BUSINESS LIVE: EasyJet winter losses narrow; Hipgnosis faces takeover; Deliveroo returns

AJ Bell shares rose on Thursday after the trading platform reported record assets under administration (AUA).

The group had £80.3billion worth of AUA as of 31 March, as net inflows jumped 33 per cent year-on-year to £1.6billion.

The boss of one of Britain’s leading asset managers says UK small and mid-cap stocks are out of favour after investors pulled billions from its funds.

In an update underlining the strife in the industry, Liontrust Asset Management was hit by £6.1billion of withdrawals last year.

BP will reduce the size of its executive leadership team to 10 members as the energy giant prepares a ‘simplified’ organisational structure.

William Lin will lead BP’s gas and low carbon energy business, following the retirement of Anja-Isabel Dotzenrath, and that Emeka Emembolu will lead technology functions as Leigh-Ann Russell exits for ‘an external opportunity’.

CEO Murray Auchincloss: ‘As I set out in February, bp’s destination from IOC to IEC is unchanged – and we need to deliver as a simpler, more focused and higher value company.

‘These changes will help us do just that, reducing complexity within bp, allowing our team to focus on delivering our priorities and growing the value of bp.

‘I congratulate William on his new role and am delighted to welcome Emeka to the leadership team. William brings extensive experience, expertise, and leadership to gas & low carbon energy – a key part of our portfolio.

‘He has a proven track record of delivery, managing complex relationships and deals – effectively leading teams to build resilient businesses. Emeka has been chief of staff for the past two years and in a 25-year bp career has held senior technical roles right across the business, always focused on safety, value growth, people and technology.’

Takeaway giant Deliveroo saw orders rebound in the first quarter thanks to strong overseas growth.

The London-based food delivery company’s online purchases increased by 2 per cent year-on-year to 73.5 million in the first three months of 2024.

UK and Ireland orders flatlined at 39.7 million amid continued cost-of-living pressures, but rose by 4 per cent to 33.7 million throughout the rest of the world.

EasyJet losses narrowed by over £50million year-on-year over its winter trading period, amid strong booking levels and higher prices ahead of the summer season.

The airline told investors on Thursday it expects to post a headline loss before tax of £340million to £360million for the six months to 31 March, against losses of £411million a year earlier.

Hedge funds are betting against Britain’s listed utilities after a cash crisis at Thames Water highlighted soaring debt levels across the industry.

New York firm Millennium has taken a short position on supplier United Utilities, which has been accused of dumping sewage in the Lake District.

London-listed stocks are in the green this morning, boosted by a string of upbeat corporate results, while investors await comments from Bank of England policymaker Megan Greene to gauge the outlook on interest rates.

EasyJet leads gains on the FTSE 100, adding 2.8 per cent, after the airline’s winter performance improved on growing demand.

Hipgnosis Songs Fund has surged 30.9 per cent after Concord Chorus said it would acquire the music investor for $1.4 billion.

AJ Bell has added 4.7 per cent after the investment platform reported record assets under administration.

Deliveroo has climbed 5.6 per cent after the meal delivery firm reported it returned to order growth in the first quarter.

Dunelm Group is down 4.3 per cent after the home furnishing retailer missed third-quarter sales estimates.

Later in the day, investors will parse comments from BoE’s Greene to gauge the central bank’s rate cut outlook.

Russell Pointon, director, consumer at Edison Group:

‘Deliveroo’s Q1 trading update looks a little better than guided at the gross transaction value level, with 6% growth at constant currency versus management’s prior guidance that it would be in line with Q423’s 4%. It is good to see a return to growth of orders and a good improvement in its international markets.

‘As Deliveroo continues its diversification of revenue growth, including grocery delivery, all eyes will be on how Deliveroo can continue to show improvement in its financial performance.

‘Financial guidance for the year has been reiterated – the company is helped by easing comparatives through the year get given the drag from reducing inflation in the prior year.’

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:

‘Disruption in the Middle East has led to a £40mn direct impact for easyJet in the first half. Flying into Israel has been suspended for the summer. In true easyJet fashion, the group’s been able to flex its unexpected capacity to other areas, and has still been able to reduce losses compared to the previous year. easyJet’s best-in-class approach to capacity planning and route discipline has allowed it to be one of the biggest beneficiaries of travel’s renaissance.

‘The budget airline has also upped its capacity by around 8% to meet swelling demand. It’s clear the importance of travel isn’t petering out for consumers, and easyJet has grasped the nettle by backing its holidays business which has paid dividends. Summer bookings look strong, which will continue to help offset the rising costs.

‘Another important consumer bellwether, Dunelm, has reported that sales rose 3% in the third quarter – led by volume. While this suggests consumers are still prepared to part ways with their cash on homewares, the market remains very challenging. Dunelm speaks of volatile trading patterns and profits aren’t expected to be especially impressive.

‘While Dunelm is one of the strongest names in the sector, and the most nimble, this corner of retail faces an uphill battle for now. Customers are prioritising their trips to the sun and putting off replacing the curtains. This could make Sainsbury’s results a challenging read next week, as the supermarket giant has large exposure to general merchandise.’

Tesla has asked shareholders to approve a £45billion pay deal for billionaire Elon Musk – just months after the package was struck down in court.

The payday, decided in 2018, would be the biggest in US corporate history.

But in a setback for Musk, 52, judge Kathaleen McCormick, of Delaware’s Court of Chancery, said he controlled the board through his personality and influence – meaning that his package could not be decided through a fair process.

Ferrexpo swung to an annual loss last year after being hit by a $131million provision it set aside in light of the on-going legal dispute against its Ferrexpo Poltava Mining (FPM) unit in Ukraine.

The company posted a loss of $85million for the year ended 31 December, compared with a $220million profit in 2022.

If not for the provision, Ferrexpo said it booked a profit of $46million, which is however, still lower than the previous year due to foreign-exchange swings and fallout from the Russia-Ukraine conflict.

Dunelm Group has forecast gross margins to grow this year, after the furniture retailer reported a rise in sales during the third quarter on higher volumes as offers continued to attract customers back to their stores.

The company, which has products ranging from cushions and bedding to kitchen equipment, said total sales in the three months ended on 30 March, rose 3 per cent to £435million.

Boss Nick Wilkinson said:

‘We have delivered a resilient performance in Q3, with continued volume-based sales growth through a period of more challenging and volatile market conditions. Whilst discretionary spend remains under pressure, our relevant and attractive product offer continues to resonate with customers as they shop across our broad ranges to find quality and value for all areas of the home.

‘This performance reflects our deep-rooted understanding of our customers and the effectiveness of a total retail system which continues to drive growth across store and digital channels, bringing further market share gains. At the same time, our operational grip continues to mitigate ongoing cost headwinds and has supported a strong gross margin performance.’

Saga cheered an ‘outstanding’ year for its cruise business – but still racked up a £129million loss as troubles at its insurance arm took their toll.

The company, which specialises in insurance and holidays for over-50s, sailed back into the black at its ocean cruise business where profits came in at £36million for 2023, up from the £700,000 loss the year before.

Its river cruise arm unveiled annual profits of £3million, from a £5million loss in 2022.

Deliveroo returned to order growth in its first quarter, with a 2 per cent increase year-on-year driven by its operations in France, UAE and Hong Kong and continued strength in Italy.

Orders in Britain and Ireland, which account for more than half its total, were flat over the period.

Founder and CEO Will Shu said:

‘The team has been relentlessly focussed on delivering service and value for money, helping drive a return to order growth and continued growth in GTV.

‘We made particularly strong progress in International markets during the quarter, with notable improvements in France, UAE and Hong Kong, and continued strength in Italy.

‘In UKI, while the consumer environment remains stable but uncertain, our commitment to offering fair prices and a flawless consumer experience is building strong foundations for the future and will continue to differentiate our business. I’m excited about building the best consumer experience possible and am confident in our ability to drive profitable growth and sustainable cash generation.’

Concord Chorus, a music and theatrical rights firm, has agreed to acquire troubled London-listed music investor Hipgnosis Songs Fund for $1.4billion.

Shareholders of Hipgnosis Songs will get $1.16 apiece in cash, representing a premium of about 32 per cent based on current exchange rates, and the company’s board plans to unanimously back the deal.

Concord said its financing partner Apollo Global Management will help finance the deal.

Concord is indirectly controlled by Alchemy Copyrights, which acquired music copyright-focussed investment firm Round Hill Music Royalty Fund last year.

Robert Naylor, chairman of Hipgnosis said:

‘The Board is pleased to announce and unanimously recommend this US$1.4 billion Offer for Hipgnosis from Concord. The acquisition represents an attractive opportunity for our shareholders to immediately realise their holding at a premium, mitigating the risks we see ahead to achieving a material improvement in the share price.

‘At the same time, the Board is confident that Concord, one of the world’s leading independent music companies, is the right owner to take on the Hipgnosis catalogue and manage it in the interests of composers and performers.

‘We would now encourage Hipgnosis Song Management, the Company’s Investment Adviser and Blackstone, which is HSM’s majority owner, through funds they manage and/or advise, to agree an orderly termination of the Investment Advisory Agreement.

‘This would enable the payment of a larger consideration under the agreed transaction with Concord and bring to an end a period of uncertainty for all Hipgnosis stakeholders.’

The French owner of Gatwick Airport is to buy a majority stake in Edinburgh Airport for around £1.27billion.

Vinci has agreed to buy a 50.01 per cent stake from Global Infrastructure Partners (GIP), the owner since 2012. GIP will retain the remaining 49.99 per cent stake.

In 2019 Vinci bought a 50.10 per cent stake in Gatwick Airport, with investors led by GIP retaining the rest.

EasyJet narrowed its winter losses by around £50million compared to the same time last year, and demand for flights and holidays ahead of its key summer season is building, the airline said on Thursday.

The airline’s improved first half fortunes were driven by 8 per cent passenger growth in the second quarter and 8 per cent growth in revenue per seat.

Consequently, the group expects to post a headline loss before tax of £340million to £360million.

Boss Johan Lundgren said:

‘The importance that consumers place on travel coupled with easyJet’s trusted brand has driven good demand for our flights and holidays. Our growth and focus on productivity have reduced winter losses by more than £50 million.

‘We have further enhanced our network with the launch of new bases in Alicante and Birmingham providing greater choice for consumers across Europe.

‘We are well set up operationally for this summer season where we expect easyJet to be one of the fastest growing major airlines in Europe and take more customers on easyJet holidays than ever before.’