Avon Protection on Wednesday warned of lower-than-expected annual earnings after a soft start to its financial year.
Trading in the six months to the end of March saw a continuation of some of the challenges seen last year, it said, but with performance accelerating through the second quarter.
‘Order intake was, as expected, lower than the comparable period last year reflecting a very strong first half in 2021, but, following the events in Ukraine, enquiries remain robust giving us confidence in order intake for the second half and beyond,’ said Avon.
However, the personal protection company said half-year profit was hit by a weaker than expected sales mix and additional manufacturing costs, particularly in the helmets business, due to ‘supply chain and process inefficiencies.’
Profitability is expected to improve in the second half versus the first but still not offset the weakness seen in the first six months of its financial year - and, as a result, full-year underlying earnings will be below previous expectations.
‘The board expects Ebitda margins to recover progressively through the second half of the financial year and beyond, with the extent of this improvement in part dependent on the quantum and timing of incremental orders. Looking forward into FY23, the group’s profitability will benefit from the improved FY22 exit run-rate and the full year effect of the cost savings,’ the firm said.
Shares were down 18% in early trading and have fallen 67% over the past 12 months.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.2% at 7,601.77
----------
Hang Seng: down 1.3% at 22,218.72
Nikkei 225: closed down 1.6% at 27,350.30
S&P/ASX 200: closed down 0.5% at 7,490.10
----------
DJIA: closed down 280.70 points, or 0.8%, at 34,641.18
S&P 500: closed down 57.52 points, or 1.3%, at 4,525.12
Nasdaq Composite: closed down 328.39 points, or 2.3%, at 14,204.17
----------
EUR: down at $1.0887 ($1.0927)
GBP: down at $1.3006 ($1.3115)
USD: up at JP¥123.99 (JP¥123.38)
Gold: down at $1,918.45 per ounce ($1,926.80)
Oil (Brent): firm at $107.17 a barrel ($107.07)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Wednesday’s key economic events still to come
11:00 CEST EU PPI
11:00 BST Ireland monthly unemployment
09:30 BST UK CIPS / Markit construction PMI
10:00 EDT US Secretary of the Treasury Janet Yellen testifies to annual House committee
10:30 EDT US EIA weekly petroleum status report
07:00 EDT US MBA weekly mortgage applications survey
14:00 EDT US Federal Open Market Committee meeting minutes
----------
China’s services sector contracted in March, as rising Covid-19 cases took their toll, survey data revealed. The Caixin services purchasing managers’ index fell to 42.0 points in March from 50.2 in February. March’s figure moved below the 50.0 no-change mark, and it also suggested the sharpest activity decline since the virus first emerged back in February 2020. The composite figure, a weighted average of the services and manufacturing data, fell to 43.9 in March from 50.1 in February. ‘Cost pressures meanwhile intensified, with the overall rate of input price inflation accelerating to a five-month high, but prices charged inflation eased slightly,’ S&P Global said. March’s composite figure represents the first private sector activity decline since August and like the services figure, the sharpest decline since the initial onset of the pandemic.
----------
The US was expected to announce tough new sanctions on Russia Wednesday, including a ban on new investments, a day after Ukraine’s president showed the UN Security Council harrowing images of violence and accused Moscow of widespread atrocities. The sanctions come after an outcry over the discovery of dozens of bodies in civilian clothing in areas from which Russian troops have withdrawn around Ukraine’s capital, including the town of Bucha. Ukrainian leader Volodymyr Zelensky likened Russia’s actions to Nazi atrocities in an impassioned speech by videolink to the 15-member UN Security Council on Tuesday. The killings in Bucha and elsewhere have galvanised support for Ukraine, with Washington announcing another $100 million in military aid, and produced new momentum for additional sanctions on Moscow. On Wednesday, Washington, in coordination with the G7 and the EU, is expected to announce measures including a ban on all new investments in Russia. A new sanctions package being prepared by Europe, meanwhile, is set to include oil and coal, France’s foreign minister said at EU talks in Luxembourg.
----------
BROKER RATING CHANGES
----------
Berenberg cuts Polymetal to ’hold’ (buy) - price target 300 (500) pence
----------
Berenberg raises Hochschild Mining to ’buy’ (hold) - price target 160 (130) pence
----------
COMPANIES - FTSE 100
----------
Imperial Brands said it continues to perform in line with its five-year strategy launched in 2021. The cigarette maker said investment in its top-five combustible markets - which account for around 70% of adjusted operating profit - has driven an increase in aggregate market share for those markets. Gains in the US, UK and Australia more than offset declines in Germany and Spain. These share gains were achieved while maintaining strong pricing discipline, and overall tobacco volumes are in line with expectations, it said. Imperial said it was on track to deliver full-year results in line with revised guidance issued in March, with expected full-year net revenue growth of around 0% to 1% on a constant currency basis and adjusted operating profit growth of around 1%. Further, Imperial said first-half net revenue is expected to be broadly flat on last year on a constant currency basis, in line with expectations. This reflects a weaker tobacco performance in Europe, which offsets growth in other regions, it explained. Interim adjusted operating profit is expected to grow by around 2% on a constant currency basis, benefiting primarily from reduced losses in NGP, it said, while tobacco performance will be weighted to the second half.
----------
COMPANIES - FTSE 250
----------
Hilton Food Group said it delivered a strong annual financial performance with volumes and revenue both growing. Separately, Hilton Food said Nigel Majewski is to stand down from the chief financial officer post and promoted Matt Osborne to the position. For the year ended January 2, the company generated revenue of £3.3 billion, up 22% from £2.8 billion the year before, driven by growth across proteins and geographies. However, annual pretax profit was £47.4 million, down 12% from £54.0 million a year ago after exceptional items of £8.2 million. Adjusted pretax profit rose 13.0% to £67.2 million from £61.1 million. Hilton Food declared a total dividend of 29.7 pence, up from 26.0p paid out a year ago. The food company has been transforming the business to expand into new protein products and categories, to enter new international markets, to deepen its technology and engineering capabilities, and to expand sustainability across all protein categories.
----------
Redrow said it would sign the UK government’s pledge to for housebuilders fund the remediation of life critical fire safety issues on high-rise buildings. The housebuilder said that in signing the pledge it will be remediating all the buildings in which it was involved, going back 30 years. Redrow said this was a ‘highly complex matter’ and the exact remediation work required and for the exact number of buildings would take time to determine. Its existing provision for fire safety in high rise buildings is £36 million. However, it believes an additional provision of £164 million would be required as a result of the pledge. This will be treated as an exceptional item in the results for the 2022 financial year, it explained.
----------
COMPANIES - GLOBAL
----------
Twitter has announced that it has been working on an edit feature and will begin testing in the coming months. The social media giant said the feature had been in the works since last year. It comes following the news that Tesla and SpaceX founder Elon Musk has bought a 9.2% stake in the company and joined its board of directors. The billionaire tech entrepreneur tweeted a poll asking users if they wanted the feature to be added. It is currently not possible to edit tweets once they have been sent. The news of Musk’s appointment to the board of Twitter was shared by its chief executive Parag Agrawal on Tuesday, who said Musk would make the company ‘stronger in the long-term’.
----------
The Canadian government unveiled legislation Tuesday that would require global digital giants to pay for local news content, in step with a landmark law passed by Australia last year. The Online News Act, which is expected to be passed into law by Prime Minister Justin Trudeau’s Liberal government with backing from a small leftist faction, comes after more than 450 news outlets closed in Canada since 2008 as digital platforms took over the space. It builds on Australia’s New Media Bargaining Code, which was a world first, aimed at making Alphabet’s Google and Meta Platforms-owned Facebook pay for news content on their platforms.
----------
US soft drink giant Coca-Cola plans to cut 410 jobs in Germany, the company’s German subsidiary announced on Tuesday. The group plans to shut down its site in Hamm, in the state of North Rhine Westphalia, by the end of the year. Currently, 82 people work there and a good half of the jobs are to be cut. The other half, such as sales consultants, will remain in the region, but will be assigned to other locations. The majority of the planned job cuts involve vending machine fillers and service technicians, who currently work throughout Germany and are organizationally assigned to specific locations. Until now, Coca-Cola has also been in the vending machine business in Germany, filling beverage and snack vending machines, and also taking care of maintenance. However, the company no longer plans to do this business itself, but to hand it over to external service providers.
----------
Wednesday’s shareholder meetings
Downing Renewables & Infrastructure PLC - AGM
----------
Copyright 2022 Alliance News Limited. All Rights Reserved.
