THG on Thursday said it has received indicative takeover proposals from ‘numerous parties’ in recent weeks, but rejected them all on the grounds the offers failed to reflect the full value of the firm.
The online beauty products platform confirmed it is not currently in receipt of any approaches.
‘We continue to focus on delivering our exciting growth strategy across a number of large global sectors, and prepare to step up to the premium segment of the LSE at the appropriate time,’ said Chief Executive Matthew Moulding.
The update came alongside THG’s annual results, which showed revenue in 2021 jumped 35% to £2.18 billion from £1.61 billion the year before. Its pretax loss slimmed to £186.3 million from £534.6 million.
On more recent trading, THG said the first quarter of 2022 saw ‘very encouraging’ consumer demand against a challenging comparable lockdown period in 2021, and added that the second quarter has started in line with expectations.
‘The group is fully aware of the significant impact of short-term cost inflation on both global consumers and supply chains alike. THG intends to limit the impact of cost pressures on our consumers by maximising efficiencies in our operating model, absorbing some of the pricing pressures, and raising prices at a lower rate to underlying input costs,’ THG said, adding that it believes the inflationary environment is largely transitory.
THG shares were up 5.4% to 100.06 pence early Thursday. The stock debuted in London back in 2020 at 500p.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher, up 3.33 points at 7,604.61
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Hang Seng: down 1.6% at 20,607.21
Nikkei 225: closed up 1.2% at 27,553.06
S&P/ASX 200: closed up 0.3% at 7,592.80
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DJIA: closed up 249.59 points, or 0.7%, at 35,160.79
S&P 500: closed down 2.76 points, or 0.1%, at 4,459.45
Nasdaq Composite: closed down 166.59 points, or 1.2%, at 13,453.07
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EUR: up at $1.0892 ($1.0860)
GBP: up at $1.3077 ($1.3045)
USD: up at JP¥128.03 (JP¥127.70)
Gold: flat at $1,952.56 per ounce ($1,952.11)
Oil (Brent): up at $108.25 a barrel ($107.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday’s key economic events still to come
1100 CEST EU harmonised consumer price index
1600 CEST EU flash consumer confidence indicator
0830 EDT US weekly export sales report
0830 EDT US Philadelphia Fed business outlook survey
0830 EDT US unemployment insurance weekly claims report
1000 EDT US leading indicators
1030 EDT US EIA weekly natural gas storage report
1630 EDT US foreign central bank holdings
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The UK government will attempt to delay a vote on a probe into whether Prime Minister Boris Johnson misled Parliament over partygate, after Johnson suggested the scandal matters little to voters. Johnson will be on an official trip to India when a Labour-led motion calling for a parliamentary investigation into whether he lied to the Commons takes place on Thursday. The PM tried to avoid discussing partygate on the flight to Gujarat, as he vowed to fight the next election no matter how many times he is fined for breaching Covid laws. The government has tabled an amendment to defer the vote on the Commons inquiry until the Metropolitan Police’s own probe into lockdown-busting parties in Downing Street and Whitehall has concluded, and the Sue Gray report has been published. This will allow MPs ‘to have all the facts at their disposal’ when they make a decision, it said. It is understood that all Tory MPs are being whipped to support the amendment.
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Relentless Russian attacks pounded the last Ukrainian stronghold in the besieged city of Mariupol as a fighter apparently on the inside issued a video plea for help, saying defenders holed up in a giant steel factory ‘may have only a few days or hours left’. Another attempt to evacuate civilians trapped in the pulverised port city failed on Wednesday because of continued fighting, and the number of people fleeing Ukraine passed five million. Meanwhile, the Kremlin said it submitted a draft of its demands for ending the war as the West raced to supply Ukraine with heavier weapons to counter the Russians’ new drive to seize the industrial east. The UK’s Ministry of Defence said in an assessment on Thursday that Russia likely wants to demonstrate significant successes ahead of its annual May 9 Victory Day celebrations. ‘This could affect how quickly and forcefully they attempt to conduct operations in the run-up to this date,’ it said.
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BROKER RATING CHANGES
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Berenberg cuts National Grid to ’hold’ (buy) - price target 1,210 (1,100) pence
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JPMorgan raises Just Eat Takeaway price target to 3,724 (3,391) pence - ’overweight’
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COMPANIES - FTSE 100
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Rentokil Initial said 2022 has started well, with first quarter revenue growth of 1.8%, or 12% when excluding the disinfection business that got a Covid-19 boost last year. Organic growth, excluding disinfection, was 8.0%. The pest control and hygiene firm said it has experienced inflationary pressures in the period, but it has managed to mitigate this squeeze on margins via annual price increases. ‘Total price increases achieved in Q1 have entirely offset input cost inflation in the quarter and we remain confident that we will be able to continue to counter rising inflation through APIs during the course of the year,’ said Rentokil. The company said it is performing in line with expectations. Though it will lap strong disinfection revenue in the first half amid a backdrop of macro economic uncertainty, it expects to deliver ‘good operational and financial progress’ in the coming year.
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Miner Anglo American reported a 10% decline in output in its ‘normally slower’ first quarter amid Covid-related absences, high rainfall in South Africa and Brazil, and operational challenges at metallurgical coal and iron ore operations. Copper production was down 13% year-on-year, platinum group metals production was down 6%, metallurgical coal production dropped by 32% and iron ore production decreased by 19%. The only category to see an increase was diamonds, with output up by a quarter. Full year cost guidance has increased by 9%, with a 4% hit from stronger producer currencies and 3% from inflationary pressures. At the same time, Anglo America reduced output guidance for its PGM, iron ore and metallurgical coal operations.
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Peer BHP cut annual guidance for copper production as well as nickel output, as the miner also grapples with Covid-19-related labour market woes. Its outlook for iron ore, metallurgical coal and energy coal for the year ending June 30 were unchanged, however. In the third quarter ended March 31, copper production fell 6% annually to just under 370,000 tonnes. Quarter-on-quarter it rose 1%. For the year, however, BHP now expects total copper output between 1.57 million and 1.62 million tonnes, lowered from the previous guidance range of 1.59 tonnes and 1.76 million tonnes. This means that at worst it expects copper output to fall 2.8% from 1.64 million tonnes in financial 2021.
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Data analytics provider Relx said it expects full-year underlying growth rates in revenue and adjusted operating profit, as well as constant currency growth in adjusted earnings per share, to remain above historical trends. In a trading update ahead of its annual general meeting, Relx said 2022 has started well, ‘with growth in key business metrics remaining in line with or ahead of historical trends’.
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COMPANIES - FTSE 250
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Gambling operator Rank Group cut its earnings guidance after a soft end to financial third-quarter trading. Like-for-like net gaming revenue in the three months to March 31 jumped to £156.4 million from just £48.7 million a year before. Rank noted its UK venues were closed for the entirety of the prior-year period. When compared against the most recent non-Covid-affected third quarter, Rank said Grosvenor venues NGR was down 14% and Mecca venues down 25%. ‘For both our UK venues businesses there was a softness in visits at the end of the quarter consistent with the rise in new Covid-19 cases reported across the UK,’ said Rank. The company anticipates an improvement in performance after April, but cautioned it ‘remains to be seen how the trends in the rate of return of office workers to city centres and overseas customers to London will develop towards the summer.’ As such, it lowered its full-year earnings before interest and tax guided range to between £47 million and £55 million from a prior range of £55 million to £65 million.
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COMPANIES - SMALL CAP
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Card Factory said it has successfully completed a refinancing, removing a commitment to raise funds. The greeting cards retailer has agreed revised terms on reduced facilities of £150 million, previously £225 million. As part of this, Card Factory will reduce its government-backed Coronavirus Large Business Interruption Loan Scheme element to £20 million from the original £50 million. Restrictions on dividends will continue to apply until the CLBILS facilities and the £11.3 million term loan are repaid, which is expected in January 2024, subject to the leverage ratio being 1.5 times or less. ‘The best efforts commitment given by Card Factory to its banks, to raise net equity proceeds of £70 million by 30 July 2022 has been removed from the revised facilities. The board has no current intention of completing an equity raise,’ it added.
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COMPANIES - GLOBAL
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Pershing Square Holdings said it disposed of its entire stake in Netflix, after shares in the streaming service plunged, potentially taking a hit of roughly $400 million from the bet. The investor, managed by Bill Ackman-founded Pershing Square Capital Management, was full of praise for Netflix’s management, but said the company is unpredictable. It had snapped up 3.1 million shares over the course of several days in late January. It made Pershing a ‘top-20 shareholder in the company’. The investment came after Netflix shares had slumped 22% on January 21, when investors sold off the streaming services after it reported subscriber growth slowed. Based on closing prices on January 21, Pershing’s stake was worth $1.12 billion. However, Netflix shares closed down 35% to $226.19 each in New York on Wednesday. Based on Wednesday’s closing price, Pershing’s stake was valued at $701.2 million, implying roughly a $400 million valuation fall. ‘While we have a high regard for Netflix’s management and the remarkable company they have built, in light of the enormous operating leverage inherent in the company’s business model, changes in the company’s future subscriber growth can have an outsized impact on our estimate of intrinsic value,’ Pershing explained.
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Thursday’s shareholder meetings
Alliance Trust PLC - AGM
Ibstock PLC - AGM
Journeo PLC - AGM
Relx PLC - AGM
STV Group PLC - AGM
Ruffer Investment Co Ltd - EGM re share issue
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