Updates from Tata Steel, InterContinental Hotels and Whitbread

Updates From Tata Steel, InterContinental Hotels And WhitbreadThe FTSE 100 took at 25-point drop on Monday, taking it to 6,352.3. Miners AngloAmerican and Glencore took the brunt of the sell-off – much of it predicated on worrying China GDP worry – slumping 7.3% and 5.1% respectively (to 625.50p and 110p). Antofagasta and Fresnillo took lesser but still pronounced thumps. However Shire and Compass Group both rose, up 2.5% and 1.7% (to 4626p and 1072p).

US shares remained steady with the Dow up just 14 points to 17,230.5. Nike and Intel shares both climbed though it was a different matter for Exxon and Chevron as the economic news from the world’s second-largest oil consumer was absorbed. The big – and worrying – news this morning is Tata Steel1: the steel operator looks set to announced as many as 1,200 job cuts at plants in Lanarkshire and Scunthorpe. The company has come under increasing pressure from the strong pound and the dumping of cheap imports from China. It’s thought that the bulk of the job losses will be born by Scunthorpe; Tata may also clarify the position of plants in Motherwell and Clydebridge. The news comes right behind the closure of the Redcar steelworks. Around 30,000 people are still employed in the UK steel industry. So far around 3,000 jobs have gone this year.

Tata says they do not comment on rumour or speculation. An announcement looks likely today or tomorrow. Next, moving onto the InterContinental2 hotel lobby: the hotel player claims global Q3 revPAR (revenue per available room) is up 4.8% at constant exchange rates. The hotel group claims record levels of demand in the US, delivering rate growth of 3.8% and a 75.8% occupancy level in the quarter. European revPAR was up 7.8% in the third quarter and 6.1% in the first 9 months; there was UK growth of 4.8%, driven by London. InterCo claims 10.1% RevPAR growth in Continental Europe driven by solid trading in Germany, and double digit growth across Southern Europe and Russia and the CIS. The financial position of the group remains robust claims InterCo. “The US Dollar continued to strengthen through Q3 which reduced group RevPAR to a 0.4% decline in the quarter when reported at actual exchange rates.” Finally, Whitbread3. Total revenues for the six months to 27 August surges 11.3% to 1,439.8m with underlying profit up 13.8% to 291.3m.

Underlying basis earnings per share are up 14% to 127.30p. Whitbread claims group like-for-like sales of 3.6% with Premier Inn total sales growth of 12.6% and like for like sales up 5.0%. Costa total sales growth of 16.2% and UK like-for-like sales up 4.4%.

“Group total sales,” says chief exec Andy Harrison, “grew by 11.3% to 1.4 billion with good like-for-like sales growth of 3.6%. This drove underlying earnings per share up 14% and the Board has increased the interim dividend by 13.1%.” Breaking news: Fashion retailer Asos predicts 20% sales growth this year

Updates From Tata Steel, InterContinental Hotels And Whitbread
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  1. ^ Tata Steel (www.tatasteel.com)
  2. ^ InterContinental (www.ihgplc.com)
  3. ^ Whitbread (www.whitbread.co.uk)
  4. ^ Oil Stocks: Have We Reached Bottom? (news.tddirectinvesting.co.uk)
  5. ^ How To Spot A Market Bubble (uk.saxomarkets.com)
  6. ^ Are Investors Holding Their Nerve? (news.tddirectinvesting.co.uk)

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