FTSE Rises, Royal Mail Gains as Investors Cheer Cost-Cutting Moves

Royal Mail Gains as Investors Cheer Cost-Cutting Moves

Shares in Royal Mail rise 5% as investors welcome moves by the company to cut costs despite reducing full-year profit guidance. The company now expects an adjusted operating profit of around GBP430 million for the year ending March, compared with previous guidance of GBP500 million, due to a restructuring charge. “Royal Mail’s latest update showed the firm is continuing to drive efficiencies with plans to cut a further 700 management jobs,” AJ Bell investment director Russ Mould says. “In streamlining the business, Royal Mail needs to ensure it doesn’t go too far and diminish its operational capability or spark widespread industrial action, the threat of which has hung over the business in the past.”

 
Companies News: 

Royal Mail Downgrades FY 2022 Guidance on Plan to Cut Around 700 Manager Jobs

Royal Mail PLC said Tuesday that it plans to cut 700 manager jobs, and that it is reducing its guidance for fiscal 2022 because of the launch of a consultation process for its restructuring.

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Pelatro Expects 2021 Results in Line With Expectations

Pelatro PLC said Tuesday that it expects results for 2021 to be in line with expectations, and that although it anticipated results for the year to be released in late March or early April this could be subject to change due to the disruption stemming from Covid-19 restrictions.

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Sivota to Buy Majority Stake in Marketing Platform Apester

Sivota PLC said Tuesday that it has entered into a conditional deal to buy a 57.5% stake in digital marketing engagement platform Apester Ltd. for $12 million.

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Autins Group’s FY 2021 Pretax Loss Narrowed

Autins Group PLC reported on Tuesday a narrowed pretax loss for fiscal 2021 and said medium term guidance remains positive.

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PCF Group Shares Slide 50% as Profit Falls, Trading Resumes

PCF Group PLC shares halved in early trading Tuesday after its trading suspension was lifted and the company said half-year profit decreased due to the impact of the pandemic.

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AIQ Shares Rise on Issue of Loan Notes to Shareholders

AIQ Ltd. shares rose Tuesday after it said it raised 500,000 pounds ($674,500) through the issue of unsecured convertible loan notes, for working capital purposes and widening its offer to new sectors.

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Unilever Looks to Jumpstart Growth With Sweeping Overhaul

Unilever PLC said it would restructure its operations into five stand-alone divisions, reshuffle top executives and cut jobs in a sweeping reorganization aimed at accelerating sales growth as the Dove soap owner girds itself against an activist investor and looks to quell shareholder dissatisfaction.

 
Market Talk: 

Pebble Beach Systems’ Maintained Momentum Prompts Raised Forecasts

1119 GMT – Broadcasting-software company Pebble Beach’s 2021 performance update shows how it maintained momentum across all key metrics, prompting analysts at finnCap to raise forecasts for the year to reflect its performance. Revenue and adjusted Ebitda generation rose 26% and 19%, respectively. Its order pipeline remains strong, with orders received rising 75% to an estimated GBP13.7 million for 2021 from GBP7.8 million in 2020, including delayed contracts worth GBP1.5 million, the U.K. brokerage says. “We look forward to 2021 results, expected in April, particularly around the acceleration in technology investment that will open up ‘untapped geographic territories with innovative products that suit customer needs in those markets,'” the broker says. finnCap has a 20 pence target price on the stock.

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Drax Has Improved Prospects, Supported by Power Prices

1111 GMT – Drax Group’s midterm prospects have improved, supported by the power price outlook, John Musk at RBC Capital Markets says. The U.K. power company has a three-pronged growth strategy across bioenergy with carbon capture and storage, pellets and pumped storage, the analyst notes. RBC reaffirms an outperform rating on the stock and raises the target price to 925 pence from 750 pence. This reflects growth options at the Cruachan 2 pumped hydro storage power station and increased confidence that merchant biomass generation without subsidy may be possible beyond 2027, Musk says. “Growth ambitions are well underway at Drax and we see an additional boost from medium-term power prices,” he says.

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Sureserve Is on the Path for Growth

1103 GMT – Sureserve is on the path for growth, mainly driven by the margins of its compliance and energy-services divisions, Shore Capital says. The U.K. investment group says revenue for fiscal 2021 rose in line with expectations, but a 70% increase in pretax profit was higher than expected. “We believe the two divisions benefit from high revenue visibility, from typically three-to-five year contracts, plus much longer ones,” Shore Capital says. Although the board suspended dividends, it has outlined an ambitious growth strategy with potential for mergers and acquisitions, it adds. Shares are up 6.4% at 92.0 pence.

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Boohoo’s Outlook Drives Downgrades to Consensus Estimates

1059 GMT – Boohoo’s top-line recovery doesn’t spark confidence in RBC Capital Markets, which believes the company is vulnerable to further market share loss. The U.K. fashion retailer’s international proposition remains uncompetitive, the Canadian bank says, noting that this is something that would be necessary to at least maintain market share. RBC cuts its adjusted Ebitda estimates by around 40% following Boohoo’s “recent soft trading performance and outlook” and reduces its target price to 150 pence a share from 330 pence. RBC also downgrades Boohoo to sector perform from the previous outperform rating. Shares are currently up 3% at 104.05 pence.

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National Grid Remains Well Positioned, But Shares Are Fairly Valued

1040 GMT – National Grid remains well-placed in the energy transition with the fastest regulatory capital value growth among fully regulated energy-network peers at a guided 6%-8% compound annual growth rate over the next five years, RBC Capital Markets says. In addition, higher inflation is a positive for National Grid’s earnings estimates, RBC notes. However, following recent sector outperformance, the company’s shares now look fairly valued, the banks says. “We raise our PT [price target] to 1100 pence per share (from 1040 pence) but are forced to downgrade to sector perform.”

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TinyBuild Set for Exciting 2022 With Potential M&A, Shore Capital Says

1021 GMT – TinyBuild is an attractive investment opportunity in a historically fast-moving sector that continues to look exciting in 2022, Shore Capital says. While 2021 was a strategic year for the videogame company, 2022 should see it continue to explore M&A opportunities whilst also investing in its intellectual property to create a long-term franchises model applicable in various media sectors, the U.K. investment group says, adding that it sees earnings incrementally growing over its forecast horizon. Further, Shore Capital says the company should benefit from its low staff turnover thanks to good workplace practice and potentially high staff morale. Shore Capital has a buy rating on the stock. Shares trade up 2.2% at 185 pence.

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Marston’s Shares Could Rise if It Delivers in Three Areas

0959 GMT – The performance of Marston’s during the fallout from the Omicron coronavirus variant may not be as bad as first feared when restrictions were imposed, Shore Capital says. The British pub operator’s like-for-like sales for the 16-week period to Jan. 12 fell compared with fiscal 2019 by 3.9%, with December performance 1 percentage point ahead of the broader market, the U.K. investment group says. Shore Capital says that if Marston’s can return to a historical level of profitability, reduce debt to below GBP1 billion and realize value from its stake in Beer Co., its shares could potentially be worth around 180 pence each. Shore Capital has a buy rating on the stock. Shares trade up 2.2% at 79.8 pence.

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Royal Mail Restructuring Plans Seen as Needed Step for Modernization

0940 GMT – Royal Mail’s restructuring plan is proof of its commitment to modernizing the business, AJ Bell’s investment director Russ Mould says. The British letter-and-parcel courier finally seems to be getting its act together, helped by an increase in parcels being sent during the coronavirus pandemic, Mould says. “In streamlining the business, Royal Mail needs to ensure it doesn’t go too far and diminish its operational capability or spark widespread industrial action–the threat of which has hung over the business in the past,” he says. Shares are up 5.1% at 458.80 pence.

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Pound Seen Shrugging Off Growing Calls for UK PM to Resign

0937 GMT – Calls for U.K. Prime Minister Boris Johnson to resign are reaching “fever pitch” but sterling is likely to remain little moved by the political uncertainty, ING says. “Should Johnson leave, his successor would likely be seen as a safe pair of hands and we do not see any political risk premium being built into GBP,” ING analysts say. The prospect of the Bank of England raising interest rates further and general risk appetite are far more important for sterling, they say, noting that sterling fell on Monday in reaction to Russia-Ukraine tensions. GBP/USD trades flat at 1.3493 and EUR/GBP falls 0.3% to 0.8373.

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com

(END) Dow Jones Newswires

January 25, 2022 06:57 ET (11:57 GMT)

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