Three things you need to know in the financial markets today from investment writer, Tony Cross.
#1. Direct Line premiums rise sharply in bid to restore margins
There’s a Q1 trading update out from Direct Line Group LON:DLG this morning, highlighting a 9.7% increase in revenues across the group but with an inflation-busting 19% uptick being recorded on car premiums. Despite this, the company notes that motor claims from damage continue to be higher than expected, although weather-related claims are comfortably below target. The company is committed to driving margins higher, but as it has already found, initial moves to do this have resulted in a meaningful reduction in policies sold.
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#2. Purple Bricks: risk of fire sale looms
There’s an update from Purple Bricks LON:PURP on its full year trading and Formal Sale Process. Critically, there are issues with cashflow, which is accelerating the conclusion of the sales process. That however comes with the caveat that the offers currently being tabled fall well below the current share price. A further equity raise has been considered but it lacks the necessary support – it seems likely that today will be a difficult one for the stock.
#3. Marshalls: slowdown in house building takes toll
Marshalls LON:MSLH has published a trading update ahead of tomorrow’s AGM. Thanks to a recent acquisition, revenues for the first 4 months of the year are up 12% but on a like for like basis have fallen 14%, with the marked decline in construction of new homes weighing. Cost reductions and efficiency increases are being pushed through in response to this, including job cuts. The company’s balance sheet remains robust, but given that slowdown in house building, the board now expects to deliver a full year result below original expectations.