When David Potts arrived at Morrison (Wm) Supermarkets (MRW) as chief executive almost five years ago, he inherited a bloated company, inadequately equipped to fend off the threats posed by the German discounters Aldi and Lidl. He has, by and large, managed to turn around the fortunes of the smallest of the UK’s big four supermarkets, but by his own admission there’s still plenty to go for. Investors do not seem to agree, however. The grocer’s interim results on Thursday are also expected to be underwhelming. Bruno Monteyne, a retail analyst at Bernstein, describes Morrisons as a “pretty stable business; it’s not like it’s falling apart. It has been well-managed for several years. There is some further improvement that could come from wholesale and a few other things, but it isn’t the upside story of Tesco, which was in bigger trouble and it has more [profit] recovery potential and investors like that.” Industry chatter suggests it is has become a cheap acquisition target, especially after the recent £2.7bn swoop on pub owner and brewer Greene King. Similarly, the Bradford-based supermarket has an attractive store portfolio, the majority of them freeholds. There is also Morrisons’ existing relationship with Amazon, which helps it sell some of its products online. The tech giant has been frequently touted as a potential suitor.
Dechra Pharmaceuticals (DPH) is set to launch a pain relief medication for piglets, lambs and calves that promises to significantly improve welfare for these animals. It will launch Tri-Solfen in the UK and Europe and then the rest of the world in the next 18 months. It is a gel that contains both a short-acting and a long-acting anaesthetic, adrenaline to stop blood flow and an anti-infective to promote healing and create a protective barrier against infection. It is inexpensive and easy to use as it can be sprayed on to a wound by farmers without the help of a vet. “It’s a very simple idea but hugely effective,” said Ian Page, chief executive of Dechra. “There are injectable pain killers and some other topical anaesthetics, but nothing specifically developed for animals. The bizarre thing about this is that for many years I don’t think we realised how painful these procedures are to animals and now animal welfare is becoming more and more important.”
One of Britain’s biggest car dealers has sounded out restructuring experts as it grapples with plummeting sales. Pendragon (PDG) conducted a beauty parade of financial advisers earlier this year, only for the process to be paused in the wake of the shock departure of chief executive Mark Herbert in June.Car dealers such as Pendragon are at the centre of an existential crisis facing the automotive sector. They are exposed to huge risks from only a small downturn, running big balance sheets but generating only wafer-thin profit margins. Figures published last week underlined the car industry’s ongoing downward spiral. New car sales fell 1.6% in August despite a flood of dealer registrations prior to the Government’s low-emissions deadline. It is understood that Pendragon had narrowed the field of restructuring advisers down to a “couple of firms” including Alvarez & Marsal, the boutique consultancy headed up by former KPMG advisory head Richard Fleming.
Sainsbury (J) (SBRY) is preparing a major overhaul of its bank as it pursues a “back to basics” approach following its botched attempt to merge with Asda. The grocer is understood to be examining options for its loss-making financial services arm as it prepares to lay out a new strategy to City analysts and investors later this month. Sainsbury’s could seek to offload its mortgage book, as rival Tesco did last week. One senior source close to Sainsbury’s suggested such a move was more likely than a sale. Sainsbury’s Bank has been weighing on the supermarket chain’s profits and consuming cash for years. It made a loss of £34m last year compared to a profit of £25m the year before. Its total income edged up 1.8% to £332m from £326m.
Thomas Cook Group (TCG) £900m rescue is under threat after pension trustees made a string of demands on the troubled travel agent. The retirement fund wants a guarantee that annual contributions of more than £25m will not be cut in exchange for support of a takeover led by Fosun – the Chinese owner of Premier League football club Wolverhampton Wanderers – banks and bondholders. While “substantial agreement” over the rescue of the 220-year-old company was achieved at the end of August, talks have been ongoing with other stakeholders, whose support is needed for the takeover to go ahead. A package of demands was made by pension trustees at a meeting earlier last week, according to Sky News, which first reported the stand off.
Greene King (GNK) defended its decision to give former chief executive Rooney Anand an £850,000 payoff after it suffered a shareholder rebellion. Nearly a third of investors voted against the remuneration report at its annual meeting on Friday. The FTSE 250 brewer said it was “disappointed” by the result. Shareholder advisory firm ISS had recommended that investors lodge a protest vote over the payment to Mr Anand to prevent him joining a rival company after he left in May.
Questor: could Morgan Sindall Group (MGNS) follow Carillion into oblivion? Its cashflows suggest not. Buy. Questor share tip: the construction sector’s thin margins did for Carillion and Interserve but Morgan looks much better run
