42 Wednesday November 10 2021 | the times
BusinessMarkets
news in brief
Pret back on City menu
The lunch hour is almost back to
normal in the City of London and
Canary Wharf, at least if sales of
Pret A Manger cappuccinos and
five berry bowls are the measure.
Bloomberg’s Pret Index shows
that last week’s transaction
volume in the two financial
districts rose to 86 per cent of
pre-pandemic levels, the highest
since the start of the pandemic.
Demand in the two areas for
Pret’s coffee and fare may
continue to rise through the rest
of the year if Covid cases in do
not increase, Pano Christou, the
chief executive, said.Reshuffle at Barclays
Barclays has appointed Paul
Compton as head of investment
banking as part of a wider
reshuffle in the wake of Jes
Staley’s departure as chief
executive. Compton was global
head of banking and had been
co-heading the investment bank
along with CS Venkatakrishnan
before the latter’s move to chief
executive. Alistair Currie
becomes head of consumer
banking and payments and
Ashok Vaswani takes a new role
as chief digital strategy officer.Good time for Watches
Watches of Switzerland upgraded
its profit guidance, sending its
shares up 15 per cent on their
their best day in more than a year.
The jeweller revised its guidance
for fiscal 2022, with estimated
revenue raised from between
£1.05 billion and £1.1 billion to
£1.15 billion to £1.2 billion. Earnings
before interest and tax were
raised from flat to 0.5 per cent to
1 per cent to 1.5 per cent. Total
revenues rose by 44.6 per cent to
£586.2 million. The shares rose
170p to £13.04.Sheps back to basics
The boss of Britain’s oldest
brewer insisted the fundamentals
of the British pub were “as good
as they’ve ever been”, despite a
second year of losses. Jonathan
Neame, chief executive of the
Kent-based Shepherd Neame,
said the pandemic had “made
people think about what life
would be like in their community
without a decent pub”. In the year
to June 26, pre-tax losses eased
from £21 million to £16.4 million
as revenues fell from
£118.2 million to £86.9 million.Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 85.55 +1.87
BFOE(Jan) 84.91 +1.35
BFOE(Feb) 83.69 +1.21
WTI(Jan) 82.56 +0.61
WTI(Feb) 81.05 +1.48Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 771.00 772.00 +30.00
Gasoil EEC 726.00 728.00 +10.00
3.5 Fuel Oil 426.00 428.00 +0.50
Naphtha 761.00 762.00 +6.00ICE Futures
Gas Oil
Nov 742.00-741.50 Feb 714.25-713.75
Dec 730.75-730.50 Mar 706.75-705.75
Jan 721.25-721.00 Volume: 901253Brent (9.00pm)
Jan 84.92-84.91 Apr 81.79-81.00
Feb 83.70-83.68 May 80.87-79.33
Mar 82.60-82.56 Volume: 1927042LIFFECocoa
Dec 1646-1632 Mar 1687-1685
Mar 1660-1658 May 1688-1687
May 1684-1667 Jul 1687-1678
Jul 1850-1671
Sep 1684-1676
Dec 1685-1681 Volume: 81050RobustaCoffee
Nov 2223-2181 Sep 2087-2060
Jan 2226-2219 Nov 2145-2075
May 2120-2114
Jul 2196-2075 Volume: 11698White Sugar (FOB)
Reuters Aug 510.30-505.10
Oct 503.00-497.30
Dec 514.80-513.50 Dec 498.00-495.20
Mar 512.10-511.90 Mar 498.30-493.20
May 512.00-510.80 Volume: 59361PRICES
Major indices
New York
Dow Jones 36319.98 (-112.24)
Nasdaq Composite 15886.54 (-95.81)
S&P 500 4685.25 (-16.45)
Tokyo
Nikkei 225 29285.46 (-221.59)
Hong Kong
Hang Seng 24813.13 (+49.36)
Amsterdam
AEX Index 815.17 (-2.42)
Sydney
AO 7756.30 (-11.60)
Frankfurt
DAX 16040.47 (-6.05)
Singapore
Straits 3243.42 (-20.48)
Brussels
BEL20 4388.90 (+5.07)
Paris
CAC-40 7043.27 (-4.21)
Zurich
SMI Index 12367.52 (+14.17)
DJ Euro Stoxx 50 4344.63 (-7.90)London
FTSE 100 7274.04 (-26.36)
FTSE 250 23367.14 (-172.78)
FTSE 350 4173.00 (-17.92)
FTSE Eurotop 100 3514.67 (-7.15)
FTSE All-Shares 4155.40 (-17.42)
FTSE Non Financials 4987.81 (-12.32)
techMARK 100 7064.39 (-29.47)
Bargains n/a
US$ 1.3561 (-0.0004)
Euro 1.1699 (-0.0004)
£:SDR 0.98 (+0.00)
Exchange Index 81.33 (+0.27)
Bank of England official close (4pm)
CPI 112.42 Sep (2015 = 100)
RPI 308.60 Sep (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 677.16 (+5.72)
Morningstar Long/Short Commod4703.45 (+27.75)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Dec 21 126.91 127.29 126.84 127.19 286206 833225
Mar 22 125.96 126.23 125.95 126.19 607 78239
3-Mth Sterling Dec 21 99.745 99.755 99.730 99.750 25486 534126
Mar 22 99.350 99.360 99.315 99.335 22457 335270
Jun 22 99.110 99.120 99.050 99.075 18223 240614
Sep 22 98.960 98.970 98.885 98.910 32092 344393
Dec 22 98.890 98.910 98.815 98.835 45759 507674
3-Mth Euribor Dec 21 100.57 100.57 100.56 100.56 55593 438059
Mar 22 100.52 100.53 100.52 100.52 28601 310247
Jun 22 100.46 100.47 100.46 100.47 30371 311423
Sep 22 100.40 100.42 100.40 100.41 37311 410553
Dec 21 100.33 100.35 100.32 100.34 53666 466230
3-Mth Euroswiss Dec 21 100.78 100.79 100.78 100.79 418 50441
Mar 22 100.72 100.74 100.72 100.74 2879 35317
Jun 22 100.69 100.72 100.69 100.71 1608 32978
Sep 22 100.63 100.66 100.62 100.65 2938 31769
FTSE100 Dec 21 7271.5 7294.5 7243.0 7255.5 66565 626426
Mar 22 7195.0 7223.0 7193.0 7187.5 7 745
FTSEurofirst 80 Dec 21 5975.5
Mar 22 5958.0© 2021 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
herein is proprietary to Tradeweb; may not be copied or
re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
investment advice. Tradeweb is not responsible for any loss or damage that might result
from the use of this information.€20 million by 2025. Other drivers of
greater recycling by firms include
new regulations, such as increased
incineration taxes in Belgium.
The challenges? Commercial waste
volumes are not yet back to pre-
pandemic levels, with the closure of
hospitality during lockdown and the
shift to home working resulting in
less waste being collected from
restaurants, hotels and offices. Some
sectors will never recover to pre-
Covid levels, management believes.
But its big ATM site, which cleans
contaminated soil, water and
chemical waste in the Netherlands, is
the biggest weak spot. Delays in
regaining permits to ship thermally
treated soil — on the back ofsecondary alternatives and pushing
the price of recycled material higher.
The price inflation might be
expected to moderate this year, but
that has not stopped expectations for
Renewi’s results being raised again.
Peel Hunt, the house broker, has
raised its adjusted profit forecasts for
the next three years, pencilling in
€78 million this year, up from
€47.4 million the year before.
Over the medium term, margins
should benefit from an efficiency
programme aimed at cutting office
costs, saving €20 million a year by- So, too, should capital
expenditure on projects including
upgrading sorting lines, which is
expected to boost earnings by
C
ompanies around the world are
setting lofty decarbonisation
targets, conscious of the need
to convince consumers that they are
taking environmental concerns
seriously. Renewi, the European
waste management company, hopes
to capitalise on this trend.
The FTSE 250 group collects and
recycles waste and sells it back to the
market. A lack of production of some
raw materials has resulted in supply
shortages of paper, metals and
plastics, boosting demand forEmma Powell Tempus
Buy, sell or hold: today’s best share tipsPrimark owner piles up the bargains
B
eing cheap is the chief
selling point for Primark,
Associated British Foods’
best-known brand. That
attribute also should ignite
investors’ interest in the stock.
Shares in the group, which
additionally owns Twinings tea and
Ovaltine drinks, have struggled to
regain ground since last March and
are valued near their pandemic
trough at only 12 times forecast
earnings for next year.
A stretched balance sheet deserves
to be punished, but a company
sitting on too much cash also tries
investors’ patience. ABF has long
been a strong cash-generator. In
September, its net cash stood at
£1.9 billion. That excluded lease
liabilities, although those were lower
owing to rent concessions, signing
short leases and a switch to monthly
payment terms.
Now, though, there’s a better
chance that more of the cash
churned out by the business will find
its way back to shareholders. Its
bosses have set out conditions to
return surplus cash, namely having
“substantial” cash balances at the
end of the half-year and financial
year-end and net debt consistently
below adjusted earnings before tax
and other charges. That’s being
kicked off with a special dividend of
13.8p a share, in addition to a finaldividend of 20.5p. Permission is also
being sought from investors at next
month’s annual meeting for share
buybacks.
Talking up the opportunity for
Primark overseas is one thing, but
throwing cash behind rolling out
more stores is what counts and plans
to accelerate the expansion of shops
in Italy, Iberia, France and theUnited States should force a further
rerating in the shares. Last year only
600,000 sq ft of new store space was
added and this year openings will
remain low, at barely 500,000 sq ft.
But analysts estimate that a target to
develop the estate from 398 to 530
over the next five years will equate to
just over a million sq ft of space being
added over the next four years.
Cash will be spent, too, on
improving its digital shop window,
but that doesn’t mean it will be
launching home delivery or even
click-and-collect — not in the near
term, at least. Primark’s lack of
online presence could be read in one
of two ways: as a competitive
disadvantage against digitally savvyGoing cheap
share priceSource: Refinitiv
Q12021
Q2 Q3 Q41,6001,8002,0002,2002,4002,600£Adjusted operating profit
2020 2021
GroceryRetailSugarIngredientsAgriculture£437m
£413m£362m
£321m£100m
£152m£147m
£151m£43m
£44mfashion rivals, or as evidence that its
brand’s bargain-basement reputation
is strong enough to continue driving
customers to its shops.
Pre-tax profits this year are
forecast to double to £1.46 billion, but
inflation remains one of the chief
risks to fulfilling profit expectations.
Higher corn oil prices led adjusted
profits for the grocery business —
41 per cent of the group total — 5 per
cent lower than last year.
At Primark, higher attrition in staff
numbers helped to boost the margin
during the second half of the year.
Not all those employees will be
replaced, which management hopes
that, together with an expected
£2 billion increase in sales, will hold
the division’s adjusted operating
margin above 10 per cent this year.
That guidance takes into account
higher freight costs, on which it has
agreed pricing until October next
year. Buying most stock in US dollars
means the devaluation of sterling
against the greenback should help it
to absorb higher wage and supply
chain costs. Shore Capital, the
broker, reckons the benefit could be
above £100 million this year.
ABF may suffer from a potential
conglomerate discount, as investors
aren’t generally fond of disparate
businesses bolted together. The level
of influence the Weston family exerts
by owning a 54.5 per cent stake via
its Wittington Investments vehicle
may be less desirable, as well. But a
bargain valuation, together with the
prospect of better cash returns,
compensates for the downsides.ADVICE Buy
WHY The share price does not
reflect the potential for
surplus cash returns and
improving salesenvironmental concerns raised in
2018 — combined with a lower
volume of inbound soil to the site
mean a full recovery in profits here
has been pushed back by two years.
The shares have recovered to their
highest in three years, rising 11 per
cent off the back of first-half results
alone. A forward earnings multiple of
12, lower than the pre-2018 range,
leaves Renewi looking fairly priced.ADVICE Hold
WHY Further recovery in
waste volumes could boost
sentiment towards the sharesassociated british foods
Pre-tax profit
£725mDividend per
share 40.5prenewi
Market cap
£581mHalf-year
revenue €916m