Weekly Roundup - week ending 16/05/2014
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Mobile devices retailer, Carphone Warehouse, and electrical goods retailer, Dixons, announced their plans for an all-share merger today (15th May).
The combined market capitalisation of both companies currently comes in at around £3.7bn.
This announcement follows a statement released back in February, which confirmed that both companies were in the early stages of mergers discussions.
Housebuilder, Bovis Homes, released a relatively upbeat statement today (16th May), saying that sales prices continue to increase ahead of expectations.
Bovis Homes boasted an 80% increase in homes built in the first four months of the year; in addition, private reservations rose 78% for 2014 delivery.
The strong trading conditions gave the company the confidence to forecast at least a 15% increase in return on capital employed for 2014.
Bovis Homes’ shares opened up this morning but are down around 2% (at time of writing).
Yesterday, shares of Walmart closed down after it released its first quarter results.
The company reported a 0.8% increase in net sales for the period at around $114bn, excluding the impact of adverse currency movements, net sales would have increased some 2%.
Net income for the period, however, dropped 5% at $3.6bn - adverse weather conditions in the US was cited as having negatively impacted profits.
Looking ahead, Walmart expects second quarter earnings per share (EPS) to be between $1.15 and $1.25, which is below expectations. The guidance, according to the company, takes into account increased investments and headwinds from higher health care costs in the US.
The market cheered for Cisco, which reported third quarter earnings after trading hours on Wednesday (14th May).
The company reported third-quarter revenue of around $11.5bn, marking a 5.5% drop from the same period last year. The figure beat the company’s own guidance of between a 6% and 8% decline in revenue for the period.
Net income for the period also declined but also beat expectations, coming in at some $2.2bn, a drop from the $2.5bn made in the same period the prior year.
The market reacted positively to the update yesterday, with Cisco’s shares having closed up 6%.
Tuesday saw pub operator Enterprise Inns release its results for the first half of the year.
For the six months ended 31st March, the company took revenue of £308m, down from £312m in the same period last year.
Like-for-like net income (like-for-like gross profits across its pubs) increased by some 1%, at around £180m, in contrast to the decline reported in the same period the prior year, and, also marking its third consecutive quarter of like-for-like net income growth.
Net profit came in at £37m, an increase over the prior year’s figure of £25m – helped, according to the company, by lower exceptional property charges.
On Monday, Platinum producer, Lonmin, reported a decline in revenue and earnings for the six months to 21st March.
Revenue came in at $578m, down from $735m in the same period last year; and operating profit was $34m, down from $93m last year. The long-running wage strike in South Africa adversely impacted the company’s results.
On the M&A front: Carphone Warehouse and Dixons announced their tie-up plans yesterday, that follows their announcement, back in February, regarding early-stage merger talks.
Also on the M&A front, Canada’s Valeant Pharmaceuticals indicated on Wednesday that it is set to return with a new bid for US-based Allergan. Earlier in the week, Allergan had publicly rejected Valeant’s initial bid on valuation grounds.
Meanwhile, talk of a potential acquisition of Bouygues Telecom by Orange also made the rounds this week.
The Office for National Statistics (ONS) released UK unemployment figures on Wednesday, which showed that the rate had dropped to 6.8%. Average earnings growth rate was unchanged at 1.7%.
Wednesday also saw the Bank of England’s inflation report - with growth and inflation forecasts broadly unchanged - serving to dispel expectations of an imminent rise in interest rates.