Greggs surprises City
In the latest news from the City, Greggs surprises the stockmarket, Sainsbury's gets tough with Delta Two and FMD jitters hit home
Greggs, the country's leading sausage roll and sandwich seller, surprised the stockmarket with a strong rise in pre-tax profits - up 34% to £16.7m in the 24 weeks to June 16, on sales up 5% to £256m. Citigroup is forecasting full year earnings per share of 289.8p against 252p in 2006, despite one of the wettest summers on record and flooding across many parts of the country.
Boss Michael Durrington said the weather would not upset Greggs' full-year profit prospects. In the first five weeks of the current year,
sales were up 4.1% despite the
shops closed in flooded areas. Greggs is facing inflationary cost pressures in an aggressively competitive market and is revamping its range to cater for the healthy eating bandwagon and upgrading its stores.
Sainsbury's has slammed one door shut against the Qatari Royal Family's proposed £10.6bn bid for the group. After four weeks of talks, Sainsbury's board has refused to open its books to the Qatari's Delta Two bid vehicle, which has 25% of Sainsbury's equity. Delta Two needs 75% of Sainsbury's shares to ensure its bid succeeds.
Delta Two retaliated by refusing to increase its offer over 600p a share and would not change the structure of the deal on offer, which relies heavily on debt and the sale of Sainsbury's property portfolio. Sainsbury has asked the Qataris to increase the cash element on their offer, which contains £7bn of debt.
Both sides will meet again this week, but the market speculates that stockmarket and credit market turmoil may prevent the Qatari bid from succeeding.
Foot-and-mouth disease(FMD) jitters hit the stockmarket, which slashed share prices in the restaurant, hotel and pub sectors on the basis we will all eat less meat. Worries about this fresh outbreak slightly hit the share price of Genus, the bull semen producer, but the company retaliated that it has seen no measurable impact. Broker Panmure Gordon expects the current FMD outbreak to have no effect on Genus' profits.
Tesco has been told by the Competition Commission to stop work on a retail development in Slough, previously the site of a
Co-op supermarket, which is only a mile from one of the largest Tesco stores in the UK. The Commission may order Tesco to sell the store to a competitor and Sainsbury's has already shown interest in acquiring the site, should that occur.
Tesco is also being blocked in its £155.6m recommended bid for Dobbies, the garden centre chain. Scottish billionaire Sir Tom Hunter is seeking to prevent the takeover of the Dobbies chain by refusing to sell Tesco his 26% stake. While he has not made a bid himself, his stake will be a significant block to Tesco's plans for Dobbies. Sir Tom reckons the Tesco offer does not put a high enough price tag on Dobbies.
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