Stock Insights: ABF, RTO, JD

About Associated British Foods PLC

Associated British Foods Plc (ABF) is one of the leading diversified food, ingredients and retail groups based out of the UK. The group’s major businesses include Sugar, Ingredients, Grocery, Agriculture and Retail. ABF caters primarily to industries including Agriculture, Pharmaceutical, Retail and Food. The group presently operates in 50 countries worldwide.

ABF-Pre closing trading update

On 9th September 2019, the company announced pre closing trading update. Although, the decline is anticipated in AB Sugar, this is expected to be offset by strong profit generation by Primark and Grocery during the year. The company’s full year outlook remains unchanged and the adjusted EPS is in accordance with the last year. The company’s net cash is expected to be around £900 million by the year end as against £614 million in the previous year. This update was released prior to release of the company’s full year results for the financial year 2019 period ended 14th September 2019, the results are expected to be announced on 5th November 2019.

ABF-Financial Highlights (H1 FY2019, £million)

On a constant currency basis, the group’s revenue surged by 2 per cent to £7,532 million as against the H1 FY2018 data. Adjusted operating profit declined by 2 per cent to £639 million against the last year same period data.

On AER basis, the company’s reported revenue surged by 1 per cent as compared to that recorded in H1 FY18. Adjusted operating profit decreased by 1 per cent (on AER basis) against the corresponding period of the last year, due to the changes in the sterling exchange rate. Adjusted Profit before tax stood at £627 million and in line against the previous year same period data. Adjusted earnings per share (EPS) stood at 61.1 pence and it was in line with that in the previous year. The board declared an interim dividend per share of 12.05 pence, an increase of 3 per cent as compared to that in H1 FY18. Gross investment and net cash stood at £433 million and £386 million, respectively.

In the first half of the financial year 2019, the company reported solid profit growth in Primark and in Grocery division. The company expects that the full-year 2019 profit will decline in sugar division, and it was reflected in the first half of the financial year 2019. The full-year 2019 prospects for the company was unchanged, with adjusted earnings per share projected to be in line with the previous year.

In the retail segment, the company will increase its margin for the full-year results of 2019. On an underlying basis, the company expect profit growth in Primark division for the full year 2019. This profit will increase because of the additional development of the selling space expansion and client experience services. In the grocery segment, the company has made robust progress, with a surge in adjusted operating profit. Primark Birmingham flagship store opened on April 10 – 160000 square feet store.

 

ABF-Share price performance

Daily Chart as at 10th-September-19, before the market close (Source: Thomson Reuters)

On 10th September 2019, at the time of writing (before the market close, at 3:25 pm GMT), Associated British Foods Plc shares were trading at GBX 2,224. Stock’s 52 weeks High and Low are GBX 2,659.00/GBX 2,011.00. Stock’s average traded volume for 5 days was 853,254.80; 30 days – 822,864.97 and 90 days – 765,544.74. The outstanding market capitalisation was around £18.15 billion. 

About Rentokil Initial PLC

Rentokil Initial Plc (RTO) is a Camberley, Surrey-based company that provides the pest control, hygiene and offers a range of pest control services as well as a range of other specialist services, which protect people and enhance lives, everywhere. The company’s operations are spread over five geographical regions: UK & Rest of World, Europe, North America, Asia and Pacific.

RTO-Financial Highlights (H1 FY19, £million)

On AER basis, the ongoing revenue increased by 10.7 per cent to £1,289.9 million as compared with the corresponding period of the last year. In H1 FY19, the revenue surged by 10.4 per cent to £1,298.9 million as compared with the previous year same period data, due to the growth in all main business segments and regions. Adjusted profit before tax increased by 13.7 per cent to £141.6 million as compared with the corresponding period of the last year, due to growth of operations in all regions. Profit before tax was £113.8 million, an increase of 3.7 per cent against the same period in 2018. Adjusted EPS climbed by 14 per cent to 5.99 pence as compared with the previous year same period data. EPS stood at 4.75 pence. Interim dividend per share increased by 15.2 per cent to 1.51 pence against the corresponding period of the last year.

On a CER basis, the revenue increased by 8.5 per cent, operating profit surged by 14.6 per cent, profit before tax rose by 3.2 per cent and EPS surged by 0.7 per cent.

Free cash flow stood at £95.9 million, an increase of £22.9 million as compared with the corresponding period of the last year.

Guidance for 2019, IFRS 16 is now expected to accelerate ongoing operating profit by £3 million and adjusted interest charge by £3 million, with no overall impact on Adjusted profit before tax. In 2019, P&L and cash interest costs are now projected to be £4 million lower than previously guided. Changes in the macro-economic environment, a rise in commodity prices or an increase in multinational competitors, could have a major impact on the ability of the business. Geopolitical events like Brexit, which can impact the free movement of people or reduced appetite for immigration in the US might make it more challenging to attract frontline colleagues. However, the company operates a profitable growth model which is assisted through organic growth and M&A. New acquisitions have enabled the company to broaden its expertise in newer growth areas. Moreover, the company is trading near its 52-week high, raising doubts of its upside potential at the current prices.

RTO-Share price performance

Daily Chart as at 10th-September-19, before the market close (Source: Thomson Reuters)

On 10th September 2019, at the time of writing (before the market close, at 3:28 pm GMT), Rentokil Initial Plc shares were trading at GBX 433.7. Stock’s 52 weeks High and Low are GBX 468.60/GBX 280.00. Stock’s average traded volume for 5 days was 3,122,676.00; 30 days – 4,526,551.70 and 90 days – 6,339,513.92. The outstanding market capitalisation was around £8.25 billion. 

 

About JD Sports Fashion PLC

JD Sports Fashion PLC (JD) is a General Retailers company selling branded leisurewear. The company, through its chain of retail stores, operates in two segments being Sports Fashion and Outdoor. The sports fashion business includes brands like Kooga, Cloggs, Tessuti, Sprinter, Source Lab, JD Gyms, Kukri Sports, Getthelabel.com, Nicholas Deakins, Scotts and Chausport. The outdoor business includes a portfolio of brands such as Ultimate Outdoors, Millets, Blacks and Tiso.

JD-Financial highlights for H1 FY20 (£, million)

For the first half of the financial year 2020, the company’s revenue surged by 47 per cent to H1 FY2020 to £2,721.20 million as against £1,846.30 million in the H1 FY2019. The increase in the revenue was driven by an increase in global Sports Fashion fascias in the UK and Ireland markets. The company’s operating profit (before exceptional) increased to £199.8 million in H1 FY2020 from £123.9 million in the H1 FY2019. The PBT (Profit before Tax and exceptional) surged to £158.6 million in H1 FY2020 from £121.9 million in the H1 FY2019. The PBT (Profit before Tax) surged to £129.9 million in H1 FY2020 from £121.9 million in the H1 FY2019. The company’s profit for the period stood at £98 million in H1 FY2020 versus a profit for the period of £95.4 million in the H1 FY2019. The company’s basic and diluted earnings per share stood at 9.67 pence in H1 FY2020 versus basic and diluted earnings per share of 10.05 pence in H1 FY2019. The company’s interim dividend for H1 FY2020 was at 0.28 pence versus 0.27 pence in H1 FY2019.

JD-Share price performance

Daily Chart as at 10th September 19, before the market close (Source: Thomson Reuters)

On 10th September 2019, JD Sports Fashion Plc shares were trading at GBX 679.60 at the time of writing before the market close (at 2:35 PM GMT), up by 7.43 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 679.60/GBX 318.50. The group’s stock is reflecting lower volatility as against the benchmark index based on the company’s beta of 0.76.

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