Weekly review

Equity view

Real estate investment trust Tritax EuroBox has entered into a conditional agreement with a subsidiary of German property investor Dietz Aktiengesellschaft for the speculative forward funding acquisition of a €76.41m logistics asset in Dormagen, located between Cologne and Düsseldorf. Tritax Eurobox said on Friday that the asset, which was currently being constructed, was held freehold and once built will comprise three adjacent units with a total gross internal area of approximately 36,437 square metres. The three units will offer flexible leasing options to be let to either multiple tenants or a single tenant.

Vital components manufacturer Essentra turned in a "strong" full-year trading performance on Friday, driven by accelerated growth in the final quarter of 2021. Essentra said full-year revenues were up 7% year-on-year at £960.0m, while adjusted operating profits were 35% higher at £84.0m and pre-tax profits increased 45% to £67.0m. Adjusted earnings per share were up 38% at 18.2p.

Power generation company ContourGlobal reported a record full-year financial performance on Friday as it said trading in the current financial year was ahead of the board’s expectations. Full-year adjusted EBITDA rose 17% to a record $842m, with revenue up 53% to $2.15bn. The company said EBITDA was driven mainly by its acquisition of Western Generation and a strong performance from its power plant in Arrubal, Spain.

South Africa bank Investec lifted full-year profit guidance, driven by the post-pandemic economic recovery. The company said its adjusted earnings per share were now expected to be between 51 - 55p for the year to March 31, up from guidance of 48 – 53p and compared with 28.9p last year.

Mining giant Anglo American has inked a memorandum of understanding with EDF Renewables to secure a 100% renewable energy supply for its South Africa operations.Anglo American said on Friday that the duo will work together towards developing a regional renewable energy ecosystem in South Africa, with the ecosystem expected to be designed to meet Anglo American's operational electricity requirements in the nation through the supply of 100% renewable electricity by 2030.

Drugmaker AstraZeneca's rare disease unit has entered into a settlement agreement with Chugai Pharmaceutical, resolving all patent disputes between the two companies related to long-acting C5 complement inhibitor, Ultomiris (ravulizumab). In accordance with the settlement agreement, AZN's Alexion wing and Chugai have both taken steps to withdraw patent infringement proceedings filed in the US with the District Court of Delaware and in Japan with the Tokyo District Court.

Online rail and coach ticketing platform operator Trainline said on Thursday that ticket sales and revenues both improved in 2022 as the group attempted to bounce back from the peak of the Covid-19 pandemic. Trainline stated total group net ticket sales had surged 222% to roughly £2.52bn, within its previously guided range of £2.4-2.8bn despite the impact of the Omicron variant in the fourth quarter, while full-year revenues were up 181% to approximately £189.0m.

Specialist lending and retail savings group OSB posted record full-year profits on Thursday as it announced a £100m share buyback. In the year to the end of December 2021, underlying pre-tax profit rose 51% to a record £522.2m, while statutory pre-tax profit was 78% higher at £464.6m, mainly due to a lower cost of retail funds and an impairment credit for the year.

Deliveroo's annual loss widened as spending on marketing and technology more than offset higher revenue at the food delivery group. The company also said sales growth would slow markedly in 2022, reflecting uncertainties including rising inflation and the effect of the war in Ukraine.

Computer services provider Computacenter said on Wednesday that it had delivered double-digit revenue and profit growth in 2021, leading the group to hike its full-year dividend. Computacenter said full-year revenues were 23.6% higher at £6.72bn, while adjusted pre-tax profits were 27.5% stronger at £255.6m. Diluted earnings per share shot up 20.3% to 160.9p.

Promotional product marketer 4imprint on Wednesday reported soaring profits as order numbers recovered from Covid lockdowns. The company said annual pre-tax profit rose to £30.23m from £3.84m a year earlier as processed orders soared to 1.42m from 960,000 in 2020. A final dividend of 30p a share was declared taking the total for the year to 45p a share.

Intellectual property company IP Group said on Wednesday that full-year profits had more than doubled following solid increases in both its net asset and total portfolio values. IP Group stated full-year after-tax profits had surged 142% to £449.3m, driven by a "strong performance" across all sectors, while its net asset value had increased 30% to £1.73bn and its total portfolio value grew 27% to £1.5bn. Cash realisations of £213.4m were up 11.7%.

Software and cloud services specialist Bytes Technology hailed "another upbeat year" on Wednesday as it said results were ahead of expectations. In an update on trading in the year to 28 February 2022, the group reported double-digit growth in its three key financial performance metrics with accelerated growth in the second half of the year.

Automotive fluid systems manufacturer TI Fluid Systems said on Tuesday that full-year revenues and operating profits had improved year-on-year in 2021 as it managed to successfully navigate yet another "volatile year". TI Fluid Systems said full-year revenues were up 5.6% at constant currency rates to €2.95bn, which, when coupled with a more than percentage point improvement in its margin from -6.3% to 4.3%, helped raise adjusted underlying earnings from a reported loss of €176.3m to a profit of €126.8m.

Plumbing and heating products supplier Ferguson said it was doubling its share buyback to $2bn after interim profits rose by two-thirds driven by a strong US residential house building market. The company reported adjusted core profits of $1.46bn, up 59.8%, as net sales rose 29.1% to $13.1bn for the six months to January 31. The interim dividend was lifted by 15% to 84 cents a share.

Plastic piping manufacturer Genuit said on Tuesday that both annual revenues and profits had surged in 2021 as margins improved despite cost headwinds and supply chain constraints. Genuit stated revenues were up 49.1% at £594.3m in 2021, which, when coupled with a 540 basis point improvement in its underlying profit margin to 16.0%, led to a 120% improvement in operating profits and a 164% jump in pre-tax profits to £62.9m.

Specialist publisher Informa reported a jump in annual revenues on Tuesday, helped by the return of in-person events following the worst of the pandemic. Revenues at the blue chip in the 12 months to 31 December were £1.80bn, compared to £1.66bn a year previously, boosted by stronger subscriptions, growth in digital services and the "progressive" return of live and on-demand business-to-business events as Covid-19 restrictions around the world eased.

Thermal processing services provider Bodycote said on Monday that it had made "good progress" in 2021, with both revenues and profits growing throughout the year. Bodycote posted a 3% uptick in revenues to £615.8m, which, when coupled with a 2.8 percentage point increase to 15.4% in its headline operating margin, helped the group deliver a 26% increase to £94.8m in headline operating profits.

Essential components supplier Essentra revealed on Monday that it had tapped former Marshals chief financial officer Jack Clarke to succeed outgoing CFO Lily Liu. Essentra stated Clarke will join the board as chief financial officer Designate, with effect from 4 April, with Liu set to step down from the board following the conclusion of its annual general meeting on 19 May. She will, however, remain with the group to focus on its strategic review and her leaving date will be announced separately.

Anglo-Australian miner Rio Tinto has made a $2.7bn bid to buy the 49% of Canada’s Turquoise Hill it doesn’t own as it looks to settle its relationship with the Mongolian government over the massive Oyu Tolgoi copper project. Rio is offering 34 Canadian dollars in cash a share, a 32% premium to Turquoise Hill's last closing share price on the Toronto Stock Exchange.

Phoenix Group has upped its dividend after annual cash generation exceeded expectations, the blue chip life insurer said on Monday. The group, which owns Standard Life and ReAssure, among others, said cash generation for the year to 31 December 2021 was £1.72bn, marginally higher than 2020’s £1.71bn and well above internal targets for between £1.5bn and £1.6bn.

Economic news

Hundreds of crewmembers at one of Britain’s largest ferry operators have been sacked, as P&O Ferries cancelled sailings for “several days” and warned on its viability. The company, owned by Nasdaq-traded Emirati shipping conglomerate DP World, earlier ordered all its vessels to port “in preparation for a company announcement”.

The Bank of England hiked interest rates as expected on Thursday by 25 basis points and struck a more dovish tone as it warned inflation could exceed 8% this year. The Monetary Policy Committee voted 8-1 to lift rates to 0.75%, with only deputy governor Jon Cunliffe voting against a hike. At the February meeting, four members voted in favour of a 50 basis points hike.

The US, UK and European Union have tightened sanctions on Russia, including a ban on the export of luxury goods and increased import tariffs. The British government said that it, alongside G7 allies, had banned the export of luxury goods to Russia as well as denying the country, in conjunction with the World Trade Organisation, access to most favoured nation tariffs.

UK unemployment has fallen to pre-pandemic levels, but wages are struggling to keep up with soaring inflation, official data showed on Tuesday. According to the Office for National Statistics, there was both an increase in employment and a decrease in unemployment in the three months to the end of January 2022.

The formal suit is out, and the likes of sports bras and dog collars are in, as the rise of home working continues to have an effect on the UK’s official ‘basket of goods’ used to measure inflation. In the Office for National Statistics’ latest update to the basket, men’s suits have been removed, although a formal jacket or blazer has been included as the smart menswear representative.

Manufacturers are continuing to raise both UK and export prices at record levels, a survey revealed on Monday, amid escalating inflationary pressures across the board which showed little sign of abating. According to the Make UK/BDO first quarter manufacturing outlook survey, UK prices rose to a balance of 58% in the first quarter, from 52% in the final three months of 2021 - the highest balances in the survey’s history, and the fourth consecutive quarter with record numbers of companies increasing prices.

British companies expect to put up prices at an "unprecedented" pace this year, according to a business survey published on Monday. The IHS Markit UK Business Outlook found that a net balance of 62% of private sector firms planned to increase prices this year, compared to 56% in October and the highest in the survey’s 12-year history.

International events

New claims for unemployment benefits fell by 15,000 to 214,000 across the US in the week ended 12 March, according to the Labor Department, for the lowest figure in ten weeks. That figure was down from the prior week's revised 229,000 reading and ahead of market expectations for a print of 220,000. On a non-seasonally adjusted basis, initial claims decreased by 16,981 from the previous week to 202,894, with marked declines recorded in New York, Massachusetts, and the District of Columbia.

The cost of living in the euro area picked up a tad more quickly than previously estimated last month, revised data showed. According to Eurostat, in seasonally adjusted terms, the annual rate of increase in the euro area's Consumer Price Index picked up from 5.1% for January to 5.9% in February.

Russia has reportedly sent an order to make $117m interest payments on two dollar bonds that were due on Wednesday, as it looks to avoid default. According to reports, Russia’s financial ministry said it had sent an order to Citibank’s London branch to make the payment. It is not known whether the payment was made in dollars or rubles.

Russia is poised to default on its debts for the first time since the 1990s, it was reported on Wednesday, as economic and financial sanctions began to bite. Interest payments of $117m on two dollar-denominated sovereign bonds that were sold in 2013 are due on Wednesday.

US retail sales came in far above economists' forecasts thanks to upwards revisions to data for January. According to the US Department of Commerce, retail sales volumes grew at a month-on-month pace of 0.3% in February to reach $658.13bn.

Global economic growth is expected to be hit by a combination of rising commodity prices, a lack of supply from Russia and sanctions on Moscow, the International Energy Agency (IEA) said on Wednesday. Oil prices soared to $140 a barrel after Russia’s unprovoked invasion and attack on Ukraine on fears of supply disruption as the West moved to punish the Kremlin with economic sanctions.

Manufacturing activity in the New York region declined in March for the first time since early in the Covid-19 pandemic, according to a survey released on Tuesday. The New York Fed’s Empire State general business conditions index fell to -11.8 from 3.1 in February. This marked the lowest reading since May 2020 and was below expectations of 7.0.

Fund managers around the world boosted their cash on hand in March to 5.9%, the highest level since the start of the pandemic, in response to Russia's invasion of Ukraine, the results of a closely-followed survey revealed. According to Bank of America's monthly Fund Manager Survey, growth optimism also took a hit, falling to its lowest level since July 2008, just before the collapse of Lehman Brothers.

Growth in industrial production was flat in the Eurozone in January, official data released on Tuesday showed. According to Eurostat, the European Union’s statistics office, industrial production was 0.0% in January compared with December 2021, when industrial production rose by 1.3%.

German investor sentiment suffered its biggest ever drop in March as the Russia-Ukraine conflict and sanctions on Russia weighed, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index fell to -39.4 from 54.3 in February, coming in well below expectations for a reading of 10.0. This marked the worst decline in expectations since the survey began in December 1991.

China’s economy got off to a surprisingly buoyant start in 2022, official data showed on Tuesday, easily beating all expectations. According to the National Statistics Bureau, industrial production grew by 7.5% year-on-year in the year to January-February. That's weaker than December’s year-to-date rise of 9.6% but above analyst expectations for growth of just 4%.

Oil prices dipped on Monday as traders clung to hopes that peace talks between Russia and Ukraine would make headway. Oil prices have surged to record highs following Russia’s invasion of Ukraine, with benchmark Brent crude touching nearly $140 a barrel at one point.