Advertising giant WPP (WPP) has posted a 30% drop in annual pre-tax profits, while overall sales slipped by 1.3% to £15.6billion. The group said its profits fell due to the ‘impact of restructuring and transformation costs and goodwill impairment.’ In October, shares in WPP slumped when the firm trimmed its full-year guidance, reported lower-than-expected third-quarter sales and confirmed it wants to offload Kantar. Looking ahead, WPP’s boss Mark Read said: ‘As we have said previously, 2019 will be challenging – particularly in the first half – due to headwinds from client losses in 2018. ‘However, we start the year with fewer clients under review than we did in 2018, and investments in creativity and technology will further improve the competitiveness of our offer.’
Revolution Bars Group (RBG), which has 79 sites in the UK, has decided to shelve its expansion plans and focus on improving its existing cocktail bars instead. The change of heart follows a dryer than expected six months for the group. Slow first-half sales – down 4% – are weighing on the firm’s bottom line too. Revolution Bars warned today that annual profits would now be in the region of £11million and £12million, just shy of previous forecasts. It blamed under-investment in its core brand, which it hopes to rectify with a refurbishment programme. The news sent the firm’s ailing stock spiralling in early trading on Friday. A 16% plunge took it to a new all-time low of £6.03 per share.
Royal Dutch Shell ‘B’ (RDSB) has revealed it is facing potential criminal charges in the Netherlands over allegations made by the Nigerian government relating to a $1.3bn oil deal. The Dutch Public Prosecutor’s Office has informed the oil giant that it is nearing the conclusion of an investigation and is ‘preparing to prosecute’. The planned prosecution is linked to the 2011 settlement of a dispute over an oil prospecting licence in Nigeria dubbed ‘OPL 245’. The Nigerian government has filed a billion-dollar claim against the duo alleging fraud and corruption which it claims diverted millions of dollars from the African nation. The funds were allegedly used for ‘bribes and kickbacks’, according to the Nigerian government’s complaint.
Shares in online property portal firm Rightmove (RMV) have fallen over 6% despite the group posting an 11.3% rise in annual profits. The group’s pre-tax profit rose to nearly £200million, while its sales increased by 10% to over £267million. The amount of cash the company raked in from advertisers jumped by £83 year-on-year to an average of £1,005 a month. Rightmove said traffic to its website increased by 4% to around 132million visits a month. The amount of time people spent browsing Rightmove’s website rose by 5% to over 1billion minutes a month, the company said.
William Hill (WMH) slumped to a statutory pre-tax loss of over £721million in the last year, against a profit of £146.5million the year before. From April, the UK Government is cutting the maximum stake on fixed-odds betting terminals from £100 to a maximum of £2 a go. As a result of this, William Hill today reiterated it could be forced to close 900 of its shops over the next two years. The group expects the rule change to dent its profits by as much as £100million a year. With its operations in the UK potentially in jeopardy, the gambling giant is now pinning its hopes on further expansion online and in the US.
Car crash at Aston Martin: Shares dive 21% as marque is hit by a £68m loss after market float cost it £136m. Aston Martin Holdings (AML) shares crashed to an all-time low as it suffered annual losses of £68.2million. The luxury car maker was hit by one-off costs of £136million relating to its much-hyped float on the London Stock Exchange in October last year – including a £61.2million pay-out in staff bonuses. Shares fell 294.4p, to 1080p as investors made their displeasure known. The company has lost 43% of its value – or £1.8billion – since the shares floated at 1900p in October.
Heatwave helps boost profits at Rentokil Initial (RTO) to £308m. The pest control business saw a surge in callouts for flies, wasps and rats, helping to lift sales in the second half of 2018. Its profits rose 8.8% over the period, sending shares in the FTSE 100 firm surging 6.7%, or 22p, to 351p yesterday. Rentokil also said chairman John McAdam will retire in May after more than ten years at the firm, to be replaced by former Intercontinental Hotels boss Richard Solomons.
Bovis Homes enjoys record profits to put its shareholders on track to pocket a dividend hike. profits were the highest ever last year as it focused on offering better quality homes, improved customer service and a boosting operating margins. Shareholders were also given a boost as the company’s board agreed to hike dividends by 20% to 57p for the 2018 financial year. Pre-tax profits grew by 47% to £168million, ahead of market expectations, the housebuilder said. Group revenue rose by 3.2% to £1.06billion, as the number of completions reached 3,759. The company’s focus on price optimisation and margin improvement paid off, as operating margin rose 390 basis points to 16.4%.
Rolls-Royce Holdings (RR.) plunged into the red with a loss of £2.9billion in 2018 as it took a hit from one-off charges related to faulty aircraft engines. The engineer that makes engines for commercial planes, the military and trains said it booked a charge of £790million related to problems with its Trent 1000 model. Last year a fault with the engine used on Boeing 787 grounded planes flown by major airlines.Rolls-Royce faces a bill of around £1.5billion spread over five years for dealing with the costs to repair the engines.
British Airways and Iberia owner International Consolidated Airlines Group SA (CDI) (IAG) has seemingly overcome a triad of challenges in the airline sector to report rising profits and sales. Despite significantly higher fuel costs, currency headwinds and air traffic control strikes last year, the firm chalked up a near 10% rise in profits to £2.6billion. Meanwhile, sales advanced 6.7% to £20.88billion. The company said it was knocked by unfavourable exchange rates to the tune of £110.35million last year, and added that its fuel costs climbed 30%. With the currency impact stripped out, the profitability of each passenger seat – a key industry metric – jumped 2.4%. IAG boss Willie Walsh said: ‘It demonstrates the fantastic work that’s gone in in the past number of years where we’ve been strengthening the cost base of the business, the efficiency of the business, extending our network.’
Foxtons warns London’s housing market is in the midst of a ‘prolonged downturn’ after slumping to £17m loss. Foxtons Group (FOXT) slumped to a pre-tax loss of £17.2million last year, down from a profit of £6.5million the year before. The London-based estate agent’s shareholders will not be receiving a dividend for 2018, after pocketing 0.7p a share for the year before. With sales plunging to ‘record lows’ amid ‘weakness’ in the London property market, the estate agent’s total annual revenues fell from £117.6million to £111.5million. Gary Watts, the group’s chairman, said: ‘The London sales market is in a prolonged downturn and the current uncertainty surrounding Brexit is clearly impacting consumer confidence. ‘We are managing the business to reflect this and ensure we are well prepared for any change in market conditions.’
Norway’s £740 billion sovereign wealth fund announced it will continue to invest in Britain despite uncertainty over the country’s departure from the EU. The fund – which is the world’s biggest – takes a percentage of oil and has revenues and invests it around the world. Last year, 8.5% of the fund was invested in Britain – spread across equities, bonds and real estate. The fund’s CEO Yngve Slyngstad said: ‘We will continue to be significant’ investors in Britain. He added: ‘And we foresee that over time that our investments in the UK will increase.’ However, the fund’s British investments declined in value over the past 12 months. He said: ‘With our time horizon, which is 30 years plus, current political discussions do not change our view of the situation.’
There was nothing rusty about Applied Graphene Materials (AGM) last night. Shares jumped 14.6%, or 3.5p, to 27.5p after it announced the successful testing and recognition of breakthrough anti-corrosion graphene technology. The AIM-listed firm said 3,000-hour trials of its proprietary Genable (R) dispersions technology delivered a more than five-fold improvement in rust protection enabling big opportunities in its industrial coatings target market.
Shares in British satellite group Inmarsat (ISAT) surged after reports said a US rival has lined it up as a takeover target. US media reports said Echostar was expected to renew its interest in the company ‘very soon’ – or at least within the next six months. Echostar dropped a £2.4billion takeover approach for the London-headquartered firm last July after failing to tempt it into talks.
Marks & Spencer Group (MKS) is facing further questions over the hefty price it’s paying for its late entry into food delivery. Analysts at US broker Jefferies downgraded their recommendation on M&S shares to ‘hold’ from ‘buy’ and cut their target price to 280p from 310p. The High Street retailer is teaming up with Ocado Group (OCDO) to create an online delivery joint venture that will trade as Ocado.com but stock M&S branded products. M&S will fork out £750million for a 50% stake in Ocado’s UK retail business as part of the deal. To fund its first foray into online grocery shopping, the FTSE 100-listed firm is selling £600million of shares and chopping its dividend by 40%. Chief executive Steve Rowe said he thinks the company is paying a fair price but the negative share price reaction to news of the venture on Wednesday suggests investors think otherwise. M&S has argued the tie-up will deliver cost savings of at least £70million per year by the third year following completion but analysts at brokers Jefferies are of the view that this may prove rather difficult to deliver in full.
M&S ready-meals supplier Bakkavor Group (BAKK) was on the back foot with shares down 10.3%, or 16.6p, to 145p after the food producer said it expects margins to shrink the first half of this year due to weak consumer confidence and inflationary pressures.
Rio Tinto (RIO) was under the cosh on the FTSE 100 with shares falling 2%, or 89p, to 4336p after Bank of America Merrill Lynch lowered its rating to ‘underperform’ from ‘neutral’ and cut its target price to 4150p from 4770p, citing limited positive catalysts for the stock.
Cigarettes giant British American Tobacco (BATS) was also up in smoke as it reported 2018 results that beat expectations but noted concerns about the impact of a regulatory crackdown in the US on menthol cigarettes.
Insurer RSA Insurance Group (RSA) was another big blue-chip faller after posting a worse-than-expected decline in 2018 operating profit, blaming weather-related claims and one-off losses in its UK operation.
CRH (CRH) shares edged upwards, up 1%, or 23p, to 2382p after the Irish buildings materials group unveiled 2018 earnings growth of 7% on the back of a strong performance in the Americas and Europe.
Howden Joinery Group (HWDN) shares dropped 6.5%, or 34.1p, to 492.7p after the kitchen supplier issued a cautious outlook in the face of Brexit uncertainty.
Alton Towers owner Merlin Entertainments (MERL) shares gained 2.5%, or 9p, to 361.6p after posting a 6.2% rise in 2018 core earnings.
