Just Eat retreated after increased investment and a softer than expected order growth overshadowed improved sale guidance. The FTSE 100-listed takeaway ordering website raised its full-year revenue target to between £740m and £770m, matching a market consensus that had already moved up to £721m, but left earnings guidance unchanged.
Analysts also noted that UK order growth was just 16 per cent in the second quarter, a sharp slowdown from the previous three months in spite of Just Eat integrating its Hungryhouse acquisition in late May.
Australia was another disappointment, with revenue down 8 per cent following the nationwide rollout of UberEats.
Macquarie left forecasts unchanged and said the results “confirm our view that 2018 is a year of investment”. It said: “We believe Just Eat’s overall growth outlook remains strong but any potential earnings outperformance will likely be reinvested. In our view, Just Eat needs to invest in marketing and delivery to reach critical mass since it is late to the market and faces more competition from delivery platforms than direct peers.”
Centrica slumped after the British Gas owner’s interim earnings missed expectations and Jeff Bell, chief finance officer, unexpectedly announced he was stepping down in October. First-half earnings per share for Centrica were 6.4p, against 6.8p consensus, due to one-offs including an unusually high level of central heating boiler breakdowns during the cold snap in February. Management reiterated full-year earnings and dividend targets.
“The key question today will be expectations for a second-half rebound,” said JPMorgan Cazenove. “To achieve our full-year EPS estimate of 13.9p or consensus 13.5p, Centrica would need to deliver 7.1p to 7.5p, which is on par with the second half of 2016 but considerably higher than second-half 2017 which was weighed down by weather and lower commodity prices. We would consider this a tall order, but not out of reach.”
Travis Perkins dropped after posting a 6 per cent decline in group operating earnings, with the builders’ merchant saying a weak UK DIY market had hit sales and profitability at its Wickes chain. Improved sales have not translated into profit as poor demand for kitchens and bathrooms hit margins, meaning 2018 earnings before interest, taxes, depreciation and amortisation will be in the lower half of the range of analyst expectations, Travis said.
Peel Hunt cut Travis to “hold” from “add” and reduced its full-year pre-tax profit estimate from £380m to £360m. The warning also hit sector peer Kingfisher.
Provident Financial led the FTSE 250 gainers after interim results from the subprime lender came in slightly ahead of expectations, thanks largely to cost savings and stable impairment charges in its Vanquis credit card division.
There was limited progress for the lossmaking consumer credit division doorstep lending division, the cause of last year’s string of profit warnings, with Provident saying it had failed to connect with as many old customers as planned. Moneybarn, the group’s car lending business, showed 24 per cent customer growth and 31 per cent cost inflation.
“We are more or less encouraged by today’s results,” said Citigroup. “Vanquis and Moneybarn continue to perform well, in our view, and the only slight disappointment comes from some commentary around the collections performance at CCD. However, we are encouraged by newer customer operating metrics there.”
In brief: Abcam upgraded to “buy” at Berenberg; Cenkos Securities rated new “buy” at Whitman Howard; Acacia Mining raised to “buy” at Panmure Gordon; Templeton Emerging Markets Investment Trust cut to “neutral” at Stifel; Vivendi upgraded to “hold” at Kepler Cheuvreux; Heineken downgraded to “hold” at Jefferies; Valora downgraded to “neutral” at Credit Suisse; Klingelnberg rated new “outperform” at Credit Suisse; MBB rated new “buy” at Commerzbank.
Today’s top News
Brexit News. Michel Barnier, the EU’s chief negotiator for Brexit, has softened his opposition to Theresa May’s post-divorce plan for London’s financial services industry. It comes a day after Deutsche Bank’s move to concentrate euro-clearing in Frankfurt rather than London revived concerns that Brexit could erode the City’s status. (FT)
North Korea News. North Korea no longer poses a nuclear threat, Donald Trump declared after his meeting with Kim Jong Un. That’s now in doubt after US spy agencies said Pyongyang was working on new missiles. The reports come after recent revelations about a suspected uranium enrichment facility that North Korea is operating in secret.
Uber News. The company dropped its plan to develop self-driving trucks and will now “move forward exclusively with cars”. The decision follows a fatal crash involving one its test cars in March, which prompted a review of its autonomous technology development.
Tesla News. There’s been much excitement after researchers backed by Tesla founder Elon Musk and Silicon Valley financier Sam Altman taught a robotic hand to grab things like a human would. The discovery could eventually make it more economical to train robots to do things that are easy for humans. Speaking of Tesla, the Wall Street Journal reports that the company is exploring building its first big European factory.
Apple earnings. The sell-off of big technology groups resumed on Wall Street on Monday. So Apple’s quarterly earnings, out after the market closes, will be closely watched. Here are five things to look for. The iPhone maker’s results come hot on the heels of Samsung’s update on Tuesday in Asia. The company reported its first profit drop in 7 quarters after lacklustre smartphone sales.
Manafort’s moment. Paul Manafort, the lobbyist who helped run Donald Trump’s 2016 presidential campaign, is scheduled to go to trial on financial fraud charges. It is the first trial stemming from charges brought by Robert Mueller, who is investigating Russia’s interference in the campaign. Here are the main points.