BT announced their final results which came in slightly light at the earnings level 25.7 pence versus 26.3 pence (F), although the dividend was slightly better up 15% to 10.9 pence versus 10.7 pence (F). They also committed to 10 to 15% dividend increases in the next two years as well. So their investment in fibre and TV seems to be paying off and it looks reasonable value on around 14x and a 3% yield.
Meanwhile in the utility space we had a very detailed Interim Management Statement (IMS) from (CNA) today. This contained a profits warning as they guided for a decline in earnings this year to 22 to 23 pence versus the consensus of 25.5 pence, so a downgrade of around 12%. However, given the ongoing review into the energy market I suspect they were never going to report bumper profits this year and they flag the retail margin at 4% being below average. They did however say they remained committed to real dividend growth albeit recognising that with a reduction in year-on-year adjusted earnings per share, the payout ratio will increase above historic levels in the short term. The shares are off on the back of this and seem likely to languish given this update and the on going investigation into the industry and the election next year, but the 5%+ yield may help to provide some support for now.
While at the pictures a more positive story was presented by Cineworld (CINE) announced a first update since its merger with Cinema City and this seems to have boosted the growth rates as the Eastern European operation acquired are in less mature markets. Box Office revenues were up 8.6% and admissions by 6.8%. The increased revenues reflected price increases of 4.8% demonstrating some pricing power. Retail spending and advertising also showed some encouraging increases. All in all a good start, but they acknowledge that the World Cup will likely have a negative effect on them this year. Consequently as the shares have had a nice bounce from recent lows they seem to be having an intermission today after this update around the middle of their recent trading range. This seems reasonable given the rating of around 15x and just over a 3% yield.
Finally, the Morrisons (MRW) horror story continues with a brief IMS which saw total sales ex fuel down by 4.2% and LFL by 7.1% in the 13 weeks to May 4th. Despite this they said "Whilst the trading environment remains challenging, our financial outlook for the full year of underlying profit before tax in the range of £325m - £375m, remains unchanged." They also talked about their recent price cuts, store revamps, on line roll out and new convenience store openings. However, they acknowledged it was too early to discern the full effects of the price cuts when they said:
"The plans we set out at our results in March are on track. The reaction of our customers to the 1,200 "I'm Cheaper" price cuts we announced last week has been very positive. Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers."
Consequently the shares are "cheaper" again today in Market Street and they also went ex the final dividend of 9.2 pence this week. The jury is still out on whether their initiatives will work, so I'll give them the benefit of the doubt for now. Seems their marketing department is not helping either (click picture above for full details if you haven't heard about it). However, it looks like the trap door is opening up on the value trap here and it may be a case of death by 1200 cuts, although in investing the first cut is often the cheapest! So maybe I'll live to regret not cutting this one sooner, despite the apparent value. But now I'm off to my local store to use one of their money off vouchers that came through my door and get 6 pence off my fuel as every little helps! Update it was much busier than usual.