ABF shares slip as weak retail and sugar volatility weigh on trading update

Associated British Foods (ABF) saw its share price drop last week following the publication of an underwhelming trading update. The company’s results reflected mixed performance across its divisions, which fell short of market expectations.

Although Primark’s average selling price increased due to a favourable product mix and effective markdown management, the overall performance in the UK was weaker than anticipated. Sales in the UK were expected to be around 0.5% lower, with like-for-like sales projected to fall by 2%.

In addition to the retail challenges, the company faced volatility in its Sugar division. Sugar profitability, while still ahead of FY23, was below previous expectations due to a sharp decline in European sugar prices. This drop is expected to impact profitability in FY25 before recovering in FY26.

Despite robust growth in other markets and a continued expansion of its store portfolio, the underwhelming results saw the shares gap lower – signalling a change in short-term momentum.

AstraZeneca hit by probe and trial setback

It’s been a challenging couple of weeks for AstraZeneca (AZN), marked by setbacks that have affected investor sentiment.

Adding to the company’s troubles, detailed results from a key lung cancer trial, TROPION-Lung01, revealed that AstraZeneca’s experimental precision drug, Dato-DXd, did not show a significant improvement in overall survival rates for patients.

This late-stage trial was highly anticipated by investors and analysts, who had high hopes for Dato-DXd as a potential best-selling medicine. The trial compared AstraZeneca’s drug against chemotherapy for non-small cell lung cancer patients who had previously undergone one or two treatments. The failure to achieve statistically significant overall survival results was a blow, particularly after previous data releases already impacted the company’s stock negatively.

The drug, which is an antibody-drug conjugate developed in collaboration with Japan’s Daiichi Sankyo, was expected to be a key player in AstraZeneca’s oncology portfolio. However, these recent developments have compounded the company’s challenges, creating a tough period for AstraZeneca as it navigates both regulatory scrutiny and disappointing clinical trial outcomes.

Centamin surge on takeover deal with AngloGold Ashanti

Centamin (CEY) surged higher on Tuesday following the announcement of a takeover by AngloGold Ashanti…

The positive market reaction reflects investor confidence in the strategic benefits of the acquisition. The deal brings together Centamin’s flagship Sukari gold mine, which is Egypt’s largest and a top-tier asset with significant production potential, with AngloGold Ashanti’s broader portfolio. The transaction is expected to enhance AngloGold Ashanti’s annual gold production and lower its combined unit cash costs and all-in sustaining costs.

Additionally, Centamin’s trading update for the first two months of Q3 2024 further buoyed investor sentiment. The update highlighted strong operational performance at Sukari, with significant free cash flow generation and solid production metrics. This robust financial performance, combined with the strategic acquisition, has contributed to the surge in Centamin’s share price.

We have decided to crystalise our profits on both of our positions in this stock – see full exit rationale here.

Computacenter faces mixed results amid revenue declines and strategic growth

Computacenter’s (CCC) recent half-year results for 2024 show a mixed performance…

Financially, Computacenter faced difficulties with adjusted profit before tax falling by 26.8% and net cash inflow from operating activities plummeting by nearly 99%. On a positive note, the company’s strong balance sheet, with a 41% increase in adjusted net funds to £401.9 million, helped cushion the impact. The firm’s £200 million share buyback program and a slight rise in the interim dividend demonstrate its commitment to returning value to shareholders despite lower profitability.

Looking forward, Computacenter expects a stronger second half of 2024. The company is optimistic about improving performance driven by a robust product order backlog and ongoing strategic investments. While it remains cautious of broader geopolitical and macroeconomic uncertainties, Computacenter aims to achieve progress for the full year on a constant currency basis, focusing on expanding its customer base and investing in growth to navigate current market challenges and ensure long-term success.