LONDON (Alliance News) - Shares in TUI Group, the result of December's merger between TUI Travel and German parent TUI AG, have hit their highest level Wednesday, after it predicted profit growth in both the first half and the whole of its current financial year.
The company said its winter season is closing out as expected, with average selling prices up by about 1%, while bookings and average selling prices for the key summer season are currently up by about the same amount, meaning it is on track to deliver first-half results that are up on the year on a like-for-like basis.
It said it is also confident of delivering underlying operating profit growth of 10% to 15% for the year as a whole, helped by improved occupancy rates and yield in its hotels and resorts business. It's also seeing strong cruise bookings for this summer, while its accomodation wholesaler business has reported a 27% increase in total transaction value for the summer.
TUI added that it's still implementing its post-merger strategy and will give more details at a capital markets day on May 13. It will release its interim results for the six months to March 31 on the same day.
Its shares, which are listed in London as TUI AG, were up 2.8% at 1,211.00 pence midday Tuesday, just off its new high as a combined group of 1,234.00 pence. It's the best-performing stock in the blue-chip index so far Wednesday.
In the FTSE 250, Balfour Beatty is the best-performing stock, despite reporting a wider loss for 2014 as it booked another writedown against its struggling construction business, and it moved further to shore up its balance sheet by scrapping its dividend as Chief Executive Leo Quinn admitted it will take another two years to turn the business around.
Analysts welcomed the extra details about Quinn's turnaround plans as the CEO targeted initial cost cuts of GBP100 million and cash flow improvements of GBP200 million over the next two years.
Balfour has already cancelled a share buyback programme and re-phased its pension fund payments to help preserve cash on the balance sheet, and Wednesday said it has also decided not to pay a dividend for 2014. It said it hopes to reinstate a dividend at "an appropriate level" by March 2016.
"Over the next two years we should work through the severe legacy of "problem" construction projects. However, in tackling the cultural change required to ensure these issues are behind us, we face major short-term challenges," CEO Quinn admitted.
In the meantime, it is hoping that its investments portfolio will give it financial flexibility as it provides a reliable income and as it sells maturing assets into a "strong market".
"Overall, much to digest from today’s statement. Phase 1 of the new strategy looks sensible in terms of a focus on cash flow improvements and cost savings, but clearly there are still risks to overcome in terms of its construction operations. We are glad to see greater disclosure in the results, but this also helps to highlight the task ahead," Investec wrote in a note to clients.
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Markets: London stocks are trading lower in a session driven by corporate news amid a dearth of scheduled economic data releases. The pound is up against the dollar after UK mortgage approvals came in at a five-month high, beating analyst forecasts.
US stock futures point to a mixed open, with the DJIA set to open down 0.2%, the S&P 500 down 0.1% and the Nasdaq 100 up 0.1%.
FTSE 100: down 0.1% at 7,014.44
FTSE 250: down 0.2% at 17,545.74
AIM ALL-SHARE: down 0.3% at 719.25
GBP-USD: up at 1.4915
EUR-USD: up at 1.0990
GOLD: up at USD1,195.58 an ounce
OIL (Brent): up at USD55.73 a barrel
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Other Top Corporate News
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United Utilities said trading in the current financial year is in line with expectations and said revenue and operating profit will be "slightly higher" than last year. The FTSE 100 water and sewage service provider said revenue is expected to increase in the year, which ends on March 31, due to the regulated price allowance for 2014 to 2015, partly offset by the impact of a previously announced one-off special customer discount of around GBP20 million. Operating profit is also expected to rise and United Utilities said it is tightly managing its cost base "despite the increase in depreciation and other cost pressures, including bad debts", United Utilities said in a statement.
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BT Group announced the launch of new 4G mobile data bundles for its existing broadband customers on a SIM only basis, its first foray back into the consumer mobile space in over a decade. The company has announced three plans on a 'bring-your-own-phone' basis, meaning it will not provide mobile devices, including deals which provide its BT Sport service for free. The deals are exclusive to broadband customers, although it said BT Mobile customers can also access BT Sport via a mobile application, even if they don't have BT broadband.
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Roadside assistance company AA outlined its refinancing plans, including a GBP200 million share issue, as it said its pretax profit fell in the financial year to the end of January due to continued investment in its IT functions and restructuring costs. AA PLC said it will seek to raise a total of GBP935 million in aggregate via an equity issue and the issue of Class B notes. It will raise GBP200 million via a share placing of 51.9 million new shares at 385 pence per share, and will raise the further GBP735 million via the Class B notes issue.
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Bellway reported surging pretax profit and revenue for the first half, boosted by a rise in completions on the back of resilient London property market, and said the good performance has continued in the first months of its financial second half, defying widely-held fears about a slowdown in the UK property market. The FTSE 250-listed housebuilder said its pretax profit rose to GBP158.9 million in the half-year to the end of January, up from GBP103.8 million a year earlier. The rise in profit prompted the company to lift its interim dividend payout by 56% to 25 pence per share from 16p.
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Citigroup Global Markets said Moneysupermarket.com Group founder Simon Nixon has decided against proceeding with a planned share sale which would have raised him around GBP100 million. Citigroup did not provide any reason for the move. Nixon had been set to sell a 6.4% stake in the company via an accelerated bookbuild handled by the investment bank.
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Nostrum Oil and Gas said its pretax profit fell in 2014 due to a slight fall in production combined with the fall in oil prices toward the end of the year. The FTSE 250 listed oil and gas company operating in Kazakhstan reported a pretax profit of USD311.7 million for the year ended December 31, down from USD362.0 million in 2013 as revenue declined on lower oil prices in the second half. Revenue for the year fell by 13% to USD782.0 million from USD895.0 million due to a slight fall in production and lower achieved oil prices, which fell 8.1% year-on-year. Production in 2014 fell to 16.2 million barrels of oil equivalent at an average price of USD100 per barrel from 16.9 million barrels of oil equivalent at an average price of USD108 per barrel in 2013.
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Stagecoach Group said its Stagecoach South Western Trains Ltd subsidiary has signed a deed of amendment with the UK Department for Transport for the South West Trains franchise. Stagecoach said the deed provides for an accelerated investment of around GBP50 million on passenger improvements initiatives between now and February 2017, including more services and seats on the line, improved customer information and easier ticket purchasing. Stagecoach said the current South West Trains franchise will end in February 2017 and it is currently holding talks with the Department of Transport to extend the South West Trains deal to April 2019.
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Card Factory reported higher pretax profit for its last financial year, as revenue growth was driven mainly by new store openings and its online business Getting Personal, but sales growth from existing stores slowed as it was hit by stiff competition and a decline in boxed Christmas card sales. The card and gifts retailer reported a pretax profit of GBP42.7 million for the year ended January 31 grew, from GBP30.1 million the year before, as revenue rose 8.1% to GBP353.3 million from GBP326.9 million, driven by the opening of 51 net new stores and 23% growth in revenue at its small, but growing online cards and gifts business Getting Personal to GBP15.5 million.
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AIM Movers
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Advanced Oncotherapy shares are doing well after Sinophi Healthcare bought the company's LIGHT proton therapy system for a oncology hospital project in Huai'an City in the Jiangsu province in east China. EG Solutions is up after saying it's confident it can continue momentum into the current year, as it swung to a profit in its recently ended financial year thanks to 69% revenue growth driven by ten significant contract wins, international expansion and increasing traction for its managed cloud services product. Wolf Minerals is another gainer after it said the ore reserve at the Hemerdon tungsten and tin project in the UK has increased by 34% after it completed a six hole geo-technical drilling programme in the fourth quarter of 2014. Eclectic Bar Group shares are down by almost half after it reported a wider pretax loss despite an uptick in revenue as it was hit by less student drinking, increased competition, and underperforming new sites. Monitise is also down after deciding it is no longer for sale and that its "best prospects" are from remaining independent. It said none of the proposals it looked at fully valued its perceived value of the business, as it reiterated its target for profitability in 2016 and named Co-Chief Executive Elizabeth Buse as sole CEO, with founder Alastair Lukies stepping down but remaining available as a strategic adviser.
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Other Top Economics And General
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UK mortgage approvals rose to a five-month high in February, the British Bankers' Association reported. The number of mortgages approved for house purchases rose to a seasonally adjusted 37,305 in February from 36,517 in January. This was the highest since September 2014. It was expected to rise slightly to 36,650. House purchase approvals are starting to trend upwards. Though February was 20% lower than last year, early 2015 is seeing higher demand, the BBA said.
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Rescuers were set to restart their search for the remains of victims of a German airliner which crashed in the French Alps, as well as for clues as to why the plane carrying 150 people went down. The crash, killing everyone on board, occurred in apparently good weather Tuesday near the town of Prads-Haute-Bleone, after the plane made a steep eight-minute descent. A black box had been recovered from the site, officials said. German Chancellor Angela Merkel, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy were later Wednesday due to visit the site where Germanwings flight 4U 9525 hit the ground.
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Greek Prime Minister Alexis Tsipras will attempt to sell a package of economic reforms demanded by creditors to his lefist party in the next few days, reports said. According to a report in the daily Kathimerini, Tsipras will try to win over hardliners within his leftist SYRIZA party to back the reform plan, which could include the continuation of a highly unpopular property tax for another year as well as labour and pension reforms. The government will also only carry out privatisations which will allow it to retain a controlling majority while the country's lenders want the special 30% reduction on VAT enjoyed by the Greek islands to be scrapped.
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The US will keep 9,800 troops in Afghanistan through the end of the year in a slowdown of a planned military exit, US President Barack Obama said. As the US works to reduce its presence in Afghanistan, 2016 troop levels will be decided later this year, with the goal of only a small troop contingent based at the US embassy by the end of next year, Obama said following talks with Afghan leaders.
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Israel denied that it spied on the US-led international negotiations on Iran's nuclear programme. "These allegations are utterly false," a senior official in Prime Minister Benjamin Netanyahu's office said on condition of anonymity. "The state of Israel does not conduct espionage against the US or Israel's other allies." The Wall Street Journal reported that the White House learned about the espionage soon after the US and other major powers began the negotiations last year. Netanyahu used the information to help build a case against the emerging terms of the deal, the paper quoted current and former US officials as saying.
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Afternoon Watchlist (all times in GMT)
12:30 US Durable Goods Orders
14:30 US EIA Crude Oil Stocks change
23:50 Japan Foreign bond/stock investment
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Thursday's Key UK Corporate Events
Churchill China - Full Year Results
Amec Foster Wheeler - Full Year Results
M&C Saatchi - Full Year Results
Henry Boot - Full Year Results
Daily Mail and General Trust - Trading Statement
International Public Partnerships - Full Year Results
Polypipe Group - Full Year Results
Supergroup - Capital Markets update
IFG Group - Full Year Results
Personal Group Holdings - Full Year Results
Baillie Gifford Japan - Full Year Results
Asia Resource Minerals - Full Year Results
DFS Furniture - Half Year Results
Concurrent Technologies - Full Year Results
easyJet - Trading Statement
Euromoney Institutional Investor - Trading Statement
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Thursday's Key Economic Events (all times in GMT)
07:00 Germany Gfk Consumer Confidence Survey
07:45 France Gross Domestic Product
08:35 US Fed's Bullard speech
09:30 UK Retail Sales
11:00 UK CBI Distributive Trades Survey
12:30 US Jobless Claims
13:00 US Fed's Lockhart speech
13:45 US Markit PMI Composite Preliminary
14:30 US EIA Natural Gas Storage change
15:00 US Kansas Fed manufacturing activity
23:30 Japan National Consumer Price Index
23:30 Japan Unemployment Rate
23:50 Japan Retail Trade
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16 Feb 2017 09:19
