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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June 12, 2024

UK economy stalls in April

Macro

The UK’s GDP did not grow in April and slipped to 0.6% year over year from 0.7% previously. Industrial and manufacturing production and construction activity were lower than expected, and the UK’s trade balance deteriorated.

These data releases suggest that rates should be lower.

UK Companies

DFS, in its trading update, reports on a soft upholstery market. Demand in the sector has remained challenging, and Red Sea routing issues have persisted, resulting in customer delivery delays. However, it expects the widely predicted lower inflation and interest rate environment to positively impact demand levels, with the market slowly recovering in FY25.

Equals PE suitor Madison Dearborn does not intend to make an offer, having been considering its position since November of last year.  

Frontier Developments’ H2 update stated that its annual operating costs were reduced by approximately 20%, and cash increased by £12 m to £29.5 m. The board is comfortable with the current consensus of analyst expectations and is confident of achieving profitability in FY25 by focusing on driving return on investment and tight cost control.

Safestore reported that its H1 revenue was down 0.8%, with its investment property value increasing 5.8%. Free cash flow increased 28.5% to £41.0m. However, FY results are expected to be in the lower half of the range of consensus estimates. It continues to expand its portfolio in key metropolitan areas. It has a development and extension pipeline of 30 stores and 1.5m sq ft, representing c. 18% of the existing portfolio.

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