LONDON BRIEFING: UK Housebuilder Upbeat Heading Into New Year

(Alliance News) - UK housebuilders were in focus early Wednesday, taking over the trading update ...

Alliance News 15 January, 2020 | 8:01AM
Email Form

(Alliance News) - UK housebuilders were in focus early Wednesday, taking over the trading update spotlight from retailers. They also had better news.

Persimmon said it "traded well" in 2019, while the rebranded Bovis Homes said it expects profit to be slightly ahead of market consensus.

Persimmon said revenue for the year is expected to be GBP3.65 billion, down 2.4% on 2018, reflecting actions taken to ensure "improved levels of quality and service". Completions fell to 15,855 from 16,499 a year ago, with an average selling price broadly unchanged year-on-year at GBP215,700.

Pretax profit for the year is expected in line with market consensus, Persimmon said.

Looking at 2020, the company said it has a "solid platform" with total forward sales of GBP1.36 billion as at the end of December. Persimmon said it is in a strong market position heading into the spring season.

Peer Vistry said it expects to record profit slightly ahead of market consensus for 2019.

Vistry changed its name from Bovis Homes following its recently completed acquisition of Galliford Try's Linden Homes and Partnerships & Regeneration units. It said it will take GBP15 million in exceptional costs in 2019 related to the acquisition.

Vistry completed a total of 3,867 new homes in 2019, up 3% from 3,759 the year before. The total average selling price was GBP279,000 versus GBP273,200.

A "significant step-up" in the group's sale rate was maintained in the year, with an average sales rate per outlet per week of 0.58 versus 0.50.

Vistry said it expects another "record year" for profit.

"Whilst it is early in the year to comment on 2020 trading, we have a strong forward sales position and trading to date has been very positive, with consumer confidence returning and industry fundamentals remaining strong," the housebuilder said.

Persimmon was up 0.2% early Wednesday, while Vistry was up 0.5%.

Here is what you need to know at the London market open:

----------

MARKETS

----------

FTSE 100: marginally higher at 7,623.79

----------

Hang Seng: down 0.5% at 28,750.52

Nikkei 225: closed down 0.5% at 23,916.58

DJIA: closed up 32.62 points, 0.1%, at 28,939.67

S&P 500: closed down 0.2% at 3,283.15

----------

GBP: firm at USD1.3030 (USD1.3003)

EUR: flat at USD1.1129 (USD1.1127)

Gold: up at USD1,551.52 per ounce (USD1,542.80)

Oil (Brent): down at USD64.32 a barrel (USD64.70)

(changes since previous London equities close)

----------

ECONOMICS AND GENERAL

----------

Wednesday's Key Economic Events still to come

0930 GMT UK consumer and producer price indices

0930 GMT UK house price index

0930 GMT UK mortgage lending trends

1100 GMT Ireland goods exports and imports

1000 CET Germany 2019 gross domestic product - first calculation

1100 CET EU industrial production

1100 CET EU foreign trade

0700 EST US MBA weekly mortgage applications survey

0830 EST US producer price index

1030 EST US EIA weekly petroleum status report

1400 EST US Federal Reserve Beige Book

----------

Campaigning is under way in the Irish General Election after the Taoiseach ended months of speculation by naming February 8 as polling day. The Fine Gael leader Leo Varadkar travelled to see President Michael Higgins on Tuesday afternoon to ask for the formal dissolution of the Dail parliament. Earlier, as he announced the election date in Dublin, Varadkar insisted it was the "right time" for Ireland to vote. Outlining his rationale, he highlighted that the Brexit withdrawal deal had been agreed and powersharing was restored in Northern Ireland. He said there was a window before the European Council summit in March to enable an incoming government to secure a fresh mandate ahead of the next stage of Brexit negotiations.

----------

BROKER RATING CHANGES

----------

BARCLAYS CUTS RBS TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 225 PENCE

----------

BERENBERG INITIATES HARGREAVES LANSDOWN WITH 'HOLD' - TARGET 1928 PENCE

----------

BERENBERG INITIATES TALK TALK TELECOM WITH 'SELL' - TARGET 80 PENCE

----------

COMPANIES - FTSE 100

----------

SSE said it will complete the sale of SSE Energy Services Group to OVO Energy for an enterprise value of GBP500 million. This comes after the UK Competition & Markets Authority announced in December its decision not to proceed to a phase 2 investigation into the deal. Ovo was named as a potential buyer back in August and, once the deal is complete, will become one of the UK's largest retail energy suppliers. SSE said the proceeds will be used to reduce debt.

----------

Travis Perkins said it has appointed Non-Executive Christopher Rogers as chair designate of Wickes. The builders' merchant announced in July plans to demerge consumer-facing retailer Wickes as part of its plan to focus on trade customers and simplify the business. The appointment of Rogers is "another milestone" in the process, with good progress being made on completing the Wickes board. The demerger is on track for completion in the second quarter, Travis Perkins said. Rogers will not stand for re-election as a Travis Perkins non-executive and will step down following the group's AGM in April.

----------

COMPANIES - FTSE 250

----------

Tullow Oil said it has been working hard on a "major review" and the appointment of a new chief executive is "well under way". Tullow in December "reset" its future production guidance, suspended its dividend and said chief executive officer Paul McDade and exploration director Angus McCoss had resigned with immediate effect by mutual agreement. The oil & gas firm said it ended 2019 with average production of 86,700 barrels of oil per day, in line with expectations. Revenue for the year is at expected to be around USD1.7 billion and gross profit USD700 million. Tullow expects to report pre-tax impairments and exploration write-offs of around USD1.5 billion, largely due to a USD10 per barrel reduction in its long-term accounting oil price assumption and a reduction in TEN 2P reserves. Meanwhile, the firm's business review - covering all areas of Tullow's operations, cost-base and reporting - is "progressing well". The recruitment of a new CEO is "well under way" with the assistance of an executive search firm.

----------

Provident Financial said it expects to report a 2019 profit in line with expectations and said it is well place entering 2020. The subprime lender said it delivered results in line with board forecasts during the fourth quarter of the year, with Vanquis Bank slightly ahead of expectations and Moneybarn below forecasts asa a result of higher impairment. Provident said it has agreed a bilateral securitisation facility with NatWest Markets to fund Moneybarn business flows. This will provide up to GBP100 million of initial funding and is anticipated to grow to GBP275 million over the next 18 months. "I am very pleased that the group has continued to perform well in the final quarter and we expect to report full-year results in line with market expectations," said Chief Executive Malcolm Le May.

----------

COMPANIES - OTHER MAIN MARKET AND AIM

----------

Flybe's collapse has been averted after the UK government told the airline it would review air passenger duty and shareholders agreed to inject additional investment. The Treasury announced on Tuesday evening the loss-making carrier would continue operating after the review of the tax featured in rescue talks. Campaigners warned Boris Johnson that any APD review that leads to cheaper air travel would be a "complete scandal" and "rip up" the prime minister's pledge to show leadership on the climate crisis. Meanwhile, it is reported that Willie Walsh, the outgoing chief executive of International Consolidated Airlines Group, which owns British Airways, has written to UK Transport Secretary Grant Shapps questioning the deal. Flybe's shareholders Connect Airways, a consortium including Virgin Atlantic, Stobart Group and Cyrus Capital Partners, will put in more funding as part of the agreement.

----------

Also on Tuesday, Stobart Group said Andrew Tinkler sold his entire 4.975% stake in the company on Monday and now has no holding. Stobart shares closed Tuesday in London at 107.00 pence, giving the logistics firm a market capitalisation of GBP400.9 million. This makes Tinkler's disposal worth about GBP20 million. In addition to being part owner of financially troubled Flybe, Stobart also operates London Southend airport. Tinkler is the former chief executive of Stobart Group but had a major falling out with the company. Back in December, he built a 6.51% stake in Stobart spin-off Eddie Stobart Logistics, a holding he retains.

----------

COMPANIES - INTERNATIONAL

----------

Amazon.com said it is following a UK regulatory order which prevents it from lending money to investee and food delivery firm Deliveroo, Reuters reported late Tuesday. Earlier Tuesday, Bloomberg reported that Amazon had offered Deliveroo a loan after a UK competition probe into the takeaway firm's last funding round threatened a cash crunch. A spokesperson for Amazon told Reuters, however, that while an investigation from the UK Competition & Markets Authority is ongoing, the companies are required to operate separately and are restricted from "entering into non-ordinary course agreements like a loan".

----------

A Delta airliner experiencing mechanical trouble on Tuesday dumped jet fuel onto a school playground in the Los Angeles area, leaving 20 students and several adults with minor injuries. Delta Flight 89 took off from Los Angeles en route to Shanghai and was forced to turn back due to engine trouble, a Delta spokesperson said. The plane landed safely around noon after dumping its fuel, which fell onto a wide area, including Park Avenue Elementary School, located about 16 miles east of the airport. Fire officials said about 20 children and 11 adults complaining of skin irritation or minor respiratory problems at the elementary school were treated on the spot and did not require hospitalization. The Federal Aviation Administration said it was investigating the incident and said there are special fuel-dumping procedures for aircraft operating into and out of major US airports. "These procedures call for fuel to be dumped over designated unpopulated areas, typically at higher altitudes so the fuel atomizes and disperses before it reaches the ground," the agency said in a statement.

----------

Wednesday's Shareholder Meetings

Diploma

AB Dynamics

Northgate (re acquisition of Redde)

Redde (re acquistion by Northgate)

----------

By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

Email Form

Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Hargreaves Lansdown PLC 1,563.50 GBX -1.04 -
TalkTalk Telecom Group PLC 86.45 GBX -1.31 -
Persimmon PLC 2,259.00 GBX -2.00 -
Vistry Group PLC 681.00 GBX -2.37 -
The Royal Bank of Scotland Group PLC 121.85 GBX -2.52

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies