Upgrade Now

Weekly review

By Josh White

Date: Friday 20 May 2022

(Sharecast News) - The FTSE 100 ended the week XXXXX
Equity view

Merchant banking group Close Brothers said on Friday that it had "performed well" in the third quarter of its trading year. Close Brothers reported loan book growth of 1.8% in its banking division to £8.8m, driven by continued good new business volumes in the commercial and motor finance streams. Year-to-date net interest margins remained broadly flat at 7.8%.

Chemicals company Croda International said on Friday that trading had been strong in 2022, with continued sales and profit growth being seen across the group and significant input cost inflation being successfully recovered. Croda stated demand was particularly strong in North America and Asia, with April sales in China coming in ahead of the prior year despite local Covid-19 lockdowns.

Gambling firm Playtech said talks with TTB Partner were still ongoing and "progress continues to be made" but added that it was "conscious that TTB has been considering a possible offer for Playtech for 15 weeks". An independent committee formed by Playtech said it was still exploring options for maximising shareholder value, and said the group's strong performance has continued through April and into May.

Shares of M&C Saatchi surged on Friday after it agreed to be bought by Next Fifteen for £310m, just days after rejecting a £254m offer from Vin Murria's investment vehicle AdvancedAdvT. Under the terms of the deal, M&C Saatchi shareholders will receive 0.1637 of a new Next Fifteen share and 40p per share in cash.

Discount books and stationery retailer The Works reported a "strong" full-year trading performance on Friday, with two-year like-for-like sales rising 10.4%, and total two-year sales growth coming in at 12.7%. The London-listed firm said its "improved proposition" helped to offset external headwinds, with the board reiterating its EBITDA expectations for the 52 weeks ended 1 May of £15m.

Shares in e-commerce retailer THG surged early on Friday after the firm rejected a third takeover offer from Belerion Capital and King Street Capital Management a day earlier and news broke that property investor Nick Candy was also mulling a possible bid. THG said the unsolicited proposal of 170.0p a share, a 46% premium to Thursday's closing price, "significantly undervalued" the company.

Britain's Nationwide Building Society on Friday reported soaring annual profits, but warned on the impact of surging inflation on house prices. The UK's second biggest mortgage lender said pre-tax profit for the year ended to April 4 almost doubled to £1.6bn from £823m a year earlier.

Information management and document service provider Restore said in an update on Friday that trading for the four months ended 30 April was in line with its expectations, as the "strong" second half momentum last year carried into 2022. The AIM-traded firm, which was holding its annual general meeting, said revenue was 37% ahead of the same period last year, driven by organic growth of 14%, acquisition effects of 18%, and Covid-19 repair of 5%.

Engineering company Smiths Group reported its fourth consecutive quarter of organic revenue growth on Thursday, leading the firm to maintain its full-year guidance of 3% organic revenue growth. Smiths, which said organic revenues were up 4.2% year-to-date, stated its solid third-quarter performance comes amid ongoing sales momentum, with three divisions in growth.

Real estate investment trust LondonMetric Property has disposed of its 229,000 square foot DHL distribution warehouse in Reading for a total of £60.6m. LondonMetric said on Thursday that it had exchanged contracts for the sale of the asset and added that completion was expected to take place in November.

Canada's Brookfield Asset Management has agreed to buy London-listed emergency home repairs group HomeServe in a £4.1bn deal. Under the terms of the acquisition, HomeServe shareholders will receive 1,200p per share in cash. This is a 71% premium to the closing share price on 23 March, which was the last business day before the start of the offer period.

Piping systems manufacturer Genuit said on Thursday that its year-to-date performance was in line with expectations, with underlying operating profits expected to be consistent with current full-year consensus estimates of £107.0m. Genuit stated group revenues for the four months ended 30 April came to £209.0m, 8.3% higher than in 2021, despite the presence of "very strong comparators", driven by acquisitions and price increases across the firm's product portfolio And "sequential improvement" in margins, which it expects to come through "more fully" in the second half of the year.

Luxury watch retailer Watches of Switzerland said on Wednesday that it experienced a "stellar end" to the year ended 1 May, with revenues surging in the final quarter. Watches of Switzerland stated fourth-quarter group revenues had grown 48% year-on-year to £304.0m, with US revenues up 50% to £136.0m following the opening of its flagship store in Cincinnati, Ohio, while UK revenues shot up 47% to £168.0m.

Specialist media publisher Future reported a rise in first-half profits on Wednesday, driven by revenue growth and contributions from acquisitions and forecast a "modest" rise in annual guidance. The company said pre-tax profit for the six months to March 31 rose 42% to £81m. Revenue rose 48% to £404.3m, boosted by the purchase of magazine publisher Dennis last October.

Mr Kipling and Oxo owner Premier Foods reported full-year trading profit and adjusted pre-tax profit ahead of its expectations on Wednesday as it said it might have to raise prices to tackle inflation. In the 52 weeks to 2 April, trading profit was flat versus a year earlier at £148.3m but up 11.9% on a two-year basis, while adjusted pre-tax profit rose 11.4% from the previous year to £128.5m, and was 37.6% higher on a two-year basis. Revenue came in at £900.5m, down 3.6% on the year but up 6.3% versus two years prior.

British Land, the FTSE 100 property giant, said on Wednesday it had swung back into the black after three consecutive years of losses. In the year to 31 March, the real estate investment trust reported a 24.9% increase in underlying profits, to £251m, driven by a "significant" reduction in pandemic-related provisions as occupancy rates in office and retail spaces improved.

Real estate investment trust Shaftesbury has acquired a 200-year ungeared leasehold interest in the lower floors of 92-104 Berwick Street in Soho for £27.5m. Shaftesbury, which purchased the leasehold from the administrator of Berwick Street Securities, said on Tuesday that the interest was made up of roughly 15,600 square feet of retail accommodation and approximately 3,600 square feet deemed suitable for restaurant usage.

Imperial Brands reported lower operating profit after accounting for its exit from Russia in response to the invasion of Ukraine. Net sales rose 0.3% to £3.5bn in the six months to March 31 as demand for new products such as e-cigarettes offset flat revenue from traditional cigarettes on a constant currency basis.

Sales and marketing firm DCC Group reported "very strong" full-year revenues and adjusted operating profit growth that came in ahead of market expectations. DCC said revenues had shot up 32.2% year-on-year to £17.73bn, driven by higher energy commodity prices and also by the recovery in energy volumes across both its LPG and retail and oil units.

Power generation company ContourGlobal has agreed to be bought by private equity firm KKR in a £1.75bn deal. Under the terms of the acquisition, KKR will pay 263.6p per share in cash, which is a premium of 36% to the closing share price on Monday.

Credit reference agency Experian has agreed to acquire a 51% stake in Brazilian fintech group MOVA Sociedade de Empréstimo entre Pessoas as part of a BRL 40.0m (£6.45m) cash deal. Experian, which said on Monday that it had purchased the stake from private investor Érico Sodre Quirino and founder and chief executive Roberto Tesch, highlighted that it also held a call option to acquire the remaining 49% of MOVA between 2026 and 2028, whilst the sellers had also put an option exercisable during 2029.

Budget airline Ryanair posted a narrowing of its full-year losses on Monday as it said it expects to return to profitability in FY23. For the year to the end of March 2022, the company posted a net loss of €355m versus a loss of €1.02bn the year before, as it recovered from the worst of the pandemic. Meanwhile, revenues were up 193% at €4.80bn and customer numbers were 253% higher at 97.1m. The company said it plans to grow FY23 traffic to 165m.

Shares in RWS Holdings fell sharply on Monday, after a takeover approach failed to result in an offer. The AIM-listed tech firm, a specialist in language services, received an unsolicited approach from Hong Kong-based Baring Private Equity Asia Fund VIII (BPEA) last month.

UK baker Greggs warned of increasing cost pressures and reported a rise in first-quarter sales which were "flattered" by comparison with restricted trading conditions in pandemic-restricted 2021. The company, famed for its range of sausage rolls and other pastries, said it expected figures to normalise against comparisons with more "robust" trading periods last year after pandemic lockdowns eased.

Economic news

UK retail sales unexpectedly rose in April, underpinned in part by an increase in food store sales, according to figures released on Friday by the Office for National Statistics. Retail sales were up 1.4% following a 1.2% decline in March, and versus expectations for a 0.2% drop. Compared with pre-Covid February 2020 levels, retail sales were ahead 4.1%.

Consumer confidence in the UK dipped even further in May, according to a long-running survey released on Friday, making for the lowest overall confidence score since records began. The GfK consumer confidence index decreased two points to -40 in May - the lowest score since the survey started in 1974.

The competition regulator has found that the merger of Veolia and Suez would lead to a loss of competition in waste and water management services, it announced on Thursday. It said the loss of competition could lead to more costly and lower quality services, and in turn to higher council tax bills, as local councils and some businesses would have less choice when procuring key waste and water management services.

Manufacturing output grew at its fastest pace in ten months over the quarter to May, but confidence fell further, according to a survey released on Thursday by the Confederation of British Industry. The CBI's total orders balance rose to +26 from +14 in April, coming in above consensus expectations of +11. The survey found that output still failed to keep pace with demand, however, as the volume of stocks of finished goods became less adequate compared with the previous month.

Average UK house prices increased by £24,000 in the twelve months ended 31 March, according to the Office for National Statistics, a slight slowdown when compared to the previous month. The average price of a home in the UK rose to £278,000 in March as the annual growth rate came to 9.8%, down from the 11.3% annual increase seen in February.

Inflation has hit a fresh 40-year high of 9%, official data showed on Wednesday, after energy prices surged in April. According to the Office for National Statistics, the headline consumer price index rose to 9.0% in April from 7% in March. The rate is the highest in the national statistics series, which began in January 1997, and the highest in the constructed historical series, which began in January 1989.

The UK unemployment rate declined to a 48-year low in the first three months of the year, but wages were squeezed by surging inflation, according to data released on Tuesday by the Office for National Statistics. The unemployment rate fell from 3.8% in the previous quarter to 3.7% - its lowest level since 1974. Analysts had been expecting it to hold steady at 3.8%.

Ofgem is considering increasing the number of times it reviews the energy price cap, the regulator confirmed on Monday. The cap, introduced in 2019 to prevent energy companies overcharging customers for gas and electricity, is currently reviewed twice a year.

International events

The People's Bank of China cut a key lending benchmark on Friday by the most on record as it looks to support a slowing economy and support housing demand. The Bank cut the five-year loan prime rate - its mortgage reference rate - by a bigger-than-expected 15 basis points, to 4.45%, and left the one-year rate unchanged at 3.7%.

German producer prices rose at their highest annual pace in April as the war in Ukraine pushed up energy prices, according to figures released by Destatis on Friday. Producer prices for industrial products jumped 33.5% on the same month a year ago, while on the month, prices were up 2.8% in April.

Factory sector activity in the US mid-Atlantic region cooled significantly in May, largely as a result of firms' slower stock building. The Federal Reserve Bank of Philadelphia's closely-followed manufacturing sector index declined from an April print of 17.6 to 2.6.

Existing home sales in the States fell in April and the slowdown in activity appeared set to continue, a leading business lobby group said and some economists were even more downbeat. According to the National Association of Realtors, in seasonally adjusted terms existing home sales fell to an annual pace of 5.61m in April or by 2.4% month-on-month.

Homebuilding activity in the States weakened more than expected last month. According to the US Department of Commerce, in seasonally adjusted terms, housing starts dipped at a month-on-month pace of 0.2% to reach an annualised pace of 1.724m.

The cost of living in the euro area was unchanged last month, contrary to a preliminary estimate. According to Eurostat, the annual rate of headline consumer price inflation was unchanged at 7.4% in April.

Americans continued splashing out much more than expected last month, especially on automobiles. According to the US Department of Commerce, retail sales volumes jumped at a month-on-month pace of 0.9% in April to reach $677.71bn.

The Eurozone economy strengthened in the first quarter, official data showed on Tuesday, despite the impact of the war in Ukraine. According to flash estimates from Eurostat, the European Union's statistics office, GDP rose by 0.3% quarter-on-quarter in the first three months of the year, and by 0.4% across the wider bloc.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page