FTSE 250 movers: Investors hungry for Greggs, take profits at Games Workshop
Gains for a sausage roll retailer, a doorstep lender and an engineer were balanced on the FTSE 250 index by declines at builders merchant a convenience foods manufacturer and a hobby retailer.
The mid-cap index ended the day essentially flat at 20,877.87, to be precise a fall of less than one point.
Greggs led the index on the back of first half result that saw profits fall 7% but the the purveyor of sausage rolls and other "food on the go" said trading was resilient in spite of difficult weather conditions and weak consumer spending, which investors had worried would hit these results harder. Underlying operating profit for first six months of the year fell to £25.7m from £27.6m a year earlier as total sales rose 5.2% to £476m. Like-for-like sales at company-managed stores rose 1.5%.
Analysts at UBS noted that despite extreme weather conditions, Greggs' results implied a run-rate of circa 2% LFL growth through May and June, after reporting 1.3% for the first 18 weeks of 2018. "Trading was helped by the breadth of trading through the day, geographical bias towards northern regions, and ongoing product/offer developments."
Provident Financial shares were boosted as the subprime lender announced a board overhaul and said it was on track to restore its dividend even after profit more than halved in the first half. Pre-tax profit for the six months to the end of June fell to £34.6m from £73.3m a year earlier as revenue fell to £572.5m from £619.4m.
Broker Numis said overall profit was a little ahead of its estimates, with the Vanquis banking arm showing good cost control and stable impairment, Home Credit worse than expected with collections not improving in line with the management plan and in line to add to costs in the second half to increase controls within the business. "Provident has not reconnected with as many customers as planned and they are also seeing a number of customers not making full payments."
Engineer IMI reported revenues up 8% or 6% on an organic basis, with operating profit rising 13% on both measures as operating margins improved. “The recent positive momentum in some of our most important markets continued through the first half of the year,” management said, adding that full year results are now expected to be slightly ahead of current market expectations.
Jamie Constable at broker N+1Singer said the restructuring is "starting to bear fruit" with sales growth delivered inseveral areas.
On the downside, Travis Perkins trundled lower after the builder's merchant warned on profits for the full year after being dragged to a loss in the first half by its consumer facing Wickes chain, even though its trade-focused businesses grew at a solid rate. Management, which has begun a "comprehensive review" of the business, lowered guidance for the full year which will result in around a 3-4% cut to consensus profits.
"The big issue for the shares is what will be said and delivered from the next strategic review," said broker Canaccord Genuity. "Cost cutting continues but current year estimates continue to look under pressure and it is difficult to get too excited in the near term, despite the recent weak share price."
convenience foods manufacturer Greencore reported flat third quarter revenue growth, with pro forma revenue up 8.1% thanks to good contributions from the UK Food to Go business and Peacocks in the US. Investors seemed disappointed even though full year guidance is being maintained for adjusted earnings per share of 14.7-15.7p, with the analyst consensus towards the conservative end of the range.
Analysts at Jefferies said the top line performance "looks likely to be an upgrading influence on consensus but adverse margin mix may be an offset, in what remains a back-loaded year".
Games Workshop saw its shares hit by profit taking, having roughly doubled over the preceding 12 months. The tabletop gaming retailer described its Warhammer game as in “good shape” as annual revenues revenues stomped up 39% to £219.9m and pre-tax profit roared 94% higher to £74.5m as the company earmarked “North America, Germany and Asia" as targets for expansion.
Nick Bubb, retail analyst and author of The Daily Retailer, said that GW’s results were “upbeat” despite the company facing tough competition and that he expects GW to follow its current model to build on last year’s success.
Market Movers
FTSE 100 (UKX) 7,748.76 0.62%
FTSE 250 (MCX) 20,877.87 -0.00%
FTSE 250 - Risers
Greggs (GRG) 1,054.00p 9.62%
Provident Financial (PFG) 670.00p 8.59%
IMI (IMI) 1,249.00p 6.43%
Vedanta Resources (VED) 820.00p 5.21%
Hastings Group Holdings (HSTG) 249.00p 4.89%
Drax Group (DRX) 363.80p 3.82%
Kaz Minerals (KAZ) 848.00p 3.62%
Centamin (DI) (CEY) 119.00p 3.57%
Superdry (SDRY) 1,244.00p 3.41%
Energean Oil & Gas (ENOG) 524.00p 3.35%
FTSE 250 - Fallers
Travis Perkins (TPK) 1,196.00p -10.78%
Greencore Group (GNC) 177.30p -5.19%
Senior (SNR) 317.20p -5.14%
Contour Global (GLO) 228.00p -5.00%
Games Workshop Group (GAW) 2,995.00p -4.92%
Essentra (ESNT) 481.20p -4.33%
Fisher (James) & Sons (FSJ) 1,802.00p -3.64%
Renewi (RWI) 70.60p -3.05%
IP Group (IPO) 124.00p -2.97%
Millennium & Copthorne Hotels (MLC) 520.00p -2.80%