Online fashion retailer ASOS (ASC) has reported its third consecutive year of double-digit sales and profit growth, overcoming the cost of ongoing investment. The news sent its shares up 14%, helping to stem some of the decay of recent months.
Mediclinic International (MDC) said core profits fell by 8% in the first half of the year. It has blamed fewer-than-expected patients admissions in Switzerland and South Africa. The South African firm last year tried to take over UK-based Spire, which however rejected the offer, saying it ‘undervalued the group and its prospects’.
There were mixed results from the housebuilding sector today as Crest Nicholson Holdings (CRST) warned over profits but Barratt Developments (BDEV) said it started its new financial year in ‘a strong financial position’. In an unscheduled update, Crest Nicholson blamed a ‘more difficult’ than expected property market for a slowdown in property sales in London and the South during the traditionally stronger autumn months. The Surrey-based company said it now expects profits for the full-year to come in between £170million and £190million – well below last year’s pre-tax profit of £207million. But Barratt Developments, the UK’s biggest housebuilder, said it continued to benefit from taxpayer-funded Help to Buy loan scheme and low borrowing costs. The updates come after Newcastle-based lender Bellway yesterday cautioned over the threat of a Brexit hit to next spring’s busy selling season. Shares in Crest Nicholson fell in morning trading, while Barratt Developments shares were also down despite the upbeat trading update.
Airline Flybe Group (FLYB) lost more than a third of its market value today after it issued another profit warning, blaming higher fuel prices, a weaker pound and lower demand for flights. The low-cost UK carrier said it will now make an adjusted loss of around £12million for the year to the end of March 2019. This is a smaller loss than last year’s £19.2million, but is worse than market forecasts, and comes despite a £10million one-off boost to its accounts. Flybe’s shares crashed 36 per cent to 20.37p in morning trading following the update.
Pearson (PSON) looks set to get out of the teacher’s bad books as it announced it is on track to return to profit growth this year, sending its shares soaring. The education publisher said sales at its North American division, which is its largest, were flat during the first nine months of the year due to an ongoing decline in its US textbooks offsetting growth elsewhere. However, it said there will be underling profit growth, as it remains confident that its shift from more traditional classroom materials to digital is beginning to pay off.
The new boss of Royal Mail (RMG) paid no UK tax on a £5.8m ‘golden hello’ before he took the top job. Rico Back was paid the money as part of a deal to renegotiate his contract – triggering outrage from campaigners who felt he was being given special treatment. It has now emerged that the pay-out was not covered by British tax law because it was paid by a Netherlands arm of Royal Mail. Back, 64, is a tax resident in Switzerland. The revelation came as MPs on the Business Select Committee savaged Orna Ni-Chionna, head of Royal Mail’s pay-setting committee, for failing to clamp down on corporate excess.
A number of failings, including allowing a customer to gamble money stolen from a dogs home, has been cited as the reason has been fined £2.2million by the gambling watchdog. An investigation by the Gambling Commission found that Paddy Power’s online exchange Betfair did not carry out adequate anti-money laundering checks, allowing a ‘significant’ amount of stolen money to be gambled with. The focus of the commission’s inquiry was on five customers in 2016 – two of which were allowed to gamble stolen money.
Shares in Merlin Entertainments (MERL), the company behind Alton Towers and Madame Tussauds, fell today after it blamed last year’s terror attacks and the heatwave for a continued downturn in numbers of customers visiting some of its attractions. That’s despite total revenues growing 4.7% in the first quarter to 6 October, once currency movements are accounted for, while group like-for-like sales were up 1.4%. Growth was driven mostly by new business development, which includes the launch of two new attractions; Peppa Pig World of Play and The Bear Grylls Adventure.
Despite the media frenzy around Tesco’s new discount chain, Jack’s, the UK’s biggest supermarket still lost market share to cut-price rivals Aldi and Lidl over the last three months. Tesco (TSCO), Sainsbury (J) (SBRY) and Asda – three of the UK’s so-called ‘Big Four’ grocers – all lost ground during the period, new figures show, as the arrival of cooler weather brought an end to a bumper summer for many grocers. Despite widespread interest in its new fledgling discounting venture launched in September, Tesco suffered the steepest drop, with its market share falling to 27.4%, according to analysts Kantar Worldpanel.
Bellway (BWY) sold a record number of homes and saw profits rise last year, but warned of risks associated with Brexit as it launched a cost-cutting programme to boost margins. The housebuilder said the taxpayer-funded Help to Buy loan scheme, which accounted for 39% of completions in the year to the end of July, helped it sell 10,307 homes in the period, marking the first time the company has sold over 10,000 units. Continued house price growth, despite having slowed down over the past year, helped pre-tax profits 14.3% higher to £641.1million, with revenues rising 15.6% to £2.96billion in the year.
Sliding sales at Legoland have sent shares in its parent Merlin Entertainments (MERL) tumbling. The theme park operator revealed revenues were down 0.3% in its Legoland Parks unit so far this year, blaming a temporary closure in Shanghai and the lack of a Lego movie to boost customer visits. Chief executive Nick Varney said he had been expecting to see lower revenue, after ‘several years of very strong growth’. He did not cut the company’s guidance, but shares still dipped 8%, or 29.7p, to 340p.
The gambling industry may be dominated by big-name players, but technology company Nektan is quietly creeping up the ranks. Nektan (DI) (NKTN) has signed a contract to work with Bet Victor, a major European gaming firm, which will use its casino platform. Jane Ryan, who heads Nektan’s business-to-business unit, said the partnership would help drive ‘significant revenue generation’. This is the first deal of its kind for Nektan.
Investors’ high hopes for cigarette alternatives at British American Tobacco (BATS) went up in smoke as the company revised revenue guidance for its vaping and other non-traditional products from £1billion to £900million. The popularity of tobacco heating products – which get warm but don’t burn – had remained flat in Japan, while Vuse Vibe vapes had to be recalled in the US due to faulty power units. Shares dropped 154.5p to 3176.5p, their lowest level since early 2014. Just last week US regulators warned they would be increasing their scrutiny of vapes due to fears over teenage addiction, and implied that they may be considering cutting the tobacco content of normal cigarettes. This could prove to be a problem for BAT, which is trying to pay down its debt pile. Though the company said its debt reduction plans ‘remain on track’, analysts at Royal Bank of Canada noted this was only the case assuming currency exchange rates have remained at January 2017 levels. At current levels, the analysts added, these targets would be missed by a ‘meaningful’ margin.
Meggitt (MGGT) soared 34.9p, to 529.4p. In an update to the market, it said trading had been ‘stronger than previously anticipated’ in the third quarter of the year, especially in the civil aerospace and defence segments. Meggitt had previously guided that revenue would rise between 4 per cent and 6 per cent, but it raised this to a range of 7% to 8%. Demand for business jets and new larger jets had been growing, it said, and President Trump’s pledge to maintain defence spending in the US was feeding its business.
The Government gave a helping hand to retirement housebuilder McCarthy & Stone (MCS) as it proposed that the retirement sector should be allowed to continue charging ground rents, as companies in the sector often use the income to cover construction costs.
