Tesco Gains Despite Posting Record Loss

Tesco (TSCO.L) the under fire supermarket chain today posted a record £6.4Bln loss to the year ending February. Compared to a £2.26Bln profit record the year before.

The loss is the largest ever suffered by a UK retailer and enters into 6th place in the largest ever losses recorded in this countrys corporate history.

Tesco (TSCO.L) has suffered from a dramatic drop in the value of its property portfolio amid falling footfall in its stores. This accounts for £4.7Bln of the losses. Tesco had said earlier this month it intends to close 43 stores.

Tesco (TSCO.L) is also feeling the pinch from competition with discount retailers and like for like sales excluding fuel are down 3.6% in the last year in the UK. This has hurt Tesco sales even more in the European markets with sales down year on year in Ireland 6.3%.

Chief Executive Dave Lewis commenting said:

“It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years. We have faced into this reality, sought to draw a line under the past and begun to rebuild, and already we are beginning to see early encouraging signs from what we’ve done so far.

Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes. More customers are buying more things at Tesco.

We are making deep changes to the way we organise and run our business, with a simpler, more agile office team, more colleagues serving customers and a new approach to the way we work with suppliers. I do not underestimate how difficult some of these changes have been for the team and I thank everyone for their professionalism and contribution at this time of great change.

The market is still challenging and we are not expecting any let up in the months ahead. When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance. Our clear priority – and the one that will deliver sustainable value for our shareholders – is to improve consistently for customers. The changes we have made and will continue to make put us in a stronger position to do this.”

Investors reacted positively despite the results with the share price of Tesco (TSCO.L) slightly up on the day at 235.7p

 

 

Record Engine Order For Rolls Royce

Rolls Royce (RR.L) has received a record order of $9.2Bln for the supply of engines for 50 Emirates A380 planes. The order represents a milestone for the company as it is the first time Rolls Royce have been asked to supply engines for the Emirates Airline.

Rolls Royce (RR.L) share price has recently been under pressure after a series of profit warnings and the deal announcement has provided an immediate boost.

Emirates president Sir Tim Clark said: “Today’s announcement is significant not only because it cements the partnership between Emirates and Rolls-Royce, but also because of the significant economic impact that this will have on aviation manufacturing in the UK and Europe.”

Rolls Royce (RR.L) shares were up 8p in early trading and currently sitting around 989p. (+1%)

Pearson Bounces after Yesterdays Strong Falls

The Share price of Pearson (PSON.L) the publishing group this morning rebounded slightly after yesterdays big falls on the back of news that Los Angeles second largest school district (LAUSD) is cancelling a $1.3Bln project based on Apple ipads using Pearsons course material. LAUSD is also thought to be considering legal action against Apple as the content does not meet its requirements.

Brokers, including Westhouse Securities have been quick to reiterate SELL ratings on the stock. Westhouse citing “scope for further share price weakness”

Commenting analysts at Westhouse said “We maintain our long-standing concerns regarding the risks attached to contract renewals and the execution risk inherent in its far-reaching transformation into a digital learning company,”

Westhouse currently has a target price on the shares of Pearson (PSON.L) of 1185p.

Pearson (PSON.L) is currently nearly 1% up today trading around 1389p.

 

Nestle Boosts Sales in First Quarter

Packaged food firm Nestle (NESN.VX) today announced improved sales figures for the first quarter, boosted by and increase in both prices and volume.

Sales rose 4.4% year on year, coming in slightly better than analyst estimates of 4.3%. Sales for the period rose 0.5% to $20.9Bln although the company notes that currency exchange rates have decreased this value by 4.5%.

Nestle (NESN.VX) still say they expect to grow sales 5% this year after 2014 proved a difficult year for food producers with sluggish growth in both developed and emerging markets.

Shares in Nestle (NESN.VX) were trading flat this morning around 77p.

Broker Round Up Thursday 16th April 2015

Numis reiterated BUY rating on Sab Miller (SAB.L) citing improved sales growth in 4th quarter.

BAE Systems (BA.L) downgraded to NEUTRAL from BUY by UBS. The shares were ex dividend today however the news is also putting on the pressure. UBS does not believe there is further value in the shares as they move closer to their target price of 540p.

Unilever (ULVR.L) beats first quarter analyst expectations and Shore Capital reiterates its previous BUY rating on the shares saying they see the shares as a “long term winner”.

Debenhams H1 results above expectations

Department store firm Debenhams (DEB.L) today announced H1 results which were ahead of analysts expectations.

Over the period the group said that like-for-like sales were up 1.3% and pre-tax profit rose 4.3% to £88.9M ahead of analyst expectations of £84M.

Christmas also proved profitable for Debenhams (DEB.L), with a new online delivery options provided before the traditional Black Friday and Christmas shopping periods driving aa 12.7% increase in online sales over the period.

Despite the results, analysts still remain unimpressed with the long term outlook for the company with Investec still maintaining a SELL on the shares citing “little profit progression expected over the medium term”.

 

Michael Sharp, Chief Executive of Debenhams (DEB.L), said:    ”I am pleased with the good progress we have made against the strategic priorities we set out last  year. We have improved our multi‐channel offer and successfully introduced the premium delivery  options that we promised for the important peak period, which met with a positive response from  our customers. The continued refocusing of our promotional strategy delivered a strong increase in  full price sales, an improvement in value perception and enabled us to end the half with an  improved stock position. Overall we delivered a good first half performance despite a difficult  clothing season in Autumn and we are on track to achieve full year expectations.

“Looking forward, our customers tell us they are feeling a little more optimistic about the economic  outlook, but they remain cautious. Accordingly we are continuing to plan prudently in the near term,  while remaining focused on our strategic priorities, and are continuing to invest to ensure that our  business is well‐positioned to drive sustainable growth in the longer term.”

Shares in Debenhams (DEB.L) were up 5% this morning in early trading. Currently sitting around the 84p mark (+4p).

Polymetals – Q1 Output falls. Maintains Full Year Guidance

Metals mining group Polymetals (POLY.L) today announced that output in the first quarter has fallen,driven by a decline in grades at two of its mines.

Gold production declined 3% in the first quarter to 186,000 ounces, while silver production dropped 7% to 6.8m ounces. Total sales declined 11% to $298m, as gold sales rose 1% but silver sales fell a massive 14%.

The company however reiterated its full year targets and  said the development of new projects remained on track.

Shares in Polymetals (POLY.L) were trading flat this morning around 580p.

 

Tullow Oil Up 6% after Re-rating by Citigroup

Shares in Oil firm Tullow (TLW.L) were up over 6% this morning after Citigroup raised its rating on the stock to BUY from NEUTRAL citing the companies “quality and defensive” portfolio as being undervalued by the markets.

Citigroups current estimate for the Net Asset Value of Tullow (TLW.L) is around 354p which the shares currently trade below. This takes into account a long term oil price of around $75 barrel and 10% discount.

Commenting Citigroup said “Our core NAV includes no value for exploration/appraisal upside in Tullow’s portfolio and risks by c15% its non-sanctioned developments (Kenya/Uganda),”

Citigroup also revised its target price up to 433p from 406p on the shares.

Tullow (TLW.L) is up 6.5% this morning trading around 362p (+22.5p)

Citigroup Lowers BP rating to NEUTRAL

Citigroup bank believes that fair value is now reflected in the share price of BP (BP.L) and has revised its rating on the share to NEUTRAL from BUY.

Commenting, Citigroup said “”We think the market now better reflects the inherent value in BP. A good-news story around a self-help agenda, narrowing Russian discount rates and a favourable Macondo Phase II ruling have all driven the equity story in recent months,” in a note to investors this morning.

Citigroup retains its current target price of 455p and noted a plan by BP (BP.L) management to re-align the company with current oil prices.

“Cost-cutting is at the centre of BP’s self-help strategy. To date the extent of the ambition has not been announced, although a cost-cutting provision has (circa $1bn). We believe that the provision will increase and that BP will end up with a target that tackles around a 15% reduction in costs in the core upstream business segment,”

Trading in shares in BP (BP.L) are slightly lower this morning at 468p (-0.46%).

Broker Round Up 13th April 2015

Citigroup revised expectations on the performance of the UK metals and mining sector this morning  to NEUTRAL from BULLISH and cut its projections for the short and medium term outlook of iron ore. Citigroup lowered ratings on Rio Tinto (RIO.L), Glencore (GLEN.L), BHP Biliton (BLT.L) and Lonmin (LMI.L) to NEUTRAL also lowering Vedanta (VED.L)  and Anglo American (AAL.L) to SELL.

Investec upped its rating from SELL to HOLD on BG Group (BG.L) after the surprise announcement last week of its takeover by Shell (RDSA.L), although the deal has yet to be voted on by shareholders.

HSBC (HSBA.L) received a rating upgrade from Morgan Stanley citing share price under performance compared to sector inding figure the STOXX600 banks index.