FTSE 250 movers: Currys in favour; TI Fluid hits the brakes

(Sharecast News) - FTSE 250: 19,973.30, +0.13% at 1500 GMT. Shares in TI Fluid Systems fell sharply as the company said sales in China had been hit in the fourth quarter due to Covid restrictions and a switch to electric vehicles in the country.

The manufacturer of automotive fluid storage systems for light vehicles said 2022 revenue is expected to be around €3.26bn, up 10% year on year.

However, it warned that group constant currency revenue growth was expected to 100 basis points behind global light vehicle production (GLVP) growth due to the rapid transition of domestic Chinese original equipment manufacturers (OEM) to electric vehicles "which presents a short term mix issue for the group in that market".

TI Fluid also said that it faced a "material" non-cash impairment charge due to lower GLVP forecasts as well as the rising interest/discount rate outlook meaning it would have to review the carrying value of some fixed and intangible assets.

"The group did experience an unexpected negative sales impact in China during Q4 primarily due to the government's Covid policy changes which caused unexpected production shutdowns," the company said in a trading statement.

"Whilst inflationary headwinds have continued, the group has made good progress on managing ongoing cost increases, with cost recoveries from OEM customers in 2022 in line with management expectations at about 70%. The group expects to report adjusted EBIT for the full year of circa €180m," TI Fluid said.

"Whilst market conditions, particularly in China, are expected to remain challenging in the short term, the group's strong market position, product leadership and clear strategy leave it well positioned to deliver on its long-term objectives," the company said.

Electricals retailer Currys backed its full-year guidance on Wednesday as it said a solid performance in the UK and Ireland has helped to offset weakness in the international segment.

In an update for the 10 weeks to 7 January, the company said UK and Ireland like-for-like revenue was down 5%, but profits were better than expected thanks to gross margin increases and continued cost savings.

Sales were strong in domestic appliances and mobile, but this was offset by weaker consumer electronics and computing.

In the international business, LFL revenue fell 7% and profits were below forecast due to the Nordics region, where it saw a market-driven sales slowdown and continued pressure on gross margin. Currys said sales declined in all categories except small appliances.

The retailer left its full-year guidance unchanged, assuming no further unexpected macroeconomic deterioration. It continues to expect adjusted pre-tax profit of between £100m and £125m.

Chief executive Alex Baldock said: "We've delivered a strong Peak performance in the UK&I, growing profits again through resilient sales, increasing gross margins (not least through record Services adoption) and strong cost discipline. Our transformation is visibly succeeding.

"Internationally, it remains tough and we continue to face into intense, but temporary, market pressures. We're not simply waiting for the external environment to improve, of course. We've already reduced stock levels and stepped up our measures to increase margins and reduce costs.

"While markets remain challenging, we're confident in our full year guidance as UK&I improvements offset International weakness."

Retailer WH Smith reported a strong performance on Wednesday, "significantly ahead" of last year as the travel business picked up.

In an update for the 20 weeks to 14 January, the company said it delivered a solid performance, with total group revenue up 41% on the year and 20% versus 2019.

WH Smith pointed to continued momentum across its global travel business since the start of the financial year, resulting in sales being up 48% on 2019 and 77% higher versus 2022. This is despite passenger numbers remaining well below 2019 levels, it said.

Meanwhile, the UK High Street division delivered a good performance, it said, in line with its expectations.

"We had a strong start to the year and, while there is economic uncertainty, passenger numbers globally continue to improve and this, combined with the strength of the group's growth opportunities, means that we are confident of a year of significant progress in 2023," the company said.

Russ Mould, investment director at AJ Bell, said: "WH Smith is slowly returning to its usual pattern of trading before the pandemic and that's largely good news for shareholders.

"The return of travellers to stations and airports has helped provide the captive audience for the company's outlets selling stationery, electronics goods, snacks and drinks.

"People being more willing to jet off on holiday has led to busier airports and the company's competitive position has arguably been strengthened as rival operators proved less durable through Covid. Though the fine print in these latest figures suggest rail strikes have impacted on WH Smith's sales in this part of the operation.

"For years the UK high street operation has been something of an afterthought, run as efficiently as possible with a firm control on costs. This may see WH Smith stores regularly rank near the bottom in customer surveys, but the business has generated useful cash flow to help with the running of the business and investment in the faster growing travel operation.

"At some point a debate over the role of the high street arm in the wider group may start to heat up and investors may look for a sale or spin-off of a business which has very different growth prospects."

FTSE 250 - Risers

Currys (CURY) 67.80p 13.09% Digital 9 Infrastructure NPV (DGI9) 96.00p 4.46% TUI AG Reg Shs (DI) (TUI) 189.95p 3.49% 888 Holdings (DI) (888) 96.55p 3.48% Dunelm Group (DNLM) 1,068.00p 3.19% easyJet (EZJ) 449.60p 3.14% Coats Group (COA) 70.40p 3.07% PureTech Health (PRTC) 279.50p 2.57% Aston Martin Lagonda Global Holdings (AML) 170.75p 2.28% Greggs (GRG) 2,638.00p 2.25%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 117.00p -13.72% Auction Technology Group (ATG) 737.00p -2.90% Watches of Switzerland Group (WOSG) 969.00p -2.76% Hilton Food Group (HFG) 603.00p -2.74% Wood Group (John) (WG.) 149.65p -2.54% NCC Group (NCC) 190.40p -2.36% Bridgepoint Group (Reg S) (BPT) 236.80p -2.23% Synthomer (SYNT) 147.10p -2.13% Genuit Group (GEN) 325.50p -2.11% WH Smith (SMWH) 1,584.50p -2.01%