FTSE 250 movers: Elementis surges on bid report; IG Group out of favour

(Sharecast News) - FTSE 250 (MCX) 19,086.17 -0.45% Elementis surged on Thursday following a report that KPS Capital Partners recently explored a bid for the specialty chemicals firm.

The New York-based private equity firm in December submitted an offer valuing the company at about 160p per share, but the Elementis board wanted around 180p.

At 1245 GMT, the shares were up 8.2% at 134.20p.

Elementis investor Franklin Mutual Advisers sent out a letter on Thursday expressing its "dismay" at the media report.

"In our view, this recent interest from KPS, coupled with prior offers from Minerals Technologies (130p, December 2020) and Innospec (160p, March 2021), again confirm Mutual Series' view that the company is a desirable acquisition target," it said.

"We believe this indication of interest should be the catalyst to launch a formal process to maximise shareholder value."

Franklin had already published a letter last September in which it urged Elementis to put itself up for sale.

It said on Thursday: "We are deeply concerned that, once again, the board does not appear to be acting in the best interests of its shareholders. It has been publicly reported that other significant investors share our views.

"We believe that the leadership team at Elementis is missing a valuable opportunity to maximise the value of the company. As we indicated in our letter dated September 20, 2023, and are reiterating today, we strongly urge the board to initiate a sales process immediately, and to engage with all potential buyers to maximize shareholder value."

Shares in Dr Martens surged on Thursday as investors breathed a sigh of relief that the UK bootmaker held full year guidance after third-quarter revenues slumped by a fifth, driven by a poor performance in the US and from its wholesale channel.

The company, which issued a profits warning in November, posted revenues of £267m for the last three months of 2023, down 21%. Wholesale orders plunged by 46%.

"Trading in the quarter was volatile and we saw a softer December in line with trends across the industry. Whilst the consumer environment remains challenging, we are taking action to continue to grow our iconic brand and invest in our business. We remain confident in our product pipeline for autumn/winter 2024 and beyond," said chief executive Kenny Wilson.

"The guidance for full year constant-currency revenue decline of high single-digit percentage year-on-year, remains unchanged. All other guidance for 2024 also remains unchanged."

Total revenues dropped by 31% in the US, compared with 15% in Europe, the Middle East and Africa, and by 8% in Asia.

Dr Martens added that the stronger pound since the end of the first half would result in a £5m forex headwind if current exchange rates persist, along with a non-cash balance sheet translation charge of approximately £5m.

"It's been a long time since we've seen Dr Martens' shares rise on a trading update but it has finally happened. While the headline figures look miserable, the positive market reaction is down to Dr Martens maintaining previous guidance rather than having to rachet it down once again," said AJ Bell investment director Russ Mould.

"Investors are breathing a sigh of relief although the company still has considerable issues to resolve."

"It's starting to look like Dr Martens is the latest in a long line of British companies which have failed to break through in the US. The bootmaker is not giving up and has a new Americas leadership team in place to fine-tune marketing strategy and e-commerce capabilities.

"An uncertain economic backdrop does not make for ideal trading conditions, particularly if people are still watching their pennies and pulling back from buying bigger ticket items. Dr Martens' boots may be iconic but they also don't come cheap."

Drinks company Britvic hailed a positive start to the year on Thursday as it posted a jump in first-quarter revenues.

In an update for the quarter to the end of December, the company said trading was in line with management expectations, with group revenue up 8.1% to £443.5m at constant currency, and volumes up 1.7% on the previous year.

Britvic said it had been a "robust" quarter for GB, with revenue up 6.9% and both retail and hospitality channels experiencing growth. In Brazil, revenue rose 21%, including the benefit of a recent acquisition, while other international markets saw revenues jump 6%, with Ireland leading the way at 12.5% growth. Revenue in France was up 1.1%.

The company hailed "strong" trading in December, with group revenue 12.1% higher and volumes up 6.4%.

Chief executive Simon Litherland said: "We are pleased with such a positive start to the year. Our performance in the first quarter was strong and in-line with our expectations, as we continue to offer consumers value as well as great taste, with our portfolio of family favourite soft drinks brands.

"We have exciting plans for the year ahead across our markets, with new innovations and engaging marketing activations, including Pepsi's first brand refresh in 14 years.

"More broadly, Britvic is a well-invested business, with a clear growth strategy. We remain confident of achieving growth this year within the range of market expectations, as well as continuing our track record of delivering superior returns longer term."

Online trading platform IG Group reported a drop in interim revenues and profits on Thursday, citing "softer market conditions" and a strong comparative period.

In the six months to 30 November 2023, total revenue declined 9% on the same period a year earlier to £472.6m, with net trading revenue down 19% to £402.4m. IG said market volatility across a range of asset classes was "materially lower" than in the first half of the previous year.

Net interest income surged to £70.2m from £24.2m, driven by driven by higher interest rates.

Meanwhile, adjusted pre-tax profit was 21% lower at £205.7m and adjusted basic earnings per share fell to 38.9p from 49.7p.

IG said active clients declined to 296,300 from 312,000, while new clients acquired came in at 33,800, down from 37,500.

Acting chief executive Charlie Rozes said: "It's encouraging to see the benefits of our diversification strategy paying off, despite a mixed trading backdrop for our clients, driven by persistently low levels of market volatility in Q1 and Q2. While some of our businesses saw revenue weakness, others achieved strong results in the period.

"Our exposure to a wider range of revenue drivers will underpin further growth in the group as we deliver on our strategy. At the same time, we've taken action to control growth in the cost base, significantly reducing the rate of cost growth from FY23, yet still making selective investments in the business. As a result, we've maintained attractive profit margins in the period."

Market Movers

FTSE 250 - Risers

Elementis (ELM) 135.00p 8.87% Dr. Martens (DOCS) 81.45p 8.10% Tullow Oil (TLW) 34.50p 3.17% International Distributions Services (IDS) 283.50p 3.02% Moneysupermarket.com Group (MONY) 253.20p 2.76% Mitie Group (MTO) 102.60p 2.70% Britvic (BVIC) 870.50p 1.81% Direct Line Insurance Group (DLG) 171.95p 1.51% Trustpilot Group (TRST) 181.20p 1.46% easyJet (EZJ) 527.40p 1.38%

FTSE 250 - Fallers

IG Group Holdings (IGG) 718.00p -7.35% Close Brothers Group (CBG) 556.00p -4.88% Pennon Group (PNN) 680.50p -4.09% NCC Group (NCC) 126.80p -3.21% Crest Nicholson Holdings (CRST) 201.40p -3.08% Senior (SNR) 155.00p -2.88% Victrex plc (VCT) 1,321.00p -2.87% PureTech Health (PRTC) 194.40p -2.80% Aston Martin Lagonda Global Holdings (AML) 187.90p -2.59% Abrdn (ABDN) 170.50p -2.57%