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%. Chief executive Greg Fitzgerald said: ‘The group has made substantial progress operationally over the past 18 months, delivering record profits and a step change in our operating margin. ‘We have transformed the quality of our product and customer service and are delighted this is reflected in our 4 star housebuilder status for 2018.’
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 per cent 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.’ The firm said it expects 2019 profits to be broadly flat.
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.’The group added: ‘We continue to have excellent coverage in London which, in the long-term, is a highly attractive property market.’
Shares in Aston Martin Holdings (AML) veered off-road in early trading today as the luxury car maker’s debut results as a listed company left a bad taste in investors’ mouths. ‘Investors pressed the ejector seat,’ said SpreadEx analyst Connor Campbell, commenting on a 15% plunge in the firm’s shares to £11.68. The sell-off came as the firm as came clean on hefty full-year losses and lifted the lid on contingency plans for Brexit. The firm has set aside £30million to deal with any Brexit disruption, with its boss Andy Palmer warning that a Brexit delay would only cause ‘further annoyance’. It said it was taking action to ‘mitigate the impact on the business from potential supply chain disruption should the UK withdraw from the European Union without an agreement or in an unstructured manner’. The James Bond favourite put a £68million annual loss – compared with profits of £85million in 2017 – down to one-off costs relating to its IPO last October. It added that earnings in the first half of this year were set to be lower.
Staying solo was the perfect remedy for AstraZeneca (AZN) as it becomes the largest drug maker in the UK. Neil Woodford has finally got something right, even if it has taken almost five years. He has come under fire of late for a string of horrible investment calls, backing big-name failures such as Provident Financial, Capita and Allied Minds. Back in the spring of 2014, some in the City thought he was making another mistake when he urged Astrazeneca to reject a thumping £70billion offer from US drugs giant Pfizer. The £55-a-share bid was 45% higher than the stock’s market value at the time, and many investors were keen to take the money given that Astra’s drug pipeline had run dry and its best-selling anti-cholesterol pill was about to lose patent protection. But chief executive Pascal Soriot, with Woodford at his back, stood firm, opting instead to slim the business down and rebuild the pipeline. Fast forward to today and the stubbornness has been vindicated. With a market capitalisation of £79billion, not only is Astra worth more than Pfizer’s best offer, it is also now the largest drug maker in the UK, having overtaken rival Glaxosmithkline.
Royal Dutch Shell ‘B’ (RDSB) slipped lower after Canadian investment bank RBC Capital stripped the oil supermajor of its ‘outperform’ rating and cut its price target. Analysts cast doubts over the sustainability of Shell’s dividend – possibly the most attractive reason for investing in the Anglo-Dutch titan. If Shell wants to avoid cutting its annual payout for the first time since the Second World War, the abacus-rattlers across the Pond reckon it will need to buy back an extra £22.5billion of shares, on top of the £18.8billion worth it has committed to buy back over the next two years. While that will make the dividend more sustainable, they argue it will limit bosses’ power to invest in its portfolio.
Wealth manager St James’s Place (STJ) was bottom of the table, down 3.6%, or 35.6p, to 941.2p, after a steady rise in annual profits was overshadowed by a continued slowdown in new business growth. Pre-tax profits jumped by 14% in 2018 to £211.9million, but that was well short of the 32% growth it notched up a year earlier. Net inflows – the amount of money being invested into its funds – rose 8% over the year to £10.3billion, following a 40% increase in 2017.
De La Rue (DLAR), which last year missed out on a lucrative deal to print the UK’s new blue passports, headed north. Shares rose 9p, to 428p after the world’s largest banknote printer inked a £3.5million deal that will see its track-and-trace system used on all 1.7billion packets of cigarettes and tobacco sold in the UK. The five-year contract was awarded by the Government in a bid to crack down on potentially deadly counterfeit products.
Totalisator-style betting firm Webis Holdings (WEB) proved to be a bad punt after its interims came up short, sending its shares down 9.4%, or 0.25p, to 2.4p. The AIM-listed company’s first half of its fiscal year was a challenging one, primarily due to the loss of a large syndicate placing bets. As a result, fewer punts were placed through its platform. This led to an overall pre-tax loss for the half-year period of £444,200, up from a loss of £14,280 a year earlier.
M&S shares tumble as Ocado deal spooks City: High Street chain taps investors for £600m and cuts dividend to fund £750m delivery tie-up. Marks & Spencer Group (MKS) shares plunged after shareholders were spooked by its ‘extravagant’ delivery tie-up with Ocado Group (OCDO). In its biggest-ever deal, M&S has agreed to pay £750million for half of Ocado’s retail division, valuing the entire business at £1.5billion. The partnership will allow M&S to deliver groceries to customers for the first time in its 135-year history. But the terms of the venture sent shockwaves through the City. In a sign that investors believe Ocado got the better of the deal, its shares rose 2.9% while M&S fell 12.5%, wiping more than £600million off its value. M&S is now preparing to tap shareholders for £600million – its first rights issue – to fund the deal, which still needs to be signed off by Ocado shareholders. It will also slash its full-year dividend by 40% to 7.1p per share, the first time it has been cut in a decade. By contrast, Ocado is being handed £750million to plough into the flourishing technology business behind its robot-powered warehouses.
Metro Bank crashes to an all-time low as regulators launch probe into accounting blunder. The stock tumbled 345p, to 955p, taking its losses since the error was reported just five weeks ago to 57 per cent. The latest sell-off came after Metro Bank (MTRO) revealed the Bank of England and the Financial Conduct Authority (FCA) are looking into the way it assessed the riskiness of some property loans. The bank is now seeking to raise another £350million from shareholders and £500million from the debt markets to bolster its finances. And in a further blow, a £120million grant awarded to Metro so it can boost its business banking operation is at risk because of the debacle.
Ad revenues on the slide at ITV (ITV) as boss Carolyn McCall warns of Brexit-fuelled uncertainty. Despite the World Cup and Love Island pulling in record audiences in 2018, TV ad sales still fell. And the broadcaster’s boss McCall warned turbulence was set to continue as shares fell 3.1%, or 4.05p, to 127.25p. The tough conditions have seen the chief executive turn to other sources of cash, such as online advertising and its studio production arm. Yesterday, she unveiled a joint streaming service with the BBC, offering a British alternative to Netflix and Amazon Prime Video. Advert-free Britbox will be launched in the second half of the year, McCall said, and will be ‘competitively’ priced.
Mining giant Rio Tinto (RIO) announced a record cash return to shareholders, including a £3billion special dividend, after posting a 56% jump in its annual profits. The Anglo-Australian firm reported net profit of £10.2billion for 2018, up from £6.6billion the year earlier, thanks to £6billion worth of disposals. Last year, it sold its stake in a copper mine in Indonesia and an aluminium smelter in France. The money helped the company declare a record cash return of £10.1billion to shareholders, including a £2.3billion final dividend, the special dividend and a £2.4billion share buyback programme. The special dividend equated to £1.82 a share.
Housebuilder Taylor Wimpey (TW.) shrugs off uncertainty surrounding Brexit as it notches up a healthy profit boost. Taylor Wimpey said it continued to see strong home-buyer demand in spite of increasing signs that Brexit worries are weighing on Britain’s property market. Pete Refdern, Taylor Wimpey’s chief executive, said: ‘2018 was another strong year for Taylor Wimpey with good progress against our strategic priorities. ‘We delivered in line with our expectations, achieving a strong sales rate and record revenues. ‘Despite ongoing macroeconomic and political uncertainty, we have made a very positive start to 2019 and are encouraged to see continued strong demand for our homes. We enter the year with a strong order book and a clear strategy in place to deliver long term value for shareholders. ‘We are very pleased with how our business is adapting to our customer-centred strategy. We are enhancing every step of our customers’ buying and aftercare service so that we become the first choice homebuilder in all market conditions.’
