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(Alliance News) - AO World, a winner from the virus pandemic, on Friday said online appliance sales growth now is slowing in the UK and Germany, but said it retained a big improvement from two years ago.
Meanwhile, two losers from the pandemic, JD Wetherspoon and Greencore, reported mixed results as Covid-19 restrictions are removed. Pub chain Wetherspoons said like-for-like sales remained well below 2019, but food-to-go maker Greencore said its sales had recently edged above pre-virus levels.
AO World shares were down 19%, the worst performer in the FTSE 250 index early Friday. Wetherspoon shares were down 5.6% and Greencore's 1.6%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.0% at 7,016.88
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Hang Seng: Hong Kong market closed for National Day holiday.
Nikkei 225: closed down 2.3% at 28,771.07
DJIA: closed down 546.80 points, or 1.6%, at 33,843.92
S&P 500: closed down 1.2% at 4,307.54
Nasdaq Composite: closed down 0.4% at 14,448.58
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EUR: flat at USD1.1580 (USD1.1584)
GBP: down at USD1.3449 (USD1.3495)
USD: down at JPY111.18 (JPY111.50)
Gold: down at USD1,754.12 per ounce (USD1,760.78)
Oil (Brent): down at USD78.23 a barrel (USD78.50)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
China National Day holiday. Financial markets closed.
0955 CEST Germany manufacturing purchasing managers' index
1000 CEST EU eurozone manufacturing PMI
1100 CEST EU flash estimate euro area inflation
0930 BST UK manufacturing PMI
0945 EDT US manufacturing PMI
1000 EDT US ISM manufacturing PMI
1600 EDT US domestic auto industry sales
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Ireland's manufacturing sector remained in good shape in September, though survey results showed growth slowed to a six-month low. The AIB Ireland manufacturing purchasing managers' index fell to 60.3 points in September from August's score of 62.8. It was still well above the 50.0 threshold that separates growth from decline; however, September's number was the lowest since March. "The month-on-month drop in the headline figure in September of 2.5 points was the largest observed in the current four-month sequence of weaker monthly figures. That said, the PMI still signalled strong overall growth in the goods-producing sector and was the sixth-highest registered since the survey began in 1998," IHS Markit commented.
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Retail sales in Germany grew at a slower pace than expected in August, but are still firmly above pre-pandemic levels. According to Destatis, retail sales in Germany grew 1.1% monthly in August, undershooting forecasts of a 1.5% climb, though faring better than July's 4.5% decline. On an annual basis, the growth rate was unchanged from July at 0.4%. Annual growth was expected to quicken to 1.9%.
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China's top state-owned energy companies have been ordered to ensure there are adequate fuel supplies for the approaching winter at all costs, as the country battles a power crisis that threatens to hit growth in the world's number two economy. The country has been hit by widespread power cuts that have closed or partially closed factories, hitting production and global supply chains. The crisis has been caused by a confluence of factors including rising overseas demand as economies reopen, record coal prices, state electricity price controls and tough emissions targets. More than a dozen provinces and regions have been forced to impose curbs on energy usage in recent months. Bloomberg News, citing people familiar with the matter who did not want to be named, reported that Vice Premier Han Zheng had told energy companies to make sure there is enough fuel to keep the country running and that Beijing would not tolerate blackouts.
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US Secretary of State Antony Blinken renewed warnings that time was running out for Iran to return to a nuclear deal, saying it was up to Tehran to act. "The ball remains in their court, but not for long," Blinken told reporters in Pittsburgh where he took part in US-EU trade talks. "There is a limited runway on that, and the runway is getting shorter." Blinken reiterated that President Joe Biden was willing to return the US to a 2015 accord in which Iran drastically scaled back nuclear work in return for promises of economic relief.
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BROKER RATING CHANGES
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GOLDMAN SACHS INITIATES PHOENIX GROUP WITH 'NEUTRAL' - TARGET 740 PENCE
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PANMURE RAISES PRIMARY HEALTH PROPERTIES TO 'BUY' ('HOLD') - TARGET 172 PENCE
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PANMURE RAISES FULLER SMITH & TURNER TO 'HOLD' ('SELL') - TARGET 740 PENCE
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COMPANIES - FTSE 100
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A 450-mile subsea power cable linking the UK and Norway has started commercial operations, allowing the two countries to share renewable energy, power lines operator National Grid said. Water flowing from mountains to fjords and harnessed by hydropower stations in Norway will power British homes, as the world's longest 'interconnector' hooks up the two countries' grids. The cable also will allow excess wind power from Britain, when turbines are producing high levels of electricity in windy conditions but demand is low, to be exported to Norway to power homes there. This will mean the Norwegian grid can effectively store energy, by conserving water in the Scandinavian country's vast Blasjo reservoir which is used to feed hydropower plants, for use at another time. The EUR1.6 billion North Sea Link, a joint venture between National Grid and Norwegian system operator Statnett, will help reduce the burning fossil fuels for power in the UK.
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COMPANIES - FTSE 250
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JD Wetherspoon reported a drop in annual earnings as the pub chain continued to hit out at the UK government's decision to impose lockdown restrictions and the detrimental effects that has had on the industry. For the financial year that ended July 25, the Watford-based pub and hotel operator reported revenue down 39% to GBP772.6 million from GBP1.26 billion the year ago. Like-for-like sales fell 38%, bar sales decreased by 42% and food sales by 37%. Pretax loss before exceptional items widened to GPB167.2 million from GBP44.7 million, while pretax loss post exceptional items was GBP194.6 million compared to GBP105.4 million in financial 2020. Wetherspoons declared no full-year dividend, unchanged from last year. There were no share buybacks in the financial year. Turning to current trading, Wetherspoons said like-for-like sales in the first nine weeks of the current financial year were 8.7% lower than the same weeks in August and September 2019 - before the pandemic started.
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Greencore said it has seen a further improvement in revenue, profitability and cash flow momentum during the fourth quarter of its financial year, which ended September 24, supported by a continued increase in demand for food-to-go categories and new business wins. The Dublin-based company said revenue trends continued to recover with revenue 27% above fourth quarter 2020 levels and 1% above equivalent pre-Covid levels in 2019. For the full year, Greencore expects to report revenue of GBP1.32 billion. It posted revenue of GBP1.26 billion in financial 2020. In addition, Greencore expects to generate adjusted operating profit towards the upper end of previous guidance of between GBP36 million and GBP40 million for financial 2021.
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Ahead of its interim results in November, AO World said it has continued to see growth in a challenging operating environment. For the six months to September 30, revenue increased 5% on a one-year like-for-like basis against strong comparatives during the Covid-19 lockdown for the online-only retailer. AO pointed to challenging market conditions in both the UK and Germany markets which resulted in lower volumes than expected, particularly in the second quarter. AO said given the market conditions over the past 18 months, performance over the comparable period in first half of financial 2020 provided a more "meaningful overview" of business performance than a direct comparison with financial 2021. Therefore, on a two-year like-for-like basis, revenue grew 66%, with the UK business growing 63%. Like-for-like revenues in Germany grew 84% over the same period. Looking ahead, AO said adjusted earnings before interest, tax, depreciation and amortisation for the full year is expected to be between GBP35 million and GBP50 million. AO posted adjusted Ebitda of GBP19.6 million in financial 2020.
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COMPANIES - GLOBAL
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Zoom Video Communications said it has mutually agreed with Five9 to terminate their merger agreement. At Five9's special meeting of stockholders, Five9 did not obtain the requisite stockholder support for the merger. As a result, Zoom and Five9 each had the ability to terminate the merger agreement. Zoom is a San Jose, California-based company that provides the video conferencing service that became synonymous with working from home during the virus pandemic, while Five9 is a Nasdaq-listed cloud software company, also based in California. Zoom announced the acquisition in July this year, which would have seen it pay around USD14.7 billion for Five9.
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Friday's Shareholder Meetings
Arcontech Group PLC - AGM
Gateley Holdings PLC - AGM
Genesis Emerging Markets Fund Ltd - EGM re new investment policy
Henderson Smaller Cos Investment Trust PLC - AGM
Kape Technologies PLC - GM re ExpressVPN acquisition
Sanne Group PLC - GM re acquisition by Apex Acquisition Co
Smart Metering Systems PLC - GM re share placing
TP Group PLC - GM re removal of two directors
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
