Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
06:16, 18th April 2019

Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

BP deal hands Serica Energy a five-fold surge in profits. Serica Energy (SQZ) FOLLOW has unveiled a five-fold profit boom in its first set of financial results since a deal with BP (BP.) FOLLOW catapulted the North Sea lightweight into the top three listed European oil producers. The £300m acquisition of majority stakes in three of BP’s North Sea fields – Bruce, Keith and Rhumm – helped drive Serica’s oil and gas reserves to almost 69 million barrels at the end of last year, from 3.1 million the year before. The company’s shares surged 13% higher to £1.31 a share after it reported an average production rate of 25,000 barrels a day for 2018, from fewer than 2,000 barrels in 2017.

Council contracts bolster sales for Countryside Properties (CSP) FOLLOW. “Brexit fatigue”, tie-ups with local councils and a £135m takeover of rival Westleigh helped housebuilder Countryside Properties post a big rise in half-year sales. The FTSE 250 firm sold 2,362 homes in the six months to March, up 43% on the same period last year. Even excluding the Westleigh takeover, which completed last April, the total rose by 8%. Ian Sutcliffe, chief executive, said its private housebuilding arm had bounced back following a “subdued December” as buyers shrugged off uncertainty over the UK’s departure from the European Union.

Mediclinic on the mend after Swiss problems hit profits. Mediclinic International (MDC) FOLLOW has offered investors some welcome good news after months of patchy trading and a steady slide in its share price. The hospital group said annual profits would be slightly ahead of expectations as a turnaround implemented by its new chief executive, Dr Ronnie van der Merwe, starts to pay off. Performance at the South African company has been uneven since its listed on the London Stock Exchange two and a half years ago. Problems with its hospital businesses in the Middle East and, more recently, in Switzerland, have triggered a series of profit warnings and led to a £479m pre-tax loss in Mediclinic’s last financial year.

The City watchdog has issued a stark warning over the treatment of customers to the firm targeting Provident Financial (PFG) FOLLOW, in one of the most bitter takeover battles the City has seen for years. Andrew Bailey, head of the Financial Conduct Authority (FCA), said that he will not tolerate efforts to exploit the Provvy’s 2.4m customers if the bid by rival Non-Standard Finance (NSF) FOLLOW succeeds. NSF, run by the Provvy’s 70-year-old former boss John van Kuffeler, has pledged to boost the lender’s profits. But its plans, and the hostile nature of the bid, have sparked fears of a squeeze on vulnerable borrowers. In a highly unusual intervention, Bailey told the Mail that the FCA will use its powers to stop that.

Marks & Spencer Group (MKS)FOLLOW  has slashed prices on almost 500 of its most popular food items as it scrambles to win back customers and arrest its declining sales. The High Street chain has dramatically cut prices across products such as chocolate eggs and legs of lamb, in time for Easter. A bottle of Limestone Coast Sauvignon now costs £7 compared with £10 a year ago, with a family pack of salmon fillets reduced from £13 to £11. It is also selling 20 per cent more Easter eggs for £5 and under compared to last year. Head of food Stuart Machin said M&S is trying to be ‘special and relevant, with prices to shout about’. It is the latest move by chief executive Steve Rowe and chairman Archie Norman to revive fortunes by attracting more families.

Drax investors rebel over political spending splurge. Drax Group (DRX) FOLLOW shareholders have rebelled against the energy giant’s splurge on political lobbying last year after it sharply increased spending on networking with politicians. At the company’s annual meeting in London on Wednesday, more than four in ten shareholders voted against the proposal to increase “political spending” by £100,000 to £300,000 a year. Meanwhile almost a fifth of shareholders rebelled against Drax’s executive pay policy, which handed chief executive Will Gardiner £1.9m for last year. His first pay packet as boss was more than 50% higher than that given to his predecessor Dorothy Thompson, who stepped down last year after a decade with the company.

SEGRO (SGRO) FOLLOW 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. BHP Billiton (BLT) FOLLOW 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.

ITV ahead as it readies BritBox service. Signs that Netflix’s streaming empire is under siege from the emergence of new entrants boosted ITV (ITV) FOLLOW to a three-month high. The US media giant warned that its subscriber growth would be put under pressure by price rises to fund its own content as media giants, such as Disney, launch rival platforms. Liberum analyst Ian Whittaker warned that the threat to traditional broadcasters from the likes of Netflix may have been “overdone” and questioned “how many subscription services a consumer will take”. ITV has paired up with the BBC to launch its own online video service called BritBox, with their UK platform launching later this year in a bid to fend off the existential threat of the streaming giants.

‘Solid, boring’ Bunzl gives investors a jolt as growth slows. Bunzl (BNZL) FOLLOW blamed macroeconomic and market conditions for a slowdown in growth in the first quarter of this year as the historically “solid, boring” performer promised to deliver further expansion through acquisitions. Revenues at the FTSE 100 distribution and services giant rose 4% compared to the same period last year, when it delivered growth of 7%. Shares in the company, which distributes packaging, cleaning and office supplies to businesses, were down 10% on Wednesday afternoon, making it the FTSE 100’s biggest faller. “At its core, Bunzl remains a very solid compounder,” said Rory McKenzie, analyst at UBS. “I don’t think today changes that.

Price cuts prove costly for Pendragon (PDG) FOLLOW. 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) FOLLOW. 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.

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