Our companies analyst explains what’s behind some of the day’s biggest stories.
Hopes of better times ahead for Crest Nicholson Holdings (LSE:CRST), Carex owner PZ Cussons (LSE:PZC) and drugs company Indivior (LSE:INDV) helped place the trio at the forefront of FTSE 250 index trading today.
Better-than-expected annual results and the imminent return of dividend payments kept shares in housebuilder Crest on the front foot. Meanwhile, the new management team at PZ Cussons have got off to a fast start thanks to double-digit half-year profits growth.
The biggest share price gain came from Indivior, however, after it agreed a deal with Reckitt Benckiser (LSE:RB.) to settle a $1.4 billion legal claim brought by the FTSE 100 index company.
Indivior will pay Reckitt $50 million over the next five years to deal with the claim, which stems from an indemnity agreement entered between the two companies when the maker of the anti-opioid drug Suboxone Film demerged from Reckitt in 2014.
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Reckitt's legal claim, which had not been served, follows a $1.4 billion penalty imposed in a US federal investigation into the marketing of Suboxone. Indivior also recently agreed to pay $600 million to resolve civil and criminal liabilities in the United States.
Last night's agreement adds to renewed optimism around the shares, triggered when Indivior recently upgraded guidance on next month's annual results following quarterly revenues growth of between 12% and 18% for its Sublocade medication.
Shares, which were nearly 500p in 2018 prior to the US legal proceedings, jumped another 11% or 13.6p to 141.5p, their highest level since July and close to their best in almost two years.
The valuation improvement has slowed over recent weeks at PZ Cussons, although there were encouraging signs for investors today after new boss Jonathan Myers highlighted “renewed momentum” in the consumer products group.
Adjusted profits came in 16.3% higher at £34.9 million in the six months to 30 November, with Carex the stand-out performer thanks to demand for hand wash and sanitiser during the Covid-19 pandemic. Prioritising Carex production had an adverse impact on Imperial Leather, however, while high street disruption also dented revenues for its Sanctuary and hair brands.
In Nigeria, where the company has traded for 120 years and currently employs 3,500 people, a simplification project is underway in order to review a portfolio that includes the electricals business Haier Thermocool and a range of personal care brands.
Myers, who took the helm in May, said the group's half-year performance would allow for increased investment at the start of a multi-year programme to return PZ Cussons to sustainable profitable growth. He plans to give more details on his strategy in March.
Trading conditions remain challenging and volatile, but net debt has reduced to just £18.2 million from £137.7 million and the company also left its interim dividend unchanged at 2.67p.
Shares rose 2.5p to 240.5p, with analysts at Investec Securities sticking by their target of 275p following today's results.
Crest Nicholson shares were 3.4p higher at 309.6p after the housebuilder posted an underlying full-year profit of £45.9 million, which is higher than its previous guidance of between £35 million and £45 million.
It has seen a strong trading performance since the spring lockdown, buoyed by the Chancellor's stamp duty holiday and pent-up customer demand. Crest has started 2021 with a healthy forward order book of 2,435 units but the key to the next phase of its recovery will be whether it can improve operating margins to be in line with industry peers.
Some of its more complex sites may continue to hinder this progress in 2021, although the following year should see the benefits of new sites being developed with a standardised house type range and from a significantly lower cost base.
Peter Truscott, a Taylor Wimpey (LSE:TW.) veteran who joined Crest in September 2019 after four years at the helm of Galliford Try, has taken on the job of rebuilding trust in the company's performance after a run of profit warnings and share price falls.
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He said following today's annual results: “We had to make some difficult decisions during this year but because we acted swiftly we have ensured the group enters 2021 in strong shape and will remain resilient to whatever challenges this year brings.”
His comments are supported by plans to reinstate the dividend alongside half-year results in the summer. Shares have recovered sharply from 166p in September.
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