Proactive Investors -
- FTSE 100 down 25 points to 7,889
- ITV (LON:ITV) reports slip in profits
- Haleon confirms first dividend, but shares tumble
Haleon shares dive after first annual results
GSK spinoff Haleon met market expectations in its first full-year results this morning.
Revenue rose 14% to £10.86bn, of which organic growth was 9%, with 4.3% from price increases and 4.7% from volume and product mix.
Jefferies analysts noted that the fourth quarter is ahead on like-for-like terms, though full-year margins and earnings per share (EPS) fell behind.
Haleon’s margin, financing and tax guidance are “likely to inspire mid-single-digit EPS consensus downgrades”, said Jefferies.
Investors will benefit from a proposed 2.4p dividend, the first in the company’s lifetime, representing roughly 30% of adjusted earnings for the period since listing, with the board saying it intends to maintain the pay-out ratio around that level.
Haleon chief executive Brian McNamara said free cash flow of £1.6bn in the calendar year enabled the first dividend as the company was able to reduce net debt to £9.9bn from £10.7bn at the time of the demerger and “provides increased confidence in reducing debt faster than originally expected”.
Haleon shares fell over 4% to 312.53p post results.
News headlines
Here is a quick recap of some of the news making the headlines this morning.
ITV reported a slip in 2022 profits and warned total advertising revenue will continue to suffer because of the “macroeconomic environment.” Total group revenue grew 7% to £7.3bn for the year ended 31 December.
GSK’s spinoff Haleon declared an inaugural dividend as price increases and efficiencies enabled increased profits and cash flow. The first dividend has been proposed at 2.4p per share.
Housebuilder Taylor Wimpey reported signs of improved trading but still warned completions would be around 40% lower than in 2022. Annual results did, however, show a 22% uptick in annual profits to £827mlm.
Among the small caps, Metal Tiger said it is cancelling its AIM listing. The natural resources investor said this is due to a need for greater flexibility to manage its portfolio and implement a new investing policy.
FTSE 100 snapshot
The FTSE 100 Index has kicked off Thursday in muted fashion, dropping around 10 basis points to 7,911p.
Catalysts on the economic calendar are few and far between, barring a speech from the Bank of England’s Huw Pill later this afternoon.
There appears to be some momentum in the housebuilding sector.
Taylor Wimpey PLC added half a percent following its mixed bag of an annual earnings call. The housebuilder said revenue rose 3.2% to £4.42bn while pre-tax profit of £827.9mln was up 22% from the previous year.
Taylor Wimpey did, however, warn that completions in 2023 would be around 40% lower that in 2022.
Barratt Developments PLC saw a bit of a rebound after closing sharply lower yesterday, adding 0.3% this morning.
Persimmon PLC is not so lucky, diving another 2% following yesterday’s rout.
Manufacturing group Melrose Industries PLC is leading the FTSE 100 index with a 2% share price surge following its 2022 full-year results. Statutory losses per share halved against 2021 losses while an interim dividend of 1.5p (a 50% increase year on year) was announced.
Flutter Entertainment is also pulling ahead after this morning’s revenue beat, although it has a while to go before recouping overnight losses.
On the junior market, Poolbeg Pharma added surged ahead after hailing its lead asset as a potential “blockbuster”. Investors seemed to agree, pushing Poolbeg’s share price 15% higher.
On the downside, Orosur Mining Inc (AIM:OMI, TSX-V:OMI), GetBusy PLC (AIM:GETB) and Star Phoenix Group Ltd have all chalked up close to 10% in share price losses.
ITV seen lower post-earnings
ITV’s content-producing arm ITV Studios counterbalanced a fall in total advertising revenues (TAR) for the FTSE 250-listed broadcaster.
Total ITV Studios revenues were up 19% at over £2bn, while media and entertainment revenues were down 1% at £2.2bn driven by a 1% decline in TAR.
Adjusted group EBITA was down 12% at £717mln while adjusted earnings per share was 13.2p.
“The outlook for ads remains tough and sales will continue to fall going forward, while ITV Studios will also see revenue growth slow, potentially to around 5% in 2023 from the 15% seen last year, and see margins come in at the lower end of its target thanks to inflationary pressures,” said Joshua Warner, market analyst at City Index.
ITV also launched its ad-funded ITVX stream platform in December, attracting 1.5 million registrations in just two months.
“However, it is worth remembering that ITV’s streaming services are battling against some of the biggest names in media, including Netflix (NASDAQ:NFLX) and Disney, and it will need to spend big on content to compete – with operating profit already under pressure thanks to increased investment,” said Warner.
The board proposed a final dividend of 3.3p, giving a full year dividend of 5p.
ITV shares were seen 2.3% lower following the earnings call.