Vodafone Group (VOD) has written off the entire value of its troubled Indian offshoot, sending the mobile phone provider to a €1.9 billion loss and raising questions about the ability of overseas investors to do business in the world’s second most populous nation. The group warned yesterday that a dramatic ruling in the Indian supreme court last month could scupper its Indian operation. The decision leaves Vodafone Idea liable for an estimated $4 billion in backdated fees, fines and interest. Nick Read, chief executive, said that the Indian operation is likely to go under unless the government offers operators some relief from the fines. Vodafone has a 45% stake in the separately listed Indian company.
Royal Mail (RMG) has lost its appeal against Ofcom’s finding that it was guilty of market abuse designed to quash Whistl, a letter-handling rival. Sixteen months after the original verdict, when Royal Mail was fined a record £50 million by the regulator for anti-competitive behaviour, the Competition Appeal Tribunal found against the letters and parcels group. After the tribunal handed down its decision, an Ofcom spokesman said: “We found that Royal Mail pursued a deliberate strategy of pricing discrimination against Whistl, which was its only major competitor for delivering business mail. “Royal Mail had a special responsibility to ensure its behaviour was not anti-competitive. We hope that our fine, which has been upheld in full by the tribunal, will ensure that Royal Mail and other powerful companies take their legal duties very seriously.” Royal Mail has indicated that it may yet take the case to the Court of Appeal. It has claimed previously that Ofcom’s case was “fundamentally flawed”.
ITV (ITV) has warned that its advertising revenues will fall by 2% this year, despite enjoying a ratings boost from England’s progress to the final of the Rugby World Cup. The broadcaster’s coverage of the rugby tournament in Japan boosted advertising income by 1% between July and September, with a peak audience of 12.8 million people tuning in to see England beaten by South Africa. However, Britain’s stagnant economy has prompted companies to rein in their marketing budgets and advertising sales fell by 3% to £1.25 billion over the first nine months of the year. Britain’s largest free-to-air broadcaster said that its advertising sales would be down by 2% for the full year.
A shake-up is on the cards at Domino’s Pizza Group (DOM) after an activist investor who recently acquired a 6.5 per cent stake secured a seat on the troubled pizza takeaway chain’s board. Shares in Domino’s rose after news broke that Usman Nabi, founder and managing partner of Browning West, a Los Angeles-based hedge fund, would be joining as a non-executive director. Mr Nabi, 44, who is also a director of Six Flags Entertainment, the American theme parks operator, will become a member of Domino’s Pizza nomination committee, giving him a say in the recruitment of a chairman and a chief executive over the coming months.
Land Securities Group (LAND) reported a half-year loss yesterday as the “voracious storm” in the retail sector hits property valuations. The company suffered a six-month, pre-tax loss of £147 million, down sharply from a £42 million profit for the same period last year. This was driven by a writedown in the value of its retail property portfolio. The value of Land Securities’ regional shops and shopping centres fell by 9.4% to £1.9 billion, while its retail park valuations fell by 11.1% to £523 million. However, like-for-like rental income at its retail parks and shopping centres declined by a slower rate of 1.5% to £136 million in the period. Empty shops in its mainstream retail portfolio fell to 3.6%, from 4% in March.
Loss-making German business has taken a heavy toll on B&M European Value Retail S.A. (DI) (BME), forcing the discount retailer into a heavy writedown of the division, prompting a strategic review and dragging overall group profits 70% lower. Simon Arora, B&M’s chief executive, blamed “over-optimism” within the company’s German management team, which had led to too much stock being ordered while trading at the Jawoll chain remained weak. About half of Jawoll’s £12 million losses were caused by a jump in warehouse and transport costs. B&M, which bought the German business for £80 million in 2014, said that as a result of the poor trading it would take a £59.5 million writedown on the struggling division, dragging group pre-tax profits down by 70.5% to £32.2 million for the six months to September 29.
Exceedingly good cakes have lifted sales at Premier Foods (PFD) as a relaunch of its Mr Kipling brand ushered the business back into the black. The maker of Bisto gravy and Ambrosia rice pudding yesterday announced £15 million of pre-tax profits for the six months to September 28, compared with a £2.2 million loss last year. The results were boosted by 8% growth of its Mr Kipling range and a doubling of Nissin noodle sales. Premier Foods recently made a big television advertising push to drum up demand for its new upmarket range of Mr Kipling cakes, including After Dinner Mint Fancies and apple, pear and custard crumble tarts, along with three new varieties of Cadbury Dairy Milk cake slices. It will start selling its new vegan range of Plantastic flapjacks in Tesco stores this month as the brand adapts to changing consumer tastes.
Britain’s four biggest supermarkets suffered a slide in sales last month as discounters lured their shoppers. Grocery sales grew by only 1.1% over the past month, according to Nielsen, the data provider, with sales for Tesco (TSCO), Sainsbury (J) (SBRY), Asda and Morrison (Wm) Supermarkets (MRW) all falling. Aldi and Lidl, the German-owned discount retailers, accounted for almost three quarters of the £500 million of extra sales, with increases of 9.5% and 13.8%, respectively. In contrast, Morrisons’ sales fell by 1.5%, while Asda’s dropped by 0.6% and Sainsbury’s and Tesco both reported declines of 0.2%. Marks & Spencer Group (MKS) increased its food sales by 2.1% over the four weeks, ahead of Waitrose, its rival, which suffered a 0.3% fall. Clive Black, a retail analyst at Shore Capital, said that the grocery data showed consumers were in a “recessionary mood”, despite virtually full employment and rising wages.
DCC (DCC) has snapped up a maker of health supplements in a takeover that pushes it further into the American nutritional market. DCC said yesterday that its healthcare division had bought the Florida-based Ion Laboratories for $60 million, including debt. Ion, which has revenues of $80 million, makes dietary and pet supplements and skincare products. Last year DCC bought Elite One Source, another nutrition business, which marked its entry into the US health and beauty market.
The liquidation of British Steel has dealt a £10.4 million blow to Electrocomponents (ECM) and dragged down its first-half earnings. The engineering group’s shares retreated after it reported the multimillion-pound writedown. That, in turn, weighed on profits of £89 million in the six months to September 30, down from £93 million in the same period in 2018. British Steel, which employs 5,000 staff at sites including Scunthorpe, was placed into compulsory liquidation in May. Jingye, a state-backed Chinese company, agreed this week to buy it from the government for £50 million and a promise of £1.2 billion of investment over the next decade. Outstanding payments from Electrocomponents’ dealings with the steelworks operator amount to £7.2 million, while it also attributed £3.2 million “against inventory recovered from British Steel”.
Investors cheered Experian (EXPN) after the world’s biggest credit data company reported an encouraging performance in the United States. Shares in the company climbed after it unveiled a 2% rise in first-half pre-tax profit to $480 million on revenues that increased 6% to almost $2.5 billion. City analysts were impressed by the credit-scoring group’s consumer division in America, which Brian Cassin, chief executive, has overhauled and where organic revenue growth accelerated to 16% in the second quarter, from 9% in the first.
Aggreko (AGK) has reported a 2% drop in revenues for the first nine months of the year. Aggreko said that it had suffered a drop in revenues in its rental business and its power solutions utility division, which focuses on powering longer-term projects for utility customers in emerging markets. Aggreko said that its underlying revenues were flat year-on-year after stripping out fuel costs, currency movements and the effect its contracts for various Olympic Games. Its power solutions industrial unit, which makes up about 53% of revenue, was down 1% in the first nine months of 2019. Robert Plant, an analyst at Panmure Gordon & Co, kept a “sell” rating on the stock
The chairman of Softcat (SCT) sold off another big chunk of his stake in the IT group. He banked £12.3 million after selling 1.17 million shares in the company. Since stepping down as chief executive of Softcat in April last year, Mr Hellawell, his wife, Mandy, and charitable foundations linked to the family have cashed in shares worth just over £57 million. Last July, the couple disposed of shares worth more than £23 million, while more recently they disposed of stock worth £21.3 million. The money should help him to find a better work-life balance, which was one of the reasons he stepped back from the day-to-day running of the business.
Oxford Instruments (OXIG) rose after it reported a 55% jump in profits. The company was spun out of Oxford University 60 years ago and its scientific tools are used in laboratories around the world. China has been a key market for the group and sales there jumped 14% in the opening six months of its financial year, while total revenue climbed by 13.1% to £166.3 million. Pre-tax profit leapt to £18 million from £11.6 million a year ago as the company’s Horizon strategy, which was brought in a couple of years ago to improve margins, did just that.
OnTheMarket plc (OTMP) shares climbed after the online property portal struck a deal with Persimmon (PSN). The housebuilder, which sold more than 16,000 new homes last year, will list all of its residential developments on On The Market’s website. A similar deal was reached with Barratt Developments in September.
Tempus – Vodafone Group (VOD): Buy. The company is on a steady footing ahead of its masts spin-off
