54 Thursday November 25 2021 | the times
BusinessMarkets
5
news in brief
Factories face gridlock
Britain’s factories are struggling
to meet the record demand for
their goods as supply constraints
put a brake on production lines.
Manufacturing total order books
in November improved to their
strongest since records began in
1977, according to the latest
monthly CBI Industrial Trends
Survey. The survey of 282
manufacturers also saw export
order books at their strongest
since March 2019. Almost half, or
46 per cent, of companies said
total order books were above
normal, while 20 per cent said
they were below normal.Profit pops at Britvic
Britvic reported yesterday that its
annual profit rose despite
revenue remaining mostly
unchanged, due to a lockdown-
damaged first-half performance.
The soft drinks producer said
pre-tax profit for the year to the
end of September grew by 29 per
cent to £142.9 million but revenue
was largely flat at £1.41 billion —
a marginal decrease of 0.5 per
cent. The annual dividend was
lifted 12 per cent to 24.2p a share
and the shares closed up 22p, or
2.5 per cent, at 900p.Work ‘more secure’
Employment has become more
secure over the past decade
despite the pandemic, research
suggests. Compared with 2010,
there are fewer people working
variable hours, working part-time
or wanting more hours. The
proportion in non-permanent
employment and on low pay has
also fallen, according to the
Chartered Institute of Personnel
and Development. But almost
one in five workers are “non-
permanent” either self-employed
or on temporary contracts.Musk sells more stock
Elon Musk, chief executive of
electric carmaker Tesla, has sold
a further 934,091 shares worth
$1.1 billion, according to US
securities filings. Musk tweeted
on November 6 that he would
sell 10 per cent of his stock if his
followers approved; a majority
agreed and since then he has sold
9.2 million shares — more than
5 per cent of his holding — worth
$9.9 billion, some to meet tax
obligations. The shares rose by
$6.97, or 0.6 per cent, to close at
$1,116 in New York last night.Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 82.51 -0.54
BFOE(Jan) 82.31 -0.10
BFOE(Feb) 81.17 -0.29
WTI(Jan) 78.39 -0.11
WTI(Feb) 77.61 -0.33Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 725.00 726.00 +8.00
Gasoil EEC 685.25 687.25 +8.25
3.5 Fuel Oil 427.00 428.00 +9.00
Naphtha 734.00 736.00 +8.00ICE Futures
Gas Oil
Dec 688.00-687.75 Mar 682.00-681.25
Jan 686.75-686.25 Apr 678.75-665.00
Feb 685.00-684.75 Volume: 646757Brent (9.00pm)
Jan 82.14-82.12 Apr 80.35-79.69
Feb 80.92-80.90 May 79.21-78.70
Mar 80.31-80.28 Volume: 1916450LIFFECocoa
Dec 1683-1662 Mar 1730-1714
Mar 1719-1717 May 1724-1702
May 1731-1690 Jul 1725-1678
Jul 1750-1705
Sep 1722-1721
Dec 1745-1717 Volume: 66166RobustaCoffee
Nov 2331-2290 Sep 2198-2150
Jan 2283-2280 Nov 2200-2095
May 2208-2186
Jul 2231-2171 Volume: 7017White Sugar (FOB)
Reuters Oct 499.50-491.20
Dec 497.60-495.10
Mar 511.80-511.40 Mar 493.60-490.10
May 512.80-510.40 May 496.90-473.00
Aug 508.20-505.40 Volume: 50580PRICES
Major indices
New York
Dow Jones 35804.38 (-9.42)
Nasdaq Composite 15845.23 (+70.09)
S&P 500 4701.46 (+10.76)
Tokyo
Nikkei 225 29302.66 (-471.45)
Hong Kong
Hang Seng 24685.50 (+33.92)
Amsterdam
AEX Index 802.96 (+0.72)
Sydney
AO 7725.50 (-16.20)
Frankfurt
DAX 15878.39 (-58.61)
Singapore
Straits 3227.15 (-0.38)
Brussels
BEL20 4205.06 (+52.95)
Paris
CAC-40 7042.23 (-2.39)
Zurich
SMI Index 12395.72 (+28.99)
DJ Euro Stoxx 50 4276.25 (-7.57)London
FTSE 100 7286.32 (+19.63)
FTSE 250 23167.06 (-54.55)
FTSE 350 4172.46 (+7.54)
FTSE Eurotop 100 3505.29 (+4.54)
FTSE All-Shares 4152.43 (+7.53)
FTSE Non Financials 4976.40 (+10.63)
techMARK 100 6796.72 (-59.18)
Bargains n/a
US$ 1.3324 (-0.0050)
Euro 1.1901 (+0.0008)
£:SDR 0.98 (+0.00)
Exchange Index 82.04 (+1.73)
Bank of England official close (4pm)
CPI 113.64 Oct (2015 = 100)
RPI 312.00 Oct (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 21 125.89 125.94 125.21 125.46 765996 490976
Mar 22 124.85 124.89 124.17 124.41 525371 355736
3-Mth Sterling Dec 21 99.795 99.810 99.790 99.800 27857 539647
Mar 22 99.340 99.345 99.305 99.330 24252 314025
Jun 22 99.025 99.035 98.980 99.010 19129 259690
Sep 22 98.810 98.820 98.755 98.790 19586 328369
Dec 22 98.715 98.725 98.650 98.685 22859 464381
3-Mth Euribor Dec 21 100.57 100.58 100.57 100.58 85752 449852
Mar 22 100.52 100.53 100.52 100.53 40342 311397
Jun 22 100.47 100.48 100.47 100.48 39280 332117
Sep 22 100.41 100.43 100.41 100.42 66146 422073
Dec 21 100.34 100.36 100.33 100.35 65971 488439
3-Mth Euroswiss Dec 21 100.79 100.80 100.79 100.80 660 47140
Mar 22 100.74 100.75 100.74 100.75 869 32724
Jun 22 100.72 100.72 100.72 100.72 260 32230
Sep 22 100.66 100.67 100.66 100.66 471 31954
FTSE100 Dec 21 7280.0 7298.5 7234.5 7283.0 76403 618992
Mar 22 7191.5 7213.0 7170.0 7216.5 9 801
FTSEurofirst 80 Dec 21 5911.0
Mar 22 5894.0© 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.polymer substrate supply for the
Bank of England £5, £10 and £50
denominations from July.
There’s still competition, so how
does it avoid coming undone again
from volatility in banknote demand?
A fall in “overspill” orders, contracts
issued by central banks when state-
owned printworks can’t satisfy need,
has previously caused the group to
warn on profits. There are no
overspill orders in the group’s current
business plans, said chief executive
Clive Vacher, and cost savings in the
business mean it can bid for more
contracts that previously would have
been uneconomical.
Given the lengthy history of
disappointment, it’s hardly surprisingsuspected corruption in South
Sudan. Net debt has been reduced to
£43.9 million, equivalent to 0.8 times
earnings before taxes and other
charges, which means it can stomach
a 47 per cent decline in profits before
breaching its covenants. It has also
cut £36 million from its annual cost
base, with another £7 million to
come by the end of the year.
Now it has to prove it can
sustainably win contracts to print
cash from central banks and with
revenue authorities and brands for
its physical and digital
authentication products. Revenue for
the core currency division rose 5 per
cent over the first half of the year,
and it was awarded the majorityI
nvestors in De La Rue need a
strong stomach — the group has
been stuck in a perpetual cycle
of so-called turnaround
strategies since 2015. It is almost
two years to the day that the
banknote printer warned that it
could collapse if it failed to tackle its
ballooning debts.
Since then, some key uncertainties
have been removed. First, the
Serious Fraud Office announced last
year that it was dropping an
investigation into De La Rue overEmma Powell Tempus
Buy, sell or hold: today’s best share tipsEngineering group running on empty
T
he destruction of capital
that resulted from exiting
manufacturing battery
materials has already lost
Johnson Matthey a swathe
of investors. Regaining favour with
the market requires the FTSE 100
engineering group to illuminate just
where returns will be generated — a
task that will take some work.
It was billed as the ideal hedge in
the automotive industry: developing
and manufacturing its patented
eLNO — lithium nickel oxide —
material for automotive battery
makers, funded in part by cash
generated by its catalytic converters
business, which specialises in the
chemistry that reduces emissions
and pollution from cars, vans and
lorries. The realisation this month
that it’s not worth the bother, is
hardly the best advertisement if
you’re looking to offload a business
at a decent price. The result? A
£314 million charge against the value
of said business. That’s quite apart
from the hundreds of millions sunk
into the division in recent years.
Break-up talk is inevitable. Beyond
its non-core four businesses labelled
“value” and the health operations,
there’s no other disposals on the
cards, says chief executive Robert
MacLeod. But he’s off in February, to
be replaced by Bayer crop science
division chief Liam Condon. Sellingits Advanced Glass Technologies
business, one of those non-core
businesses, for £178 million will boost
cash sufficiently for management to
return £200 million via share
buybacks starting in the new year.
Three strands could emerge,
brokerage Berenberg thinks: a“growth” unit including its green
hydrogen assets; a “cash” unit with
the profitable platinum group metals
and autocatalysts operations; and a
non-core, “other” unit, primarily
consisting of the health business.
Based on 2022 earnings forecasts
and after removing a conglomerate
discount, a standalone “growth” unit
could have an enterprise value of
almost 31 times earnings before
interest and taxes. That’s compared
with a multiple of nine currently
attached to the group.
Selling some or all of the battery
materials business means capital
expenditure should come in at
£450 million this year, below the
£600 million previously anticipated.Power failure
share priceSource: Refinitiv2021Q1 Q2 Q3 Q420222426283032£34Underlying operating profit
2022 (H1) 2021 (H1)
Clean airEfficient natural
resourcesHealthOther markets£150m
£77m£197m
£88m−£4m
£15m−£11m
−£2mSo if we’re taking a more short-
term view, there’s more cash for
dividends, perhaps. This year’s
payment is forecast to come in at
79.2p a share, equivalent to a
potential dividend yield of 3.7 per
cent at the current share price.
The internal combustion engine
catalyst business faces longer-term
decline as diesel vehicles are phased
out, but management reckons it can
generate £4 billion from the clean air
business over the next ten years.
In the immediate term, the group
faces other challenges in driving a
re-rating in the shares. Clean air
revenue recovered to just under
£1.2 billion, but still some way below
a pre-pandemic level of £2.7 billion,
as semiconductor shortages curbed
car production. That means the heat
has come out of precious metal
prices, which buoyed revenue during
the first half, although a net
£45 million benefit could still be
banked this year. Analysts expect
pre-tax profits this year to be behind
the pre-pandemic level at
£481 million, but recover ahead of
2019 by next year.
The group has lost just over a
quarter of its market value since the
start of September, when the FTSE
indices were last re-shuffled. As
things stand, the next quarterly re-
weighting — at the end of this
month — leaves Johnson Matthey
headed for the exit of the market’s
top rung. That could bring with it the
departure of some big institutional
investors. It will take a more drastic
shake-up to win over investors.ADVICE Hold
WHY Despite its problems,
further disposals or
separation could unlock value
for shareholders and there is a
decent dividend on offerthat investors need more convincing.
The shares are still languishing at the
same level they were when
management cast doubts over the
group’s ability to continue as a going
concern two years ago.
A price equivalent to just over
ten times forecast earnings for next
year looks suitably cautious.
More proof of winning contracts
profitably is needed.ADVICE Hold
WHY Balance sheet is in better
shape but must show progress
in winning new businessjohnson matthey
Market cap
£4.23 billionOperating profit
£20 millionde la rue
Revenue
£179 millionOperating profit
£13.8 million