Companies roundup: BP, YouGov & Games Workshop

Shares in BP (BP.) pulled back slightly following the release of a fourth quarter update which detailed a fall in production from the previous quarter. Conditions in the oil production & operations segment have been challenging in both the Gulf of Mexico and the UAE with performance constrained by price lags. 

The fourth quarter results are expected to include non-cash, post-tax impairments of $1.0bn-$2.0bn (£820mn-£1.64bn) — a rather wide spread, admittedly — although net debt is expected to fall from the prior quarter, aided by $2.8bn in divestments. 

And changes to the geographic price mix mean that the underlying effective tax rate for the full year is now expected to be around 42 per cent, up two percentage points from previous guidance. 

Hydrocarbon pricing was mixed with Brent Crude averaging $74.73 a barrel, against $80.34 in the prior quarter, although Henry Hub prices improved significantly through the period. 

The group’s capital markets day has been rescheduled to 26 February and will now take place in London instead of New York. The delay has been made to allow chief executive Murray Auchincloss to fully recover from a medical procedure. MR

Activist investor calls on YouGov to oust chief executive 

Activist investor Gatemore has called on YouGov (YOU) to replace current chief executive Steve Hatch with former boss and co-founder Stephan Shakespeare as interim CEO to lead a strategic review that explores the sale of the company. 

In a letter to the board, managing partner Liad Meidar cited a number of management “missteps” that have led to YouGov’s underperformance since Hatch’s appointment in August 2023, including “budgeting failures” and “volatile” financial guidance.

Gatemore, which holds a 1.3 per cent stake in the Aim-traded polling and research company, went public with its call for a strategic review in November. YouGov did not immediately respond to a request for comment. VM

JD Sports downgrades profit forecast

JD Sports Fashion (JD.) cut full-year profit guidance following a disappointing end to the year.

Although like-for-like sales in December edged up by 1.5 per cent, across the nine-week period to 4 Jan they were down by 1.5 per cent.

The company blamed a “challenging and volatile market that saw increased promotional activity”.

As a result, chief executive Régis Schulz said full-year adjusted pre-tax profit would be “slightly below” previous guidance, at between £915mn-£935mn. At its mid-point, this is 3 per cent below the consensus forecast of £958mn, according to RBC Capital Markets analyst Richard Chamberlain.

JD Sports’ shares slumped by 10 per cent in early trading, meaning they now trade at just 7 times forecast earnings.  They’ve fallen by around a third in the past three months, which “implies there’s a credibility issue, and the market is likely to remain sceptical of short-term expectations”, said Kate Calvert, an analyst at Investec.

Although the group still offers attractive long-term opportunities, “evidence of better trading and market stability” is needed before they re-rate, she added. MF

Chemring’s cyber security arm inks new supply agreement

Defence company Chemring (CHG) announced that its cyber security arm Roke has signed an agreement to supply its high-speed miniature radar altimeter product, which is used in missile systems and air vehicles, to a “major US prime contractor”. The contract is worth at least £26mn over four years, and deliveries will start in October 2025. 

The shares rose 3 per cent in early trading. CA

Read why we’re bullish on Chemring

Hunting builds its cash margin as orders impress 

The market reacted positively to a full year trading update from Hunting (HTG) which reiterated cash profit guidance in the range of $123mn-$126mn (£101mn-£103mn) on an underlying margin of 12 per cent. Despite periodically challenging market conditions through the year, the OCTG and Subsea product groups have delivered cash margins over the target of 15 per cent published on the company's capital markets day. 

The free cash flow conversion rate is likely to be around 110 per cent, driven by improvements in working capital management. A review is underway to gauge where further savings could be made, including the restructuring of the EMEA operating segment. 

The oil services group closed out the year with the order book at c.$500mn, even after the completion of several large orders through the second half. As a consequence, the group expects 2025 cash profits of between $135mn-$145mn. MR

Christmas brings cheer for Card Factory

A strong Christmas for Card Factory (CARD) helped to push its shares higher, with the company reporting like-for-like growth of 3 per cent in November and December. It attributed the improvement to the introduction of a discount Christmas card range and a broader gift selection, as well as an in-store space optimisation programme.

Store revenues for the 11 months to the end of December were up 6.2 per cent to £507mn and full-year adjusted pre-tax profit should be in line with consensus forecasts, the company said. These average around £66mn, which would be a 6 per cent increase on last year.

For next year, Card Factory said it expects changes to the National Living Wage and employer national insurance contributions to add £14mn to its costs, but that it will offset this through its ongoing efficiency programme, as well as changes to ranges and prices.

The shares were up 9 per cent in early trading to 99p. MF

Robert Walters expects to break even in 2024

Professional recruiter Robert Walters (RWA) said it no longer expects to make a profit this year following weaker than expected fee income in the fourth quarter to 31 December.

Net fee income was 14 per cent lower on a constant currency basis at £75.5mn, with double-digit declines across all regions. Chief executive Toby Fowlston said global hiring markets remain challenging, given “muted” client and candidate confidence.

Specialist professional recruitment fee income declined by 14 per cent to £62.1mn, with permanent recruitment down 18 per cent against a 10 per cent drop for temporary positions. Recruitment outsourcing net fee income fell by 14 per cent to £13.4m.

The company cut its total headcount by 5 per cent in the quarter to 3,294, taking the total reduction for the year to 17 per cent, or 686 roles. Fee earner headcount fell by 7 per cent quarter-on-quarter and by 17 per cent year-on-year. VM

Smiths Group confirms CFO change and raises revenue guidance

Smiths Group (SMIN) will have a new chief financial officer on 1 February, as it confirmed that current finance boss Clare Scherrer will retire from the engineering business at the end of this month. She will be replaced by Julian Fagge, the current president of the group’s electronic components arm Smiths Interconnect.

Management also announced an upgrade to full-year organic revenue growth guidance, from 5-7 per cent to 6-8 per cent, because of a stronger-than-expected performance in the second quarter at Smiths Interconnect and screening equipment business Smiths Detection. 

However, it kept its forecast for a 40-60 basis points annual expansion in operating margin steady. CA