Tesco (TSCO) has reported a double-digit rise in profits and says that it has met the “vast majority” of its turnaround goals despite a highly competitive market. Britain’s biggest supermarket said that its pre-tax profit had jumped by 28.8% to £1.67 billion, which was well ahead of the market’s expectations. The grocer’s revenue was up 11.2% at nearly £64 billion in its third consecutive year of growth and its operating profit rose by 17.1% to £2.1 billion last year. Dave Lewis, 54, the chief executive who was parachuted in nearly five years ago to help revive a business that was on its knees, was in a bullish mood this morning as he said that Tesco’s turnaround was complete and that the grocer had restored its competitiveness.
Stagecoach thrown off railways in row over pensions. Stagecoach Group (SGC) has effectively been thrown off the railways after the Department for Transport disqualified it from all the train franchises for which it is currently bidding. The news sent Stagecoach shares down 8% at the start of trading and prompted an angry response from the company. In an unprecedented intervention by Chris Grayling, the transport secretary, Stagecoach has lost the East Midlands Trains franchise it currently operates into and out of London St Pancras; has been barred from the competition to operate the South Eastern commuter franchise into London Bridge and Cannon Street; and, most eye-catchingly, has been thrown out of the competition to operate the trains on HS2, the new line from London to Birmingham. The latter effectively means that it will also have to give up its joint operation with Virgin Trains of the west coast rail line into and out of London Euston, the UK’s most lucrative rail service.
US opioid case ‘could bankrupt Indivior’. A federal grand jury in Virginia formally charged Indivior (INDV) last night over an alleged scheme to increase prescriptions of Suboxone Film, its opioid addiction treatment. According to the US Justice Department the London-listed company is accused of deceiving healthcare providers about the drug’s safety. Indivior is a major operator and the United States accounts for most of its business. However, its finances have already been squeezed by competition and City analysts said that the prospect of a severe legal penalty, if it is found guilty, could push it towards bankruptcy unless it managed to raise funds.
Asos profits plunge after difficult Christmas. First-half profits have plunged by 87% at ASOS (ASC) after the online group was hit by higher-than-expected discounting in the UK and weakness in its French, German and American markets. The fast-fashion online clothing group said that it had made a pre-tax profit of only £4 million even though its revenue rose by 14% to just over £1.3 billion in the six months to February. While its sales growth in the UK was solid at 16%, in the European Union it was slightly lower than expected at 10 per cent after choppy demand and sales in Germany and France.
Associated British Foods (ABF), the owner of Dorset Cereals, Ryvita crispbreads and Silver Spoon sugar, overcame a sluggish market this morning as the food manufacturing sector transforms itself. Barclays declared that “small is the new big and speed the new scale” in the food industry but it believes that generational leadership changes at the top of major companies will help them to recover lost ground. The bank’s analysts told clients that the company was a top pick. The analysts said that the traditional advantages of scale, big brands and mass marketing in the sector have been eroded but acknowledged that large European food businesses were becoming more flexible. Barclays believes that it will be harder for smaller brands to “blindside” the dominant players again and predicts that larger companies would prevail on “the next big battlegrounds”: food personalisation and consumers’ data.
Ashley fury at Debenhams defeat. Tycoon accuses board after he loses £150m stake in collapsed retailer. Mike Ashley has accused the board of Debenhams (DEB) of stealing from shareholders, lying to him and obstructing his rescue efforts after the department stores chain’s pre-pack administration. The founder of , which has been locked in a battle with Debenhams for months, said that he would go to “the ends of the earth” to save stores and would not stop in his “quest to get to the bottom of this appalling managed process and to find and hold to account those responsible for this final turn of events”. The billionaire retailer, 54, is estimated to have lost £150 million of his shareholders’ money investing in Debenhams. He accused politicians and regulators of “fiddling while Rome burnt” and said that they were all as “effective as a chocolate teapot” as he called for the administration to be reversed.
Trump threatens $11bn tariff war on EU aircraft, wine and cheese. President Trump has accused Brussels of economically exploiting America “for many years” after US officials revealed an $11 billion list of European tariff targets, including motorcycles, cheese and wine. He predicted that the European Union would soon modify its approach after the latest escalation in a long- running dispute over state assistance for aviation manufacturers. The White House unveiled plans to retaliate against the bloc’s subsidies for Airbus, which it claims are causing damage worth $11 billion to the US economy each year.
Hornby’s new model yet to make headway. Efforts to remodel Hornby (HRN) have yet to transform the fortunes of the London-listed maker of train sets, Airfix kits and Scalextric racing cars. The company said yesterday that it was set is to suffer another year of losses and declining revenues. In a trading update, Hornby said that annual sales would fall below last year’s £35.7 million because of long-running supply issues that had led to stock being delivered late to its factories. These problems have pushed the company into the red once again, although it said that losses for the year to March 31 would be “significantly lower” than the £10.1 million pre-tax loss it suffered last year thanks to a “tailing off” of the supply issues
Indivior is charged in US over opioid treatment drug. A federal grand jury in Virginia indicted London-listed Indivior (INDV) last night for engaging in an alleged scheme to increase prescriptions of Suboxone Film, its opioid treatment, by deceiving healthcare providers about the drug’s safety, the US Justice Department said. Indivior is a dominant operator in the market, particularly in America, which accounts for most of its revenues.
Companies ran cartel in safety equipment supply. Three construction companies have been provisionally found guilty of price-fixing and of running a cartel in the supply of site safety equipment. VP (VP.), a quoted company formerly known as Vibroplant, and MGF and Mabey Hire, two private companies, have been told by the Competition and Markets Authority that it believes they colluded in the provision of groundworks equipment at big construction and infrastructure projects, reducing competition and keeping prices high. Mabey, which brought the case to the CMA’s attention, will escape punishment for its involvement in the cartel over a five-month spell, because it blew the whistle on Vp and MGF.
Barclays set to cut jobs in Midlands. Barclays (BARC) may cut 460 roles, mainly in the Midlands, as part of a restructuring. The bank has informed staff in its centres in Westwood Park, in Coventry, and Snowhill, in Birmingham, that their jobs are at risk. There may be job losses in several other locations, including at its head office at Canary Wharf in London and at Fleet, Hampshire. The cuts are likely to affect people working in operations and technology. Barclays hopes to relocate 400 of the affected roles to Glasgow, Greater Manchester and Northampton. It said that it would “remain a significant employer in Coventry and Birmingham”.
City Pub Group uses bonus to raise pay bar. An Aim-listed pub company plans to up the ante on bar workers’ bonuses in response to industry-wide recruitment problems. The City Pub Group (CPC), which runs 44 pubs in southern England and Wales, previously paid a bonus of 3% of profits, which last year typically paid out £750 per member of staff. Clive Watson, its chairman, said that now staff would get weekly bonuses based on sales at the pubs they work in, which could net workers on a 40-hour week £2,000 a year.
Hargreaves snaps up wealth business. Two UK fund supermarkets have bought £1.5 billion of assets and 53,000 clients from JP Morgan Asset Management as the US firm stops selling its products to retail investors. Hargreaves Lansdown (HL.), Britain’s biggest funds platform, will add 33,000 customers to its books with £765 million in assets, while the Share Centre has acquired 20,000 customers with assets of £750 million. The divestment follows four years of JP Morgan Asset Management winding down its customer investment platform, which sold products including a stocks and shares Isa and a self-invested personal pension (Sipp), allowing investors to buy shares in FTSE-listed companies.
Cake may have become a dirty word among investors after the Patisserie Valerie fiasco, but Cake Box Holdings (CBOX) is doing its best to redress the balance. The maker of egg-free fresh cream cakes reported strong trading yesterday in the year to the end of March, with like-for-like sales growth of 6.5% in its franchise stores. It opened a record 28 shops and ended the financial year with 114 franchise stores. It said that it expected to report revenues up 30% to £17.1 million, with profits in line with market expectations.
Fears of a Labour government renationalisisng the water companies have stalked the sector for months, but they gained impetus yesterday after analysts at JP Morgan Chase argued that the risk was rising as a general election was now the most likely route out of the political impasse over Brexit. “While an election is not scheduled until May 2022, we believe there is a material risk that one is called in the near term,” the US bank’s analysts said in a research note. “While we view nationalisation of UK regulated utilities as a long-tail risk, the likelihood continues to edge higher.” In addition, they noted that regulatory uncertainty was “by no means behind us”, despite Ofwat, the watchdog, making a favourable initial assessment of business plans at Severn Trent (SVT), Pennon Group (PNN) and United Utilities Group (UU.) in January. The analysts added: “The current term structure of interest rates points to downward pressure on returns, with potential implications for dividend sustainability.” JP Morgan downgraded Severn Trent and Pennon to “neutral”, from “overweight”. They remained “overweight” on United Utilities, but cut their target price on all three companies to reflect the inclusion of a “nationalisation scenario” in their valuation.
Sirius Minerals (SXX) shares jumped by as much as 20% in mid-morning trading, despite the only news being the disclosure that the California-based Capital Group had sold an interest in its shares of about a 2% last week. Sirius, which has a strong retail investor base, said its position had not changed since its announcement last month that it was pursuing an alternative financing model after receiving a conditional proposal from a leading global financial institution. The company is seeking to gain firm commitments by the end of this month.
Restaurant Group (RTN) which The Times reported yesterday had appointed Savills to sell 22 outlets, primarily Frankie & Benny’s and Chiquito sites, was buoyed by an upgrade to “neutral” by analysts at Citigroup. They “see limited downside now that the fallout from the Wagamama acquisition and chief executive’s departure are in the rear-view mirror”.
After the markets had closed, Cairn Homes (CRN) said that its co-founders intended to sell 17 million shares, or about 2.2% of the stock, via a placing.
A Cambridge-based drugs company has struck a deal worth up to £51 million for the development, licensing and commercialisation of cannabinoid drugs for therapeutic uses. Shares in Nuformix (NFX) surged by 25% to 3½p yesterday after it announced the agreement with Ebers Tech, a private Canadian company. The deal with Ebers Tech is focused on cannabinoids, found in cannabis, and on uses such as treating pain or side-effects of chemotherapy. The agreement entails up to £51 million of research and development and milestone payments, plus royalties of 20% of net sales. Nuformix will be responsible for early research and development. Ebers will handle “late-stage development, clinical programmes and commercialisation”.
Tempus – GlaxoSmithKline (GSK): Hold. Renewed focus and investment in core pharmaceuticals division under new, well-regarded management
Tempus – Smart Metering Systems (SMS): Hold. Reliable-looking dividend and shares may be boosted as more meters are installed
