Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
AO World [LON:AO] has published full year results this morning, covering the period to March 31st. Group revenues were up 15.9%, whilst EBITDA improved by 7%. Growth in the UK market was however hampered by a sluggish performance in Germany. This has been the subject of a review, although a quick look at the lengthy report gives few ideas of how the company expects to resolve the cash drain that’s being seen here. In terms of the outlook, the closure of non-essential retail stores delivered some predictable upside for AO, but consumer confidence has been knocked by the COVID-19 pandemic and the business is mindful of this.
Half year numbers from Ocado [LON:OCDO] up to May 31st have been released and predictably, this shows some eye-popping growth. Retail revenues are up 27%, whilst group revenues are up by 23%. However, a marked increase in CAPEX meant the company was again unable to turn a profit for the period, although losses were significantly diminished from a year ago. The business is understandably confident that the health crisis will mark a turning point in the way people shop. The fact they white label technology and processes into other retailers too means that there’s real potential here when it comes to the future.
There’s a trading update out from FeverTree Drinks [LON:FEVR] today, noting some significant growth in off-trade sales during the pandemic. In the UK this rose by 34% for the 12 weeks to mid-June, whilst some select data sampling from the US showed growth closer to 90%. It’s not all good news however with some importers running down stocks owing to the uncertainty and Southern Europe, where the on-trade is far more popular, slowing dramatically. The company is however confident that the strength of the prevailing brand will support future growth. There’s a curious rider on this note of the purchase of the company’s sales agent in Germany. The stand-out here seems to be the pricing, which was EUR2.6m cash, writing off EUR5m of debt owed to FeverTree and repayment of loans worth EUR1.9m. The company argues that this was a quicker route than building the same capabilities from scratch. Perhaps more interesting is the fact that from the details we can see here, the target looked somewhat distressed and will more vertical integration like this follow in the wake of COVID?
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