The Mail 16/04/19 - Vox Markets | Vox Markets

The Mail 16/04/19

Galliford Try (GFRD) shares have tumbled by nearly 20% after the construction firm issued a profit warning and said it will scale down its business. The FTSE 250 company now expects profits to come in £30 to £40million lower than it previously expected – instead of £156million, profits could be as low as £116million amid rising costs. Galliford said the single largest element in the one-off costs related to its Queensferry Crossing joint venture in Scotland, after an estimate for final costs on the project was increased. It also said it intends to trim the size of its construction unit to focus on its ‘key strengths’ as part of a ‘strategic review’. It will give more information on such plans on May 21, when it will issue a trading update. Galliford has a construction arm, a housebuilding division, through its Linden Homes business, and a ‘regeneration’ arm.

Discount greetings cards retailer Card Factory (CARD) saw profits fall last year amid declining footfall and higher costs, but still continued to open new stores. At a time when many retailers are shutting down shops, Card Factory opened 51 new stores in the year to January 31 – even though like-for-like sales came in flat amid falling demand. The company, which sells card from 99p as well as party items like balloons, said pre-tax profits fell 8.3% to £66.6million. It also said it aims to grow its stores estate to reach more than 1,200 stores in the UK, from the current 972 stores in the UK and Ireland. Boss Karen Hubbard said: ‘Encouragingly, some initial trials with Aldi in the UK, in an Australian retailer, and with a franchise partner in Jersey show that the Card Factory brand is a footfall driver that has real resonance; we will pursue these types of opportunities to open new routes to market where we see attractive returns.’

JD Sports Fashion (JD.), which is set to acquire smaller rival Footasylum (FOOT), saw its sales nearly double last year despite the ongoing gloom on the High Street. In the year to 2 February, the popular retailer saw revenues jump 49.2% to £4.7billion, with like-for-like sales at its sports fashion stores rising 6%. The company said the performance was ‘encouraging’ in light of the ‘widely reported challenges’ experienced by other retailers. Profit before tax rose 15.4% to £339.9million and the company nudged its dividend higher to 1.44p from 1.37p. Executive chairman Peter Cowgill said: ‘JD is not immune to the widely reported challenges to physical retail in the UK with lower footfall on many high streets, malls and retail parks combined with cost challenges from increasing minimum wage rates and rises in business rates. ‘Therefore, it is very pleasing that the core UK and Ireland Sports Fashion fascias, the most mature part of our Group, have delivered a further increase in sales and profitability.’

Boom in full time jobs and people becoming self-employed sees the number of people in work hit highest number since records began almost 50 years ago. The number of people in work has reached a record high driven by a surge in full time jobs and those becoming self-employed, official figures revealed today. Employment jumped by 179,000 in the three months to February, to 32.7 million, the highest total since records began in 1971 – 48 years ago. The figure has increased by 457,000 over the past year, all among full-time employees and the self-employed, while the number of people in part-time jobs fell by 15,000, according to the Office for National Statistics (ONS). Unemployment fell by 27,000 to 1.34 million, continuing a general trend which started in early 2012. The UK’s unemployment rate of 3.9% is now lower than at any time since the end of 1975. The ONS’s deputy head of labour market statistics, Matt Hughes said: ‘The jobs market remains robust, with the number of people in work continuing to grow. ‘The increase over the past year is all coming from full-timers, both employees and the self-employed. ‘Earnings have now been growing ahead of inflation for over a year, but in real terms, wage levels have not yet returned to their pre-downturn peak.’

The boss of Centrica (CNA) is fighting for his job as investors lose faith in his leadership. Iain Conn has been chief executive of the British Gas owner since 2015 – picking up £11.1million in pay along the way. But the FTSE 100 group’s shares have tumbled 60% on his watch and are at their lowest level since 1999. The father-of-three’s position is seen as particularly vulnerable since the arrival of Charles Berry, who succeeded Rick Haythornthwaite as chairman in February. One major institutional investor said: ‘With the new chairman coming in, Iain Conn’s days are numbered.’ And with Centrica’s prized dividend under threat, a City source told the Mail that major shareholders are questioning Conn’s future.The source said: ‘Shareholders have voiced desires to see a change in management. I think, personally, people have no issues with Iain Conn. But there wouldn’t be too many who would be disappointed if he went.’

Provident Financial (PFG) boss has been landed with a major distraction by one of his other lucrative posts just as he fights off a hostile takeover bid. Malcolm Le May – who is leading the doorstep lender’s efforts to fend off rival Non-Standard Finance (NSF) – has been tasked with recruiting a chairman at trading company IG Group, where he is senior independent non-executive director. It is likely to raise questions over whether the 61-year-old is overstretched.

The corporate raider demanding a seat on Barclays’ board has insisted its investment arm must be hacked back to boost shares. As the war of words escalated, US-based Edward Bramson accused Barclays (BARC) bosses of pursuing a flawed strategy which will cost investors money. The latest broadside came ahead of the lender’s annual meeting next month when Bramson hopes to win a shareholder vote making him a non-executive director. He is thought to favour massive cutbacks to the lender’s prized investment banking arm.

Legal & General Group (LGEN) – Legal & General Investment Management voted against a record number of companies last year as City shareholders flexed their muscles. The savings group took aim at firms over sky-high pay, incompetent auditors and a lack of women in the boardroom. The business – which looks after more than £1 trillion for savers – voted against the reappointment of 3,864 directors in 2018, up 37% on the previous year. It particularly targeted inflated pay packets, voting against more than a third of remuneration deals at AGMs.

Sainsbury (J) (SBRY) is set for a major shake-up under new chairman Martin Scicluna if its £14billion merger with Asda is blocked, analysts have warned. Research by investment bank Jefferies suggested there is just a 20% chance the Competition And Markets Authority (CMA) will have a change of heart and wave through the supermarkets’ tie-up. The report suggested Asda would be snapped up by a private equity buyer if the merger does not go ahead, with its US owner Walmart keen to make a quick exit from the UK. And it said Sainsbury would be forced into a major overhaul as it loses further ground to arch rival Tesco. James Grzinic, equity analyst at Jefferies, said: ‘In reality, we struggle to assume anything beyond a 20 per cent chance of a drastic rethink by the CMA. It is therefore probable that a definitive CMA block would supply the catalyst for any potential private equity interest for Asda to materialise swiftly.’

MX Oil (MXO) shot up after announcing it had secured investment from a member of Dubai’s ruling family. Shaikh Ahmed Bin Dalmook Al Maktoum bought 1.3m shares in the energy company, worth £534,000, as MX Oil raised a total of £680,000 from investors. MX, which has an oilfield in Nigeria, said the Shaikh owns a portfolio of oil assets and his knowledge should be valuable. He now owns 29.9% of the company. Shares jumped 218.2%, or 0.12p, to 0.17p.

IWG (IWG) may have been popping a few corks last night after agreeing the firm’s first franchising deal in Japan. Worth £320million – more than double the best-case estimates of analysts at Peel Hunt – it comes as vindication for IWG’s chief executive Mark Dixon.Last year he walked away from takeover talks with a number of private equity firms, slamming the bidders for ‘totally mispricing’ his business. Dixon’s new franchising strategy, dubbed a ‘Plan B’ by several analysts after the failed takeover negotiations, will see it sell some of its office buildings and instead charge a fee to other firms for using its branding.

Indivior (INDV), the heroin addiction treatment manufacturer accused of fuelling America’s deadly opioid epidemic, continued its roller-coaster ride on the stock market. Its shares tumbled more than 70% last week after prosecutors in the US claimed the firm had used shaky evidence to promote a new version of its Suboxone treatment above rival products. The US Department of Justice demanded at least £2.3billion in fines. But the shares were up 19.1%, or 6.74p, to 41.97p yesterday, after analysts at Bernstein suggested the final sum of any fines is likely to be much lower.

Rio Tinto (RIO) was weighing on the FTSE 100, as it announced plans to plough £230million into its Resolution Copper project in Arizona. It will use the money to make sure it has done all of the relevant research, and completed all the surveys and assessments, to ensure it is granted permits to get the mine up and running. Rio claims the Resolution project could supply almost 25% of the US’s copper consumption, and it will now have spent more than £1.5billion on its development.

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Mentioned in this post

BARC
Barclays
CARD
Card Factory
CNA
Centrica
FOOT
Footasylum
GFRD
Galliford Try
INDV
Indivior
IWG
IWG
JD.
JD Sports Fashion
LGEN
Legal & General Group
MXO
MX Oil
NSF
Non-Standard Finance
PFG
Provident Financial
RIO
Rio Tinto
SBRY
Sainsbury (J)