Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Packaging experts Smurfit Kappa [LON:SKG] have published final results this morning, covering the period to December 31st. Revenues are down, but pre-tax profits have edged higher thanks to a particularly strong second half, allowing the company to report EBITDA ahead of guidance. Demand has been robust, although the company notes input costs have been rising. Investors however are set to be cheered by news that dividend payments are to increase 8% and the company is convinced that the surge in online shopping will help ensure the positive trajectory can be maintained for some time yet.
Interims from Dunelm [LON:DNLM] covering the 26 weeks to December 26th show the company remains unstoppable despite the pandemic hitting store openings. Sales are up 23% against the same period a year ago, margins have risen by 50bps and pre-tax profits are up by more than a third. Whilst uncertainty in the near term lingers – and is acknowledged in the note – the company believes that its market leading position, supported by a challenger brand mentality, leaves it well positioned for further growth. On the basis that other avenues for discretionary spending may be limited to a degree for the next 12 months that makes sense, but investors may be looking to understand how the market can grow in the longer term.
Persimmon [LON:PSN] has this morning advised the market it is making a £75m provision to cover itself against the cladding crisis. The company is keen to point out that in many cases, it no longer owns these buildings but feels it is the right thing to do as one of the UK’s leading housebuilders. This amount is however a drop in the ocean when put against the billions government is earmarking as it attempts to tackle the situation and with the housebuilders collectively having had a very good run in recent years – thanks largely to government engineered support – it’s difficult not to see this gesture as being an attempt to head off any significantly larger claims in the future.
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