24th Apr 2024. 9.01am
Regency View:
Update
Regency View:
Update
ABF’s bottom line soars: Profits surge by 37%
Associated British Foods (ABF) reported a significant increase in interim profit and revenue, leading to an upward revision of its full-year profit outlook. In the first 24 weeks of the fiscal year, adjusted pre-tax profit surged by 37% to £911 million, with revenue reaching £9.7 billion, up 2% at actual rates and 5% at constant currency.
The growth was primarily driven by strong performance in both the retail and food businesses. Revenue from the retail segment, particularly from its flagship brand Primark, increased by 7.5% to £4.5 billion, with adjusted operating profit up by 46% to £508 million. This growth was attributed to the opening of new stores and strategic price adjustments to counter inflation.
Sales in womenswear, menswear, and health and beauty categories all saw healthy growth. Additionally, the grocery arm experienced a 5% revenue increase to £2.1 billion, with adjusted operating profit up by 39% to £230 million.
ABF expressed confidence in achieving significant growth in profitability and cash generation for the fiscal year. CEO George Weston highlighted the company’s strong financial performance and operational improvements, emphasising its ability to navigate geopolitical risks and consumer challenges while delivering returns to shareholders.
On the price chart, ABF’s shares have gapped significantly higher – taking our position deeper into profit. With the relative strength index (RSI) indicator moving into overbought territory, we will be monitoring price action closely in the coming sessions.
ABF Daily Candle Chart
easyJet’s trading update: Winter losses reduced, positive growth across metrics
easyJet’s (EZJ) recent trading update revealed significant improvements in its financial performance. Compared to the same period last year, the airline managed to reduce its winter losses by over £50 million, with an expected headline loss before tax between £340 million to £360 million for the reported period.
In terms of operational metrics, easyJet experienced an 8% increase in passenger numbers, a 9% rise in ticket yield, and a 10% increase in ancillary yield year-over-year. Additionally, the company saw a remarkable 206% boost in profit before tax, amounting to £31 million, from its holidays segment. It anticipates a customer growth of over 35% in this division for the full financial year.
Capacity expansion remains on track, with approximately 59 million seats projected to be on sale in the second half of 2024, marking an 8% increase compared to the previous year. The airline observed strong demand during Easter, contributing to March’s revenue due to the holiday’s early timing at the end of the month.
easyJet’s CEO, Johan Lundgren, expressed enthusiasm about the company’s progress, highlighting the launch of new bases in Alicante and Birmingham as well as the operational readiness for the upcoming summer season. Lundgren expects easyJet to emerge as one of the fastest-growing major airlines in Europe during the summer and anticipates a record number of customers booking easyJet holidays.
EZJ Daily Candle Chart
Hunting reports strong Q1 performance and positive outlook
Oil engineer, Hunting (HTG) released its Q1 2024 trading update alongside its AGM. The update showcased a positive start to the year, with earnings (EBITDA) reaching approximately $28.9 million, slightly surpassing management’s expectations and last year’s Q1 figure of around $22.4 million.
The sales order book stands at approximately $544.0 million, showing growth from the previous year.
Notably, OCTG and Subsea product groups exceeded expectations, while the Advanced Manufacturing business also reported positive performance. However, the Perforating Systems segment experienced a slower quarter due to soft US onshore markets, though an optimistic outlook is held for the second half of the year.
Despite increased working capital driven by forward purchasing of raw materials, management is confident in reducing inventory throughout the year to improve cash flow. The Group maintains its guidance for EBITDA of $125-135 million for the full year, reflecting confidence in the strength of the global oil and gas sector.
Overall, most product lines have seen a favourable start to the year, supporting the Group’s positive outlook.
Our position is in a healthy profit and prices are currently testing long-term resistance. Given the strength of the trading update we would expect the shares to kick on higher in the coming weeks.
HTG Daily Candle Chart
Moneysupermarket’s insurance grows stronger in Q1
Moneysupermarket (MONY) has reported continued robust growth in insurance in its latest trading update…
Revenue for the quarter ended March 31, 2024, increased by 8% to £114.6 million. The company noted sustained growth in car and home insurance, driven by high levels of switching, despite significant year-on-year increases in car insurance premiums.
Other sectors, such as Money, saw strong performance in credit card switching but encountered challenges in banking due to fewer attractive offers compared to the previous year. Home Services continued to experience softness in broadband switching, with no notable increase expected in revenue from energy switching.
In Travel, the company continued to grow in a competitive market, while Cashback reflected momentum in services, including Insurance. The SuperSaveClub loyalty and rewards program saw continued growth, with over 300,000 members and an expansion to 10 products. Club members demonstrated higher product purchasing rates compared to traditional visitors.
Looking ahead, the Moneysupermarket anticipates that adjusted EBITDA for the year would be in line with current market expectations, which ranged from £133.7 million to £143.7 million. CEO Peter Duffy reiterated the company’s mission to help households save money, emphasising the importance of SuperSaveClub in driving sustainable and profitable growth for the Group.
MONY Daily Candle Chart
Norcros keeps flowing: Operating profits in line despite market waves
Bathroom and kitchen supplier, Norcros (NXR) anticipates its underlying operating profit for the year ending March 31 to meet market expectations…
Despite a challenging demand environment, the Group demonstrates business strength. Overall revenue for the period is projected to be approximately £390 million, a decrease of 11.1% from the previous year on a reported basis and 6.1% on a constant currency like-for-like basis.
In the UK, the Group’s market-leading business showed robust performance, with revenue slightly down by 3.3% compared to the previous year. Operating margins improved due to portfolio management and new product development efforts, particularly within the mid-premium segment of the market.
In South Africa, despite challenging market conditions exacerbated by power interruptions, the business remained resilient. Reported revenue decreased by 12.3% on a constant currency basis. Recovery in demand is expected to be gradual, although proactive initiatives have been implemented by the local management team.
Financially, Norcros maintains a strong position with high cash generation and net debt expected to be around £37 million, representing leverage of less than 0.9x underlying EBITDA. Norcros said its solid foundation will enable it to pursue its strategic priorities effectively.
NXR Daily Candle Chart
QinetiQ faces turbulence: Management changes and market challenges
QinetiQ (QQ.) issued a trading update for its fourth quarter to March 31, highlighting its strong operational performance and expectations to meet FY24 targets. The Group reported robust organic revenue growth and stable operating profit margins, supported by excellent order intake exceeding £1.7 billion, demonstrating high demand for its offerings.
Despite management changes, including the departure of Finance Head Carol Borg and the appointment of Martin Cooper as Group CFO, QinetiQ remains on track to deliver in line with market expectations. The company’s strategic focus on disciplined execution and shareholder value enhancement remains intact.
Segment-wise, EMEA Services showed exceptional revenue growth in FY24, driven by successful program execution and strong order intake. Conversely, Global Solutions faced challenges due to difficult market conditions in the US, resulting in modest revenue growth for Avantus. However, strong order intake in Avantus provides confidence in future growth prospects.
Looking ahead to FY25, QinetiQ anticipates another strong year, with continued growth in EMEA Services and stable performance in Global Solutions. CEO Steve Wadey expressed confidence in the company’s strategic direction and its ability to deliver sustainable growth and value for shareholders amidst market challenges.
QQ. Daily Candle Chart
Rentokil’s lackluster quarter leaves investors unimpressed
Rentokil (RTO), disappointed investors with its first-quarter trading update, causing the shares to wiping out recent gains. Despite a stable performance in North America, quarterly sales growth remained sluggish. Revenue increased by 0.9% on a headline basis to £1.27 billion, with organic growth driven by price rises. While customer retention remained stable and cost inflation was passed on to customers, the overall performance failed to enthuse.
Organic revenues showed modest increases across pest control, hygiene & wellbeing, and France Workwear divisions. Notably, North American revenue rose by 1.5% organically, while Europe and Latin America saw a 6.2% increase. Despite these figures, the market reception was tepid, likely due to expectations not being met.
Rentokil’s acquisition of Terminix was legally merged with its North American operations, allowing resource sharing and system integration. Additionally, the company made eight small acquisitions, aiming for annualized revenue of £45 million before acquisition. However, the firm reiterated its full-year forecasts, projecting 2% to 4% organic revenue growth in North America, albeit with results weighted toward the second half of the year. This cautious outlook left investors uncertain about the company’s future performance.
RTO Daily Candle Chart
Tesco’s bag market share gains
Tesco’s (TSCO) preliminary results for 2023/24 revealed significant market share gains and a return to positive volume growth, driven by increased customer preference for Tesco’s offerings.
Key financial highlights included a 7.4% rise in group sales and a 12.8% increase in adjusted operating profit. Tesco Bank’s adjusted operating profit surged by 213.6%, reaching £69 million.
Despite challenging trading environments, Tesco achieved strong sales growth across all markets, particularly in the UK and Republic of Ireland. The company’s disciplined investment approach, coupled with continued cost savings, contributed to robust financial performance.
The planned sale of banking operations and the strategic partnership with Barclays were expected to generate significant cash returns.
Tesco remained optimistic about future growth opportunities, with plans to further enhance its customer offerings and digital capabilities.
On the price chart, the shares continue to consolidate near long-term highs within a choppy trading range. This price action is indicative of trend continuation and we remain happy to hold the stock within our list of FTSE Investor open positions.
TSCO Daily Candle Chart
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All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.