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UK PMI Data Point to Further Weakness Ahead

11/23/2022 | 07:38am EST

UK PMI Data Point to Further Weakness Ahead

1147 GMT - Data from a purchasing managers index suggested the U.K. economic contraction didn't worsen in November, but some forward-looking data such as new orders signal the rate of contraction could accelerate in the coming months, Berenberg economists Holger Schmieding and Kallum Pickering say in a note. The rebound in business expectations is likely linked to the improving political situation, but current activity remains under severe strain from weak confidence, costs pressures and tight financial conditions, they say. The data suggest U.K. companies are still adding jobs despite the worsening outlook, but the slowing pace of job creation is probably an ominous sign employment will start to fall as the recession deepens in winter, Berenberg says. (xavier.fontdegloria@wsj.com)

 
Companies News: 

United Utilities 1H Pretax Profit Rose, But Swung to Underlying Loss

United Utilities Group PLC said Wednesday that pretax profit rose for the first half on lower net finance expenses, but it swung to a loss on an underlying basis as macroeconomic conditions hit earnings.

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Johnson Matthey Swung to 1H Pretax Profit, Keeps Dividend

Johnson Matthey PLC on Wednesday reported a swing to pretax profit for the first half of fiscal 2023, despite lower revenue, and maintained its dividend payout.

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Bakkavor Sees FY 2022 Profit at Lower End of Views Despite 3Q Top-Line Growth

Bakkavor Group PLC said Wednesday that revenue grew well in the third quarter despite macro pressures, and that it sees full-year profit in line with market forecasts, though at the lower end of expectations.

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Pets at Home Group 1H Pretax Profit Hit by Higher Costs; Backs FY Guidance

Pets at Home Group PLC on Wednesday reported a 19% fall in pretax profit for the first half of the fiscal year after booking higher costs, but raised the dividend payout and backed its full-year underlying guidance.

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Britvic FY 2022 Pretax Profit, Revenue Rose on Increased Volume; Lifts Dividend

Britvic PLC said Wednesday that fiscal 2022 pretax profit and revenue rose on increased in volume and despite macroeconomic headwinds, and lifted its dividend.

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Halfords Group 1H Pretax Profit Fell on Higher Costs; Keeps Dividend

Halfords Group PLC said Wednesday that pretax profit for the first half fell amid higher sales costs and operating expenses but service demand continues to increase.

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Best of the Best Hopes to Finalize Negotiations With Globe Invest Before Year End

Best of the Best PLC said Wednesday that it is hoping to have finalized agreements with Globe Invest Limited, which signaled its intent to take a stake in the company, before the end of the year.

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Coats Group Revenue Rose in 2H to October; Sees 2022 Meeting Views

Coats Group PLC said Wednesday that it is on track to meet its full-year expectations, and with strong organic growth in the latter half of the year.

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De La Rue Swings to 1H Pretax Loss; Expects to Miss FY Forecast

De La Rue PLC on Wednesday reported a swing to pretax loss for the first half of fiscal 2023 after booking exceptional charges mainly related to the termination of a contract and said that it will miss adjusted operating profit market forecasts for the year.

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Hostelworld Sees 2022 Revenue, Earnings Improving on Persistent Momentum

Hostelworld Group PLC said Wednesday that strong bookings and revenue momentum have persisted since its performance update in October, and it expects full-year revenue and earnings to significantly improve.

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DP Eurasia 10-Month System Sales Grew 12%, Backs 2022 Guidance

DP Eurasia NV said Wednesday that 10-month system sales rose by 12%, supported by pricing.

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Rotork Four-Month Revenue Rose 19%; To Meet FY 2023 Guidance

Rotork PLC said Wednesday that revenue for the four months ended Oct. 30 rose 19%, boosted by higher selling prices as well as measures taken to improve supply-chain issues.

 
Market Talk: 

Pets at Home's New Customers Help to Boost Sales

1136 GMT - Pets at Home Group is picking up more new customers, HSBC says after the U.K. pet-goods retailer stuck to its full-year guidance, though first-half underlying pretax profit fell amid higher transport and energy costs. The 1H results matched expectations, supported by increased second-quarter sales and customers, HSBC says. "This is another good update from Pets and builds on a strong 1Q update in August," HSBC analyst Paul Rossington says in a note. "Key for us is that this is supported by an increase in new customer growth." Still, Pets shares drop 3.6%. (philip.waller@wsj.com)

UK PMI Data Add to Signs of Immediate Recession

1121 GMT - The U.K. economy is likely to have already fallen into recession, Capital Economics U.K. economist Ashley Webb says in a note after November's purchasing managers index data. The composite PMI, which ticked up to 48.3 from 48.2 in October, is consistent with a 0.2% quarterly contraction in the three months to November, a figure that is slightly better than what current forecasts for overall 4Q imply, he says. The data also showed price pressures continued to moderate, but growth in firms' input costs remained high, Webb says. "With domestic inflationary pressures still very intense, we don't think that the weakening activity will convince the Bank of England to stop raising interest rates just yet," he says. (xavier.fontdegloria@wsj.com)

Halfords's Lack of Consistency Could Be Behind Share Fall

1112 GMT - Given that a couple of months ago Halfords said it would hit its FY 2023 target, its current guidance for earnings to be at the bottom end of expectations has halted its shares' momentum and prompted a profit taking, AJ Bell Investment Director Russ Mould says as shares drop 5.4%. Despite this, the company's strategy to bolster its motoring services division offers a more predictable and repeating revenue, making the business more resilient to weather the consumer backdrop, he says. "The big thing which may be worrying investors...is the lack of consistency," Mould says. (michael.susin@wsj.com)

Halfords's Lack of Consistency Could Be Behind Share Fall

1112 GMT - Given that a couple of months ago Halfords said it would hit its FY 2023 target, its current guidance for earnings to be at the bottom end of expectations has halted its shares' momentum and prompted a profit taking, AJ Bell Investment Director Russ Mould says as shares drop 5.4%. Despite this, the company's strategy to bolster its motoring services division offers a more predictable and repeating revenue, making the business more resilient to weather the consumer backdrop, he says. "The big thing which may be worrying investors...is the lack of consistency," Mould says. (michael.susin@wsj.com)

Sage Makes Progress, But Margin Uncertainty Lingers

1109 GMT - Sage is making progress but risks remain, Deutsche Bank says, upgrading the accountancy-software firm to hold from sell and increasing its price target to 800 pence from 590p. Management is making the right decisions in a competitive environment to increase growth, while investment is boosting revenue momentum despite a tougher economy, Deutsche says. "Having said that, uncertainties remain around margin progress going forward, with management choosing to invest the growth upside into [operating expenditure] in FY22," Deutsche analyst Johannes Schaller writes, adding that economic risks remain, particularly in the U.K. "There appears to be scope for better operating leverage into FY23, but with shares trading above software peer-group multiples, we see a lot of this already priced in." Shares rise 0.3% to 811p. (philip.waller@wsj.com)

BT Group Looks Confident

1047 GMT - BT Group struck a confident tone in its business update Tuesday when the company confirmed it would implement the contracted CPI +3.9% price rises across its consumer brands in April and said that EE will become the flagship brand, Jefferies analysts Jerry Dellis and Yi Hsin Yeoh say in a research note. The U.K. telecom company will direct its efforts toward EE as the BT brand will be phased out, with the former having wider customer appeal, balanced representation across ages and strong customer appeal in cities, the analysts say. BT also noted that customer churn is under control even as the earliest adopters of the CPI +3.9% price rise contracts start to exit their tie-ins, they add. Jefferies has a buy rating on the stock with a 250.00 pence price target. (kyle.morris@dowjones.com)

Hostelworld's Shares Could Travel Far to the Upside

1042 GMT - Hostelworld's shares trade at an undemanding price given the near- to medium-term growth opportunities and marked discount to its historic average range, Shore Capital says in a note. The online hotel-booking platform is a unique way to invest in the travel industry and it's pleasing to see its recovery accelerate now it's clear of pandemic disruption, Shore analysts Katie Cousins and Greg Johnson say. "Across the medium term, we believe the group has scope to benefit from its increased investment into technology and social features," say the analysts. Shore Capital retains its buy recommendation for the Hostelworld stock as it sees significant upside to its fair value target of 140 pence and a positive business outlook. Shares are down 0.5% at 92.0 pence. (joseph.hoppe@wsj.com)

Contact: London NewsPlus; paul.larkins@wsj.com

(END) Dow Jones Newswires

11-23-22 0737ET

Stocks mentioned in the article
ChangeLast1st jan.
BAKKAVOR GROUP PLC -0.86% 115 Delayed Quote.19.67%
BRITVIC PLC 0.45% 777 Delayed Quote.0.00%
BT GROUP PLC -2.62% 124.65 Delayed Quote.11.25%
COATS GROUP PLC 1.39% 72.7 Delayed Quote.9.82%
DEUTSCHE BANK AG -0.57% 12.208 Delayed Quote.15.30%
DP EURASIA N.V. 1.28% 55.6 Delayed Quote.2.96%
HALFORDS GROUP PLC -0.48% 205.2 Delayed Quote.-1.82%
HOSTELWORLD GROUP PLC -1.69% 127.8 Delayed Quote.10.94%
JOHNSON MATTHEY PLC 4.06% 2256 Delayed Quote.6.06%
PETS AT HOME GROUP PLC 6.34% 352.4 Delayed Quote.24.26%
ROTORK PLC -1.18% 318 Delayed Quote.3.72%
UNITED UTILITIES GROUP PLC -1.76% 1058 Delayed Quote.6.72%
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