August 1, 2017

Pegler’s market report – 01.08.17: A raft of company news and announcements – some good, some not!

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (01.08.17) Business section under the title Pegler’s Market Report:

A raft of company news and announcements – some good, some not!

The Food & Drug Administration (FDA) in the US has said that it is looking into reducing nicotine in cigarettes to non-addictive levels. The FDA claims cigarettes is the only legal consumer product that, when used as intended, will kill half of all long-term users. If achieved it would be a hammer blow to the tobacco industry. British American Tobacco, with its huge exposure to the North American market, was hardest hit when the FDA statement was released.

Barclays made a loss of £1.2bn in the first half of the year as its withdrawal from Africa and the ongoing payment protection insurance scandal knocked the lender’s balance sheet. It has set aside an extra £700m to meet compensation claims for mis-selling PPI, while it also reduced its stake in Barclays Africa to around 15pc. The lender is pulling back from Africa as part of a restructuring plan that will see it focus on operations in the UK and US.

Pharma giant AstraZeneca staged a minor recovery after a huge 15pc fall earlier last week when it told shareholders that its flagship drug trial had suffered a setback. Small fry in terms of the £7bn wiped off its value when it first announced the news.

BT shares also took a beating, after the telecom giant told shareholders that pre-tax profit has taken a 40pc hit from the Italian accounting scandal and a £225m settlement to avoid a court battle with two of its biggest investors.

British Airways-owner IAG, shares came under some selling pressure despite posting a 14pc increase in profits. The aviation giant said that the IT failure in May which caused travel misery for thousands of passengers cost it £58m.

Office provider Workspace has raised £200m through a private share placing as it looks to take advantage of changing working habits. Workspace believe an increasing number of firms are looking for flexibility when renting office space, rather than wanting to commit to long-term leases.

Womenswear retailer Bonmarché had a welcome bounce as it reported on stronger sales momentum in its first quarter despite the challenging industry headwinds. After a string of profit warnings last year, which hit its share price, there are finally green shoots of a turnaround at the high-street retailer mainly focused on mature women’s clothing.

Finally, online property portal Rightmove shrugged off concerns over the state of the housing market as customer numbers hit record levels and profits surged by nearly 10pc. Apparently, home hunters visited Rightmove a record 3,000 times a minute in the first half of 2017. Pre-tax profits rose 9pc in the first half of the year, up from £80.6m to £87.5m, while revenues were up 11pc to £120m.

By David Pegler, Brighton Capital Management