46 2GM Thursday May 26 2022 | the times
BusinessMarkets
news in brief
Nvidia forecasts gloom
Shares in Nvidia fell sharply last
night after the chip designer
forecast second-quarter revenue
below Wall Street estimates, and
said it was prepared for supply
chain snags and slowing demand
for graphics chips used in gaming
devices. The forecast included an
estimated reduction of
$500 million of revenue relating to
Russia and Covid-19 lockdowns in
China. Weaker graphic chips
prices and lower discretionary
spending as inflation soars are set
to put pressure on Nvidia’s gaming
business. The shares fell 7.5 per
cent to $156.95 in late trading.No float for Klarna
Klarna, the Swedish “buy now,
pay later” firm, is in talks with
investors to raise more money
and has no plans to go public this
year, according to chief executive
Sebastian Siemiatkowski. The
group, which is to cut 700 jobs or
10 per cent of its workforce, cited
rampant inflation and the war in
Ukraine worsening business
sentiment. In its latest funding
round, Klarna is likely get a
valuation of about $33 billion —
lower than the valuation of about
$46 billion it saw last June.Vote backs Amazon
Amazon shareholders voted
against investor-led resolutions
that challenged its policies —
including its use of plastics and
certain concealment clauses in
contracts — at the group’s annual
meeting yesterday. A total of 15
resolutions were considered, a
record for Amazon, which
recommended voting against
them all. Technology company
shareholders are pushing for more
transparency on issues such as
pay, workplace culture and safety,
and sustainability practices.UK card fees uncapped
It could be years before card fees
for Mastercard and Visa use can
be capped again to cut costs for
retailers and consumers, MPs
were told yesterday. Chris
Hemsley, managing director of
the Payment Systems Regulator,
came under heavy pressure from
the Treasury select committee to
tackle card fees faster. So-called
interchange fees levied by
Mastercard and Visa on retailers
rose in 2021 after an EU cap
ceased to apply following the
UK’s departure from the bloc.Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 115.62 +0.44
BFOE(Apr) 114.13 +0.42
BFOE(May) 111.29 +0.43
WTI(Apr) 110.33 +0.56
WTI(May) 107.75 +0.55Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 1257.00 1258.00 +45.00
Gasoil EEC 1110.50 1112.50 +16.75
3.5 Fuel Oil 639.00 651.00 +19.00
Naphtha 893.00 895.00 +3.00ICE Futures
Gas Oil
Jun 1106.75-1104.00 Sep 1022.50-1021.50
Jul 1072.00-1071.50 Oct 1024.75-1002.25
Aug 1042.00-1041.75 Volume: 583047Brent (9.00pm)
July 113.17-113.15 Oct 105.84-105.50
Aug 110.34-110.32 Nov 104.12-103.10
Sep 107.92-107.86 Volume: 1666214LIFFE
Cocoa
Jul 1707-1706 Sep 1786-1782
Sep 1731-1729 Dec 1790-1770
Dec 1775-1772 Mar 1725 BID
Mar 1787-1777
May 1781-1778
Jul 1785-1780 Volume: 77082RobustaCoffee
May 2300-2050 Jan 2065-2035
Jul 2090-2087 Mar 2077-1997
Sep 2090-2076
Nov 2080-2039 Volume: 15823White Sugar (FOB)
Reuters Mar 532.10-530.30
May 522.50-518.80
Aug 563.10-562.30 Aug 515.00-512.20
Oct 548.70-545.40 Oct 548.70-545.40
Dec 545.00-536.50 Volume: 62867PRICES
Major indices
New York
Dow Jones 32120.28 (+191.66)
Nasdaq Composite 11434.74 (+170.29)
S&P 500 3978.73 (+37.25)
Tokyo
Nikkei 225 26677.80 (-70.34)
Hong Kong
Hang Seng 20171.27 (+59.17)
Amsterdam
AEX Index 684.11 (+0.00)
Sydney
AO 7391.70 (+18.50)
Frankfurt
DAX 14007.93 (+88.18)
Singapore
Straits 3179.58 (-15.46)
Brussels
BEL20 3912.25 (+0.00)
Paris
CAC-40 6298.64 (+0.00)
Zurich
SMI Index 11491.80 (+8.24)
DJ Euro Stoxx 50 3677.10 (+29.54)
London
FTSE 100 7522.75 (+38.40)
FTSE 250 19934.04 (+84.22)
FTSE 350 4181.75 (+20.78)
FTSE Eurotop 100 3305.71 (+24.51)
FTSE All-Shares 4147.08 (+20.29)
FTSE Non Financials 5096.45 (+26.74)
techMARK 100 6033.57 (-28.53)
Bargains n/a
US$ 1.2566 (+0.0027)
Euro 1.1770 (+0.0090)
£:SDR 0.98 (+0.00)
Exchange Index 79.73 (-0.51)
Bank of England official close (4pm)
CPI 120.04 Apr (2015 = 100)
RPI 334.60 Apr (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 Jun 22 118.67 119.10 118.43 118.61 642727 521748
Sep 22 117.97 118.44 117.76 117.94 482013 160160
3-Mth Sterling Jun 22 99.025 99.045 99.015 99.026 10377 232459
Sep 22 98.885 98.890 98.860 98.866 3885 301735
Dec 22 98.820 98.825 98.790 98.806 7310 347378
Mar 23 98.785 98.795 98.755 98.771 8310 229855
Jun 23
3-Mth Euribor Jun 22 100.24 100.25 100.24 100.25 64017 452408
Sep 22 99.640 99.660 99.630 99.650 65335 531312
Dec 22 99.240 99.270 99.235 99.255 73718 599260
Mar 23 98.905 98.945 98.900 98.925 64420 479339
Jun 23 98.670 98.735 98.665 98.710 60506 406384
3-Mth Euroswiss Jun 22 100.71 100.72 100.70 100.71 925 29152
Sep 22 100.68 100.68 100.67 100.68 710 31355
Dec 22 100.61 100.62 100.59 100.62 488 22748
Mar 23
FTSE100 Jun 22 7519.0 7550.5 7482.5 7524.0 66600 608324
Sep 22 7461.0 7490.0 7461.0 7470.5 8104 8098
FTSEurofirst 80 Jun 22 5097.5
Sep 22 5086.0© 2022 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
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re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
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from the use of this information.40 per cent of that business. The last
annual report put a carrying value of
£277 million on that stake, which
represents 75.5 per cent of the entire
group’s £367 million stock market
value. So it is very much still in the
brewery game.
Last week, Marston’s reported
revenue of £369.7 million, more than
five times the Covid-hit £55.1 million
that trickled in during the first half of
year, turning a pre-tax loss of
£105.5 million into a £25.6 million
profit. More significantly, like-for-like
sales were 97 per cent of 2019 levels,
suggesting a return to pre-pandemic
normality. But yesterday, Andrea
said that despite footfall slowly
rising, sales were no better thanexecutive, Andrew Andrea, spoke
enthusiastically yesterday about
segmenting the 1,482 pubs into three
categories, so that a £9 plate of fish
and chips in its Community-grade
eateries magically sells for £14 in the
so-called Revere outlets.
When the country is struggling
with fuel poverty and a cost-of-living
crisis, that smacks of both
desperation and a degree of
unreality.
It is a misconception that, since its
deal in 2020 with Carlsberg, the
company is no longer involved in
brewing. It is true that, operationally,
it has handed responsibility for the
breweries to the Carlsberg Marston’s
Brewing Company — but it ownsA
s any pub manager will testify,
it is a bad idea to disappoint
customers — and from a
corporate point of view that includes
investors. In the past few weeks,
Marston’s has stripped back its
restaurant offers, scrapped its two-
for-one deals and raised the price of
a pint by as much as 45p. And last
summer’s hint of a slimline return to
dividends has been replaced by a
cautious promise “to keep potential
future dividends under review”.
At the same time, the chiefEmma Powell Tempus
Buy, sell or hold: today’s best share tipsThis is no small change at De La Rue
I
n the 2000s, De La Rue shares
were flirting with £14, but they
are now dicing with £1. It has
been worse, though: less than
two years ago, there were such
concerns about the 201-year-old
banknote printer that the shares
tumbled to 37p and a £100 million
placing was needed to bolster the
balance sheet.
However, Clive Vacher, a former
Rolls-Royce executive, has steadied
the firm in the face of war, civil
unrest, supply bottlenecks and
inflation.
Yesterday, De La Rue announced
£375.1 million in revenue for the year
to March 26, against £397.4 million in
2020-21. Adjusted operating profit
dropped from £38.1 million to
£36.4 million, but the earlier figure
included £7.5 million from the since-
sold identity solutions arm, so there
was a 19 per cent improvement in the
two remaining businesses: banknote
printing and authentication, which
embraces tax stamps, brand
verification and much else.
Banknotes were a rare beneficiary
of Covid, as the pandemic prompted
a spike in demand for hard cash
worldwide, even though there was
less to spend it on.
Key for De La Rue is maintaining
fruitful relations with governments
of all kinds, since its bread and butter
is bidding for contracts to providecurrency. However, it also has a
persuasive entrée in its new polymer
banknotes, which are far harder to
counterfeit than the paper versions.
As yet, polymer accounts for only 1
in 20 notes globally, so there is scope
for future sales. Vacher promises
more “game-changing” security
features in the next two years.
Polymer also contains the seeds of
future sales hurdles, for while it costs70 per cent more than paper, it lasts
two or three times as long. But that
is a problem for the next generation
of managers to wrestle with.
In the meantime, De La Rue is
bewitching finance ministries with
tax stamps and other devices to help
keep revenues flowing. Arguably, the
authentication arm has even more
potential than polymer banknotes as
it can, theoretically, be applied to a
wide range of goods and services at a
time when forgery is rife, particularly
of global brands in pharmaceuticals
and other high-value products.
Understandably, though, Vacher’s
focus for now is getting the firm’s
house in order — and debts,
cashflow and pension contributionsCash business
Share priceSource: RefinitivGrowth of polymer banknotes
worldwide
Polymer Not polymer0100200300400500600700p2018 2019 2020 2021 2022October 2019TodayNext 12-18 months(12% denominations, 3.1% volume)(15% denominations, 4.4% volume)(18% denominations, 5.5% volume)12%14%18%88%86%82%are all moving in the right direction
after a period of upheaval. When he
reaches the sunlit uplands of normal
trading and more predictable
cashflow, shareholders can expect
dividends to resume. But not just yet.
Indeed, there is little reassurance
about the immediate outlook. Not
only is De La Rue affected by the
Ukraine conflict, it has a Sri Lanka
factory under threat from the riots
there. In light of all that, Vacher is
sticking his neck out no further than
a “prudent best-estimate” of adjusted
operating profit for the current year
at about the same level as just
reported. That is hardly inspiring.
Thomas Rands at Investec takes a
jaundiced view of those projected flat
profits, predicting a 13 per cent fall in
earnings before interest, depreciation
and amortisation (Ebitda). But even
that would still leave the shares on a
modest 9.5 times earnings.
Given the geopolitical risks, the
stock market is not yet minded to
give Vacher the benefit of the doubt.
The shares fell from 156p to 111p after
January’s announcement of a
turnaround plan and trading update.
They have bobbled along since then
and yesterday they shed another
11.2p, or 10 per cent, to 99.8p.
However, there is plenty of
potential in De La Rue. Cash is more
popular than many credit card
holders realise, and authentication is
only going to grow as thieves move
from robbing banks to imitating
branded goods. The shares may not
have hit bottom, but as the fog clears,
the company could benefit.ADVICE Buy
WHY A fundamentally sound
business is being undervalued
by the stock marketstable. That suggests a lower spend
per visit.
The hospitality industry bore the
brunt of the pandemic’s commercial
impact, and now inflation is
combining with the fluid trends on
working from home to create yet
more uncertainty. In that light,
Marston’s shares are only for the
brave. Better to stay on the sidelines
until the risk-reward balance
becomes clearer.ADVICE Avoid
WHY Will continue to struggle
under the cost-of-living crisisde la rue
Market cap
£196 millionAnnual sales
£375.1 millionMARSTON’S
Market cap
£367 millionHalf-year
revenue £369.7m