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Three Quick Facts: Sainsbury’s, Interserve and Mondi

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J Sainsbury

The big news from UK retail over the weekend was the mooted merger between Asda and Sainsbury to create a shopping behemoth that would challenge Tesco’s dominance. That idea will take some time to play out – including the CMA’s response – but in the shorter term we have full year results from J Sainsbury to digest this morning. In summary, revenues are up, but margins remain under pressure. With news like this is consider, the appeal of consolidation in the sector to drive further value for shareholders in both companies is easy to see. It’s the impact it has on consumers if choice declines and prices rise that needs to be considered carefully.

Insterserve

Full year results from outsourcer Insterserve this morning will make uncomfortable reading for shareholders. Revenues came in below expectations and profits slumped too. The results lead with the fact that a full debt refinancing has been completed which will take the company through the next three years, but the sector as a whole finds itself in a difficult place, with questions increasingly being asked over the appropriateness of outsourcing. A cost saving and fit for growth plan are both being implemented, but how long will the turn around take to execute?

Mondi

A low level announcement from Mondi, the paper and packaging business, but one which shows its continued commitment to growth through acquisition. It’s buying NPP in Egypt for EUR23.7 million. Given NPP generated an EBITDA for EUR5 million last year, this looks like it could be providing quite an attractive rate of return for shareholders.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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