Tuesday’s Master Investor Market Report, featuring DCC, Entertainment One, Victrex and Big Yellow Group

• The Office for National Statistics has announced that annual UK CPI inflation dropped to -0.1% in April from 0% in February and March. This is the first negative reading since the introduction of the CPI measure in 1996. Economists predicted that deflation would be short-lived and had come about due to a confluence of falling fuel costs and an early Easter. Deloitte’s Chief Economist Ian Stewart said that “falling prices raise consumer spending power and help keep interest rates low. This looks like the mild and benign variety of deflation which is good news for consumers and for growth”.
• Deutsche Bank is the first major financial institution to openly discuss withdrawing from the UK in the event that the country leaves the European Union. However, a spokesman for the bank said that it was “early days and no decisions have been made”. Deutsche Bank currently employs over 9,000 staff in the UK. British Chamber of Commerce Director General John Longforth said yesterday that a referendum on the matter should take place as soon as is practical.
• The FTSE 100 advanced by 26.23 points to 6,995.10 points; the FTSE 250 rose by 153.92 points to 18,176.13; the FTSE All Share increased by 17.17 points to 3,801.50 points; and the FTSE AIM All Share finished the day up 2.18 points at 762.17 points.

Support services outfit DCC (DCC) posted higher than expected pre-tax profits of £163.8 million for the 12 months to 31st March, an improvement of 8.1% over the prior financial year. However, revenues fell by 4% to £10.6 billion due to weaknesses in the company’s energy division. Analysts from Berenberg were positive on the stock and its recent history of dividend growth, commenting that “this track record of stable earnings growth, strong cash conversion and high rates of return make DCC a core holding in our view”. The shares grew by 564p to 4,954p.

Television programme and film producer Entertainment One (ETO) saw its pre-tax profits double to £44 million over the year ended 31st March as it cut production costs. Revenues declined by 5% to £785 million due to reduced box office earnings from the film division. On the other hand, income from the TV production arm rose by 32% on the back of increased volume and strong licensing from “Peppa Pig”. Management believe that overall market conditions were favourable despite difficulties at the cinema. Shares in the company rose by 8.6p to 327.1p.

Polymer products manufacturer Victrex (VCT) recorded a 9% rise in revenues to £130.3 million for the six months ended 31st March, with a strong performance from the consumer electronics division. Gross margins also improved to 65% and helped to drive a 10% improvement in pre-tax profits which were £53.9 million for the period. Ongoing tough conditions in the oil and gas sector are driving down demand for Victrex’s products in those markets and currency headwinds are expected to cause difficulties in the second half of the financial year, but management nonetheless expect continued improvements in profitability. The shares climbed 11p to 2,047p.

Self-storage provider Big Yellow Group (BYG) saw its profits before taxation grow by 75.9% over the year ended 31st March to £105.2 million pounds after occupancy rates substantially improved and property assets recorded valuation gains. Revenues also rose by 17% to £84.3 million. Executive Chairman Nicolas Vetch said that “we have now positioned the Group for the long-term so that we can enjoy the benefits of a strong economy and also adequately accommodate any reverses”. Shares in the firm rose by 47.5p to 703p.

tomorrow’s news today

SSE (SSE), Burberry (BRBY) and Mark & Spencer Group (MKS) are among the companies publishing reports tomorrow.

Quote of the day

“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute…”
― William Feather