BUSINESS LIVE: Barclays profits fall; Sainsbury’s Oops Guidance; BHP contemplates agreement with Anglo American

Charlie Huggins, Wealth Club Quality Stock Portfolio Manager:

‘Unilever is off to a strong start in 2024 with volume growth improving to 2.2%. As a result, it has reiterated its full-year guidance.

‘However, Unilever should perform better. Hein Schumacher’s ‘Action Plan’ is designed to revitalize performance through more impactful innovation, productivity savings and improved culture, with greater focus on the top 30 power brands.

«Although it is early, there are already promising signs. Power Brands are outperforming the rest of the portfolio, increasing their volumes by 3.8% in the first quarter. It seems eminently sensible to focus more on them. Meanwhile, the recently announced separation of the ice cream business shows that Unilever’s CEO is willing to take bold steps to transform the company, which is what Unilever desperately needs.

‘Ice cream is a lower margin business and has struggled recently, losing share to competitors. Separating the ice cream business will simplify the group and free up resources to invest in the biggest brands. It’s all part of the new CEO’s master plan to do “fewer things, better and with greater impact.”

‘Unilever will need more than just a portfolio shift to realize its potential – cost of living challenges mean private brands have never been more attractive. However, the ‘Action Plan’ is off to a good start and it finally looks like Unilever is moving in a positive direction.’

Serica Energy is one of Britain’s top ten oil and gas producers, producing around 41,000 barrels of oil a year.

Its portfolio of new projects includes the redevelopment of Buchan, 120 miles north-east of Aberdeen, the third largest undeveloped field in UK waters behind Rosebank and Cambo.

Its acting president and CEO is David Latin, an industry veteran with more than 30 years of experience working in the upstream sector, including senior positions at BP and multinational oil giant OMV Group, where he led its operations in Norway. .

In other words, know your onions.

Unilever’s first-quarter sales rose a better-than-expected 4.4 percent as one of the world’s largest consumer goods groups won back shoppers who had opted for cheaper products.

The maker of Dove soaps and Hellmann’s mayonnaise increased sales volumes 2.2 percent, its second quarter of growth after several of declining volumes. It increased prices by 2.2 percent.

Consumer goods companies are struggling to recover lost volumes after months of price increases introduced to pass on higher input costs to the customer. Prices had initially increased due to the Covid-19 pandemic, followed by the Russian invasion of Ukraine.

Analysts expected Unilever sales volumes to rise 1.2 percent and prices 1.8 percent. Its underlying sales growth was above the 3 percent estimate considered by analysts in a consensus provided by the company.

Unilever also maintained its outlook for the full year and said it expects sales volumes to continue improving.

“We have increasing confidence in our ability to achieve sustained volume growth as we accelerate gross margin expansion,” CEO Hein Schumacher said in a statement.

London-listed miner Anglo American has received a proposed buyout of shares from BHP Group, preparing a potential megadeal that would create the world’s largest copper miner producing around 10 percent of global production.

The deal, if agreed, would also trigger more transactions in the global mining industry, which has seen a series of mergers and acquisitions as companies review their assets to increase exposure to metals considered critical to the energy transition. .

The proposal comes after Anglo, which had a market capitalization of $37.7 billion at Wednesday’s close, began a review of its assets in February after a 94 percent drop in annual profits and a series of writedowns. due to a drop in demand for most of the metals it extracts.

Anglo owns mines in countries such as Chile, South Africa, Brazil and Australia.

BHP, the world’s largest listed miner and best known for mining iron ore, copper, coking coal, potash and nickel, had a market capitalization of about $149 billion as of Wednesday.

Tesla shares rose more than 12 percent after it pledged to bring forward the launch of “more affordable” cars.

The electric car maker said production could begin this year, as the group led by tech billionaire Elon Musk suffered its biggest revenue drop in more than a decade due to stagnating demand.

On Tuesday it recorded sales of £17bn for the three months to the end of March, a 9 per cent drop from a year earlier and the biggest drop since 2012.

Profits fell 86 per cent to £910m compared to £6.4bn a year ago.

Sainsbury’s has forecast strong profit growth in its new financial year, as Britain’s second-largest supermarket group beat forecasts with a 1.6 per cent rise for 2023/24.

The group, which has a 15.3 percent share of the British food market, behind only Tesco, is finding success thanks to a strategy of matching discounter Aldi’s prices on essential items and offering better prices to members of its £1.3bn-funded Nectar loyalty programme. of costs outside the business over the last three years.

Underlying profit before tax was £701m in the year to March 2, ahead of the company’s guidance of £670m to £700m and £690m delivered in 2022/23.

Chief executive Simon Roberts said:

‘We said we would put food back at the heart of Sainsbury’s and that’s what we’ve done. Our food business is running at full speed.

‘We have the best combination of value and quality on the market and that is winning us customers from all our key competitors, driving consistent market share growth in volume as more customers choose us for their weekly shop and all their occasions. specials.

‘As we embark on our Next Level Sainsbury’s strategy, we will continue to make deliberate and balanced decisions to support our customers, colleagues, communities and farmers.

“The business has real momentum and we are excited about our goal of making good food joyful, accessible and affordable for everyone, every day.”

The owner of the London stock market is facing a backlash from investors over his plans to more than double his boss’s salary.

London Stock Exchange Group (LSEG) wants to increase chief executive David Schwimmer’s maximum salary from £6.25 million to £13 million.

Investors will vote today on whether to allow the almost £7m pay rise at the annual general meeting amid soul-searching in the City over the health of the stock market chaired by Schwimmer.

Analysts warn that a “relentless” wave of takeover activity, equivalent to a “feeding frenzy” on undervalued British shares, has left the stock market facing a “death by a thousand cuts”.

Barclays’ profits fell 12 percent in the first quarter as pressure on UK mortgage prices, lower trading income and a drought of merger and acquisition fees showed the difficulties it will face in achieving its first strategic renewal in a decade.

The lender posted a pre-tax profit of almost £2.3bn for the three months to March 31, up from £2.6bn a year earlier and in line with forecasts of £2.2bn.

Barclays is trying to restore investor confidence in its universal banking business model, after years of share price underperformance, clashes with activists over the role of its investment bank and staff turnover.

Chief CS Venkatakrishnan said:

‘We are focused on the disciplined execution of the plan we presented in our Investor Update on February 20.

‘We have now announced the sale of our Italian mortgage portfolio and are investing in our most profitable consumer businesses in the UK, including through the planned completion of the acquisition of Tesco Bank in the fourth quarter.

“We continue to exercise cost discipline and remain well capitalized with a quarter-end Common Equity Tier 1 (CET1) ratio of 13.5%.”