LONDON MARKET PRE-OPEN: Trainline ups outlook; AO World to raise cash

(Alliance News) - Stock prices in London are seen opening higher on Wednesday, clawing back some of Tuesday's chunky losses, despite a far-from-stellar handover from Asia as recessionary fears continue to stalk markets.

The pound remained under pressure, meanwhile, as UK Prime Minister Boris Johnson's future hangs in the balance.

IG futures indicate the FTSE 100 index is to open 74.4 points higher, 1.1%, at 7,099.87. The blue chip index closed down 207.18 points, or 2.9%, at 7,025.47 on Tuesday.

In early corporate news, Trainline said it has seen a "faster than anticipated recovery in rail passenger volume across Europe" and Redde Northgate posted improved yearly earnings. AO World, meanwhile, has gone cap in hand to investors just days after backing its own liquidity position.

Rail and coach ticketing platform Trainline said net ticket sales in the four months to June 30 were up 16% from pre-Covid times.

"This performance reflects a faster than anticipated recovery in rail passenger volume across Europe - including a notable resurgence of inbound customers from the US - as well as the benefit of Trainline increasing its investment in its International business," Trainline explained.

Trainline now expects net ticket sales growth between 18% and 27% versus pre-Covid levels. It expects revenue to be 22% and 31% above pre-virus levels.

It had previously expected net ticket sales in a GBP3.8 billion to GBP4.2 billion range, between 2.0% and 13% above the pre-Covid figure. Revenue was expected to land between GBP280 million and GBP300 million, which would have been between 7.3% and 15% above pre-virus levels.

Redde Northgate reported improved annual earnings and the commercial vehicle hire firm said it has made a decent start to the new year.

Revenue in the 12 months to April 30 rose 12% to GBP1.24 billion from GBP1.11 billion. Pretax profit jumped 98% to GBP132.7 million from GBP67.2 million.

Redde lifted its dividend by 36% to 21.0 pence from 15.4p.

The company said: "The business has traded well across a challenging and volatile economic backdrop in recent years, supported by the structural growth in outsourcing by an increasingly broad customer base. We are enjoying the benefit of an enhanced mobility solutions platform and continue to proactively manage inflation, resource availability and supply chain constraints.

"Demand remains high for the group's rental offering and as a result, the business expects to retain more of its van fleet this year whilst limiting disposals, with the car fleet growing in line with the business strategy. The new financial year has started well and the business is well positioned in its addressable markets."

Elsewhere in London, ProCook, whose shares tanked last month after an earnings warning, posted an annual revenue hike but once again cautioned on kitchenware market strife.

The pots and pans seller's revenue in the year to April 2 rose 30% to GBP69.2 million from GBP53.4 million.

However, pretax profit tumbled to GBP94,000 from GBP8.3 million a year earlier. ProCook's bottom line was hit by GBP9.4 million of one-off hits, including float costs and employee share-based IPO awards.

ProCook said the UK kitchenware market fell 12% during the first quarter of the company's new financial year, citing GfK data. It said total ProCook revenue during the quarter was GBP11.4 million, down 22% yearly but up 36% from pre-virus levels.

"The rapid deterioration in the consumer and macro environment means that we have now had to adjust and re-prioritise our focus. We are well placed to manage these current challenges with a strong financial position, a resilient business model, a clear strategy for sustainable and profitable growth, and a customer proposition focused on exceptional service, quality and value," the company said.

AO World said it plans to raise GBP40 million through a placing to "strengthen" its balance sheet and restore liquidity to "historic levels".

AO World will price its placing at 43 pence per share, an 8.5% discount to Tuesday's closing price of 47.0p.

The electrical goods seller on Monday had said its financial position was "in line with the board's expectations".

AO had confirmed in a statement on Monday that it was aware that one of the third-party credit insurers which provides credit insurance to some of its suppliers had rebased their cover in May with respect to AO, reflecting post-Covid sales levels. It followed a report in the Sunday Times which stated that Atradius, a credit insurer, cut its credit cover for the online retailer's suppliers.

Also on Wednesday, AO said first quarter trading was "materially in-line with the board's expectations".

"The board remains mindful of the ongoing volatile and challenging macroeconomic environment and continuing supply chain disruption. The [major domestic appliance] market is stabilising around levels seen in April and May 2022, underpinned by the distressed purchase model for white goods. Consumer behaviour is evolving as the step change in online consumer buying trends varies by category and the board will continue to monitor this closely and react as necessary," AO said.

Ten-pin bowling operator Ten Entertainment said sales during the 26 weeks to June 26 were 53% above pre-virus levels.

"Record-breaking sales performances during the February half-term; the Easter break; and the May Jubilee bank holiday all contributed to an unprecedented level of sales growth. Customer demand has been consistently in growth throughout the first half of 2022. Our value for money family entertainment model is showing greater appeal than ever before. We have deliberately preserved our entertainment prices at 2019 levels and have managed food and drink prices to maintain the value for money we provide for our customers. We have been rewarded with footfall that is 43% higher than experienced in 2019," Ten said.

It also said it plans to repay financing received as part of the UK's Coronavirus Large Business Interruption Loan Scheme this month, allowing Ten to resume dividends.

The pound was quoted at USD1.1937 early Wednesday, up from USD1.1900 at the London equities closed on Tuesday, but down from USD1.1955 around the time of the closing bell in New York.

UK PM Johnson has been left trying to save his premiership after a pair of cabinet resignations and a series of government exits threatened to force him from Number 10.

Rishi Sunak quit as chancellor on Tuesday, alongside Sajid Javid who resigned as health secretary, in a move that came just as the prime minister was being forced into a humiliating apology to address the row over scandal-hit former deputy chief whip Chris Pincher.

The pair were swiftly replaced on Tuesday night, with Nadhim Zahawi promoted to be the new Chancellor and Steve Barclay becoming Health Secretary.

Sunak and Javid, both potential leadership rivals, offered sharp criticisms of Johnson in their resignation letters.

Sunak said "the public rightly expect government to be conducted properly, competently and seriously", adding: "I believe these standards are worth fighting for and that is why I am resigning." Javid said the British people "expect integrity from their government" but voters now believed Johnson's administration was neither competent nor "acting in the national interest".

Tory former Brexit minister David Frost supported their resignations, noting they had done so after he similarly stepped down in December.

The euro stood at USD1.0253 early Wednesday London time, up from USD1.0240 at the European equities close on Tuesday. Against the yen, the dollar was trading at JPY135.22, down from JPY135.90.

In Asia on Wednesday, the Nikkei 225 closed 1.2% lower. In China, the Shanghai Composite shed 2.1%, while the Hang Seng in Hong Kong fell 2.6%. The S&P/ASX 200 in Sydney ended 0.5% lower.

On Wall Street, stocks staged a late turnaround to bounce off session lows. The Dow Jones Industrial Average closed down 0.4%, but the S&P 500 added 0.2% and the Nasdaq Composite closed up 1.8%.

Gold stood at USD1,766.26 an ounce, down slightly from USD1,767.88. Brent oil was quoted at USD104.00 a barrel, down from USD105.18. Oil prices have been hit by recession fears in recent sessions.

The economic events calendar on Wednesday has a US services PMI at 1445 BST and US Federal Reserve meeting minutes at 1900 BST.

By Eric Cunha; ericcunha@alliancenews.com

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