Top News: Mitie ups guidance as Covid-19 work starts to ease
Outsourcer Mitie Group said it has raised its full year guidance after continuing to benefit from Covid-related contracts in the second quarter.
The company said it is now expecting to deliver an adjusted operating profit of between £145 million to £155 million over the full year. That would be a significant jump from the £63.4 million booked last year and the £86.1 million booked in the prior year before the pandemic hit.
That target range is also well ahead of the £107.9 million annual profit forecast by analysts, according to data from Refinitiv.
Mitie shares were trading 3% higher on the news.
The upgrade has been made after the momentum seen in the first quarter continued into the second. Mitie said this was primarily down to delivering a number of short-term Covid-related contracts. The firm has been helping the government with everything from providing security to quarantine hotels to helping set up and run testing centres.
Mitie said work related to the pandemic is expected to ease as it moves through the second half of its current financial year to the end of March 2022, but said it was confident enough to up expectations following its first-half performance and a recovery in other parts of the business.
‘Excluding COVID -related contracts, the business has continued to perform in line with expectations, with the gradual recovery of the economy and the return to work,’ said Mitie.
With that in mind, Mitie said the integration of Interserve’s facility management business that it bought back in 2020 remains on track and that the unit is ‘performing well’.
‘Current market expectations for FY23 are unchanged, pending full recovery of our discretionary variable and project work in our technical services business to pre-COVID levels and until any further COVID-related work is judged to be likely in FY23.
Mitie also revealed it has secured a new £150 million revolving credit facility to replace an existing £250 million facility that it took out in the early days of the pandemic.
The company plans to release interim results covering the six months to the end of September on November 18.
Where next for the Mitie share price?
After trending lower since the start of the month, the Mitie share price rebounded off 67.4p a six week low on Tuesday.
The share price has extended the move higher, breaking above the 50 & 100 sma on the four hour chart as well as above its falling trendline, keeping the buyers optimistic. The RSI is supportive of further upside whilst it remains out of overbought territory.
Immediate resistance can be seen at 75p the high September 10 & 14. Beyond here buyers could gain momentum and head toward 77.7p the August high.
On the downside support can be seen around 71.5 the 50 and 100 sma. A break below here exposes 67.5p the September low.
AstraZeneca sees positive results from Lynparza prostate cancer trial
AstraZeneca said the latest results from its trials testing a combination of Lynparza and abiraterone showed there was a ‘meaningful improvement’ in survival rates in men suffering from prostate cancer compared to treating them with abiraterone by itself.
Interim analysis showed the trial met its primary endpoint by demonstrating an improvement in radiographic progression-free survival in men with metastatic castration-resistant prostate cancer compared to the current standard-of-care which uses abiraterone as the first line of treatment.
AstraZeneca shares were up 2.8% in early trade this morning at 8911.0p, marking its highest level since July 2020.
AstraZeneca said, although the trial has shown a trend towards an improved overall survival rate, it is continuing to assess the overall survival rate as the key secondary endpoint of the trial.
Prostate cancer is current the second most common cancer in men and AstraZeneca said survival rates are low despite a number of new treatments being introduced over recent years.
‘These exciting results demonstrate the potential for Lynparza with abiraterone to become a new 1st-line option for patients regardless of their biomarker status and reach a broad population of patients living with this aggressive disease. We look forward to discussing the results with global health authorities as soon as possible,’ said Susan Galbraith, the executive vice president of AstraZeneca’s Oncology R&D.
How has Carnival performed after restarting cruises?
Carnival said yesterday that half of its fleet will be up-and-running by the end of October as it starts to bounce back after a lengthy shutdown during the pandemic.
The world’s largest cruise company said 42 ships of its fleet will be cruising guests around destinations through the end of October. Eight of its nine brands – Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises and Cunard – will have resumed by then.
That comes as Carnival hopes to have 65% of its fleet operational as it enters 2022. Carnival has previously said it wants to be fully operational again by Spring 2022, but this is being closely-watched considering the firm has already pushed back its reopening timeframe.
‘Based on our initial restart of guest cruise operations across eight brands, it is clear from our guests that there is tremendous confidence in our brands, our health and safety protocols, and the return of cruising as one of the world's most popular vacations,’ said Carnival’s chief communications officer Roger Frizzell.
‘As the restart of cruising continues to gain momentum and create positive economic activity for people who depend on our industry to make a living, we look forward to serving our guests with more than half our fleet capacity returning in October, while delivering a great guest experience and serving the best interests of public health,’ he added.
The update came ahead of Carnival’s third quarter update that will be released later today at around 1500BST. This will be the first quarter since it began restarting cruises as restrictions eased earlier this year.
Analysts are expecting Carnival to report third quarter revenue of $870 million as it starts to recover– having generated just $141 million in revenue in total over the last four quarters combined. Still, Carnival has a long way to go considering it booked $6.53 billion in the third quarter of 2019 before the pandemic hit.
Carnival is expected to remain in the red for now with a pretax loss of $1.62 billion, which would be narrower than the $2.86 billion loss booked last year, while its loss per share is forecast to shrink to $1.43 from $3.69.
Carnival shares were trading 1% lower this morning ahead of its results, having jumped 3.4% yesterday.
Avon Protection wins body armour contract extension
Avon Protection said the US Defense Logistics Agency has decided to extend its contract for body armour by one year, triggering a new minimum order worth some $19 million.
Avon Protection shares were up 4.6% this morning at 2022.0p, hitting its highest level in over five weeks.
The DLA has exercised the first of two one-year extensions available under the DLA Enhanced Small Arms Protective Inserts body armour contract. This extends the contract out to September 22, 2022. The DLA will need to order a minimum of $19 million worth of armour before the extended period ends.
Avon Protection said the first article is now being tested and is expected to be approved in the first quarter of its 2022 financial year, with initial shipments to start in the second.
Notably, Avon Protection will also need to pay $3 million to 3M as the extension triggers a contingent consideration when it bought 3M’s Ceradyne ballistic protection business back in 2019. That means Avon will have paid $7 million for the business in total. Avon could have to pay more to 3M depending if more orders are made and said the total consideration could be as high as $25 million.
Tortilla Mexican Grill IPO scheduled for next month
Tortilla Mexican Grill said it plans to list on AIM next month as it looks to rapidly open new restaurants over the coming years.
The company runs 62 Mexican restaurants. Around 52 of them are in the UK, including two that are franchised out to fellow London-listed SSP Group, and another 10 have been franchised out to other operators in the Middle East.
Tortilla Mexican Grill said it is aiming to open 45 new sites over the next five years, which will include new models such as ‘cloud kitchens’ that solely provide food for takeaway deliveries. It also plans to continue using its franchise and licensing model to grow.
It believes now is an opportune time to go public as the hospitality sector bounces back from the pandemic, with the company confident in the long-term fundamentals of the market.
‘We are delighted to announce Tortilla's intention to float on AIM, which marks an incredibly exciting milestone in our continued growth journey. Since its launch in 2007, Tortilla has established a long-term track record of strong financial performance driven by considered expansion of the property portfolio and like-for-like growth,’ aid CEO Richard Morris.
Notably, Tortilla Mexican Grill said it has recruited Emma Woods, the current boss of The Gym Group and former CEO of Wagamama, as its new non-executive chair and Laurence Keen, the current boss of Hollywood Bowl Group, as a non-executive director.
The company hopes to list on or around October 8.
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