Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Beaufort Securities Breakfast Alert - British Gas owner Centrica to cut 4,000 jobs after 'weak' year

Beaufort Securities Breakfast Alert - British Gas owner Centrica to cut 4,000 jobs after 'weak' year

Markets

Europe
The FTSE-100 finished yesterday's session 0.48% higher at 7,281.57, whilst the FTSE AIM All-Share index was up 0.25% at 1,043.57. In continental Europe, the CAC-40 finished 0.23% higher at 5,302.17 whilst the DAX was down 0.14% at 12,470.49.

Wall Street
Last night in New York, the Dow Jones fell 166.97 points, or 0.67%, to end the day at 24,797.78. The S&P 500 ended 14.93 points lower at 2,701.33 and NASDAQ shed 16.08 points at 7,218.23.

Asia
In Asia this morning,  the Nikkei 225 was 246.46 points lower at 21,724.35 heading into the close. The Hang Seng was also in negative territory, with the index down 0.82% at 31,172.71. Meanwhile, the Shanghai Stock Exchange remains closed as the Lunar New Year break continues in China.

 

Oil
At around 6:00am, WTI crude was 0.96% lower at $61.09 per barrel and Brent crude was down 0.72% at $64.95 per barrel.

 

Headlines

British Gas owner Centrica to cut 4,000 jobs after 'weak' year
Centrica, which owns British Gas, is cutting 4,000 jobs as it continues to lose customers. The energy supplier, which has operations in North America and Ireland as well as its main UK market, said group profits fell 17% to £1.25bn. Chief executive Iain Conn said the firm had a "weak" second half of 2017, and it was not helped by political and regulatory intervention in the UK. British Gas shed 9% of its UK domestic customers in 2017.

Source: BBC News

Company news

 

BAE Systems (LON:BA) 601.40p – Buy
BAE Systems, this morning announced its results for the 12 months ended 30 December 2018 (‘FY17’). During the period, sales advanced by +3.2% to £19,626m, underlying EBITA rose by +6.8% to £2,034m (Constant Currency: +4%), and underlying EPS grew by +7.9% to 43.5p, against the comparative period (FY16). Operating business cash flow was at £1,752m (FY16: £1,004m) and net debt more than halved to £752m (FY16: £1,542m). Order intake during the period amounted to £20,257m against £22,443m a year ago, while order backlog was at £41.2bn compared to £42bn in FY16 (unchanged on a constant currency basis). The company’s net pension deficit reduced by £2.2bn to £3.9bn. The company declared a final dividend of 13p, taking full year dividend to 21.8p, up +2.3%, to be paid on 1 June 2018.

Our view: Solid results from BAE. Though sales came marginally short, underlying EBITA was higher than expected and EPS came at the higher end of the 5-10% guidance (consensus: 42.6p). Net debt was more than halved to £752m, came significantly ahead of the “small reduction” guidance and consensus estimate. Looking ahead, in FY18, BAE Systems expects underlying EPS to be 42.1p, in line with FY17 (43.5p to 42.1p reflecting the impact of IFRS 15 adoption and assuming a US$1.40 to sterling exchange rate). Though this was below the consensus estimate, we believe there remain good upside given “improving outlook” for defence budgets in a number of BAE’s markets. The shares are valued at FY18E and FY19E P/E multiples of 13.6x and 12.7x with a dividend yield of 3.8% and 3.9%, respectively. It is not expensive comparing to UK sector average P/E of 15.6x and dividend yield of 2.6%. With a solid order backlog amid ongoing terrorism, cyber-security and geopolitical threats, at a time when global economic trend is encouraging with higher oil prices, we believe BAE remain well placed to maintain positive momentum. We reiterate our Buy rating on the shares with a 685p target price.

 

 Latest Video

On Wednesday, 7th February 2018 Mike Read, Chairman & CEO of Falanx answered questions posed by private investors at the Beaufort offices. Click here to see the interview.

Important Risk Warnings and Disclaimers 

This report is published by Beaufort Securities Ltd ("Beaufort Securities"). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. 

RELIANCE ON THIS NOTE FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSING ALL OF THE FUNDS, PROPERTY OR OTHER ASSETS INVESTED OR OF INCURRING ADDITIONAL LIABILITY. 

This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you. 

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients' unsolicited orders. 

By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for you and will not be responsible for providing advice to you in relation to this document. Accordingly, Beaufort Securities will not be responsible to you for providing the protections afforded to its clients. 

Beaufort Securities may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Beaufort Securities may be a shareholder in any of the companies mentioned in this report. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to Beaufort Securities or the Group, which is not reflected in this material. The remuneration of the author of this report is not tied to the recommendations on any shares mentioned nor to the any transactions undertaken by Beaufort Securities or any affiliate company. Further information on Beaufort Securities' policy regarding potential conflicts of interest in the context of investment research and Beaufort Securities' policy on disclosure and conflicts in general are available on request. Please refer to http://www.beaufortsecurities.com/important-info. 

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or the ICAP Securities & Derivatives Exchange are less demanding and trading in them may be less liquid than main markets. This may make it more difficult to buy and sell these securities. 

 

This document includes certain statements, estimates, and projections with respect to the anticipated future performance of securities listed on stock exchanges and as to the market for these shares. Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication. 

This document is based on information Beaufort Securities has received from publicly available reports and industry sources. Beaufort Securities may not have verified all of this information with third parties. Neither Beaufort Securities nor its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Beaufort Securities nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document (except in respect of wilful default and to the extent that any such liability cannot be excluded by the applicable law). You should not rely on this document and should not use it substitution for the exercise of the independent judgment of yourself or your adviser. 

The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein.

 

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use