Results round-up

International energy services group Hunting issued a pre-close trading statement for the first six months of the year on Tuesday,, ahead of its half year results set to be issued on 24 August.

The FTSE 250 firm said its performance in the first half benefited from the increase in onshore drilling in the US, particularly in the shale oil regions such as the Permian Basin in West Texas.

It said that growth in activity since the end of 2016 meant Hunting's perforating systems business reported results ahead of management's expectations.

"Of note has been the wider adoption of the H-1 Perforating System, which has established a strong market position given its performance, reliability and safety,” said chief executive Dennis Proctor.

"To meet this demand, the perforating systems business has increased the number of shifts, recommissioned a previously mothballed facility and added personnel."

Elsewhere, Proctor said the US offshore and international drilling markets remained weak due to the low oil price.

Drilling budgets continued to be reduced by global operators, which had an adverse impact on Hunting's businesses focused on those markets.

"While Hunting's Well Construction segment has experienced difficult trading conditions in the period, sales into the onshore US drilling market, which include the segment's premium connections and specialty supply businesses, have improved during H1 2017," Proctor explained.

"The well completion segment, which incorporates Hunting's perforating systems business, has reported a profit, driven by the activity noted above, but being offset by the weaker US offshore and international markets.

"As previously noted, Hunting's European OCTG operations have reported good activity levels since the start of the year, with sales primarily driven by orders for the US shale and Middle East markets."

Proctor also said Hunting's well intervention segment saw "difficult" market conditions as deepwater drilling activity remained subdued due to the lower investment levels seen particularly in the deepwater Gulf of Mexico.

As a result of that activity, the group expected to report a positive EBITDA in the period, but remain loss making at the profit before tax level.

Cash generation continued to be closely monitored, with working capital controls still in place across the group's businesses.

Proctor said net debt at 30 June increased to approximately $8m since year-end, primarily as a result of order book increases and the associated inventory purchases required.

Capital investment continued to be “tightly controlled” as well, with spend in the period being approximately $5m.

"The outlook for the remainder of year is predicated on sustained US onshore drilling activity driving the group's performance, accompanied by cautious optimism for stable offshore and international markets during H2 2017," Proctor said.

Sainsbury's delivered a super start to its financial year as grocery sales growth accelerated and general merchandise, including Argos, outperformed the market.

Like-for-like retail sales excluding fuel grew 2.3% across the group in the 16 weeks to 1 July, a sizeable improvement from the decline seen in the same period a year ago and the lifeless growth in the fourth quarter of last year.

The quarterly update, which will be the last reporting event before interim results on 8 November, is the first following the Argos acquisition where the retailer is not releasing separate data for Sainsbury supermarkets and Argos stores.

With grocery sales up 3%, general merchandise improving 1% and clothing growing 7.2%, total sales grew 2.7%.

The core Sainsbury's supermarkets enjoyed transaction growth of 1.9%, online grocery sales grew close to 8%, convenience stores delivered growth of around 10% and Sainsbury Bank increased its active customer base by 6%.

"We have seen strong food sales where we have invested in product innovation, such as our new Summer eating ranges," said chief executive Mike Coupe, who felt it was a strong overall performance.

"Our produce category, where we know quality matters most to customers, performed particularly well, outperforming the market with volume growth of over 1%."

He said the outperformance of general merchandise and clothing was helped by a "stellar performance" from fast track delivery, up 36%, and collection, up 64%, during the quarter, particularly during the period of warm weather when customers wanted to buy and receive products like paddling pools and fans on the same day.

"Argos customers are increasingly choosing to shop with us online, consistent with our objective of being a leading digital retailer," he said.

There were 36 Argos Digital stores opened within larger Sainsbury's supermarkets, bringing the total to 75, of which 17 replaced an existing Argos store, taking the total number of replacement stores to 20. Plans are to open 135 more of these store-within-a-store Argos Digitals by the end of 2017/18, which will take the total to 175. Three 'mini' Habitat stores were also opened to take the total to 11.

Some analysts have concerns about Sainsbury's profit margins, with Goldman Sachs' preview cautioning that the market is "materially underestimating the margin investment required" across the group, with the grocer losing market share and price competitiveness, plus with wages below those of its peers.

Touching on this, the company said it was working with suppliers to offer "market-leading value" and has improved its price position versus competitors in the quarter, while also noting that it was on track to achieve £145m of cost savings this year as part of a three-year target of £500m. There are also £160m of EBITDA synergies from the Argos acquisition expected by March 2019.

Said Coupe: "The market is competitive and we continue to manage cost price pressures closely. Our strategy is delivering and we are well placed to navigate the external environment."