MARKET REPORT: Price hikes and cost cuts deliver a profit at Just Eat

‘Revenue is vanity, profit is common sense, cash is king’ goes the saying and delivery company Just Eat seems to have got the message.

Higher prices and delivery costs and lower overhead expenses helped the company generate an underlying profit of £131m in the second half, a major turnaround from the grim start to the year when it posted a loss of £117m in the first six months .

The result was achieved despite falling order numbers.

Shares rose 4.1 percent, or 86.5 pence, to 2,215.5 pence, as analysts said the company was on track after years of chasing market share in the high-growth low-profit sector that resulted in costly acquisition mistakes and spend dazzling marketing.

Russ Mold, an analyst at AJ Bell, said: “When interest rates were zero, a lot of money was misallocated because it cost nothing. But investors are tired of it, profit is important and they want a return.’

The results also take pressure off CEO and billionaire Jitse Groen, who was targeted by investors after it bought Grubhub in 2020.

The takeover was supposed to be a doorway to North America, but less than a year into the deal, Groen put the company up for sale and wrote down the value of the division by £2.6bn.

All eyes are now on Deliveroo, a heavily loss-making company that is showing results today.

Among the top climbers, oil trader Glencore skyrocketed after the International Energy Agency said oil demand will soar to an all-time high in 2023.

Crude oil demand could rise by 1.9 million barrels a day to a record 101.7 million a day as China begins to ease its Covid restrictions, the body said.

Stock watch – H&T

The UK’s largest pawnbroker, H&T, said it had record sales in December.

H&T said watch sales were particularly strong last month, adding that trading remained robust throughout the fourth quarter of the year.

Demand for pawn loans was strong and the commitment book grew from £66.9m at the end of December to £99m at the end of December.

Shares fell 4.9 percent, or 24 pence, to 469 pence, which analysts attribute to profit-taking.

Glencore climbed 4.3 percent, or 23.7p, to 576.6p. BP rose 0.3 percent, or 1.55 pence, to 486.2 pence. But Shell, which has been hit hard by Britain’s windfall tax, fell 0.6 percent or 15.5 pence to 2403.5 pence.

Another top riser was education publisher Pearson, which will top earnings expectations for 2022 as people sought more qualifications after the pandemic.

Pearson was a city darling for many years and remained a conglomerate long after they were fashionable.

It was home to the Financial Times and The Economist and held stakes in the Lazard banks and TV production houses before being ransacked by John Fallon, who sold off the family silver while announcing a series of profit warnings.

As of 2020, it is run by Andy Bird, who comes from the Walt Disney Company.

Schimmel added, “It’s good to see Pearson back on his feet.” Equities added 1.7 percent or 15.2p to 931.6p.

The FTSE 100 failed to close at a record high, down 0.3 percent or 20.33 points at 7830.70. Investors have had champagne on ice this week hoping it would cross 7877.45, but there is still time.

TI Fluid Systems fell 14 percent after it said it was forced into production halts due to China’s Covid policies late last year.

The company, which makes cooling systems for automotive brakes, believes conditions there will remain challenging for the foreseeable future. It dropped sharply by 13.9 percent, or 18.8 pence, to 116.8 pence.

Homebuilder Vistry bucked the trend, saying his work in the affordable housing and rental sectors has partially cushioned him from the broader real estate slowdown.

Chief executive Greg Fitzgerald said it is on track to meet earnings expectations of £418m for 2022, up 21 per cent from a year earlier.

Builders are grappling with headwinds that could affect sales, including a surge in mortgage payments. Political uncertainty also weighed on sentiment last year.

But forward sales of private homes will reach £1bn by the end of 2022, up from £1.3bn earlier. It fell 1.2 percent, or 9p, to 756p.