Investors Tuck Into Greggs’ Results

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Tuesday, October 9: The FTSE 100 clung onto minor gains intraday(+0.06%) despite a global growth downgrade from the International Monetary Fund which stressed the primary index and bourses across Europe. The IMF’s World Economic Outlook cited the U.S.-China trade war, rising US rates pressuring emerging markets and a weaker Eurozone performance as the catalysts for forecast revisions. Global GDP growth is now expected at 3.7% for both 2018 and 2019, down from a July forecast of 3.9% for both years.

Greggs(+3.87%) saw share price gains after announcing LFL growth of 3.2% and total sales growth of 7.3% for Q3. Though numbers were behind with respect to Q3 last year (LFL of 5.0% and TSL of 8.6%) Investors were encouraged by the impact arising from the introduction of new focaccia-style pizzas, an expanded breakfast offering and good performance from drinks. Hot weather throughout Q3 and a change in sales prompted the trading margin to come in ‘lower than normal’. Guidance remained unchanged from that released alongside May’s profit warning.

RPC(+2.62%) also moved higher following an Interim Management Statement yesterday and the announcement of an extended deadline from the UK Panel on Takeovers and Mergers with respect to a potential offer for RPC from private equity firms Apollo Global Management and Bain Capital. Discussions between parties are ongoing, with a new deadline of November 5 for an offer. The IMS indicated that revenue growth came in at £1.88bn, 3% higher on an organic basis whilst margins and profitability were in line with management expectations. Headwinds emerged from polymer price increases, which should be negated by pass-through mechanisms.  The Group also announced the disposal of Letica Foodservice Business to Graphic Packaging for $95m.

The CAC 40(+0.35%), DAX 30(+0.25%) and the FTSE 100(+0.06%) closed in the green.

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