Vodafone pulls in €11.1bn in revenue during Q1

Liam Roche
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Vodafone pulls in €11.1bn in revenue during Q1

Vodafone said much of its growth was down to growth in Europe and Africa

Vodafone (LON:VOD) said its sales increased during the last quarter as its consumer and business operations saw improvements.

While the telecommunications company is not yet at pre-Covid levels, it made €11.1bn during Q1.

Upon the update by the company, the Vodafone share price is up by 2.2% during the morning session on Friday.

Its revenue from services, where Vodafone makes most of its money, rose by 3.1% to €9.39bn. The company said this was down to growth in Europe and Africa.

Revenue generated from selling handsets recovered from Covid-induced disruptions, rising by 5.7%.

Russ Mould, investment director at AJ Bell provided context to Vodafone’s results announcement:

“Full year numbers from Vodafone in May really created a stink. It fell short on profit and gave investors the unpalatable message that it would have to increase spending on its network, putting a dividend which had already suffered a heavy cut in 2019 potentially back in the firing line. Growth targets also left the market feeling distinctly uninspired,” said Mould.

“While the bad smell has hung around the stock since then, Vodafone’s first quarter trading statement has acted as a bit of an air freshener as it reports revenue growth across its consumer and business segments.”

Nick Read, chief executive of Vodafone, commented: “I am pleased to report that we are back to service revenue growth in Europe, as well as Africa. This growth was broad-based within both Consumer and Business segments, with the vast majority of our markets contributing. This is a result of our commercial and operating momentum built over the past 3 years as part of our strategic transformation,” said Read

“In Europe, the operating and retail environment has not yet returned to normal conditions, but we are delivering a good service revenue performance. In our Business segment, we are seeing stronger growth with our public sector and corporate customers, whilst further building a pipeline of demand for our digital services, such as IoT, security and cloud.”

“In May we announced, for the first time, our medium-term growth ambition. We have entered the year in line with this ambition, on track to deliver our guidance for the year, and with a continued focus to optimise our portfolio, to accelerate the delivery of shareholder value.”

Hotel Chocolat raises £40m to support ambitious growth plans

Liam Roche
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Hotel Chocolat raises £40m to support ambitious growth plans

Hotel Chocolat expects to see its sales jump as restrictions ease further

Hotel Chocolat, the British chocolatier, has raised £40m in a recent share placement as it eyes a new digital-based strategy.

The share placing, led by Peel Hunt and Liberum Capital, was reportedly oversubscribed.

“The £40m growth capital raised today will be invested in our fast-growing business, furthering our aim of becoming a global digital-led chocolate brand. I’m delighted that our issue was oversubscribed, demonstrating the support Hotel Chocolat enjoys with its investors,” said co-founder and CEO Angus Thirlwell.

Hotel Chocolat considers now to be an opportune time to raise funds as it expects to see its sales jump as restrictions ease further.

The company recently released a trading update suggesting its profits for the year to 27 June would surpass previous expectations.

Since the pandemic began, this is the second time that the retailer has raised money from its shareholders. In 2020, just before the UK’s first Nationwide lockdown, Hotel Chocolat confirmed a £20m placing.

At that point, despite the potential oncoming downturn, the placement’s purpose was to support the company’s growth strategy rather than to guard against financial distress.

Since then, Hotel Chocolat’s growth has predominantly come via digital channels.

The Hotel Chocolat share price (LON:HOTC) is down by 0.6% on Friday morning to 357.80p per share.

Euro strengthens as Lagarde pledges to persist with low rates

Liam Roche
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Euro strengthens as Lagarde pledges to persist with low rates

The announcement comes after the ECB raised its inflation target to 2%

The European Central Bank (ECB) committed to maintaining its low interest rates on Thursday, in addition to buying bonds, in an effort to move the eurozone economy away from slow-moving inflation.

Lagarde said in here press conference that the ECB will persist with negative interest rates until inflation reaches 2% well ahead of the end of its projection horizon and for the rest of the projection horizon.

“We did so to underline our commitment to maintain a persistently accommodative monetary policy stance to meet our inflation target,” ECB President Christine Lagarde added.

The Euro is down by 0.2% against the pound on the back of the announcement to £0.858525. While, after initially weakening, the Euro strengthened against the dollar by 0.19% to $1.18177.

The announcement comes shortly after the ECB set forward its updated strategy to raise its inflation target to 2%, where the central bank said it would be comfortable with inflation exceeding the target on a temporary basis.

Over the past ten years, inflation has fallen short of the ECB’s target, and this has been excacerbated by the

Commenting on the EUR/USD reaction to the latest ECB policy decision statement, Ben Carter, Analyst, Global Capital Markets at Validus Risk Management, said: “Much like the Fed, the ECB will be letting inflation run hot and are looking for prints of 2% “durably” for the rest of the projection horizon before considering any change in rates. Meanwhile, as expected, there were no changes in the PEPP program and this is looking like it will be a decision for later in the year, possibly the start of 2022, shifting the attention to the September meeting. With lots of talk around the Fed beginning to taper their purchases before year end, the EUR may struggle to gain any ground against the USD over the next few months as Lagarde comments that inflation has picked up but remains subdued.”

“Leading up to the decision, volatility in the EUR was subdued and EUR/USD traded below 1.18. Looking ahead, Lagarde’s dovish comments around inflation decreasing next year, due to significant slack in the economy, does not bode well for the EUR, while any rate hike certainly seems a long way off.”

BHP share price rises as miner strikes deal with Tesla

Liam Roche
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BHP Share Price

The BHP share price (LON:BHP) is up by 0.51% on Tuesday morning in London, as the mining giant confirmed it will be supplying nickel to Tesla. The news comes on the back of what has been a poor showing so far this week for the BHP share price, which is still down by 0.73% over the past five days.

Going back further, it has been a volatile 2021 for the FTSE 100 company. BHP has added 11% since the beginning of year. With news of the deal with Tesla, in addition to rumours over a bumper shareholder payout and a potential departure from oil and gas, now is a pivotal time for the company. Investors in the miner will be curious as to what the ongoings surrounding the firm mean for the BHP share price in the near-term and further ahead.

Tesla

BHP confirmed on Thursday that it reached an agreement with Tesla for the car maker to supply nickel, as well as working alongside the company to reduce carbon emissions along the battery supply chain.

“Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles,” BHP Chief Commercial Officer Vandita Pant said in a statement.

Tesla confirmed last month that it expects to spend more than $1bn per year on battery raw materials from Australia due to the country’s reliable mining sector.

BHP reiterated its claim to be one of the most sustainable and lowest carbon emission nickel producers across the world.

Nickel and copper could be two key commodities in de-carbonising the global economy. Therefore this move could prove to be beneficial to the long-term outlook of the BHP share price.

Dividend

Investors will be paying attention to BHP’s dividends ahead of its result statement on 16 August. In positive news for shareholders, Berenberg, the broker, is expecting a sizeable payout.

Berenberg is forecasting a dividend payment of $3.05, up from US$1.20 the year before, which would be a yield of around 10%.

“We believe this is achievable given our forecast US$4.5bn reduction in net debt over FY21 to US$7.5bn, which remains well below the US$12- 17bn guidance range,” Berenberg said in a note.

Additionally, in further positive news for curious investors, Berenberg set a 2,700p price target for the BHP share price.

Oil and Gas

BHP has been weighing up the possibility of selling its oil and gas assets, as the miner looks to focus itself on commodities better suited to the future. With pressure coming from investors, climate campaigners and the Paris climate agreement, the mining giant considers now a good time to review its oil and gas operations.

On the other hand, there is a financial incentive to invest in the industry in the shorter-term, due to the lack of investment. With investors and major companies increasingly focused on ESG concerns, an opportunity has been left behind.

While most of its revenue comes from iron ore and nickel, the company has a decision to make, which could upset its shareholders and the BHP share price.

Bitcoin climbs as Musk makes a series of revelations

Liam Roche
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Bitcoin climbs as Musk makes a series of revelations

The digital currency has now traded above the £23,000 mark for the last 24 hours

Bitcoin climbed higher on Wednesday as Elon Musk made a series of revelations regarding his rocket company SpaceX, bitcoin and a potential u-turn by Tesla.

The digital currency has now traded above the £23,000 mark for the last 24 hours as the billionaire mogul divulged for the first time that SpaceX holds bitcoin.

He also said at the ‘B’ Word Conference, alongside JackDorsey and Cathie Wood, that Tesla would consider accepting bitcoin as a payment method again after the electric car maker famously stopped doing so, citing concerns over the energy consumption of the digital currency.

Musk said he personally owned bitcoin, ether and dogecoin as his tone was generally positive around bitcoin, despite previously outspoken tweets.

“We’re not selling any bitcoin, nor am I selling anything personally. I would like to see bitcoin succeed,” he said.

Musk appeared to respond to detractors who accused him of manipulating the price of crypto for his own personal gain. However, he reaffirmed his loyalty to bitcoin and reiterated the fact that he continues to have skin in the game. “If the price of Bitcoin goes down, I lose money. I might pump, but I don’t dump,” Musk said.

Earlier in the year, a number of Tesla investors and environmental campaigners criticised the car company’s decision to accept bitcoin payments.

The Tesla share price closed 0.79% down yesterday following the virtual conference.

The fall-out drew attention to the ESG credentials of bitcoin. While some said it incentivises the production of renewable energy, others bemoaned that its consumption was akin to that of a small nation.

Next shares, Zenova IPO and an African growth story with Alan Green

UK Investor Magazine
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Next shares, Zenova IPO and an African growth story with Alan Green

This week’s UK Investor Magazine Podcast with Alan Green covers Next shares (LON:NXT), the Zenova Group (LON:ZED) IPO and an under appreciated African growth story in AirTel Africa (LON:AAF).

The FTSE 100 has suffered bouts of volatility over the last week as COVID cases rise globally and concerns about inflation persist. We question whether we could see more meaningful downside in markets in the third quarter and look at the potential buying opportunities in such a circumstance.

Next shares gave a boost to the FTSE 100 following a strong trading update that demonstrated the successful shift to online sales during the pandemic. With such bumper sales figures, it does raise the possibility it is simply a result of pent up demand that diminishes through the rest of 2021.

We discuss Zenova Group – which popped higher on its IPO – and what the future holds for the innovative fire protection company.

Finally there is attention paid to a very fairly priced African growth company that may have flown under the radar.

FTSE 100 pauses to catch a breath

Liam Roche
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FTSE 100 pauses to catch a breath

Following a strong showing on Wednesday the FTSE 100 is more reserved today, up by 0.10% to 7,005 during the morning session.

“The FTSE 100 was pausing for breath on Thursday having done its best to pick itself off the canvas after being felled by Covid and inflation concerns at the start of the week,” says AJ Bell investment director Russ Mould.

With the European Central Bank meeting taking place later today, the market could be given some direction as inflationary pressures will likely be high on the agenda.

US weekly jobless figures will also be closely monitored later given “US central bankers have long signaled that the jobs market is pretty much their lodestar” when it comes to making decisions on monetary policy, according to Mould.

“Part of the narrative behind the market rebound in the last couple of days has been the idea that support for economies might be sustained for longer as the world stares down the barrel of rising Covid infections linked to the Delta variant,” Mould said.

FTSE 100 Top Movers

IAG (3.9%), Flutter Entertainment (3.82%) and 3i Group (3.57%) have each made solid gains this morning as the week draws to a close.

At the bottom end of the FTSE 100 on Thursday morning is Unilever (-4.53%), Persimmon (-3.25%) and Reckitt Benckiser (-2.29%).

Greatland Gold reports ‘excellent’ growth drilling results

Liam Roche
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Greatland Gold reports ‘excellent’ growth drilling results

Greatland Gold says results from Growth Drilling continue to support the potential for resource expansion

Greatland Gold (AIM:GGP) reported continued ‘excellent’ growth drilling results at its Havieron gold-copper project in the Paterson region of Western Australia.

The AIM-listed company said drilling activities since the last update include new results from the Growth Drilling programme, which continue to support the potential for resource expansion of the Havieron gold-copper project.

The latest results involve seven new drill holes with each one intersecting significant mineralisation.

Newcrest Mining (ASX:NCM), its partner in the project, has completed a total of 184,081 metres of drilling from 212 holes so far.

Growth Drilling continues to confirm extensions to the high grade South East Crescent and the Northern Breccia mineralisation below and around the initial Inferred Mineral Resource estimate, the company said. HAD138 (Northern Breccia) reported 84.5m @ 2.0 g/t Au & 0.05 % Cu from 683m, including 12.7m @ 6.0 g/t Au & 0.01 % Cu from 685.3m.

Additionally, 2021 Growth Drilling is progressing into full-year 2022. A further 15 Growth drill holes have been completed with samples awaiting assay, anticipated to be received and reported in the next update.

Shaun Day, Chief Executive Officer of Greatland Gold plc, commented: “There is a tremendous amount of activity and excitement with the progress across the Havieron gold-copper project. In addition to the intensity of the drilling programme, the decline development is now maintaining 24- hour operations and the surface support infrastructure is nearing completion.”

“The drilling programme keeps on delivering with every hole continuing to hit significant mineralisation while also growing the scale of the Project. Drilling has identified several exciting results from the South East Crescent, extending the high grade mineralisation beneath the initial Inferred Resource estimate.”

“The ongoing success from each set of drill results builds confidence in the world class nature of the Havieron gold-copper project and its potential to expand. This de-risks the project as we progress it towards potential production and adds further upside to the value of the deposit.”

“With 15 intersections awaiting assay, the volume of information available is expected to significantly expand with our next update as we continue to grow our understanding and scale of the Havieron gold-copper project.”

The Greatland Gold share price is down by 2.27% during the morning session on Thursday.

Cost pressures weigh on Unilever’s margin guidance

Liam Roche
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0
Cost pressures weigh on Unilever’s margin guidance

Unilever’s underlying sales rose by 5% during the quarter ending in June

Unilever surpassed its expectations on Thursday with its Q2 sales growth which was helped by rising prices and its sales of ice-cream and teas.

However, the soaring price of commodities could narrow its operating margin at the end of the year.

This was reflected by investors this morning as the Unilever share price dropped by 4.34% in early trading.

The FTSE 100 company’s underlying sales rose by 5% during the quarter ending in June, 0.2% above analysts expectations.

Having previously expected an increase, Unilever is now expecting its operating profit margins to be flat for 2021.

Chris Beckett, head of equity research at Quilter Cheviot, gave further context to the news:

“Unilever’s sales growth matched market expectations, while earnings growth exceeded market expectations due to low tax and interest payments. Underlying sales grew 5% in the quarter with slowing volumes (+3%) being supported by accelerated pricing (+2%),” said Beckett.

“All product categories broadly matched market expectations with the strongest growth being recorded in Foods & Refreshment which benefited from increased European ice cream sales. Asian and emerging markets were top performing regions for Unilever, led by double digit performance in China and South Asia.”

“Of concern, however, is the reduction in operating margins and lowering of the full year margin guidance as a result of cost increases. These result from higher input costs across the supply chain affecting a number of product lines. Operating margins should now only be maintained – whereas Unilever previously expected a slight improvement.”

UK Treasury reveals plan to sell-off more NatWest shares

Liam Roche
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UK Treasury reveals plan to sell-off more NatWest shares

NatWest chairman says London office culture will never be the same

The UK Treasury is set to sell more of its stake in NatWest over the coming 12 months as it confirmed a trading plan to decrease its holding in the bank.

NatWest was rescued by the government on the back of the financial crisis over ten years ago. It remans 54.7% owned by the UK Treasury despite continued efforts to sell-off its holding.

However, the government reaffirmed that it would only sell the shares for a price it deems fair for taxpayers.

Its sales of NatWest shares have up until now represented a hefty loss on what was paid for them in the aftermath of the financial crisis.

The NatWest share price was valued below 200p as markets closed on Wednesday, meaning the FTSE 100 bank has a valuation of £23bn.

The latest trading plan has been permitted by chancellor Rishi Sunak on the advice of UKGI.

“The implementation of a trading plan represents continued progress towards the government’s plan to return this shareholding, acquired as a result of the 2007-2008 financial crisis, to private ownership,” the Treasury said.

Additionally, the chairman of NatWest, Howard Davies, said office culture in London is unlikely to ever be the same as it was before the pandemic.

Davies said that he expects the changes to remain even once the pandemic is a thing of the past: “The days when 2,500 people walked in through our office door on Bishopsgate at 8:30 and then walked out again at 6 o’clock, I think that is gone. I suspect there won’t be that many people who will be doing five long days in the office.”

While some of the company’s workers, especially traders, will continue to operate from company desks, most of the bank’s staff will be required to enter the workplace on an intermittent basis. “I suspect there won’t be many doing five long days in the office,” Davies said.

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