BUSINESS LIVE: TUI returns to profit

Songs performed by country music star Carrie Underwood have been sold to London-listed music royalty firm Round Hill Music.

The music investment fund bought the rights from New York based Big Loud Shirt Industries.

As a result, Round Hill owns popular songs such as Before He Cheats and Undo It by the 40-year-old 2005 American Idol winner.

Oli Creasey, equity research analyst at Quilter Cheviot:

‘The financial year just finished looks like a relatively good one for Bellway. Housing completions and company revenue both fell marginally (c. -2% to -4%), despite the last 12 months being a challenging environment.

‘However, this is partly a timing issue – many of the full year 22/23 sales will have been agreed before mortgage rates rose sharply, and the indications are that full year 23/24 will be considerably more challenging for the company.

‘The company’s private reservation rate has fallen by -36% during the year, and management stated that mortgage rates in June and July 2023 returned to the levels reached during the Liz Truss government, significantly impacting the volume of sales.

‘We note that the order book (sales agreed but likely to complete in FY 23/24) has fallen around -40% year-on-year, suggesting volumes next year will be significantly lower. Bellway’s outlook statement acknowledges this, with completions expected to decrease materially.

‘This sounds bleak, but is in-line with the experiences of other large housebuilders. As with the other builders, sales pricing has remained relatively robust (-1%), which has provided support to company revenues. The margin has fallen c. 250bps, largely due to inflation of build and other costs, but we do expect these inflationary effects to moderate in the coming year.’

Emma-Lou Montgomery, associate director for personal investing at Fidelity International:

‘The sun doesn’t always shine on Tui, but the Anglo-German tour operator has just seen its first profitable third quarter since the pandemic and says it’s on track for a strong summer season.

‘Some 5.5m holidaymakers travelled with Tui in the three months to the end of June, helping push group revenue up 19% to €5.3bn, compared to €4.4bn over the same period last year. That’s 11% above pre-pandemic levels.

‘The 2023 holiday season hasn’t been without its challenges though, with 8,000 holidaymakers recently evacuated as the wildfires raged across Europe. But sun-seekers are a determined bunch and the drop-off in demand proved to be only a blip, with Tui saying bookings for the last week were up 5% against summer 2022.

‘The financial impact of the wildfires on Tui will inevitably last far longer, adding around €25m to Tui’s full year 2023 costs – but the group says business is ‘close to normal’ and earnings are set to be ‘substantially higher overall this year.’

The pound slipped to its lowest level in five months as traders bet the Bank of England will start cutting rates in 2024.

Traders are pricing in two more rate hikes for 2023 as the Old Lady looks to tame inflation.

But this could be followed by 50 basis points of cuts for next year, according to traders, despite the Bank last week signalling it would keep policy ‘sufficiently restrictive for sufficiently long’.

Gamblign giant Flutter saw a 76 per cent jump in first half core earnings jumped 76% as its fast growing US Fanduel brand turned a profit for the first time in a transformation point’ for the group’s prospects.

The group, which owns Paddy Power and Betfair, saw customer growth of 28 per cent year-on-year in the six months to 30 June to 12,285,000.

Flutter’s US revenue overtook that of its most profitable UK and Ireland market in 2022, recording adjusted earnings before nasties of £49million for the period versus a £132million loss last year.

That contributed to reported EBITDA of £765million across the group, versus the £731million forecast by analysts.

Flutter expects full-year adjusted US earnings of £90million to £190million as it invests further in the second half and earnings in the rest of the group of up to £1.6billion.

Bellway has warned it will build fewer homes in the current fiscal year as the housebuilder faces further margin pressures amid a slowing housing market.

The group built 10,945 homes in the fiscal year ended 31 July, slightly down from the guidance of 11,000 units.

Bellway said it expected its underlying operating margin for its last financial year to be around 16 per cent, down from 18.5 per cent in the year-ago period, hurt by high build costs and overhead inflation.

‘The backdrop of macroeconomic uncertainty and cost of living pressures affected consumer demand during the year and, given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term,’ Bellway chief executive Jason Honeyman said.

Shares in Italy’s largest banks slumped after the country’s government slapped a surprise windfall tax on the industry.

US banks, meanwhile, were also knocked by a series of downgrades from Moody’s.

The credit rating agency warned the sector could find its profits under pressure from an economic slowdown and the effects of higher interest rates.

TUI has posted its first post-pandemic quarterly profit after the tour group cashed in on a rebound in travel demand, with its boss pledging to grow profitability ‘significantly’ going forward.

The tour group posted underlying earnings before interest and tax of €169million (£145.2million) for the quarter, as well as €5.3billion in revenue.

‘We are investing today to continue to significantly grow profitably in the future,’ said TUI chief executive Sebastian Ebel.