Profits warning and dividend cut send Saga shares down by a third. Saga (SAGA) has reported a full-year loss for 2018, halved its full-year dividend and warned that profits in the current financial year will be substantially lower than expected as it acted to stem the decline in its insurance business. The insurer and tour operator for the over-50s said that the £134.6 million loss had been caused by a £310 million writedown in the value of its insurance division. Lance Batchelor, group chief executive, said he was making a fundamental change of strategy to overcome the increasing challenges in its markets, particularly in insurance. “This has had an impact on both customer numbers and profitability,” he said.
The biggest selling period of the year, the registration plate change month of March, has fallen flat for the motor trade. New car sales have fallen to their lowest level in five years and the collapse in demand for diesel vehicles has continued. Latest industry figures show that 458,000 new cars were registered in March, down 3.4% on the same month last year and the worst since 2014. For the first quarter of 2019, 701,000 cars were sold, a year-on-year fall of 2.4%. March, with its new number plates — this year’s is 19 — is the single most important month of the year for motor dealers, and typically accounts for 20% of all sales.
Electrocomponents (ECM), the country’s largest industrial distribution company, reported a jump in like-for-like revenue in the fourth quarter and said that full-year adjusted earnings would be in line.
Insider takes the hot seat at shopping centre giant Intu. The finance boss at Intu Properties (INTU) is in line to be promoted to the top job running Britain’s largest shopping centre developer. Matthew Roberts, 54, is expected to be confirmed as chief executive, replacing the long-term incumbent David Fischel, 61, in the next few days. It is understood that Mr Roberts was the frontrunner but had to face competition from external candidates, including Tony Buffin, former chief operating officer of Travis Perkins, the builders’ merchant, and Lawrence Hutchings, chief executive of Capital & Regional.
Campaigner for women takes chair at Babcock. A former oil industry executive has been lined up to become the first chairwoman of Babcock International Group (BAB). Ruth Cairnie will take over from Mike Turner, who was paid £330,000 a year in the part-time role, when he leaves the engineering and services contractor in July. Babcock will hope that the appointment will end a long-festering corporate governance issue. Mr Turner, 70, had been a non-executive director at the company for twenty years and had been its chairman for ten years, breaching City guidelines.
Strict rules tighten squeeze on spread-better CMC Markets (CMCX). One of Britain’s biggest spread betting companies has warned for a third time in little more than six months that revenues from financial wagers will fall short of expectations. Underlining the challenges that it and its competitors face from stricter rules and tough trading, CMC Markets said that it expected annual revenues from spread bets and contracts for difference of about £110 million, a 37% drop from a year earlier. IG Group and Plus500, its rival London-listed financial betting firms, also have issued warnings recently as the industry reels from the impact of stricter regulations on CFDs imposed last August by the European Securities and Markets Authority and from a lack of interest in trading from clients.
SSE fined for failure over smart meters. One of Britain’s biggest energy companies will pay a £700,000 penalty after missing a target for installing smart meters in customers’ homes. SSE (SSE) agreed the payment with Ofgem, the industry regulator, after taking about two months longer to hit an undisclosed figure last year. The FTSE 100 company is the second energy company to be fined for failing to hit its target after EDF paid £350,000 last year for being three weeks late.
AA’s profits driven down by move to repair roadside assistance teams. A drive by AA (AA.) to put more staff out on patrol and in its call centres to respond to stranded motorists has resulted in plunging profits at the roadside assistance and insurance group. Shares in AA have been heading downhill since they were floated at 250p five years ago by CVC and Permira, the private equity groups, which left the business full of debt. Its annual results yesterday showed that borrowings remain at £2.7 billion, eight times annual trading profits, a ratio that is at three least times more than would be classed as normal.
Stagecoach on a roll as rail delays rumble on. The signal failure in government over the future of the railways has turned into good news for Stagecoach Group (SGC). Though the company has been one of the big losers in the rail industry in recent years, it emerged yesterday that a decision-making hiatus at the Department for Transport is set to boost its bottom line. Stagecoach’s once-extensive portfolio of rail franchises has been slimmed down to the west coast main line between London Euston and Glasgow, which it runs in a separate joint venture with Virgin Trains; and East Midlands Trains, which runs from London St Pancras.
We’ll make profits at GKN soar, says Melrose. Melrose Industries (MRO) has upped the ante in its reforms of GKN, the aerospace and automotive parts group that it acquired after an £8 billion hostile takeover battle last year, promising to increase profit margins to more than 11% from the 10%-plus that it had pledged already. In presentations in the City yesterday, it said that GKN’s aerospace business would raise its profit margin from a historic 8.2% to more than 12% by sorting out procurement and costs servicing five big global aerospace projects. These involve short-haul aircraft on the Boeing 737 and Airbus A320 programmes, the Boeing 787 and Airbus A350 long-haul commercial planes and F-35 fighters, including for the Royal Navy’s aircraft carriers.
Dechra falls after finance chief’s sudden departure. The finance boss of a listed veterinary pharmaceuticals company resigned abruptly yesterday. Dechra Pharmaceuticals (DPH) said that Richard Cotton, 58, its chief financial officer since January 2017, had told the board that he was stepping down with immediate effect for personal reasons. A source said that Mr Cotton had backed the business model and had a good relationship with directors, but had decided to leave because of family commitments.
Superdry coup sparks share sell-off. A sell-off in Superdry (SDRY) shares continued after its directors resigned en masse amid a conflict with its co-founder. Julian Dunkerton, 54, secured 51.75% of shareholders’ votes to narrowly win a bitter seven-month campaign to be re-elected as a director of the fashion retailer. Peter Williams, 65, former chairman of Boohoo, was also appointed to the board by a similar margin in this week’s coup.
Burberry Group (BRBY) was resoundingly out of favour yesterday as analysts queued up to find fault. The retailer was among the biggest fallers on the FTSE 100 as JP Morgan Chase’s analysts slashed annual profit estimates on the ground that it would be badly hit by volatility in the value of the pound caused by Brexit. They expected annual results to be “soft” and to include a £15 million impact from fluctuations in foreign exchange markets. Core earnings for 2018 are forecast to be about £580 million. Bank of America Merill Lynch cut its rating from “neutral” to “underperform”. The bank, which maintained its £18 target price on Burberry shares, said that the retailer’s four-to-one price-to-earnings ratio in 2019 was unjustified, “given limited visibility over timing and trajectory of potential brand turnaround”.
Among the leading stocks, housebuilders and banks thrived on the Brexit news, which makes a closer economic relationship with the EU more likely. Taylor Wimpey (TW.) was up 7¾p, at 187p, while Persimmon (PSN) gained 79p, to close at £22.41. Barratt Developments (BDEV) rose 14¾p, to 621¾p.
Cineworld rated a hot ticket. It is more than a year since Cineworld’s $5.8 billion swoop on Regal Entertainment, of the United States, yet despite positive signs and growing synergies the cinema operator cannot quite convince the sceptics. Concerns seem to centre on the threat posed by Netflix, which will spend $13 billion on content this year, with the launches of Disney+ and Apple TV+ set to raise the pressure further on traditional cinema.
Tempus – Experian (EXPN): Hold. Richly valued, high-quality business should deliver steady, long-term returns
Tempus – Costain Group (COST): Buy. Shares look cheap for a company in strong financial health
