Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
06:30, 23rd July 2019

Below are the key morning press headlines, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

BP (BP.) FOLLOW is to expand its Brazilian biofuels business by combining it with a larger rival in a move that it said would help the transition to lower-carbon energy. The FTSE 100 energy group is merging its operations producing ethanol from sugarcane in Brazil with those of Bunge, the US agricultural company. The combined business, known as BP Bunge Bioenergia, will be a 50-50 joint venture and rank as the second biggest biofuel company in Brazil.  It will grow sugarcane over 290,000 hectares — an area about the size of Staffordshire — as well as buying from other producers, before processing it at 11 biofuel sites capable of crushing 32 million tonnes of sugarcane per year. This produces ethanol and sugar, with the total output equivalent to about 2.2 billion litres of ethanol per year. Ethanol is widely used as a vehicle fuel in Brazil, which produces about 26 billion litres of it each year.

British Airways is launching legal action to block its pilots from staging a potentially disruptive walkout this summer. International Consolidated Airlines Group SA (CDI) (IAG) FOLLOW will go to the High Court on Tuesday to seek an injunction to stop the planned strikes, which are due to be led by the British Airline Pilots Association (Balpa). The airline said it was pursuing “every avenue to find a solution to protect our customers’ travel plans and avoid industrial action” and urged the pilots to return to the negotiating table. The two sides appeared headed for court after Balpa members voted overwhelmingly in favour of a walkout. More than nine in 10 voted in favour of what would be the first strike action by BA pilots in about four decades.

Britons appear less likely to quench their thirst with one of Fever-Tree’s tonics amid warnings that drinkers are suffering from “gin fatigue”. Sales growth is expected to fall by more than half in results to be announced on Tuesday. Fevertree Drinks (FEVR) FOLLOW has exploded onto the market in recent years, satisfying a growing demand for premium mixers. Since last autumn, however, almost £2bn has been wiped off the value of its shares as questions have been raised whether a stock market rally has been overplayed. Shore Capital is estimating a 14% rise in half-year sales – considerably lower than the 40% increase posted this time last year. Analyst Alex Smith said this was not a result of increased competition as events such as the royal wedding and the men’s football world cup flattered 2018 returns. “We see the slowdown as a reflection of distribution maturing and weather or other one-offs,” he said.

Shares in Ted Baker (TED)FOLLOW  surged yesterday as investors seized on speculation that the founder of the struggling high street fashion retailer is considering backing a bid to take it private. Ted Baker rose 113p to 951p after a report over the weekend that Ray Kelvin, 63, has indicated that he will use his 35% stake in Ted Baker to support a private equity buyout with existing management staying in place. Ted Baker made no official statement to the stock market despite the share price bounce, implying that no talks had taken place between the retailer and its founder and no bid approach had been made.

Shares in Abcam (ABC) FOLLOW, one of Britain’s leading biotech companies caught a cold yesterday as its finance director quit to spend more time with his family and investors fretted that more investment needed in the business might affect earnings. Yesterday it reported that after the end-of-June financial year and ahead of its results due in September, revenues have risen 11% to £259 million. However, what seemed to spook investors was Abcam’s announcement that it is to produce a five-year plan in September which will be an “opportunity to further grow the organisation organicially through a programme of internally funded investments” but that investors will not be able to review it in depth until presentations in November. Miles Dixon, an analyst at the broker Peel Hunt, said he believed that would prompt investors’ concerns over deteriorating profit margins and create uncertainty not helped by the finance director’s departure. Gavin Wood said he was leaving for a job closer to his family home in Oxford.

Convenience-hungry Brits can now have cooked Sainsbury (J) (SBRY)FOLLOW  pizzas delivered to the doorstep, as the UK’s second biggest supermarket pens a deal with fast food firm Deliveroo. A pilot has kicked off today at five Sainsbury’s supermarkets – Cambridge, Selly Oak in Birmingham, West Hove in East Sussex, Pimlico in central London, and Horsey in Norfolk. Customers in the above areas will be able to order pizzas through the Deliveroo app up until 10pm from Monday to Saturday. They will be picked up and delivered by Deliveroo. Shoppers will also be able to order Sainsbury’s snacks and drinks, with a wider range of products set to be added during the trial. It is the first time a UK supermarket has offered takeaways through Deliveroo, but Sainsbury’s rival Asda recently signed a deal with Just Eat to drop off groceries to shoppers within 30 minutes of ordering. It comes as Sainsbury’s and its competitors look to profit from the fast-growing food delivery market.

Zambia houses some of the world’s most productive copper mines. But it’s far from fully explored and Arc Minerals Limited NPV (DI) (ARCM) FOLLOW might have hit upon another major deposit in the country. Arc is focused on the Zamsort and Zaco licences in the north-west of the country and an area that is attracting increasing interest from the copper mining giants. But Arc is there already and excitement has started to build following the start of a maiden drill programme.  More results are due in the coming months but so encouraged has the company been that a drill rig has been pulled away from Cheyeza West to accelerate the exploration with a third rig to arrive shortly from neighbouring DRC. The aim is to establish a JORC or industry-standard resource for the deposit after which the company can look seriously at development plans. House broker SP Angel said the successful intersection of copper at Cheyeza boosts the possibility of a further discovery at West Lunga. Having found anomalous copper in soil samples over the entire 6km of strike it is possible that ARC might have discovered a higher-grade portion of the Lufilian Arc, said the broker.

Petra Diamonds Ltd.(DI) (PDL) FOLLOW spooked investors by admitting it is struggling with a weak market, adding fuel to concerns that an industry crisis is brewing. Full-year revenue fell 6% to £372m in the year to June 30, missing analysts’ expectations.  And South Africa-focused Petra trimmed its production guidance from 3.8m carats in the 2019 financial year to 3.7m in 2020. It follows Anglo American-owned De Beers’ announcement last week that it is cutting its 2019 output forecast in line with lower demand. Dwindling sales have been put down to everything from falling marriage rates to a backlash against blood diamonds and the decline of bricks-and-mortar retail, though Petra said the US-China trade spat had hit sales and prices. The crucial test will be what happens to demand in the run-up to Christmas, which accounts for as much as a quarter of annual industry sales.

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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