikes

The Bank of England’s decision to raise interest rates by 0.25% to 1% signalled an urgent bid to curb skyrocketing 7% inflation, which is currently projected to hit 10% in October this year.

The move represents the next step in a series of anticipated hikes, with analysts predicting a rise to 1.25% at the next meeting in June, and rates as high as 2.5% year-on-year.

However, the bad news for borrowers is great news for Barclays, with the banking group’s profits set to rise on the back of higher interest rates.

Financial Results

The bank reported a 10% rise to £6.5 billion in group income over Q1 2022, alongside a pre-tax profit of £2.2 billion.

The firm enjoyed an 11.5% return on tangible equity over Q1, with a tangible net asset value per share of 294p against 291p year-on-year.

The company’s strong financial performance would have put it in a great place heading into 2022, and Barclays announced strong growth across all sectors as global markets and high rates of UK mortgage lending boosted the bank’s revenue in its consumer and payments business.

Expensive Accident

However, Barclays suffered a significant dent in its balance sheet through a well-publicised incident, which saw a trader accidently over-issue US securities and lead to a £500 million fine from the US Securities and Exchange Commission (SEC).

The loss increased the group’s operating costs to £4.1 billion from £3.6 billion in Q1 2021.

The company subsequently reported the suspension of its scheduled £1 billion share buyback scheme for the second time, however the bank confirmed that it intended to restart its programme as soon as possible.

Outlook

The bank reported estimated operating costs for the entire year of £15 billion, and confirmed a target return on tangible equity of over 10% for 2022.

Barclays assured investors that its diversified income streams put it in a good position to weather market volatility and turbulent economic conditions.

The company highlighted a target CET1 ratio between 13-14%, along with its intention to re-launch its share repurchase scheme at its earliest opportunity.

Is it a Buy?

The recent analyst consensus represents a positive outlook for Barclays, with 11 analysts rating the shares as hold, one as overweight and nine rating Barclays shares as a buy.

Given the positive consensus from brokers, and the potential for higher rates in the future, the Barclays share price will be worth keeping an eye on.

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