1238 GMT - Tissue producer Accrol's licensing agreement with Unilever to sell and produce a kitchen towel product under its Lifebuoy brand is likely to encourage shareholders, Shore Capital analysts Tom Fraine and Clive Black say in a note. The agreement should enhance the company's reputation and give confidence that it can return to the double-digit Ebitda margin it achieved in fiscal 2021, the analysts say. This was done on much higher sales and would warrant a considerably higher share price, they say. "We note that the current management team came into the business when it had major difficulties. However, we believe the heavy lifting is now complete," the analysts say. Shares are up 7.4% at 33.30 pence. (anthony.orunagoriainoff@dowjones.com)
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Persimmon Faces Margin Pressure as Outlook Stays Cloudy
1206 GMT - Persimmon faces margin pressure this year as the housing market slows, though there are reasons for optimism, says Wealth Club. Cost inflation remains a problem, the company has warned of lower completions this year and sales and marketing costs may need to rise to sell homes in a tougher market, the non-advisory investment brokerage says. Still, mortgage rates have fallen due to intense lender competition and consumer spending has held up better than many expected, Wealth Club says. "This explains why Persimmon's share price has recovered recently," Wealth Club's head of equities Charlie Huggins writes. "However, to build on this recovery, investors will likely need clarity on the path of interest rates and the impact on house prices." (philip.waller@wsj.com)
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Persimmon's Share Price Drop Unsurprising Given Gloomy Outlook
1154 GMT - Persimmon's warning for 2023--a potentially big drop in profit margins and cutting its dividend--explains its share price tumble Wednesday, AJ Bell investment director Russ Mould says. The house builder warned completions could drop by more than 40% to around 8,500 if sales rates don't pick up from early 2023, which would take volume completions back to, or even below, the levels seen in 2009 at the tail end of the recession, Mould says in a market comment. Worse yet, if prices flatlined that would knock five percentage points off margins owing to input cost inflation, Mould says. However, shares didn't drop as much as expected and it is possible a lot of bad news is already priced in, Mould says. Shares are down 9.3% at 1,1318.0 pence. (joseph.hoppe@wsj.com)
Contact: London NewsPlus, Dow Jones Newswires;
(END) Dow Jones Newswires
03-01-23 1226ET
