Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Ocado
Ocado LON:OCDO has this morning published full year results for the period to November 29th 2020. The company’s share price has been on a tear as a result of the lockdown and today’s numbers will be scrutinised to see if the gains can be justified. Retail revenues are up 35%, whilst fees charged to international service partners have also risen. Losses narrowed to £44m, in from the £214m seen a year earlier, but the company notes that revenue forecasts will be influenced by the length of the current lockdown. Acquisitions will help drive revenues for the current FY and the company has £2.1 billion on the balance sheet. As Ross Hindle, Analyst at Third Bridge, notes: “Ocado couldn’t have asked for better trading conditions, as customers clamoured to secure online shopping slots like never before. The question now is how much of that growth will stick, and how much will slip away as lockdowns ease.”
Bellway
Homebuilder Bellway LON:BWY has issued a trading update for the six months to January 31st. The company notes a record first half performance although pent up demand from the first lockdown plus the stamp duty holiday will have combined to create a very favourable backdrop here. Against weak comparatives, the next six month period is also set to flatter, although perhaps more significantly a forecast increase in margins for the full year will offer investors something of an anchor. Government and macroeconomic policies do however seem set to play an ever increasing function in the housing market, so changes in help to buy, the end of the stamp duty holiday and the risk of interest rates starting to creep higher will all present headwinds for the business.
TUI
Tour operator TUI [LON:TUI] has published a quarterly statement for the October-December period this morning. The shuttered tourism market means the numbers make for grim reading and even forward booking for this summer are looking limited, despite the narrative that has been pushed by some peers of massive pent up demand. There’s an expectation that once the vaccination program progresses, bookings will come back, but TUI only plans to operate 80% of 2019 capacity over the summer. The company notes potential for an even stronger recovery if travel restrictions are lifted before Easter and is working on the basis that it will move towards cash break even in Q3. EUR2.1bn worth of liquidity is on hand and current cash burn rates mean there’s 7-9 months of headroom available.
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