Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
06:34, 10th July 2019

A fire at Ocado’s Andover warehouse in February has cost the online groceries firm almost £100million. The blaze in Hampshire, which razed one of its high-tech delivery centres and cost it £98.5million, hit sales growth by around 2 per cent in the first half of the year. It pushed losses to £142.8million, from £13.6million the previous year, even though retail sales climbed from £736.6million to £811.5million. Tim Steiner, the company’s boss, said that decorative pieces of plastic have now been removed from the robots in Ocado’s warehouses to prevent any future fire spreading so rapidly. Though the company eventually expects to be fully compensated for the damage, Ocado Group (OCDO) FOLLOW thinks the fire will still cause £15million worth of disruption for the rest of the year. It has already tried to moderate the damage, by signing a deal with Morrisons to claim back space it had rented to the supermarket at its new distribution centre in Erith, near London. Meanwhile the Andover facility should be rebuilt within a couple of years, and another new warehouse is being constructed in Purfleet, Essex.

M&S warns it could close even more stores. Marks & Spencer Group (MKS) FOLLOW has admitted it is now paying the price for “not shutting stores 10 or 20 years ago” as its boss warned investors that more shops than initially planned could close. Steve Rowe, chief executive, told shareholders at the company’s annual meeting on Tuesday that current plans to shut 110 stores were “not finite”. He added that its portfolio of legacy stores was holding the retailer back, but that it was on track to reach its £350m savings target by closing “old-fashioned stores”. Business would also be boosted by its venture with online supermarket Ocado, Mr Rowe said. The high street giant is in the middle of a company overhaul as it looks to return to sustainable profit growth, including plans to axe 85 stores and about 25 Simply Food outlets.

WPP nears Kantar sale to Bain Capital. WPP (WPP) FOLLOW is preparing to announce the sale of a majority stake in Kantar to Bain Capital as part of an ongoing push to downsize one of the world’s largest advertising companies. WPP last week confirmed it had entered exclusive talks with the buyout fund to acquire the underperforming market research business, which provides insight into consumer behaviour. The deal is expected to value Kantar at £3.2bn. A number of big private equity funds, including EQT, Permira and CVC, had been linked to the discussions following a lengthy sale process. WPP has previously said it would retain a stake worth up to 40% stake in the business. Representatives for Bain and WPP declined to comment.

Kingfisher (KGF) FOLLOW suffered an investor revolt at its annual meeting as almost a quarter of shareholders objected to a bonus payment to its outgoing chief executive in a year when profits fell. The home improvement group said it would respond within six months after 24.19% voted against its remuneration report. They took exception to a £522,000 bonus for Véronique Laury, 53. She was paid a total of £1.77 million last year, up from £1.58 million the year before. Kingfisher unveiled a near-16% drop in pre-tax profit to £573 million for the year to the end of January.

Micro Focus International (MCRO) FOLLOW warned yesterday that its revenues would fall by as much as 6% this year as it continues to digest Hewlett Packard’s software division, which includes Autonomy, the Cambridge-based developer. It said that the acquisition in 2017 of Hewlett Packard Enterprise, which propelled Micro Focus into the FTSE 100, still required “substantial” work. It said that the “complexities” of uniting the HP portfolio with its existing business demanded “detailed attention and substantial programme planning and execution”. Micro Focus expects revenues to fall by between 4% and 6% in the present financial year. Turnover fell by 5.3% to $1.7 billion in the six months to the end of April, while operating profits rose 2.5% to $33 million.

Shares in easyJet (EZJ) FOLLOWRyanair Holdings (RYA) FOLLOW and British Airways-owner International Consolidated Airlines Group SA (CDI) (IAG)FOLLOW  all slid after France announced a new eco-tax on all flights from the country. The tax, which will vary depending on the type of ticket passengers have, is expected to raise £162million a year from 2020. National carrier Air France slammed the move, saying it would cost it an extra £54million per year.

Eddie Stobart Logistics (ESL) FOLLOW has said an accounting error it has uncovered will hit its annual results. The haulage and logistics firm also downgraded its earning expectations for the current year. The company said its new chief finance officer Anoop Kang found problems in its accounting policies around leasing and that it will have to restate its results for the year to November 2018. It expects the review to dent underlying earnings for 2018, which had been stated at £55.3million, by £2million. Eddie Stobart also said that it expects first half earnings to come in at the lower end of expectations. That’s because of slower-than-expected productivity in its contract logistics and warehousing units, as well as exiting a ‘problematic contract’ at the end of March, the company said. But Eddie Stobart gave assurances that, despite the half-year trading knock, it still expects to be on track with full-year forecasts thanks to expectations for a stronger second half.

Several British industrial firms fell after German group BASF issued its second profit warning in seven months. The chemicals giant said its full-year performance would be hit by the US-China trade war, falling car production and a disruption to the crop planting season in North America. Among the ripple-effect fallers were Melrose Industries (MRO) FOLLOW, which closed down 7.75p, to 179.1p, Weir Group (WEIR)FOLLOW , which lost 33.5p, to 1487p, and Bodycote (BOY) FOLLOW, which shed 44p, ending at 780.5p.

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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