Just Eat Delivers


Tuesday, May 1: London shares climbed higher today after a slowdown in British manufacturing sent the pound lower, in turn helping to push dollar earners higher. Further optimism was provided across European bourses after Trump announced he will delay his decision, by a month, on whether to impose steel and aluminium tariffs on the EU, Mexico and Canada. He must have a lot on his plate which brings us nicely to the best performer son the FTSE today; Just Eat. The online food ordering and delivery service has achieved an improvement in first quarter revenue by 49% year on year driven by strong order growth and higher value order deliveries. Stripping out the HungryHouse acquisition JustEat’s performance was still strong and investors are choosing to ignore the firm’s spending to bolster delivery capabilities at the expense of margins as well as below par Australian performance. Nevertheless, the UK business is still churning out double digit growth alongside triple digit growth from the Canadian business SkipTheDishes. Shares closed the day 4.5% higher.

As we mentioned, the April PMI read for British manufacturing was disappointing and showed more signs of economic weakness, making it less likely the Bank of England will raise rates in the near term. For April the manufacturing PMI in the UK was 53.9, below expectation of 54.5 and below March’s 54.9. This was a 17-month low and lacked the excuses that February and March had given the poor weather. Britons also cut back on borrowing during March, another economic indicator that doesn’t support domestic rate hikes. The pound has dropped to just above $1.36 as we write.

Over in the US Wall Street continues its recent downward trend as further earnings disappoint, in contrast to the FTSE. The Dow sits down >1% so far after yesterday’s 0.61% drop, looking likely to make it three consecutive sessions of losses. Other companies alongside Just Eat that reported today included BP, DS Smith and Virgin Money. The latter saw Q1 deposit growth ahead of its own expectations and re-affirmed full year guidance with shares closing +6.46%. The packaging business DS Smith retained FY 2018 guidance as synergy benefits improved ahead of expectations from their US acquisition. Shares closed +1.07%. Oil & gas giant BP posted its strongest quarterly profit since 2014 from rising oil prices and higher production. The proxy net profit measurement was $2.6bn, beating expectations of $2.2bn and Q1 production was +6% from a year before. Shares closed +1.8.

In more light-hearted news today, the Bank of England has suggested it may start using music streaming download data as a further gauge on consumer mood and confidence. Because it is 2018 and why not? In a way it makes sense, unless the likes of Adele bring a new album out. In which case boffins at the bank would likely think everyone in the UK has less confidence than an England player in a penalty shootout and a recession is imminent. Who knows this time next year we could be getting a Spotify PMI?

We will end on a light note. Keeping with the theme of music also. Yesterday it was announced Sainsbury’s and Asda agreed to merge, subject to final CMA approval. The ramifications of such are yet to be seen on the consumer despite a cheaper price promise. This has left suppliers worried today, whom rightly feel a little nervous at the power they will potentially have to squeeze them. But this morning the CEO of Sainsbury’s had to apologise after being caught singing ‘We’re in the money’ on live TV. This of course could be one of his favourite songs or coincidentally stuck in his head the day after the huge deal was announced. Either way it is unfair to assume he’s been belting it out in the shower whilst pound signs roll across his eyes. Of course, if suppliers are squeezed or stores are to be closed to satisfy the CMA on the deal, this clip will absolutely not be spoken about again.


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