Drax Group Pretax profits Fall

Final results from power station owner Drax Group (DRX.L)  reveal a fall in pretax profit after higher carbon costs. Pretax profit fell to £32M from £190M. EBITDA for 2013 down 23% at £230 million, dividend was also cut to 17.6p a share from 25.3p.

The company also highlighted the possibility of a weaker 2014 with the milder winter conditions experienced this year.

Dorothy Thompson, Chief Executive of Drax, said:

“As expected, the increasing cost of carbon drove earnings down year on year. Recognising this, we have been investing significant capital to transform Drax into one of the world’s largest renewable generators, burning sustainable biomass. At the same time we have delivered strong operating performance across the business, including notably, good output, efficiency and reliability from our first converted unit.

“We are well placed to secure CfD Investment Contracts for our second and third unit conversions. We look forward to the conclusion of the government’s contract award process this Spring. These contracts will underpin the investment required to secure the sustainable biomass supply chain for our second and third unit conversions. We are targeting April 2015, when these contracts become effective, for our next unit conversion and quarter four of 2015 at the earliest, for the third.

“In 2016, we expect half of Drax to be fuelled by sustainable biomass, some 4% of the UK’s electricity. In delivering this transformation, we will provide cost-effective, reliable renewable power to consumers, secure jobs at Drax and across the UK supply chain and deliver attractive returns for our investors.”

First Group Win Franchise Extension

First group Plc (FGP.L) have announced that after discussions with the Department of Transport they have agreed an extension to their current First Capital Connect rail franchise until Sept 14th 2014.

This will allow the franchise to continue running until the start of the new Thameslink, Southern and Great Northern franchise which is proposed by the government.

Commenting, Tim O’Toole, Chief Executive said:

“Today’s agreement with the Department for Transport provides continuity and consistency for First Capital Connect passengers, building on the improvements our experienced team is already making as we play an active part in delivering the multi-billion pound Thameslink Programme. This agreement allows us to continue our improvements over the next six months, focusing in particular on customer information provision and assistance.”

Lloyds Upgraded by JPMorgan

The bank, Lloyds banking Group (LLOY.L) received a boost this morning, which may help stem the falls after yesterdays results release after an upgrade by JPMorgan. Lloyds was upgraded to overweight from neutral and JPmorgan says it sees further upside despite the recent lowered forecast released by Lloyds when releasing their results, saying the results “reflects a rebasing of expectations around legacy costs, net asset value growth and capital return”

JP Morgan now has Lloyds as their pick of the UK Banking sector and raised its target price for the company from 84p to 95p implying an upside of 17% on current prices.

Nestle Expecting Challenging Year

food company Nestle (NESN.VX) has issued a statement today saying they expect another challenging year ahead amidst emerging market slowdowns.

In 2013 Nestlé’s sales increased by 2.7% to CHF 92.2 billion, impacted by negative foreign exchange of 3.7%. Organic growth was 4.6%, composed of 3.1% real internal growth and 1.5% pricing. Acquisitions, net of divestitures, added 1.8% to sales.

The company reported a drop is net profit of CHF 10billion, missing analysts estimates, saying this was due to restructuring costs and exchange rate fluctuations.

Commenting on its outlook in full year results release the company said “Last year was challenging and 2014 will likely be the same. We will continue to be disciplined in driving our performance in line with the Nestlé Model of profitable growth and resource efficiency. We therefore expect our 2014 performance to be similar to last year and again weighted to the second half, outperforming the market, with growth around 5% and improvements in margins, underlying earnings per share in constant currencies and capital efficiency.”

Homeserve Agrees Fine with FCA

Homeserve (HSV.L) the home emergency repair company today announced it had agreed to pay a fine of £30.6million to the FCA in relation to regulatory non compliance issues which have occured historically at the company.

Homeserves issues mainly related to sales and marketing and problems with complaints handling procedures over the last 2 years. The company has confirmed all customers affected will be contacted by the end of March.

Chief Executive Officer Richard Harpin said: “We acknowledge the FCA’s final notice which brings its investigation to a conclusion. We sincerely regret that some customers have been affected by these issues.

We have transformed the business, rebuilding and strengthening the management team, retraining staff and restructuring systems and controls. We have worked very hard over the last two years to put customers back at the heart of our business and we are committed to offering valuable products with a high quality of service.”

Rolls Royce and Lockhead Martin agree $1Billion 600 engine Deal for C-130

Aerospace company Rolls Royce (RR.L) today announced a new deal with Lockhead Martin to supply 600 engines for C-130J Hercules aircraft.  The agreement secures the Rolls-Royce AE 2100 as the engine of choice for all variants of the C-130J to 2025. The engine agreement will service US Government and International contract requirements between 2014 and 2018.

Tom Bell, Rolls-Royce, President Defense, said, “Lockheed Martin and Rolls-Royce have partnered for decades to produce thousands of the world’s leading medium transport aircraft. Our new engine agreement secures that relationship for years to come, enabling operators to continue to enjoy the versatile, powerful and fuel efficient aircraft they have come to appreciate through 1 million flight hours and counting.”

George Shultz, Lockheed Martin, Vice President and General Manager, C-130 Programs, said, ”This agreement is a very important step in providing our customers the most affordable airlifter in the world. The C-130J Super Hercules has proven the ‘value of the power’ as the Rolls-Royce AE 2100 propulsion system allows the Super Hercules to perform any mission, anywhere, any time.”

Broker Downgrade hits Thomas Cook

Travel group, Thomas Cook Group (TCG.L) was downgraded by Numis Securities today as the company continues to struggle to cut its losses and return to profit.

Numis changed its recommendation to ‘hold’ from ‘add’ after Thomas Cook revealed that although its losses have been cut for the last quarter, revenue is down as fewer people are visiting Egypt amidst continuing problem in that area of the world.

Numis said in a broker note: “We believe there is little in the first-quarter announcement to excite the market in the short-term and expect some consolidation in the share price.”

Cable & Wireless Communications confident outlook

Communications company Cable & Wireless (CWC.L) announced third quarter results and said it continued to have confidence in its outlook for 2014 with mobile revenue up 4% across the group and particularly strong sales in Monaco and the Carribean. Also having an impact is the companies current cost reduction program.

The highlights of their interim management statement included:

·      Mobile revenue up 4% across the Group driven by strong data growth

·      Continued momentum in Jamaica, mobile subscribers up 23% on prior year

·      Driving further cost efficiency in Caribbean, operating costs 11% lower in Q3

·      Group trading performance in line with outlook

Commenting on the Group results, Tony Rice, Chief Executive of Cable & Wireless Communications Plc, said:

“Our first half was characterised by an impressive performance in our mobile business and good progress on our cost reduction programme. Growth in mobile revenue and EBITDA of 3% for the Group was a strong result given competition and other market challenges we faced.

We are setting the standard for mobile data in our markets, and customers are responding. Mobile data revenue rose 29% over the half with all regions seeing growth. We are continuing to invest in mobile data, particularly in Long-Term Evolution (LTE) networks, which we launched in Monaco recently and will launch in The Bahamas and Cayman in the second half.

“We continue to improve in Jamaica, particularly in mobile where our customer base is up 23% and mobile service revenue rose 14% at constant currency during the half. We are presenting innovative products to our customers, and have successfully positioned our business as the ‘value’ provider, in a very price sensitive market.

Our productivity and efficiency programme has started well. The Caribbean has been the focus with operating costs reducing by US$18 million in the first half and we expect to step up the pace in order to meet our US$100 million target. Centralising our regional operations in our new Miami office will be a key driver and I’m pleased to report we’ve made good progress in establishing our new regional hub.”

Johnson Matthey Appoint New Finance Director

Johnson Matthey (JMAT.L) the chemicals company has today announced a replacement for Robert Mcleod who recently moved to the role of Chief Executive.  The new finance director will be Den Jones who has many years experience working at board level with fellow FTSE company BG group.

Chief Executive McLeod commented ”I am delighted that Den will be joining Johnson Matthey in June and I am looking forward to working with him. His experience of working in a large diverse global company within an engineering and operations environment complements Johnson Matthey’s business well and will enable him to make an immediate contribution.”

Barclays Quarterly Profits Fall after Restructuring Costs

Barclays Bank (BARC.L) reported a sharp fall in adjusted pretax profit showing a 32% drop overall after lower profits and restructuring costs. The company also reported lower adjusted income after falls in head office and investment bank divisions.

The companies fourth quarter results were badly affected by exceptional items including a big hit for regulatory fines and legal costs relating to the series of scandals the company has been involved in. PPI mis-selling provisions were increased from the prior year and  the mis-selling of interest rate hedged products to small businesses is now also hurting the company.

Despite this the UK retail and business continued to perform well and highlights include the mortgage business. Net interest income is up 6%

In a statement Chief Executive Antony Jenkins said: ”Despite challenging conditions, our underlying performance has been resilient and momentum is building, as evidenced by the results we are reporting this morning…[] While we have more work to do to achieve our goal of becoming the Go-To bank, I believe that we begin 2014 in a better position than we have been for many years”

A final dividend for 2013 of 3.5p per share will be paid on March 28th, resulting in a total 6.5p dividend per share for the year. Total dividends paid to ordinary shareholders came to £859m, up from £733m in 2012.