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Bid Interest in UK Supermarkets Reflects Better Sector Economics

08/23/2021 | 04:15am EST

Bid Interest in UK Supermarkets Reflects Better Sector Economics

0838 GMT - U.K. supermarket companies are drawing bid interest due to the improved economic outlook of the industry and it isn't fanciful to speculate that there will be no listed U.K. supermarkets in due course, Shore Capital says. The Sunday Times reported that U.S. private-equity group Apollo is considering a bid for J Sainsbury, the U.K.'s second-largest supermarket chain. "The better sector economics reflect an amalgam of elevated sales, improved online returns, stable gross margins, better fuel profitability, the lowering of operating costs and capital discipline--particularly around low store-development expenditure," Shore says. That amalgam and maturing German discount chains in the U.K. make for structurally improved free cash-flow generation, Shore says. (adria.calatayud@dowjones.com)

 
Companies News: 

Sainsbury Shares Jump on Buyout Report

Shares of U.K. supermarket chain J Sainsbury jumped 9% on Monday, amid reports it will be next in line for a private-equity bid after Wm Morrison Supermarkets.

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EasyJet Appoints Stephen Hester as Chair Designate

EasyJet PLC said Monday that it has appointed Stephen Hester as chair designate.

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WPP Buys AI Specialist Satalia

WPP PLC said Monday that it has acquired Satalia, an artificial-intelligence technology company, for an undisclosed sum to strengthen the technology offering of its Wunderman Thompson unit.

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Oxford Cannabinoid Technologies Sees FY 2021 in Line With Budget

Oxford Cannabinoid Technologies Holdings PLC said Monday that it expects to report earnings for fiscal 2021 in line with budget and has made a good start to the new fiscal year.

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Shaftesbury Says London Rent Collection Is Recovering

Shaftesbury PLC said Monday that rent collection is recovering and that it expects further improvements following the lifting of coronavirus-related restrictions.

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Mitie to Sell Document-Management Unit to Swiss Post Solutions for GBP40 Mln

Mitie Group PLC said Monday that it has agreed to sell its document-management business to Zurich-based Swiss Post Solutions Ltd. for 40 million pounds ($54.5 million).

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Renold Expects 1H, FY 2022 Earnings to Rise Above Views

Renold PLC said Monday that it expects adjusted operating profit for both the first half and the full year ending March 31 to increase from fiscal 2021 and to exceed market expectations.

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Up Global Sourcing's Underlying Profit Beat Views But Shipping Disruption to Continue

Up Global Sourcing Holdings PLC said Monday that underlying pretax profit for fiscal 2021 came in ahead of consensus estimates but it expects shipping-availability challenges to continue for months.

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Burford Capital Says New Commitments, Deployments Reached Record Levels in 1H

Burford Capital Ltd. said Monday that its new capital commitments and deployments reached record-breaking levels in the first half of the year.

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BATM Advanced Communications Sees 2021 Earnings Ahead of Views After 1H Rise

BATM Advanced Communications Ltd. said Monday that it expects earnings for 2021 to be significantly ahead of market expectations, on the back of demand for high-margin diagnostic products, and that first-half pretax profit rose sharply.

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Condor Gold Appoints John Seaberg as Finance Chief

Condor Gold PLC said Monday that it has appointed John Seaberg as chief financial officer from Sept. 1, replacing Jeffrey Karoly.

 
Market Talk: 

Renold Shares Rise as Strong Momentum Continues in FY 2022

0940 GMT - Shares in Renold jump 23% after the supplier of industrial chains issued a promising trading update for the first four months of the fiscal year from April to the end of July. Strong momentum enjoyed in the fourth quarter continued into the current year in both revenue and order intake, Peel Hunt says. In addition, net debt is broadly unchanged despite an increase in working capital due to improved activity and lengthening supply chains, the brokerage notes. Looking forward, Peel Hunt raises its adjusted operating profit forecasts for fiscal 2022, 2023 and 2024, assuming an earlier-than-anticipated recovery from Covid-19. Renold is a corporate client of Peel Hunt. (jaime.llinares@wsj.com)

Pound Trims Gains Vs Euro After UK PMI Suggests Slowing Recovery

0914 GMT - The pound trims earlier gains against the euro, with EUR/GBP last flat at 0.8591, after provisional U.K. purchasing managers' survey data for August suggested the country's economic recovery was losing momentum. The composite PMI index, which comprises both services and manufacturing activity, dropped to a six-month low of 55.3, according to IHS Markit, below the 59 reading projected by a WSJ poll of economists. Although the reading is still above 50 and points to expansion, "there are clear signs of the recovery losing momentum in the third quarter," says Chris Williamson, chief business economist at IHS Markit. ING currency analysts say EUR/GBP is likely to stay supported above 0.8565. GBP/USD is up 0.3% at 1.3652, buoyed by a weaker dollar. (jessica.fleetham@wsj.com)

UK's Economic Recovery Loses Traction as Supply Woes Hit

0905 GMT - The economic recovery in the U.K.'s private sector slowed sharply in August amid widespread supply and labor shortages that constrained growth, data from IHS Markit show. The flash composite PMI stood at 55.3 in August, signalling expansion but down from the 59.2 reading registered in July. Weaker recoveries were seen in both the manufacturing and services sectors, but the economy registered the steepest rate of job creation since the survey began in 1998, data show. "Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages," IHS Markit's chief business economist Chris Williamson says. (xavier.fontdegloria@wsj.com)

UK 10Y Gilt Yield Rises As UK Flash PMI Unexpectedly Drops to 6-Month Low

0904 GMT - U.K. 10-year benchmark government bond yields trade higher as preliminary U.K. composite purchasing managers' survey data for August unexpectedly plunged to a six-month low. The composite PMI index, which comprises both services and manufacturing activity, dropped to 55.3, according to IHS Markit, below the 59 reading projected by a WSJ poll of economists. While a figure about 50 still points to economic expansion, the lower-than-expected reading is likely to stoke concerns about a slowdown in the pace of the economic recovery. The 10-year gilt yield trades last up 3 basis points to 0.554% relative to Friday's close, according to Tradeweb. (lorena.ruibal@wsj.com)

UK Grocer M&A May Raise Questions About Food Security

0858 GMT - Shares in J. Sainsbury gain 11% after the Sunday Times cited unidentified sources as saying U.S. private-equity company Apollo was considering a possible takeover bid for the U.K. grocer, but this could raise questions about food security, says AJ Bell. "M&A remains in focus amid weekend reports of a private-equity bid for Sainsbury's," says AJ Bell analyst Danni Hewson. "The takeover chatter helps underline the appeal of the U.K. supermarket sector to overseas bidders, following the battle for Morrisons, but further transactions could raise questions about having such key components of the country's food security in the hands of overseas private-equity firms." (philip.waller@wsj.com)

Antofagasta Copper Production Seen Falling Below 660,000 Tons in 2022

0844 GMT - Antofagasta will produce 721,000 metric tons of copper in 2021 and 659,000 tons in 2022, RBC's Tyler Broda forecasts after the company warned of drought risks in Chile. As a result, the analyst cuts its Ebitda estimate by 4% for this year and by 16% for 2022, and trims the target price to 1,000 pence from 1,050 pence. Broda expects taxes will come in higher than RBC's base case scenario and consensus, potentially materially so, as Chile's Senate debates fiscal policy changes. "We maintain our underperform recommendation and continue to see better risk-adjusted exposures elsewhere," he says. (jaime.llinares@wsj.com)

Contact: London NewsPlus, Dow Jones Newswires; paul.larkins@wsj.com

(END) Dow Jones Newswires

08-23-21 0615ET

Stocks mentioned in the article
ChangeLast1st jan.
AJ BELL PLC 1.06% 381.4 Delayed Quote.-12.94%
ANTOFAGASTA PLC -0.07% 1417.5 Delayed Quote.-1.53%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.10% 0.6311 Delayed Quote.-1.46%
BATM ADVANCED COMMUNICATIONS LTD. -1.13% 79.1 Delayed Quote.-13.98%
BRITISH POUND / EURO (GBP/EUR) -0.56% 1.16813 Delayed Quote.4.64%
BURFORD CAPITAL LIMITED -2.61% 759.6427 Delayed Quote.9.70%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.19% 0.700207 Delayed Quote.7.23%
CONDOR GOLD PLC 0.88% 28.5 Delayed Quote.-43.50%
DJ INDUSTRIAL 1.40% 35719.43 Delayed Quote.13.18%
EASYJET PLC -3.79% 533.4 Delayed Quote.-20.69%
INDIAN RUPEE / EURO (INR/EUR) -0.23% 0.011736 Delayed Quote.4.86%
J SAINSBURY PLC -0.36% 277.7 Delayed Quote.23.59%
MITIE GROUP PLC -0.61% 65.6 Delayed Quote.60.98%
RENOLD PLC 0.98% 30.8 Delayed Quote.145.45%
RSA INSURANCE GROUP 0.00%End-of-day quote.1.00%
SHAFTESBURY PLC -0.61% 613.24 Delayed Quote.8.44%
UP GLOBAL SOURCING HOLDINGS PLC 3.67% 197.5 Delayed Quote.58.09%
US DOLLAR / EURO (USD/EUR) -0.24% 0.884893 Delayed Quote.8.05%
WM MORRISON SUPERMARKETS 0.00% 286.4 End-of-day quote.61.49%
WPP PLC 0.42% 1099.5535 Delayed Quote.36.88%
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