BUSINESS LIVE: Aston Martin losses narrow; SJP faces £426m provision; Halfords cuts profit forecast

Matt Britzman, equity analyst, Hargreaves Lansdown:

‘Reckitt’s fourth quarter missed the mark. Performance across pretty much all business areas was weaker than expected. The one positive to take away was an outlook that remains broadly in line with expectations, but investors will likely be disappointed with how the year ended.

‘It was a year when price hikes did all the work, with volumes taking a hit in the process. Cleaning and disinfectant brands like Lysol and Finish are back in growth mode after suffering from a post-pandemic rebase in demand. However, sales of over-the-counter cold and flu medicines were lower than usual in the final quarter, and the baby formula business in the US is still adjusting after competitor supply shocks in the previous year inflated sales. That rebase is expected to continue into the first half of 2024 before returning to growth in the second half. The positive news on this front is that Reckitt has been able to retain some of the market share it gained during the prior year.

‘Work to improve gross margins has yielded some results over the year and investment to reduce the fixed cost base is ongoing. The real question mark is around when volumes will start to turn positive as cost cuts can only support margin growth for so long.’

Starling founder Anne Boden has called time on ‘men in gilets’ dominating investment as she looks to push more cash towards female founders.

The Welsh entrepreneur, who set up the online bank in 2014, said women remain at a ‘huge disadvantage’ because ‘people invest in people who look and sound like themselves’.

Consumer goods group Reckitt missed fourth-quarter like-for-like net sales expectations, after a slump in sales of cold and flu season products.

But the maker of Nurofen pain medication and Dettol cleaning products said it is ‘confident in the year ahead’ and expects like-for-like net revenue growth of 2 to 4 per cent, with mid-single-digit growth for its Health and Hygiene portfolios.

Reckitt said quarterly like-for-like net revenue fell 1.2 per cent while analysts in a company-supplied poll had expected 1.6 per cent growth.

‘While our performance in Q4 was unsatisfactory, we look to 2024 and beyond with confidence,’ CEO Kris Licht said.

Abrdn’s boss has picked up a 26 per cent pay increase to £2.1million – even as the fund manager slashes hundreds of jobs and suffers an investor exodus.

Chief executive Stephen Bird’s pay at the fund manager for 2023 included £1.1million in bonuses, 68 per cent up on the year before.

That was despite another year of losses for the beleaguered business – although at £6 m these were smaller than the £612million in 2022. Abrdn suffered net outflows of £13.9billion, up from £10.3billion.

Halfords Group has cut its annual profit forecast, warning that it had seen a further weakening in demand for bicycles in January as unseasonal weather also hit sales of winter products for cars, and tyres.

Halfords, which is the UK’s biggest provider of motoring services and products, said it now expected underlying pretax profit for the year to the end of March to come in at £35million to £40million, a downgrade of at least 17 per cent.

Falling sales at Halfords come despite official data published earlier in February showing that British retail sales increased by the most in nearly three years in January as consumers recovered some of their appetite for spending, after a weak December.

But wet, mild weather hit Halfords’ sales, it said.

St. James’s Place swung to a loss last year after the wealth management firm took a £426million provision for potential client refunds over historic servicing complaints.

The company’s loss after tax amounted to £9.9million for the year to 31 December, compared with a net profit of £407.2million a year earlier.

Boss Mark FitzPatrick said the group will be forced into a change of strategy for investor payouts.

He said: ‘A combination of the provision we have established and an expected decrease in the level of profit growth in the next few years as we transition to our new charging structure, reduces our ability to invest for long term growth in our business over the next few years.

‘Accordingly, the Board has decided to revise our approach to shareholder distributions. Going forward, the Board expects that total annual distributions will be set at 50% of the full year Underlying cash result. For the next three years this will comprise 18.00 pence per share in annual dividends declared, with the balance distributed through share repurchases.

‘Once our new charging structure is fully embedded, we anticipate that the business will be on an improving earnings trajectory during 2027 and beyond.

‘The Board expects that distributing 50% of the Underlying cash result will continue to strike the right balance between investment for growth and returns to shareholders, while seeing shareholder distributions increase over time. The upward trajectory in profits should then provide the Board with options to grow the dividend element within the total return.’

Shein’s boss has held talks with Jeremy Hunt over a possible multi-billion pound London float that could deliver a huge boost to the beleaguered stock market.

Donald Tang met the Chancellor earlier this month and raised the prospect of the City snatching the Chinese-founded fast-fashion giant’s initial public offering (IPO) away from New York.

Reports suggest the company, now based in Singapore, could be valued at between £40billion and £70billion – setting the scene for what could be Britain’s biggest-ever stock market float.

Aston Martin pre-tax losses narrowed to around £172million last year from £451million in 2022, beating market expectations thanks to a rise in selling prices.

Analysts, on average, were expecting an adjusted pre-tax loss of £209million for the period, according to a company-compiled consensus.

Wholesale sales volumes were up just 3 per cent for the year, but revenues soared 18 per cent to £1.6billion ‘reflecting continued execution of our growth strategy; enhanced positioning of our ultra-luxury brand and enriched product portfolio driving growth in volumes and record average selling prices’.