FTSE 250 movers: Energean gushes, AG Barr loses fizz

by | Mar 28, 2023

FTSE 250: 18,402.14, -0.69% at 1345 GMT.
Irn-Bru maker AG Barr posted a rise in full-year profit and revenue on Tuesday as it hailed a strong performance across its soft drinks portfolio, but warned over a short-term hit to operating margins due to inflationary pressures and ongoing investment.

In the year to 29 January 2023, adjusted pre-tax profit rose 13.3% to £43.5m, with reported pre-tax profit up 5.2% at £44.4m. Revenues were ahead 18.2% at £317.6m.

The company said its soft drinks division enjoyed “particularly strong” market share value gains in England and Wales, but a more subdued performance in Scotland, which did not benefit from the better summer weather experienced in much of the rest of the UK.

Meanwhile, the Boost business – which became part of the group in December 2022 – has performed “exceptionally well” within the total soft drinks market across the past 12 months, it said, with a double-digit increase in its value and volume share.

Chief executive Roger White said: “Over the past 12 months we delivered an excellent financial performance and made significant progress across our strategic objectives, an achievement only made possible by our committed and hardworking teams.

“Our strategy to build and develop a multi-beverage portfolio capable of significant long-term growth is progressing well. We are now in an investment phase, designed to capitalise on the strategic growth opportunities ahead. We do anticipate a short-term impact on operating margins, as a result of the combination of this investment, ongoing inflationary cost pressures, and the initial dilutive impact from the Boost acquisition. This growth and investment phase will support the rebuilding of our operating margin over the medium term and the creation of a stronger and more sustainable business.”

Victoria Scholar, head of investment at Interactive Investor, said: “Investors are shrugging off the earnings beat, focusing on margin pressures with shares trading lower by more than 1%, landing the stock in negative territory year-to-date. Drinks brands have been facing headwinds on two fronts both on the cost side as well as the consumer side with the cost-of-living crisis prompting households to make cutbacks on non-essential items.

“Over recent months, shares have been rebounding, helped by the broader pick-up in market sentiment since the lows in October with shares up almost 15% over the past half year.”

Wood Group said on Tuesday that full-year profit was at the top end of its guidance range, thanks in part to solid performances from its consulting and operations businesses.

In the year to the end of December 2022, adjusted earnings before interest, tax, depreciation and amortisation came in at $385m, down 4.7% from the previous year or flat at constant currency, and at the top end of the $375m to $385m guidance given in the January update.

Revenues ticked up 4% to $5.4bn, with growth of 4% and 15% respectively in the consulting and operations segments, offset by an expected decline in projects revenues, which fell 6%. Wood Group said the projects business returned to growth in the second half.

Chief executive Ken Gilmartin said: “We are pleased to have delivered results in line with expectations for 2022, including a return to revenue growth – with 8% growth at constant currency. This was achieved in a year of major change for the group, under new leadership, as we addressed legacy issues, transformed our balance sheet and launched a new strategy.

“Our strategy is already delivering. We started 2023 with good momentum – our order book for delivery in 2023 is up 10%, headcount is up 8% and financial guidance for 2023 is in line with our medium-term financial targets of adjusted EBITDA growth at mid to high single digit CAGR, with momentum building as our strategy delivers. We now we look to the future with confidence as a much stronger company.”

Israel focused gas and oil producer Energean surged on the back of positive sentiment from a $4bn deal involving FTSE 100 heavyweight BP and Abu Dhabi National Oil Co (ADNOC) to buy 50% of Israeli offshore natural gas producer NewMed Energy and take it private. The news also boosted FTSE 250 peers Ithaca Energy and Harbour Energy.

The offer would see the duo acquiring NewMed’s free floating shares as they plan to form a joint venture “focused on gas development in international areas of mutual interest including the East Mediterranean”.

Softcat shares surged on Tuesday after the IT infrastructure products provider said it expects the outturn for the full year to be “slightly ahead” of previous estimates following outperformance in the first half.

In an update for the six months to the end of January 2023, the company said that gross profit – its key measure of income – grew 17.9% to £177.1m, with demand broad-based across all customer segments and areas of technology.

Softcat said gross profit was ahead of expectations “despite a very challenging set of comparative numbers which included several one-off, high value transactions with a major customer”.

Operating profit was also ahead of expectations, down 1.7% to £63.1m.

Group revenues fell 11.3% to £512.4m. Softcat attributed the drop to a reduction in hardware income from the prior period’s largest customer.

Chief executive Graeme Watt said: “I am pleased to be reporting positive numbers across a whole range of key performance indicators in a period that has exceeded expectations.

“We have increased our headcount by 21.1% on the prior period to meet this demand and underpin future growth, and we have grown our customer base by 3.3% which is the fastest rate for three years. We have reported strong cash conversion in the period, continue to be debt free, and are pleased to be declaring an interim dividend of 8.0p, up 9.6% on the prior year. All this has been achieved in an uncertain environment.”

The company said that while there is still a lot to do in the second half and the economic environment remains uncertain, the full-year outturn is set to be “slightly ahead” of previous estimates thanks to its outperformance in the first half.

TUI shares slumped in response to the 8-for-3 rights issue to raise €1.8bn at a deeply discounted price simply to repay the state aid received during the Covid pandemic.

FTSE 250 – Risers

Energean (ENOG) 1,278.00p 8.67%
Softcat (SCT) 1,233.00p 6.85%
Ithaca Energy (ITH) 153.00p 3.59%
Harbour Energy (HBR) 263.90p 3.01%
Carnival (CCL) 670.00p 2.67%
Aston Martin Lagonda Global Holdings (AML) 222.10p 2.63%
Marks & Spencer Group (MKS) 158.90p 2.45%
Ninety One (N91) 182.10p 2.42%
Senior (SNR) 155.40p 2.37%
BlackRock World Mining Trust (BRWM) 646.00p 1.41%

FTSE 250 – Fallers

TUI AG Reg Shs (DI) (TUI) 702.20p -49.23%
Synthomer (SYNT) 109.80p -11.38%
Barr (A.G.) (BAG) 513.00p -5.35%
Molten Ventures (GROW) 267.00p -4.98%
UK Commercial Property Reit Limited (UKCM) 49.40p -4.08%
Wood Group (John) (WG.) 195.20p -3.84%
Direct Line Insurance Group (DLG) 135.75p -3.72%
Bytes Technology Group (BYIT) 361.00p -3.58%
Workspace Group (WKP) 418.20p -3.46%
TR Property Inv Trust (TRY) 264.50p -3.29%

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