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McColl’s (MCLS) shares have jumped on news that the convenience retailer returned to like-for-like growth in the first quarter of 2019.
Sales improved throughout the year to 25 November 2018, the retailer said, with sales flat for the fourth quarter following decline in the previous quarters.
However, profits halved and like-for-like sales slumped at the chain in 2018, blaming supply disruption from Palmer & Harvey’s collapse earlier in the year.
Pre-tax profits plummeted 57% to £7.9m in 2018, from £18.4m in the previous year. The retailer, which has seen its shares plummet almost 80% following two profit warnings last year, said earnings growth is expected to see “modest improvement” in 2019.
Trading in the current financial year has continued to improve, with McColl’s reporting 1.2% like-for-like for the 11 weeks to 10 February 2019.
In 2018, total like-for-like sales dropped 1.4% as it was also impacted by its rapid transition to Morrisons’ supply chain.
Overall revenues jumped 8.1% to £1.24bn as it was buoyed by the acquisition of stores from the Co-op in 2017.
McColl’s also bought up 11 new stores and updated 59 existing stores during the financial year.
“2018 was undoubtedly a challenging year, marked by supply chain disruption following Palmer & Harvey’s entry into administration and the accelerated transition to our new supply partner Morrisons,” commented chief executive Jonathan Miller.
“Despite this disruption, we continued to make progress against a number of our key strategic plans.
“We completed the rollout of 1,300 stores to Morrisons supply in less than nine months, which represents a considerable achievement and provides us with a more secure supply chain and a higher quality chilled and fresh offer.
“We are a profitable and cash generative business, and our priority for the year ahead is to rebuild operational momentum and we remain confident in delivering our strategic plans.”
Shares are up 11.8% to 56.6p in early trading.
Morning update
Consumer giant Reckitt Benckiser (RB) matched its annual growth targets on the back of strong growth in India and Brazil.
The Nurofen manufacturer delivered fourth quarter like-for-like sales growth ahead of analyst expectations, at 4%, to bounce back from manufacturing disruption at its baby formula facility earlier in the year.
The results come weeks after CEO Rakesh Kapoor announced the end of his eight-year tenure leading the company.
Full-year revenues jumped to £12.6bn, on the back of 3% like-for-like sales growth.
The business was helped to reach the top end of revenue targets by the successful integration of the Mead Johnson Nutrition (MJN), business it acquired for around £13bn in 2017. The FTSE100 supplier said it has already achieved £158m in synergies from the deal.
The global consumer group expects to maintain its operating profit margin and is targeting net revenue growth between 3% and 4% for the current financial year, it said.
“2018 was a year of good financial progress, achieved in an environment of both significant change within the company, and challenging market conditions,” said CEO Rakesh Kapoor.
“We delivered the upper end of our 2018 revenue growth target, and accelerated the delivery of MJN cost synergies versus our ingoing expectations.”
“As we look to the future, we are well positioned for long term, sustainable growth, from the excellent portfolio of brands within each of our more focussed and agile Business Units.”
Elsewhere, the UK-listed Coca-Cola Hellenic Bottling Company (CCH) has announced the acquisition of Serbian confectionery business Bambi for €260m.
The confectionery business has been purchased from Central European investment group Mid Europa Partners and the deal is expected to be completed in the second quarter of 2019.
“This acquisition represents an excellent opportunity to create additional value for Coca-Cola HBC, its customers and shareholders,” commented CEO Zoran Bogdanovic.
“It adds iconic, complementary consumer brands to our portfolio of leading beverage brands, as well as consumer-focused innovation capabilities.”
The FTSE 100 has dipped 0.2% to 7,220pts this morning as trade talks rumble on between the US and China.
The early risers this morning include Purecircle Limited (PURE), up 6% to 276p, Majestic (WINE), up 3.3% to and Glanbia (GLB), up 2.3% to 16.6p.
The early fallers include Premier Foods (PFD), down 2.3% to 35.9p, Domino’s Pizza group (DOM), down 2% to 242.3p, and Finsbury Food Group (FIF), down 1.8% to 83p.
This week in the city
After a morning with some key results affecting the UK grocery market, it is set to get quieter throughout the week, particularly as UK-listed businesses are concerned.
Probably the standout announcement comes tomorrow, as Asda-owner Walmart reveals its latest full-year results, as it gets nearer to finding out whether the CMA will support the mega-merger with Sainsbury’s.
On Tuesday, Irish giant Kerry Foods will also reveal its performance for 2018.
French consumer giant Danone will also report on Tuesday, announcing its full-year 2018 results as it looks to bounce back from a slowdown in Q3.
Wednesday looks set to be the quietest day of the week with no results announcements affecting the sector currently scheduled.
On Thursday, consumer health product supplier McBride (MCB) and Scottish packaging business Macfarlane (MACF) are both set for results update.
Elsewhere, Kraft Heinz will also reveal its full-year results on Thursday, as it looks to deliver year-on-year earnings growth.
Schwarzkopf owner AG Henkel will also reveal its figures for the year in a trading update on the same day.
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