FTSE 250 movers: Direct Line slumps on financing report; Greggs rolls on
By Frank Prenesti
Date: Wednesday 10 Jan 2024
(Sharecast News) - FTSE 250: 19,291.94, -0.01%
Insurer Direct Line tumbled on Wednesday amid concerns of a potential clampdown on premium financing.
Traders pointed to a report in the Insurance Post which quoted the head of insurance at the Financial Conduct Authority as saying that premium finance was a "poor product".
In an interview with the Insurance Post, Matt Brewis warned that the regulator has "talked about it enough", hinting at potential action surrounding the practice in the next 12 months.
Brewis said he "wholeheartedly" agrees with those who label premium finance as a "poverty premium".
Premium financing is a practice whereby customers borrow money needed to pay an insurance premium and pay interest on the loan.
At 1230 GMT, Admiral shares were down 5.7% at 2,567p, while Direct Line was 5.6% lower at 169.47p.
Greggs backed its full-year guidance on Wednesday as it posted a jump in fourth-quarter sales, with seasonal lines in high demand.
Total sales for the full year rose 19.6% to £1.8bn, while like-for-like sales in company-managed stores were up 13.7% on 2022.
Fourth-quarter company-managed shop LFL sales were up 9.4%. Greggs pointed to continued growth in transaction numbers and reduced contribution from price inflation.
The company - famous for its sausage rolls - said that seasonal lines such as its festive bake, chocolate orange muffin and Christmas lunch baguette were in high demand in Q4, featuring alongside mince pies and festive hot drinks.
In addition, pizza continues to perform strongly during the day and into the evening, with pizza boxes and pizza bundle deals contributing to growth.
Chief executive Roisin Currie said: "2023 was a year of further progress by Greggs. I am proud of our teams, who did a fantastic job serving more customers as we continue to grow our shop estate and offer greater availability through digital channels and extended trading hours.
"We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity to deliver the growth strategy, supported by our strong balance sheet. Our value-for-money offer, and the quality of our freshly prepared food and drink continue to evolve and position us well for further progress in the year ahead."
Matt Britzman, equity analyst at Hargreaves Lansdown, said: "A solid final quarter means Greggs can tick off 2023 as a year of real progress. Double-digit growth in like-for-like sales was down to extended opening hours, more delivery options, improving supply chain capacity and a fresh new suite of tasty treats.
"Festive bakes and chocolate orange muffins led the way over Christmas but bears may point to sales growth slowing over the year, and the fourth quarter was the lowest of 2023. That's largely because Greggs was able to limit price hikes as inflation cooled.
"Longer-term, that's a net positive. One of Greggs' key strengths is offering a lower value treat and keeping that proposition intact is key, especially when consumer incomes are stretched. The most important thing is to see volumes trend higher, and that remains the case.
"The job's not done. Expect to see more progress over 2024 as investment continues into the digital offering, delivery partnerships and expanding the store estate."
Persimmon was able to beat guidance with new home completions in 2023 after a decent fourth quarter, with the housebuilder entering 2024 in a strong position with private forward sales ahead of last year.
New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November.
"This was achieved while providing exceptional service to our customers and we are proud to have maintained our five-star Home Builders Federation rating. We have further improved our quality metrics in the year to what we believe are our best ever, with a 43% improvement in reportable items per home in 2023, as measured by the NHBC," the company said.
Average selling prices improved by 3% year-on-year to £255,750, with private selling prices up 5% at £285,770. Pricing was firm in the first half, but softness and increased discounting was seen int he second half.
As expected, full-year operations margins are expected to be in line with the first half at 14%, as a result of build cos inflation, lower volumes and one-off costs to do with the remediation of a small number of completed sites and accelerated exit from two sites, along with further investment in the business.
The current forward sales position stood at £1.06bn at the end of December, up 2% on 2022, with private forward sales rising 4% to £499m.
"We anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year," Persimmon said.
"However, mortgage rates are beginning to ease, and the response to our recent Boxing Day campaign has been positive, generating a substantial number of leads for our sales teams. Encouragingly, build costs continue to moderate which will benefit completions in 2024."
FTSE 250 - Risers
Greggs (GRG) 2,622.00p 5.98%
Jupiter Fund Management (JUP) 79.95p 5.82%
Persimmon (PSN) 1,467.00p 5.43%
Ferrexpo (FXPO) 81.95p 5.13%
Aston Martin Lagonda Global Holdings (AML) 213.80p 3.69%
Vistry Group (VTY) 989.50p 3.18%
Syncona Limited NPV (SYNC) 122.60p 2.51%
Darktrace (DARK) 328.70p 2.30%
Babcock International Group (BAB) 447.60p 2.29%
Trustpilot Group (TRST) 145.00p 2.26%
FTSE 250 - Fallers
Direct Line Insurance Group (DLG) 166.90p -7.05%
AO World (AO.) 87.85p -3.73%
Tritax Eurobox (GBP) (EBOX) 58.50p -3.15%
Auction Technology Group (ATG) 467.00p -3.01%
Essentra (ESNT) 160.60p -2.67%
Domino's Pizza Group (DOM) 368.40p -2.64%
Tullow Oil (TLW) 32.26p -2.60%
Dr. Martens (DOCS) 79.40p -2.58%
HGCapital Trust (HGT) 429.00p -2.50%
International Distributions Services (IDS) 263.30p -2.45%
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