Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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January 18, 2024

Alpha matures, Energean pumps & Watches warns

UK Company News

Lots of updates in the UK today. These are a few of interest.

Alpha Group updated on a year of strong but controlled growth as the revenue quality improved, which it believes will go a long way to securing long-term competitive advantage. It said revenue was left on the table as it doubled down on risk management and challenged clients on what they need versus what they want during recent heightened FX volatility. Higher rates have been a favourable tailwind and generated substantial interest income. Its overarching preference is to allocate capital to organic growth initiatives within existing and potential business units. Alpha will join the FTSE 250 when it graduates to a full listing.

Alpha demonstrates a resilient business mix and further evidence of an exceptional business culture. Morgan Tilbrook, the CEO, said that its foundations for growth have never been stronger, and market opportunity has never been more significant for a business that becomes more resilient with every new challenge.

Energean updated a 99% uptime on its FPSO during Q4 2023 despite the military conflict in the region. Its FY production aligns with the latest guidance with core strategic projects across Israel, Egypt, Italy and Greece, along with a new gas development in Morocco. Coal phase-out delays and warmer-than-average winter temperatures have influenced gas demand in Israel.

Given the trading backdrop of rising regional tensions and military conflict, this is a decent outturn for Energean as it consolidates its strategy to be a major force in developing hydrocarbons in the East Med. 

Elementis updated that its FY operating profit will be slightly ahead of expectations. 

Having divested a significant division, Elementis can benefit from a stronger focus on a highly attractive industrial materials business. 

Franchise Brands updated that its divisions serving business customers (Pirtek, Metro Rod, Willow Pumps, Filta UK and Filta International) are trading at record levels. The Board expects FY profits to be in line. 

Gear4Music updated that its peak season trading is in line with Board expectations. It also sees margin progress, making it well-positioned for profitable growth during FY25. (Note here)

Naked Wine updated that trading over peak Q3 has aligned with the company’s expectations. The average repeat customer base is 12% smaller. It says it is delivering on key initiatives with a further £7m cost savings to £30-33m in FY25 this month. Its closing Q3 inventory level was £163m vs £173m. It says it is committed to building a leaner and stronger Naked. 

Watches of Switzerland lowered guidance, saying the UK was more challenged. There was an unusually high level of promotional activity in non-branded jewellery. 

The negative trend in luxury sales now extends across many categories. 

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