Sun shines on high street as retail sales rise. A bout of warm weather encouraged shoppers to hit the high street last month, causing an unexpected spike in spending. Retail sales rose by 1.1% in March as households defied the Brexit uncertainty that is hanging over the economy and spent more, according to the Office for National Statistics. Economists had expected a contraction of 0.3%. In the year to March, sales grew by 6.7%, the fastest pace since October 2016. The ONS said that this could partly be explained by the milder weather this year compared with the Beast from the East last year.
Price rises and emerging markets lift Unilever (ULVR) sales. One of the world’s biggest consumer goods groups has made a better-than-expected start to its financial year under its new chief executive, relieving the City after a tumultuous period. Unilever, the FTSE 100 company behind brands such as Persil washing products, Ben & Jerry’s ice cream and Dove soap, posted underlying sales growth of 3.1% in its first quarter, ahead of the 2.8% forecast by analysts in the City. It meant that Unilever reiterated its full-year forecast of underlying growth in the lower half of between 3 and 5%. Unilever also confirmed it remained on track to hit its 2020 target for an underlying operating margin of 20%, which was set in 2017 as it sought to recover from a shock $143 billion takeover approach from Kraft Heinz in the United States.
Moneysupermarket.com Group (MONY) jumped more than 8% in morning trading after the price comparison site posted a boost in quarterly revenue and confirmed a special dividend. The FTSE 250 company said that revenue rose 19% to £104.9 million for the first quarter. The higher revenue was driven by a 70% rise in revenue in the company’s home services channel, which helps consumers to switch energy suppliers. The company said that it expected performance in home services to “moderate” through the year, but added that its outlook for the full-year results remained unchanged. It said it would return £40 million to shareholders via a special dividend of 7½p per share, to be paid on May 21 to shareholders on the register on May 3.
SEGRO (SGRO) builds income thanks to boom in online shopping. The boom in online shopping has boosted demand for warehouse space and helped Britain’s largest listed property company to add £21 million of rental income in the first quarter. The extra rent has come from letting empty units, boosts from rent reviews and renewals and from new developments. The £21 million is less than the £27 million secured in the same period last year because of a fall in pre-lets on developments yet to be completed. However, Segro reduced its vacancy rate — the proportion of its property portfolio that is empty — from 5.2% to 4.4% over the three months.
Cyclone Veronica batters BHP’s iron production targets. The world’s largest mining group has warned that its iron ore production will be lower than expected after disruption caused by Cyclone Veronica. said that it expected to produce between 235 million and 239 million tonnes of iron ore this year, down from its previous prediction of between 241 million and 250 million tonnes. The company produces iron ore in Western Australia, transporting it via railway lines to the coast for export. BHP suspended its port and rail operations last month when the cyclone hit the region and it then suffered further disruption from flooding. The downgrade comes after a similar move by Rio Tinto, its rival that also mines iron ore in Western Australia.
Drax rebels won’t entertain pay policy. The owner of Britain’s biggest power plant has suffered a shareholder revolt over executive pay and its plans to spend more on entertaining politicians. Almost a fifth of investors opposed Drax Group (DRX), which owns the North Yorkshire coal and biomass plant of the same name, over its remuneration report, which included a £1.9 million pay package for Will Gardiner, its chief executive. Mr Gardiner benefited from £838,000 in shares that vested under a long-term bonus scheme, which had attracted the anger of investors when first awarded in 2016 and triggered a revolt at its 2017 annual meeting. Almost 42% of shareholders voted against a resolution allowing Drax to increase its “political” spending to £300,000 a year, from £200,000, which the company said was in order to avoid “inadvertent infringement” of spending rules.
Price cuts prove costly for Pendragon (PDG). One of Britain’s leading motor dealers has skidded into the red after cutting prices to try to encourage people to buy cars or get them serviced. Pendragon yesterday reported an underlying pre-tax loss of £2.8 million for the first quarter of 2019, well below the profits of about £7.2 million that the City had expected. The trading update comes four months after Pendragon said that Trevor Finn, 61, its chief executive of 30 years, would stand down. The company, which operates from about 200 outlets, trades as Stratstone for more upmarket brands and Evans Halshaw for volume vehicles. Last year its revenues were £4.6 billion, but it fell to a loss of £50 million at a pre-tax level because of borrowing costs and writedowns on the future value of the business.
Brexit backlog piles on pressure at Carclo (CAR). A troubled plastics parts manufacturer suffered another meltdown in its shares yesterday as it continued to struggle with a backlog of Brexit-driven orders. Carclo warned that although production volumes had begun to increase at Wipac, the main operating business in its LED technologies division, backlogs “remained largely unchanged”. It said that the lack of improvement was because of rising customer demand, partly as companies stockpile before Brexit. The company’s shares, which were changing hands for 179p in June 2017, slumped by 23.9% to 21¼p yesterday, making the stock the biggest faller in the FTSE all-share index.
Countryside boosted as buyers get Brexit blues. Homebuyers shrugging off Brexit uncertainty has enabled Countryside Properties (CSP) to report a big jump in half-year sales. The building company, which has increased its output after taking over Westleigh, a rival, sold 2,362 homes in the six months to the end of March, a 43% increase on the previous year. Excluding Westleigh, the housebuilder sold 8% more homes than last year. Ian Sutcliffe, chief executive, said that customers were feeling Brexit fatigue after the “Brexit hyperbole” in the run up to Christmas. “Underlying demand for housing is still there and people need to get on with their lives,” he said.
Sales in America hit bump in road for Bunzl. Bunzl (BNZL), the FTSE 100 company often taken as a bellwether for the health of the global economy, endured its worst day in a decade yesterday after it warned that macroeconomic trading conditions, particularly in the United States, had turned against it. The news in a first-quarter trading update took investors by surprise and the shares ended the day down more than 9%, or 237p, at a five-month low of £23.14. The stock had been at an all-time high of £25.51 at Tuesday’s close.
Cap puts lid on Utility Warehouse’s revenue growth. The warm winter and the government’s price cap on energy bills have dented profit growth at Utility Warehouse. The mid-sized, multi-utility group run by Andrew Lindsay, a former Olympic rower, cut its energy prices by about £75 per household per year when the cap came into force in January. Shares in Telecom Plus (TEP), Utility Warehouse’s listed parent company, fell by 3.2%, or 48p, to £14.42 yesterday after it said that the lower revenues would result in adjusted pre-tax profits of about £56 million for the year to the end of March, up from £54.3 million a year earlier but at the lower end of previous guidance.
A sharp fall in the value of shopping centres owned by New Frontier Properties sent shares in listed retail property landlords down across the board in London yesterday. New Frontier said that the value of its three shopping centres in Burton upon Trent, Middlesbrough and Blackpool had fallen by 34% to £181 million. The centres, which it bought for £284 million in 2015, have been hit by shop closures from retailers including New Look and the now-collapsed Poundworld. That fall in valuation has pushed up the landlord’s loan-to-value ratio to a startling 90%. New Frontier warned that company voluntary arrangements — a controversial involvency procedure that can lead to store closures and reduced rents — and tenant defaults were expected to continue. Listed landlords en masse fell into the red. NewRiver REIT (NRR) fell 11p to 235p; Intu Properties (INTU) shed 4p to 98p; Hammerson (HMSO) slipped 6½p to 329½p; British Land Company (BLND) edged down 11½p to 597½p; and Land Securities Group (LAND) finished down 17¾p at 915½p.
Miners were under pressure after Vale announced plans to resume operations at its Brucutu mine in Brazil within 72 hours, increasing the supply of iron ore worldwide. The sector has undergone a rally on the back of higher iron ore prices amid expectations of reduced supply, so the Vale statement sent shares lower. Rio Tinto (RIO) lost 125½p to £45.47, while Ferrexpo (FXPO) fell 16¼p to 285¼p.
GB Group (GBG), a data intelligence firm, jumped 81p to 630p after it reported better-than-expected forecasts in a pre-close trading statement. The company offers digital services that help to protect businesses from fraud and carries out employee screening. It said that revenue for the year was expected to be up 19.7% at £143.3 million. Chris Clark, its chief executive, said that acquistions made over the year had “bolstered” its “international reach and capabilities in the growing identity sector”. Peel Hunt, the broker, said: “The momentum is clear to see and has translated to an operating margin trending ahead of guidance.” However, it said that the company was “still in build mode” and there was “much to be done strategically”.
Learning Technologies Group (LTG), which develops software that helps companies to train staff, climbed 10p to 76p after it said that it had bought Breezy HR, a talent acquisition software business, for $12 million. The acquisition will be funded by the group’s existing cash and bank facilities.
Tempus – Burberry Group (BRBY): Hold. If the chief executive’s new strategy pays off, profits and the share price should increase strongly
Tempus – Equiniti Group (EQN): Buy. Shares are inexpensive and US opportunity is massive
