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UK Investor Magazine Podcast- CEO Alan Green discusses Burberry, Argo Blockchain, and AB Dynamics
Alan Green joins the Podcast as we discuss key market themes and a selection of UK equities.
We discuss:
- Burberry (LON:BRBY)
- Argo Blockchain (LON:ARB)
- AB Dynamics (LON:ABDP)
UK inflation has began to fall and the FTSE 100 continues to flirt with all time highs. We look at what could derail a rally and the key influences on stocks.
Burberry has been a major beneficiary of Chinese economic expansion over the past 20 years. We run through this morning’s update as China reopens.
Argo Blockchain have secured financing to avoid a worst case scenario in the short term, we look at whether the recent jump in Argo shares is a dead cat bounce, or can be sustained.
We finish by looking at AB Dynamics.
Ian Pollard – Burberry #BRBY revenue falls; excitement with brand heat & social conversation
Burberry Group plc BRBY would have you believe that customers are experiencing excitement ahead of new product delivery. They are also building brand heat and that is causing the customer excitement to grow even more. Digital engagement is also high on the list of jargon in todays update which is for the 13 weeks to the 29th December. Unfortunately the figures will not create any excitement as they show retail revenue fell by 1% during the thirteen weeks or 2% at constant exchange rates.Social conversation reached c57 million consumers during the Festive season. The company seems to appear to be proud of that even if it did not do much for revenue. In case you missed it first time round hey are keen to confirm this brand heat thing.
Antofagasta ANTO finished the year strongly with record copper production for the quarter whilst net cash costs for the quarter were the lowest since 2012. 2019 is expected to start with real momentum for what the company expects to be another record-setting year’ with production increasing by up to 9% to 750-790,000 tonnes.Group and copper production also set a record for the year and fourth quarter gold production increased by 87% over the previous quarter. Gold, copper and molybdenum production in 2019 are all expected to set new records.
WH Smith plc SMWH claims a strong trading performance across the Group for the 20 weeks to the 19th January.Total sales rose by 6% and like for like by 3%, The High Street is said to be doitg well with a sales fall of 1%, whilst the international business has continued to grow and now has over 420 stores.
Hotel Chocolat Group HOTC updates that total Group revenue for 13 weeks to the 30th December increased by 15% compared to the previous year. 15 new stores were opened during the six months to the end of December,
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Ian Pollard – Burberry #BRBY Forced To Adopt Meaningless Jargon
Burberry Group BRBY claims to have completed global roll out of new digital clienteling tool. Despite this first quarter comparable sales have grown 3%, which it finds pleasing.Even worse in the jargon stakes it is engaging consumers with frequent and sometimes unexpected “drops of fresh product”. The final insult to the intelligence of its readers, shareholders and customers is its claim that “Farfetch collaboration” is performing ahead of its expectations. What management in its right mind, especially one trying to market high end luxury goods, is so lacking in know how, that it proudly admits to having anything in its armoury which is far fetched
Barratt Developments BDEV updates that it has produced a strong financial and operational performance for the year to the 30th June and achieved 17,579 completions the highest level in a decade. Helped by a strong end to the year, profit before tax expected to be around £835m a rise of some 10% on last years figure.
Wetherspoon JDW in the 10 weeks to the 8th July like for like sales rose by 5.2% sales. In his by now almost one man battle to ensure that Brexit happens, Chairman, Tim Martin explains in detail the benefits of Brexit to both Wetherspoons and many other companies. “The main advantage of Brexit is that the EU is a protectionist system that imposes high tariffs on non-EU imports such as wine, rice, coffee, oranges, children’s shoes and clothes, and over 12,000 other products. “Leaving the EU allows the UK to adopt the approach of countries like Singapore, Hong Kong, Switzerland and Australia by dismantling the tariff walls, which improves general living standards.He ends with a quote from the Australian High Commissioner that there was never a country that embraced free trade that was poor as a result.
Page Group plc PAGE The second quarter produced a number of records with a record 16% rise in profits and a record total profit for any quarter of 202m. The rise of 16% was the highest quarterly growth rate for seven years. For the half year total profits rose by 12.5% or 14% at constant exchange rates.
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Ian Pollard – Mitchells & Butler – Reports Results on a Snow Adjusted Basis
Mitchells & Butler MAB tries to claim a strong performance for the half year to the 14th April but is reduced in the process to having to adjust its growth figures by calculating the impact of snow. Thus like for like sales growth of 1.6% becomes 2.5% on a snow adjusted basis. In the end it decides to give up the pretence and restore its credibility by admitting that underlying profitability remained flat, which is in itself perhaps something of an exaggeration with reported profit before tax down from £75m to £69m. It is a pity when management has to admit that it can not tell the difference between flatness and a fall. Basic earnings per share came in at 13p as against 13.7p
SSP Group SSPG reports another strong performance for the half year to the 31st March, with underlying profit before tax rising by 40.3% and earnings per share by 33.3%. Like for like sales increased by 2.8%. The interim dividend is to be increased by 50% to 4.8p per share.
Burberry Group BRBY saw 2018 as a year of transition which would leave the company ready to start its transformation. Like for like sales for the year to the 31st March grew by 3%, together with growth in both profit and cash flow. Revenue for the year fell by 1% both on a reported basis and and at constant exchange rates. Adjusted operating profit was up by 2% on a reported basis and by 5% at constant exchange rates and adjusted diluted earnings per share was up by 6% and 10% respectively. The final dividend is being increased by 6% from 38.9p per share to 41.3p. The outlook for 2019 includes a proposed share buy back of 150m.
Coats Group plc COA is now undergoing a transformation which will accelerate its transition from the industrial age to the digital age. In the first four months of the year it has seen robust growth of 4% in its core thread business and double digit growth continued in Performance Materials with a rise of 19%. Group sales were up 5% at constant exchange rates with a strong performance from the industrial business with growth of 6%.
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Pearson Selling The Family Silver
Pearson plc PSON The best that can be said about Pearsons 2017 results is that they came out at the top end of guidance and that the restructuring programme is on track. Nonetheless underlying revenues fell by 2% due to a 4% decline in North America where US higher education coursework fell by 3% despite a rise of 9% in digital coursework. For 2018 further falls are possible and adjusted operating profit is expected to be between £520m and £560m after disposals compared to 2017’s £ 570 to £575m. Disposals which were completed in 2017 included a 22% stake in Penguin Random House. Perhaps it is time that management woke up to the fact that there is only a limited supply of family silverware and in the end it runs out.
Burberry Group BRBY not surprisingly saw retail revenue down by 2% in the quarter to the 30th December which management should perhaps be reminded, included Christmas, although to be fair, on a comparative store basis, they did manage an increase of 2%. Here is another former stalwart of British retail whose management is trying to transform it and to do so with strings of meaningless verbiage. The aim is to establish it firmly in luxury – it does not actually say ” luxury what” but no doubt they will get round to deciding that later.They seem to have completely forgotten that the company was for decades firmly esconsed in the luxury goods market and apparently no longer is..This great transformation is going to be underpinned by “people strategies”, We will also see a “global engagement campaign” for employees and best and most important of all “the piloting of new enhanced digital sales associate tools.”At least management is not lost for words, it is just sales it is a bit short of.
Beazley plc BEZ expects to report that pre tax profits for the year to the end of December will be ahead of current market expectations, helped partly by a reduction in US Corporation tax rates from 35% to 21%.
Cineworld CINE achieved growth of 11.6% in the year to 30th December after admissions increased compared to 2016. Another year of progress is expected for 2018 after refurbishments and selective site closures duing 2017.
UK High Street – Not In Good Health ?
Sainsbury SBRY hs been forced to cut its interim dividend by 14% to 3.1p. Despite all the hype about outperforming this and growing market share in challenging conditions etc etc, in the end it was forced to choose between sticking to its strict policy of paying an interim dividend equal to 30% of the prior full year dividend or leaving it as it was, so it chose to cut. And looking at the figures that comes as no surprise. Underlying earnings per share and profit before tax fell by 22% and 9% respectively whilst on a statutory basis profit before tax slumped from 372m to 220m and earnings per share collapsed by over 50% from 14.8 pence per share to 7.1p. The Group Chief Executive regards this as a good performance. Like for like sales for the half year to 23rd September do provide a better picture with rise of 1.6% including fuel.
Burberry Group BRBY is increasing its interim dividend by 10% after delivering a strong first half which double digit underlying profit growth of 17% after revenue growth of 4% on an underlying basis and 9% reported. It is perhaps significant that Burberry has a strong international presence which will help to protect it from the ills afflicting British retailers.
National Grid NG maintained strong momentum in the US and continued to deliver a solid performance in the UK during the half year to 30th September. Despite all round falls in profit before tax, operating profit and earnings per share, which senior executives now seem to regard as an essential before their company can be described as a success, the interim dividend is tweaked upwards by 2.1%.
Halfords HFD also felt the effects of the abandonment of High Street shopping by the great British Public with its first half to the 29th September producing all round falls in underlying profit before tax (down 9.8%), basic earnings per share (down 10.8%) and underlying EBITDA (down 3.9). all of which taken together are seen as justification for increasing the interim dividend, in this case by 3%. The outlook for the full year remains unchanged they say, provided of course Christmas shoppers will abandon that nasty habit of shopping online and leave the comfort of their homes to endure huge traffic jams and all the other horrors of reality shopping in winter Britain.Luxury villas & houses for sale in Greece http://www.hiddengreece.net
Royal Mail Responds To Challenges
Royal Mail Group RMG One can adjust ones view of Royal Mails results for the year to 31st March, according to whether one prefers ones results on a reported or on an adjusted basis.Whichever one prefers the final dividend of 15.6% means a rise for the year of 4%. On a reported basis, profit before tax has risen by some 50% to £335m and basic earnings per share have risen from 21.5p to 27.5p.
Its main achievement for the year has been to respond to a challenging operating environment. No explanation is given as to what management found challenging in managing to deliver parcels and letters on time but these days no self respecting company misses the opportunity to say it operates in challenging conditions, which helps to make management look better than it actually is. On a positive note for the current years performance, RMG says it is past the peak of its investment spend.
Burberry Group BRBY tried to elevate its business in the year to 31st March, using key revenue drivers to enable it to gain the necessary height. It also had growth in digital as it invested in omni channel – the ignorant amongst us may ask “omni channel” what ? Elevating the brand appears to have resulted in profit before tax falling by 21% on an underlying basis and 5% on an adjusted and reported basis, Dividends for the full year are to be increased by 5%. A new CEO will also come on board soon. Let us hope for the sake of Burberry that he will have and keep his feet on the ground.
Greggs GRG has made a good start to the year with sales up by 7.5% on the first 19 weeks to the 13th May. There is growing demand for its £2 breakfast and for Balanced Choice but what may one ask will happen to the good old sausage sarnie – will that too become just a symbol of a bygone age? 87 shops have been refurbished during the year
Thomas Cook TCG enjoyed strong winter demand for Spain and long haul destinations led to a 3% revenue rise for the six months to 31st March. Online UK bookings have risen by 15%, way behind the Germans who are showing a rise of 35%. summer demand is strong for Greece and smaller European destinations,with bookings from Northern & Continental Europe showing double digit growth and confirming that there is real momentum behind managements strategy for growth. Greece has proved to be the outstanding destination for the coming summer.
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Brand CEO Alan Green talks Feedback (FDBK), Burberry (BRBY) & ASOS (ASC) on TipTV
Brand CEO Alan Green discusses Feedback (FDBK), Burberry (BRBY) & ASOS (ASC) with Zak Mir on TipTV.
Burberry Fails To Benefit From Collapse In Sterling
Burberry BRBY claims that its ambitious revenue growth plans are on track with a 4% drop in revenue for the six months to the end of September. Presumably it can find some form of logic in that but if there is it certainly seems to have escaped the CEO who produces a wordy paragraph of what read like vague and empty promises and explanations to justify the company’s performance. True, the second quarter did show some improvement with like for like sales rising by 2%, compared to the first quarters fall of 3%. Wholesale revenue for the half year fell by 14%, demand in the Americas is described as uneven and licensing revenue fell by 54% after the planned expiry of Japanese licences. Digital was one strong point and outperformed in all regions.
Burberry is just the sort of company which was supposed to reap large benefits from the collapse of sterling and is yet more proof, if proof were needed that company’s are failing miserably to take advantage of this so called golden opportunity.
Hays plc HAS shows the UK slumping whilst the rest of the world gets on with making itself prosperous.Whilst Asia Pacific grew by 30% in the quarter to the end of September and Continental Europe and the Rest Of the World by 33%, poor old UK & Ireland actually fell by 10%. As an example of how bad this is, France managed to produce 22% growth. recruitment is one of the main bel lweather of any economy. On these figures the UK’s bell is badly cracked. Hays claims it has a world class management team in the UK and it is leading the company through uncertain times.
Utilitywise UTW is increasing its dividend by 30% for the year to the end of July, after a 22% rise in revenue led an increase of 7% in profit before tax. Net debt was down by 97%. Customer numbers were up by 23% in the UK and Ireland and by 49% internationally.
Gear4Music G4M Strong first half revenue and profit growth seems set to be followed by a strong Christmas trading period and the board believes that full year results will now be ahead of its previous expectations.Revenue for the half year to the end of August rose by 73% and gross profit by by 74%. Adjusted profit before tax came in at £966,000 after last years first half loss of £217,000. Europe produced particularly strong growth, especially in July and August and now accounts for nearly 40% of sales.
Marshall Motor Holdings MMH claims it knows of no reason for recent share price movements, other than general speculation about the possible consequence of Brexit. Since the end of June the company has enjoyed material growth in revenue and profits, following two acquisitions and September produced significant like for like new vehicle sales growth, whilst after sales revenue also grew strongly.
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Wetherspoon Savages Mandelson and Cameron
Wetherspoon (JD) JDR Tim Martin devotes most of todays update to a withering attack on Christine La Garde, Cameron, Carney and all the others involved in the fear and terror propaganda machine known as Remain.
First the boring bits. For the 11 weeks to 10th July Wetherspoons like for like sales rose by 4% and for the 50 weeks to 10th July they were up by 3.4%. total sales for the 50 weeks rose by 5%.
As for the company’s outlook he says; Wetherspoon trade strengthened slightly in recent weeks and we consequently anticipate a modestly improved outcome for this financial year. Caution should be exercised in extrapolating current levels of sales growth for future years.” And then comes the killer thrust.
“Unbeknown to most voters, one of the “architects” of the Remain campaign, which devised the above approach, was Peter Mandelson (“How the struggle for Europe was lost”, Peter Mandelson, Financial Times, 2 July), who worked closely with Cameron, Osborne and others.
“In my opinion, the above individuals and organisations are either dishonest, or they have a poor understanding of economics, since democracy and prosperity are closely linked and the EU is clearly undemocratic. By voting to restore democracy in the UK, I believe the UK’s economic prospects will improve, although it is quite possible that the unprecedented and irresponsible doom-mongering, outlined above, may lead to some kind of slowdown.
Barratt Developments BDEV proclaims another strong performance for the year to 30th June with profit before tax expected to show a rise of 20%, after a 5.3% rise in completions and another huge rise of 10.6% in average selling prices. Not surprisingly Barratt remains supportive of governments schemes designed to ensure that housebuilders can continue to benefit from strong demand and inflation beating price rises.
Burberry BRBY continues to suffer from falling sales even in its most important markets, as it tries, so far without much signs of success, to position itself for long term growth in the midst of a challenging external environment. In the three months to the 30th June, Asia Pacific and Hong Kong, where it once rode so high, saw a double digit % decline in like for like sales whilst Continental Europe was depressed and saw a similar fall in sales to travelling luxury customers.The UK on the other hand did deliver mid, single digit % growth. Caution is also expressed about the outlook for wholesale sales since May and expects that the 6 months to the end of September will produce a fall of 10%.
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