Top News: Biffa suffers during a tough year but optimistic amid Viridor deal
Biffa said it performed better than expected during its recently-ended financial year despite reporting lower revenue and falling to hefty losses thanks to the pandemic.
The waste management company saw revenue fall over 10% in the year to March 26 to £1.04 billion from £1.16 billion the year before. That, combined with tighter margins, caused adjusted pretax profit to plunge by more than half to £29.0 million from £71.7 million. On a reported basis, Bifffa turned to a pretax loss of £52.8 million from a £56.4 million profit the year before.
Demand for waste collection from industrial and commercial customers was hit hard during the year as many businesses shut or operated at reduced capacity, while its unit dealing with recycling waste and energy also suffered.
‘I'm extremely proud of the way the entire team responded in what has been a defining year for Biffa. We were able to protect our people and continue to provide the essential services on which society depends, while taking decisive action to strengthen the finances of the group and continue to invest for the future. It has been a year none of us want to repeat but certainly one which showed us at our best,’ said chief executive Michael Topham.
‘We are pleased to have been able to end the financial year with results ahead of our expectations. We are strongly positioned for the post-pandemic recovery with leadership positions in our core markets, a well-developed investment programme and exciting growth opportunities ahead, leveraging the group's unique position at the heart of the circular economy,’ he added.
Biffa had already suspended the dividend to help it survive the tough year and no final payout is being made.
Despite the tough year, Biffa is feeling increasingly confident about its position as the economy recovers and things start to normalise. Volumes were still below pre-pandemic levels in the second half of the year but they were much better than what was seen in the first, suggesting its markets are gradually recovering. Plus, it recently announced major plans to buy its rival Viridor’s waste collection business and some recycling assets, which it hopes can accelerate its longer-term growth strategy. It is expecting the deal, which will enhance earnings immediately, to be completed in August at the earliest.
The recovery prospects sent Biffa shares up 6.9% in early trade at 314.3p, marking a fresh all-time high for the stock.
‘We have been pleased with the recovery of our performance in recent months and are confident that the year ahead will see a good recovery in our trading performance, as we benefit from the economic rebound that is emerging follow the easing of lockdown restrictions. We will also see the benefit of the investments and acquisitions that we have made over the course of the year. Accordingly, our expectations for the year (excluding the impact of the Viridor transaction) are unchanged,’ said Biffa.
Wickes expects profits to grow as sales explode
Wickes said sales have blown-past pre-pandemic levels since the start of 2021, giving it confidence that it can deliver results toward the top end of market expectations in its first year as a standalone company.
The DIY and home improvement retailer, which was spun-off from Travis Perkins earlier this year, said like-for-like sales were 45.7% higher year-on-year in the 21 weeks to May 22. Like-for-likes were up 23.1% compared to the same period in 2019, before the pandemic hit.
Wickes said local tradespeople and individual consumers both fuelled growth in the period, with a particularly strong uptick in business since April. The company reopened its Do It For Me services, which designs and installs entire projects such a new kitchen for customers, on April 12 and Wickes is expecting the unit to return to like-for-like growth in the second half of this year.
The strong start to the year means Wickes is expecting to deliver an adjusted pretax profit of around £45 million in the first half and full-year profits toward the top-end of the £55 million to £74 million forecast by analysts. For perspective, Wickes reported annual adjusted pretax profit of £49.5 million in 2020.
‘At Wickes, we are here to help the nation feel house proud, and I am delighted with how the entire business has responded to the continued strong demand for our products and services. Availability constraints and inflationary pressures across some raw materials have been well-flagged, but we have strong supplier relationships and are working closely with them to ensure we continue to provide customers with the products they need at the best possible value,’ said chief executive David Wood.
Wickes shares were trading 4.3% higher this morning at 267.0p.
JD Sports denies reports that it is hunting for new boss
JD Sports has denied speculation in the press over the weekend that it is accelerating its plan to recruit a replacement for its boss Peter Cowgill.
JD Sports published its annual report last week and stated that one of the main focuses of the board was the ‘succession planning’ for its chairman and CEO role. That prompted talk that the company is looking to shake-up its board in the near future, with the Times suggesting JD Sports was responding to pressure from investors.
‘JD can confirm to both investors and to its international brand partners that the board is not engaged in a process to recruit a chief executive officer or chairman,’ said the company in a statement on Tuesday morning.
‘JD can also confirm that it is continually reviewing the depth of its management team to ensure that the senior operational leadership team in the business has the necessary skills and experience to exploit the ongoing global development opportunities,’ it added.
JD also said it plans to host its second Capital Markets Day in London on October 13. It will mainly focus on operational progress and plans like the first investor day back in 2018.
JD Sports shares were trading 0.6% higher in early trade at 956.0p, treading just below a new all-time high.
Micro Focus appoints Matt Ashley as CFO
Software company Micro Focus has appointed Matt Ashley as its new chief financial officer from the start of July and said it expects him to make a ‘significant contribution’ to the company’s recovery plans.
Ashley was previously the CFO at bookmaker William Hill and has previously held several roles at National Express, including CFO and the head of its North American division.
‘Matt brings a highly relevant mix of operational experience together with a history of delivering significant value creation. He joins our board and leadership team at an important stage in the execution of our recovery plan and we are confident he will make a significant contribution to the business from the outset,’ said chief executive Stephen Murdoch.
Micro Focus is in the second of a three-year turnaround programme aimed at simplifying its operations, strengthening its portfolio of products, sharpening its service to customers and improving shareholder returns over the long-term.
The current CFO Brian McArthur-Muscroft is leaving the business at the end of June to take up a new job elsewhere.
Micro Focus shares were trading 0.7% higher in early trade at 523.9p.
Victorian Plumbing plans London IPO next month
Victorian Plumbing, an online-driven retailer of bathroom products and services, has outlined plans to go public by listing on AIM next month.
The company claims to be the UK’s second-largest seller of bathroom products based on revenue in 2020 and says it has around 14.2% of the market. It sells over 24,000 products from over 125 different brands – but, notably, it makes over 75% of its revenue from selling own-brand goods.
The company said it hopes to have its shares admitted to trading ‘on or around’ June 22.
Victorian Plumbing said it offers investors a ‘powerful combination’ of a strong market position and track record, consistent topline growth, high profitability and strong cash generation.
The firm reported revenue of £208.7 million and adjusted Ebitda of £26.2 million in the year to the end of September 2020. Growth has accelerated this year, having booked £140.7 million in revenue and £20.1 million in earnings in the six months to the end of March 2021.
‘It's been a fantastic and eventful journey growing Victorian Plumbing over the past two decades. Our early and sustained investment in digital retailing and the advantages that brings has allowed us to make the most of the structural shift in consumers increasingly looking to buy bathroom products online,’ said founder and chief executive Mark Radcliffe.
‘As we are now the leading online retailer of bathroom products in the UK, it seems the ideal time to join the UK stock market. With the deep sector expertise and talent of our senior team members and the fundamental strengths of our proven business model within a growing market, we are excited for the significant growth opportunities that lie ahead for Victorian Plumbing,’ he added.
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