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Pearson (PSON), IG Group (IGG), Dunelm (DNL), Trustpilot (TRST), Carr’s (CARR), Whitbread (WTB), Bakkavor (BAKK) and Deliveroo (ROO)
Underlying group sales at Pearson (PSON) grew by 3 per cent last year, excluding its online programme management (OPM) and strategic review businesses. The education giant said adjusted operating profit rose 10 per cent from 2023 to between £595mn and £600mn, driving a 120 basis point margin improvement to 16.8 per cent.
Higher Education sales returned to growth in the period, rising by a modest 1 per cent. Virtual Learning fell by 4 per cent and English Language Learning and Workforce Skills rose by 8 per cent and 6 per cent, respectively.
The company did not offer any earnings guidance for the current financial year but noted free cash flow conversion for 2024 is “in excess of” 100 per cent. It also said net debt, including lease liabilities, is “less than” £900mn.
Pearson also revealed the restructuring of the Workforce Skills unit, aiming to bring all enterprise sales under one division. Citi analysts said this move and the enterprise AI deal with Microsoft announced this week “bodes well for an improved growth profile in 2025”. VM
Read more: Pearson is back – but will its new strategy stick?
IG Group bets on UK investors with Freetrade acquisition
IG Group (IGG) has bought investment platform Freetrade for £160mn, as part of a push to increase its presence in the UK.
The FTSE 250 company, which specialises in contracts for difference and spread betting, said Freetrade will broaden its addressable market and add a strong brand in direct-to-customer trading. Having launched in 2018, Freetrade now has 720,000 customers and £2.5bn of assets under administration.
IG Group also flagged that, between 2018 and 2023, the UK’s direct investing market grew by 10 per cent on a compound annual basis and is forecast to keep growing strongly.
IG Group is set to publish its full-year results on 23 January. JS
Dunelm pushes through ‘volatile’ quarter
Like-for-like sales at homewares retailer Dunelm (DNL) grew by 1.6 per cent in the quarter ending in December, which analysts described as “soft”.
Sales growth slowed from 3.5 per cent in the prior quarter, dragging down the half-year figure to 2.4 per cent.
Management described the market as “volatile”, but said that it had captured market share and nudged up its gross margin by 10 basis points. Dunelm expects full-year gross margin to be “at the upper end” of its 51-52 per cent guided range.
Although the company will face a couple of months of additional employer national insurance costs, it expects to be able to mitigate these through productivity improvements “over the medium term” and left full-year guidance unchanged. Analysts are forecasting a pre-tax profit of around £213mn.
The shares fell by 2 per cent in early trading. MF
Trustpilot boosted by rising North American volumes
Shares in Trustpilot (TRST) rose after the consumer review platform said that its full year cash profits will come in ahead of consensus. Fast rising volumes in North America have boosted the top line with revenue from bookings up by 23 per cent to $239mn (£196mn), while recurring revenue increased from $197mn to $231mn.
New business is heading in the right direction, but the latest update indicates that the service is now becoming embedded from a commercial perspective. Product innovation and new pricing models underpinned a net dollar retention rate of c.103 per cent, strengthening cash generation. MR
Carr’s finalises sale of engineering arm
Agricultural group Carr’s (CARR) has agreed to sell its engineering business for £75mn to Cadre Holdings (US:CDRE).
The sale includes both its US and UK engineering operations, but not Chirton Engineering, which is being sold separately. The price equates to a multiple of 7.4 times adjusted cash profit.
Carr’s intends to return £70mn of the proceeds to shareholders through a tender offer, adding that it had also generated £4mn through sales of “non-core” properties and is close to completing a buy-in to de-risk its defined benefit pension scheme.
The company now intends to streamline its organisational structure and focus purely on its agriculture business, with “a clear focus on delivering ongoing shareholder value”, said chair Tim Jones.
Carr’s shares jumped by 10 per cent. MF
Whitbread navigates difficult UK hotel trading
Premier Inn owner Whitbread (WTB) struggled to find domestic growth in the third quarter in a challenging cost environment, but trading has improved of late and profit plans in Germany are on track.
For the 13 weeks to 28 November, total sales fell 2 per cent to £763mn on flat UK accommodation revenue. However, UK hotel sales were up 2 per cent in the six weeks to 9 January. Over in Germany, where expansion is proceeding at a rapid pace, total sales were up 19 per cent and the company still expects to become profitable on a run-rate basis this year.
Given the policy changes in the UK Budget, guidance is now for gross cost inflation of 5-6 per cent on the cost base of £1.7bn, although with £50mn-worth of efficiencies, a net figure of 2-3 per cent is expected.
The shares were down 3 per cent in early trading. CA
Bakkavor bullish on profits
Bakkavor (BAKK) expects profit for 2024 to be “at least in line” with the upper end of brokers’ forecasts.
The private label food producer reported like-for-like sales growth of 5.1 per to £2.3bn, on the back of improved volumes, as well as some price recovery. It also said it would finish the year with net debt towards the lower end of its target range of between 1 and 2 times cash profit.
House broker Peel Hunt lifted its operating profit forecast for the year by 3 per cent to £111.5mn, and its earnings per share expectations by 4 per cent to 10.6p.
Bakkavor’s shares rose by 6 per cent, and are up over 60 per cent over the past 12 months as evidence of a turnaround in its performance has strengthened. MF
Deliveroo’s growth accelerates in the UK and Ireland
Deliveroo (ROO) shares rose 5 per cent in early trading as the food delivery app reported strong growth in the UK and Ireland (UK&I) in its fourth quarter and said its annual profits would come in at the upper end of guidance.
Revenue was up 7 per cent in UK&I in the quarter, with order numbers up 5 per cent and gross transaction value up 9 per cent. International revenue was flat, impacted by a challenging market in Hong Kong.
Management expects adjusted cash profits to come in “towards the top end” of its £110mn-£130mn guidance range, and it reiterated that the business would be free cash flow positive this year. CA
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