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

St James’s Place shares fell over 30 per cent on Wednesday after the wealth management group unveiled provisions for potential client refunds and slashed its dividend.

The wealth manager has set aside £426million for potential client refunds after last year receiving a sizeable number of customer complaints about inadequate levels of service.

More than 140,000 small businesses have been de-banked by major lenders in the past year, according to a report by MPs.

Some 2.7 per cent of the 5.3 million business accounts held by small businesses were closed by banks, according to the Treasury Committee.

Halfords shares nosedived on Wednesday after the group slashed its annual profit guidance amid continued weak trading across most of its core markets.

Britain’s largest cycling and motor services retailer saw its share price plunge by 23.7 per cent to 153p by midmorning, making it the second- biggest faller on the FTSE All-Share Index behind financial advisory firm St James’s Place.

Aston Martin is delaying the launch of its first battery powered electric vehicle (EV) by a year.

The London-listed carmaker said it now expects to launch a battery EV in 2026, from earlier plans to launch next year.

In June, Aston Martin signed a supply agreement with Saudi Arabia-backed Lucid Group to strengthen its electrification strategy.

Mark Crouch, analyst at investment platform eToro:

‘Despite being behind some of the most desirable sports cars ever made, if truth be told Aston Martin Lagonda has proven to be a lousy investment for their shareholders. Continued losses and a heavy debt burden have plagued the business since the IPO in 2018. In which time the share price has fallen over 90%.

‘The luxury sports car manufacturer today posted another pretax loss of £171.8m, albeit that was significantly less than analysts forecasts.

‘Rewind twelve months, things were looking up for Aston Martin. A buzz surrounded the anticipated launch of new models including the DB12, and there were positive noises from the company that they may at last become cash flow positive. And while demand is high, production delays forced the company to cut delivery forecasts and share price gains for the year swiftly unravelled.

‘Investors might be running low on patience with the Luxury car maker and will want to see much more from the business if they are not to cut their losses, and given Aston Martins poor track record, who can blame them.’

Britain’s biggest car battery factory looks set to get off the ground in a much-needed boost for the motor industry.

Agratas, a new business within the Tata Group, will today outline plans to build a gigafactory to produce batteries for electric vehicles (EVs) at the Gravity Smart Campus site in Puriton, near Bridgwater, Somerset.

Anthony Codling, managing director at RBC Capital Markets:

‘Taylor Wimpey’s FY2023 results were slightly ahead of guidance, but planning and site availability is likely to temper growth in 2024. On the positive side current trading shows some encouraging signs of improvement, but on the supply side as we highlighted last year, planning challenges continue to slow the rate of site openings, which limits the number of homes Taylor Wimpey can sell.

‘Operationally Taylor Wimpey is strong, lean and agile and ready to either face headwinds or to benefit from tailwinds. Homeownership remains an aspiration for many and in an election year we expect some form of housing market stimulus which will help all housebuilders sell more homes, and if the planning system is improved, they will be able to build more too.’

Taylor Wimpey will build fewer homes this year amid persistent weakness in the housing market, as the British housebuilder posted a 49 per cent slump in annual profit, in line with market expectations.

The FTSE 100-listed developer’s operating profit came at £470.2million for 2023, in line with company-compiled average analysts’ estimates of £469million.

Jennie Daly, chief executive, said:

‘We delivered a good full year performance in line with expectations despite a challenging market, benefiting from our sharp operational focus, the quality of our homes and locations and a continued proactive sales effort. I would like to thank all our teams and supply chain partners for their ongoing hard work and commitment.

‘It is still early in the year and the macroeconomic backdrop remains uncertain, however it is encouraging to see some signs of improvement in the market, with reduced mortgage rates positively impacting affordability and customer confidence.

‘While the planning environment remains challenging, we have a high-quality, well-invested landbank and a strong financial position which underpins our ability to provide investors with a reliable income stream via our differentiated Ordinary Dividend Policy. Looking ahead we are well-positioned in an attractive market, with significant underlying demand for our quality homes and are poised for growth from 2025, assuming supportive market conditions.’

Alcohol sales have bounced back this month after Dry January came to an end.

Increasing numbers of drinkers are going ‘on the wagon’ at the start of the year – much to the despair of the nation’s publicans.

But it seems many are eager to quench their thirst when the month of abstinence finally comes to an end.

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

‘Aston Martin is pumping reams of cash into marketing in a bid to help position itself at the ultra-luxury end of the spectrum. This pivot was never going to come cheap, and that’s led to some disappointing momentum on margins, even though there has been significant improvements.

‘Repositioning the brand is ultimately a good idea, as super-luxury is a more resilient corner of the market than where Aston Martin is currently parked. So-called Specials volumes are moving in the right direction, with these personalised, more lucrative vehicles a good indicator of demand for more expensive vehicles. Customers sign up and pay a deposit for these rare models before they’re built, allowing for tighter working capital control. The cars have also become cheaper to make thanks to efficiency improvements.

‘Longer term, it’s the effectiveness of the group’s hybrid models that will drive sentiment. For all Aston Martin’s heritage brand strength, electric is the direction of travel and the roadmap for this part of the strategy remains a little unclear.’

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’.