Daily market update: Bakkavor, ITV, Premier Foods, B&M, Watches of Switzerland

“A big pullback in oil prices weighed on markets across Europe,” says Russ Mould, Investment Director at AJ Bell.

“Traders focused on the prospect of a US/Iran nuclear deal which could see economic sanctions lifted on the latter and potentially lead to greater supplies of oil. That weighed on shares in BP and Shell which pulled down the FTSE 100. Commodities trader Glencore was also weak.

“FTSE 100 investment trust 3i Group dived 7% after it indicated that volatile market conditions could lead to a slowdown in private market transactions. Private equity investment companies aim to sell investments for more than they originally stumped up and any hurdles to realising deals is seen as negative by investors.

“German steelmaker Thyssenkrupp slumped 9% after reporting a big drop in earnings. Customers have been worried about tariffs and that’s negatively affected demand for its products.”

Bakkavor

“After a song and dance, hummus-to-pizzas maker Bakkavor has finally agreed to be gobbled up by sandwich king, Greencore. The convenience food groups blend together nicely, with complementary product lines.

“Greencore has been on a roll since bouncing back from pandemic-driven weakness and buying Bakkavor gives it a bigger foothold in the ready-meal market.”

ITV

“Fundamentally, ITV has turned in a robust performance. It’s all the more impressive when you consider the uncertain economic backdrop is not conducive to strong advertising demand.

“The ITVX streaming platform continues to flex its muscles and prove that consumers aren’t spending all their time glued to Netflix or Disney+. ITVX is attracting more eyeballs and that boosts its attraction to advertisers, explaining why the broadcaster has grown digital advertising revenue ahead of the market.

“However, investors can be hard to please and ITV’s trading update doesn’t deliver enough glitz and glamour, judging by the negative share price reaction. While the overall business is standing tall, there are a few negative areas which sour the trading update.

“Guidance for lower margins in the Studios business is disappointing. It is also facing tough comparative advertising sales figures to beat in Q2 as that period last year benefited from promotions around the Euros football championship.

“Investors are keen to hear from ITV about growing speculation of third-party interest in the Studios arm. There’s radio silence from the broadcaster, but it’s clearly the hot topic for the market and rumours are getting stronger that some sort of deal could be in the wings. The trouble is that ITV is a perennial bid target and some investors are getting tired of hearing the same old M&A rumour over and over again.”

Premier Foods

“It doesn’t seem too much of a stretch to dub Mr Kipling maker Premier Foods’ latest results as exceedingly good – given sales have topped £1 billion.

“The company became a zombie in the 2010s, so heavily loaded with debt it couldn’t do much more than run to stand still and meet its interest payments. However, a turnaround which has included a massive deleveraging effort has transformed its prospects.

“The company is benefiting from a ‘premiumisation’ trend. Despite an uncertain backdrop which might dissuade people from making big ticket purchases, they still want to reward themselves with pricier sweet treats and Premier Foods has plenty in this space.

“The company is taking market share, suggesting it has a good idea of what shoppers want to put in their baskets. Newly acquired brands like The Spice Tailor and FUEL10K are delivering strong growth as they are integrated into the business.

“Thanks to the improved balance sheet position, Premier Foods has been able to deliver a material increase in the dividend and the company is moving closer to a full resolution on its pension scheme which could facilitate further generosity to shareholders in the future.”

B&M

“The appointment of Tjeerd Jegen as CEO at B&M has been greeted with a shrug by the markets. Jegen will provide an experienced hand at the tiller for a discount chain which has veered off course of late.

“His predecessor Alex Russo was supposed to be taking the company on to greater things after his 2022 appointment but after just two-and-a-half years he was out on his uppers, having served up a damaging profit warning.

“B&M should have thrived in a period when households were watching every penny and its failure to do so suggests that something wasn’t quite right with the strategy and its offering to shoppers. It will be Jegen’s job to put that right in what remains a competitive environment.”

Watches of Switzerland

“It has been a far from easy time for the luxury sector but high-end watch retailer Watches of Switzerland has bucked that trend. Its full-year trading update revealed resilient trading with demand holding up well in the UK and the US.

“The company is seeing strong trading at its showpiece store on London’s Old Bond Street and the integration of recent acquisitions Hodinkee and Roberto Coin seems to be running like clockwork.

“A revamped US e-commerce site is a key project for the business and investors will be watching performance across the Atlantic closely to see if there is any impact from the current tariff-related uncertainty.”

National Grid / United Utilities

“The last set of results at National Grid before CEO John Pettigrew’s retirement represented a decent period as the company achieved meaningful profit growth despite record investment.

“The company is at a crucial point in its history, spending big money to help support the energy transition in the UK. The responsibility for steering through this investment will fall to former Shell director Zoë Yujnovich when she takes over later this year. The scale of spending means keeping everything on track will represent a significant challenge.

“Water companies are fast becoming the corporate entities people most love to hate and there is further ammunition in United Utilities’ latest update. Its profits have gone up as customers face a big increase in bills. The company seems to have contained the damage caused by sewage spills and it needs to maintain this situation if it is not to draw the ire of politicians, the regulator and the public.

“Shareholders were not jumping up and down about this latest announcement – with a fairly modest increase in the dividend relative to the increase in earnings.”