After Hours Summary: Pretty quiet after hours; SGH +4.4% up nicely on beat-and-raise; IMMR +11.9% higher on strong guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: IMMR +11.9% (sees Q2 EPS and revs above consensus), SGH +4.4%, SAND +1.4% (provides Q2 operational update), HOLI +0.5% (issues revenue guidance for FY21)
Companies trading higher in after hours in reaction to news: ONCS +21.9% (announces clinical trial collaboration and supply agreement with MRK), XBIT +12.8% (declares extraordinary cash dividend of ~$2.50/sh), GSKY +1.3% (announces multi-year expansion of relationship with Electric & Gas Industries Assn), GVA +1.1% (wins Highway 101 project contract worth $151 mln), FTI +1% (awarded contract for Jubilee South East Development offshore Ghana), STAR +1% (to explore market interest for its net lease assets), SVRA +0.7% (files for $250 mln mixed securities shelf offering), SPR +0.2% (AIN and SPR announce collaboration to expand hypersonic capabilities), NXTC +0.1% (initiates Phase 1/2 clinical trial for NC762), KRA +0.1% (receives Critical Guidance Recognition for its high-density polyethylene bottles), SKIL +0.1% (stock offering)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: None
Companies trading lower in after hours in reaction to news: IDYA -10.9% (stock offering), EFC -3.2% (stock offering), PSTL -0.3% (provides Q2 business update), IIPR -0.2% (provides operating activity update), VAL -0.1% (wins four-well contract with BP offshore), HUYA -0.1% (discloses receipt of proceeds from sale of minority stake in gaming co by private fund)
Toyota’s Chip Supply Helps It Beat General Motors for the First Time
Japanese car maker tops GM in second-quarter U.S. sales, but company plays down feat and calls it an unusual case
TOKYO— Toyota Motor Corp.’s TM 0.31% decision to build a stockpile of chips for its cars paid off by lifting it above perennial top dog General Motors Co. GM -0.25% in the U.S. for the first time.
But the Japanese car maker, whose American dealers have supply problems of their own, isn’t thumping its chest about its triumph over Detroit.
Between April and June, Toyota TM 0.31% sold 688,813 vehicles in the U.S., giving it a razor-thin 577-unit margin of victory over GM, according to figures from the two companies. It was the first time a Japanese car maker took the top position in the U.S., according to car-shopping website Edmunds.com, and came as the politically sensitive U.S. trade deficit is widening.
“Toyota thinks this was an unusual case due to production constraints and other factors,” spokeswoman Shino Yamada said. She called it a “short-term event for this quarter.”
During the post-pandemic boom in the U.S., auto dealers’ problem isn’t finding customers—it is finding cars to sell them. Factories have suffered from a shortage of parts, in particular the semiconductors that go into everything from engines to key fobs.
That is where Toyota has had an edge this year.
Building on its experience following Japan’s 2011 earthquake, Toyota eased away from a strict application of its just-in-time production system, in which parts are delivered to factories right as they are needed. It has said it built up a four-month stockpile of chips and other key parts.
While other car makers were shutting down factories because of the shortages, Toyota was nearly unaffected, according to research firm LMC Automotive. Toyota’s factories have run at over 90% capacity so far this year, compared with 50% to 60% for most of its rivals, according to LMC data.
Toyota dealers are still dealing with a severe shortage of cars on their lots, but they are somewhat better supplied than the competition with models like the RAV4 sport-utility vehicle, Toyota’s bestseller in the U.S.
Stephen Wade owns several dealerships in Utah, including ones that sell Toyotas and Chevrolets. “My GM store really got hurt. It looks like a war zone, like I’m going out of business,” he said. “I don’t have a lot of RAV4s, but they’re trickling in.”
There are signs that customers are looking to Toyota when they can’t find what they want elsewhere.
“While we are low-inventory on trucks and SUVs, we are seeing some competitors’ customers at our dealerships,” said Victor Vanov, a U.S.-based spokesman for Toyota.
The market is so tight that sedans are selling again, Toyota said, after years in which the U.S. tilted toward trucks and SUVs. Dealers said the current sales frenzy includes people who can’t afford one of the bigger models.
“Not everyone can spend 60 grand on a truck,” said Adam Lee, chairman of Lee Auto Malls, which owns 19 dealerships in Maine including a Toyota and GMC dealership.
Most Toyotas sold in the U.S. are manufactured at the company’s North American factories in Kentucky, Indiana, Texas and elsewhere. But some, including most high-end Lexus models, are exported from Japan. Toyota’s exports to the U.S., which predominantly come from Japan, rose 16% to 234,229 units in the first five months of this year.
The U.S. trade deficit is widening again this year. So far, that deficit hasn’t become a political hot potato as it was during the Trump administration, but Tokyo remains wary about potential trade tension after getting hit with tariffs on steel during the Trump years.
Toyota’s ability to stay ahead in the production race will likely determine whether it remains No. 1 in the second half of this year. It said its plants are operating normally now and declined to comment on future semiconductor supplies.
Other companies say the shortage isn’t getting better soon.
Ford Motor Co. is cutting or stopping production at several of its factories this month. Mazda Motor Corp. said it would have to shut down production at its plant in Hofu, Japan, for 10 days this month, potentially crimping supplies of its Mazda 3 sedan and CX3 sport-utility vehicle.
Subaru Corp. has struggled to keep production up all year and had only nine days’ worth of inventory as of the end of May compared with 45 days in a normal year, the company said.
“We are eating into our reserves to sell our products,” a Subaru spokeswoman said.
On Tuesday, the website for Longo Toyota, the world’s largest Toyota dealership, showed it had a single RAV4 in stock.
Mr. Lee of the Maine dealership chain said Toyota has barely managed to keep him supplied with enough vehicles. He said he had only 17 vehicles on the lot at his Toyota dealership, around 10% of the normal number.
“They come in and they get sold right away,” he said.
Early premarket gappers
- Gapping up:
- ISEE +25.1%, ALXO +14.5%, OCGN +12.6%, MNOV +7.1%, MUX +6.4%, RADA +5.8%, CANO +3.9%, LPI +2.9%, SIBN +2.6%, WBT +2.4%, KOS +2.3%, MGNI +1.7%, KL +1.6%, MARA +1.3%, HMN +1%,
- Gapping down:
- AHT -28.3%, DIDI -17.3%, YMM -16%, BZ -10.4%, IPHA -5.4%, KMPH -3.8%, BYSI -2.3%, BEKE -2.2%, MRTX -2%, FUBO -1.9%, DQ -1.7%, GNRC -1.2%, TSN -0.8%, SQ -0.7%,
Stellantis to invest £100m in electric van production at Ellesmere Port
Deal comes with government support and safeguards the Cheshire factory
Stellantis will manufacture electric vans at its Ellesmere Port plant with a £100m investment that safeguards the Cheshire factory, following a UK government financing deal.
The carmaker, formed by this year’s merger of Peugeot and Vauxhall owner PSA and Fiat Chrysler, will make electric versions of the Vauxhall and Opel Combo vans at the facility, as well as the Citroën Berlingo and the Peugeot Partner.
However the group will shrink the size of the plant initially and will import batteries for the vehicles, although it is open to buying from UK plants in future as its sales increase, according to people briefed on its plans.
After months of talks described as “intense”, ministers agreed to around £30m of financial support for the Stellantis investment, people briefed on the discussions said.
It is the second major UK electric vehicle investment to be announced in a week, after Nissan’s £1bn project to make an electric model and battery plant in Sunderland, and comes as the government tries to drum up investment into battery production in the UK.
“This £100m investment demonstrates our commitment to the UK and to Ellesmere Port,” Stellantis boss Carlos Tavares said. “Producing battery electric vehicles here will support clean, safe and affordable mobility for the citizens. Since 1903 Vauxhall has manufactured vehicles in Britain and we will continue to do so.”
Business secretary Kwasi Kwarteng called the investment “a clear vote of confidence in the UK as one of the best locations globally for competitive, high-quality automotive production”.
While Stellantis needs more van capacity to meet increased demand from the boom in home deliveries, the company is also required to increase factory space as a condition of the €50bn merger between PSA and FCA that was finalised in January.
To assuage concerns that a merged group would dominate the highly profitable European van segment, Stellantis agreed to produce more vans on behalf of Toyota, which has a commercial vehicle partnership with PSA.
The factory that makes Toyota models in France is at full capacity, so the refreshed facility at Ellesmere means PSA models in France can give way to Japanese vehicles, it is understood. It is not clear yet whether Stellantis will make electric Toyota models in the UK.
The Stellantis decision saves the plant, which suffered from dwindling sales and risked following Honda’s car factory in Swindon and Ford’s Bridgend engine plant, which have both closed.
At its peak Ellesmere Port employed 12,000 workers. Its current workforce is around 1,000 after shifts were cut back in recent years and staff laid off.
Staff were told at a briefing on Tuesday that the manufacturing space at the site will be reduced by 64 per cent due to efficiency improvements, according to a person familiar with the details.
Ellesmere Port is one of the most export-exposed plants in the UK, sending roughly 80 per cent of its Astra models to Europe, while also dependent on imported components for more than three-quarters of its parts.
Ocado chief says pandemic has changed consumer habits ‘for good’
But online retailer faces higher costs in its ‘solutions’ business
Ocado’s chief executive said the pandemic had changed the grocery market “for good” after the latest round of UK lockdown restrictions led to another surge in sales, although the company cautioned that investments would weigh on profits.
Results on Tuesday showed the London-listed company’s first-half revenues jumped 21 per cent from the same period a year ago to £1.32bn as tens of thousands of customers signed up.
Ocado’s core retail business finished the period with 777,000 active customers, 137,000 more than a year ago. Lockdown rules had also pushed up the average order size, the company said.
While basket sizes had declined since the restrictions had been relaxed, they remained “significantly above pre-Covid levels”, Ocado said.
Tim Steiner, chief executive, argued that changes in customer habits would endure beyond the pandemic. “It is increasingly clear that the landscape for grocery worldwide has changed for good,” he said in a statement.
Despite the positive first quarter in its core retail business, Ocado left its full year financial outlook unchanged.
The company said it was facing higher costs in other divisions such as its “solutions” business, which helps other retailers develop their own ecommerce offerings. As a result, it expected profits from these operations to be £30m lower.
The London-listed company produced an operating profit of £14.1m in the 26 weeks to May 30, although including financing costs posted a loss before tax £23.6m, which was narrower than the £40.6m a year ago.
>>> Up
* Beazley Raised to Overweight at JPMorgan; PT 452 pence
* Devro Raised to Buy at Peel Hunt; PT 230 pence
* Devro Raised to Buy at Peel Hunt; PT 230 pence
* Hiscox Raised to Overweight at JPMorgan; PT 1,016 pence
* ProSieben Raised to Equal-Weight at Morgan Stanley; PT 18 euros
* Rexel Raised to Buy at Citi; PT 22 euros
* NatWest Raised to Overweight at Barclays; PT 250 pence
* TBC Bank Group Raised to Buy at Wood & Company; PT 1,430 pence (+)
* Virbac Raised to Outperform at Oddo BHF; PT 333 euros (+)
>>> Down
>>> Down
* British Land Cut to Hold at Jefferies; PT 525 pence
* flatexDEGIRO Cut to Hold at Hauck & Aufhaeuser; PT 122 euros (+)
* Halfords Cut to Hold at Panmure Gordon; PT 450 pence
* Halfords Cut to Hold at Panmure Gordon; PT 450 pence
* Kloeckner Cut to Hold at Bankhaus Metzler; PT 13 euros (+)
* Lancashire Cut to Neutral at JPMorgan; PT 725 pence
* Land Sec. Cut to Hold at Jefferies; PT 725 pence
* Lindt & Spruengli Cut to Market Perform at Bernstein
* Reckitt Cut to Underperform at Bernstein; PT 6,000 pence
* Signify Cut to Neutral at Citi; PT 58 euros
* TomTom Cut to Add at AlphaValue
>>> Initiation
>>> Initiation
* Barry Callebaut Rated New Buy at Citi; PT 2,500 Swiss francs
* Gfinity Rated New Buy at Canaccord; PT 8.60 pence (+)
* Lotus Bakeries Rated New Buy at Berenberg
>>> Call
* Lotus Bakeries Rated New Buy at Berenberg
>>> Call
* Barry Callebaut’s Model Improved, Citi Says Stock Worth Buying (+)
* Bernstein Sees Inflation Hitting HPC Sector, Cuts Reckitt, Lindt (+)
* British Land, Land Securities Cut on Payout Pressure: Jefferies
* British Land, Land Securities Cut on Payout Pressure: Jefferies
* Goldman Says Stock Indicators Remain Stretched, Reversal Eyed (+)
* Purplebricks Results ‘Bang in Line,’ Shares Have Upside: Peel (+)
* Sainsbury’s Strong Sales Growth Driven by Grocery: Jefferies (+)
* Sartorius Boosts Guidance After Strong Results: Deutsche Bank (+)
Investment industry at ‘tipping point’ as $43tn in funds commit to net zero
Almost half of global assets under management now linked to emissions pledge
The investment industry has reached a “tipping point”, with almost half the world’s assets under management now pledged to meet climate change goals in a shift that could have huge corporate implications.
Amundi, Franklin Templeton, Sumitomo Mitsui Trust Asset Management and HSBC Asset Management are among the latest big investors to sign up to the Net Zero Asset Managers initiative launched last December.
The latest signatories mean $43tn in assets, or almost half of the asset management sector globally in terms of total funds managed, are committed to a net zero emissions target. The industry oversees $100tn worth of assets, according to data from Willis Towers Watson.
“This marks a fundamental tipping point across the investment sector and a significant boost in efforts to tackle climate change,” said Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change, one of the investor networks that brought the asset managers together.
Fund managers’ focus on net zero goals will have ramifications as investors are forced to look for cleaner investments to meet their climate targets.
“We are convinced that the financial sector is a key catalyst for action in this race to net zero,” said Valérie Baudson, Amundi chief executive.
Catherine Howarth, chief executive of responsible investment charity group ShareAction, said it was “very welcome” that asset managers were recognising the need to cut emissions.
“But pledges are the easy part. They need to be backed by forceful engagement with the many high emitters in the corporate community that have been dragging their feet.”
A total of 128 investors are now part of the Net Zero Asset Managers initiative — up from just 30 with $9tn in assets in December. Signatories have pledged to set short-term emissions reductions targets across their investment portfolios for 2030. They will also work with clients who elect to reach net zero on their investments by 2050.
The investors are expected to report their exposure based on Task Force for Climate-related Financial Disclosures (TCFD) recommendations, a framework backed by former Bank of England governor Mark Carney.
In making their net zero calculations, they can include so-called carbon offsets that involve long-term carbon removal only where there are no technologically or financially viable alternatives to eliminate emissions.
But Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, said many of the recent pledges from asset managers “seem more zero action than net zero emissions”.
She said the group’s recent research into 29 large asset managers found that while many were making long-term climate commitments, only two had robust policies around issues such as the phasing out of coal.
The focus on climate from asset managers coincides with growing demand from asset owners for investments that consider environmental, social and governance issues.
In a paper released on Friday, the UN-convened Net-Zero Asset Owner Alliance, which oversees $6.6tn in assets, also called for a radical reform in global carbon pricing as part of the push. It advocates for the introduction of a mechanism that creates a global carbon price floor and ceiling that rise over time.
A carbon pricing mechanism would unleash the “massive investments” required by all industries to reduce carbon emissions, it argued.
- Sartorius (SRT3 TH) +4.1%
- Sartorius Boosts FY Sales At Constant Exchange Rates Forecast
- Vodafone (VODI TH) +1.8%
- Rio Tinto (RIO1 TH) +1.6%
- Steel Hits Three-Week High in China on Tighter Market Outlook
- EasyJet (EJT1 TH) +1.6%
- ProSieben (PSM TH) +1.4%
- ProSieben Raised to Equal-Weight at Morgan Stanley; PT 18 euros
- Vestas (VWSB TH) +1.3%
- Reckitt (3RB TH) +1.1%
- BAT (BMT TH) +1.1%
- Nibe (NJB TH) +1.1%
- Siemens Gamesa (GTQ1 TH) +0.9%
- CD Projekt (7CD TH) -0.6%
- L’Oreal (LOR TH) -0.7%
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AstraZeneca (ZEG TH) -0.8%
- Astra’s Purchase of Alexion Approved by EU Regulators
- Nemetschek (NEM TH) -0.9%
- TUI (TUI1 TH) -1.1%
- Christian Dior (DIO TH) -1.2%
- Hermes International (HMI TH) -1.5%
- Mowi (PND TH) -1.5%
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Signify (G14 TH) -1.7%
- Signify Cut to Neutral at Citi; PT 58 euros
- Alstom (AOMD TH) -3.4%
- Alstom Flags Cash Drain From Lingering Bombardier ‘Skeletons’
Founders to keep more voting rights under plans to kickstart London IPOs
FCA outlines listing reforms in bid to attract top tech groups
The UK will permit founders to retain more voting rights in companies seeking to list on the top tier of London’s stock market, under new proposals to lure leading tech groups.
The Financial Conduct Authority on Monday laid out plans to reform rules for company listings and allow more dual class shareholdings, which give certain shareholders greater voting rights than others. The watchdog is aiming to reverse a long-term decline in listings and help London compete with thriving overseas centres such as New York, Hong Kong and Shanghai.
The moves build on the recommendations of reports this year into the UK fintech sector, by former Worldpay chief executive Ron Kalifa, and the listings regime by Lord Jonathan Hill, former EU financial services commissioner, which both advocated reforms to support and encourage technology companies in Britain — an area prioritised by chancellor Rishi Sunak as part of the City’s future post-Brexit.
The FCA proposed that founders who remain executives and other directors be allowed 20 votes per share on votes to prevent their own removal as directors and to act as a deterrent to unwanted takeovers of the company. This would allow them to control 50 per cent of the voting power while holding just 5 per cent of the total shares, for up to five years. They would relinquish the right if they were no longer directors.
Dual class structures that give certain shareholders greater voting rights than others are common on other markets, particularly in New York, but have been controversial among some UK fund managers who worry about governance standards and argue that share ownership should be based on the principle of “one share, one vote”.
In March, investor concern about Deliveroo’s dual share structure was among factors that hit the food delivery company’s IPO. Its shares lost a quarter of their value on the opening day in what was dubbed “the worst IPO in London’s history” by one of its bankers.
The FCA also proposed cutting the minimum amount of shares to be offered to the public in a listing from 25 per cent to 10 per cent, lower than the 15 per cent threshold Lord Hill had recommended.
The watchdog also wants the minimum market capitalisation for new companies lifted to £50m compared to the previous level of £700,000. Smaller companies would be better supported on specialist growth markets such as Aim and the Aquis Growth Market, rather than the main market, the FCA said.
Delphine Currie, a partner at Reed Smith, the law firm, described the increase in the market cap barrier as “particularly dramatic”.
“The FCA should have looked to raise the threshold in stages as we now risk seeing those companies with a market cap of less than £50m being excluded from a primary listing,” she said.
“While any changes that make the London market more competitive are welcome, many of these proposed reforms may come too late in the day and may be detrimental.”
Authorities are keen to reverse the long-term decline in companies listing on UK stock markets. The number of listed companies in the UK has fallen by about 40 per cent compared to 2008, according to Lord Hill’s listings review, while the UK accounted for only 5 per cent of IPOs globally between 2015-2020. Even so, more than £27bn was raised on the LSE in the first half of the year, its highest total since 2014.
Julia Hoggett, chief executive of the London Stock Exchange, had backed reforms and called the consultation “a positive step”. The FCA will consult over the summer and aims to have the rules in place by the end of the year.