Date: Tuesday 15 Oct 2013
LONDON (ShareCast) - Packaging company McBride’s revenues were off by 3 per cent since the start of July, as it is exiting various less profitable business lines. Furthermore, big supermarkets followed their spring promotions with another round of price cuts in the autumn. As a consequence, its private-label revenues, providing those supermarkets with own-label produce, were up by only 1 per cent, less than expected. However, revenues are growing in Central and Eastern Europe above 10 per cent. The firm has also set a target for reducing costs by 7m pounds each year by relocating its head office from London to Manchester. There are some important product launches coming up that should get sales moving up again, but, on 12 times’ this year’s earnings, there looks to be no real reason to chase, The Times’s Tempus wrote.
Kurdistan-focused oil explorer Genel Energy yesterday announced new production records at its 25% owned Tawke oil field, located in Norther Iraq. The majority owner and operator said the new well on the site – Tawke 23 - was producing oil at a record 32,500 barrels of oil per day. Significantly, analysts estimate that the break-even cost to produce oil there is about just $30 (£18.90) per barrel. The well will pay back the capital investment in just over five days. The company added that drilling is under way at two further wells, with results expected in the next two months.
Furthermore, a new pipeline under construction by Kurdistan authorities to Turkey will give the group access to more lucrative world commodity markets. As well, a contract to export gas to Turkey is expected by the end of the year. Hence, the company's chief reiterated that he expects to be in a position to return capital to shareholders as soon as next year. The geopolitical situation in the area is quite challenging. However, Genel remains an interesting proposition. The shares trade at 22.5 times forecast earnings. However, that falls sharply to 17 times next year, and 11 times by 2015. This remains a risky investment but everything is in place to deliver those ambitious targets. 'Buy', according to the The Daily Telegraph's Questor column.
Next year looks as if it will still be tough for construction. Profit margins are expected to fall to about 2%. However, Balfour Beatty, the FTSE 250-listed construction company, is showing signs of a long-awaited recovery in the construction market, after announcing contracts in the US yesterday. Since June the company has announced £860m in new work. As well, there are encouraging signs from consultant engineers such as WS Atkins. They are a useful indicator for work, as they design the projects before handing them on to the likes of Balfour. The biggest consultant engineer in Britain, WS Atkins, has seen its shares almost double during the past 12 months on work in the UK. Hence, the shares of Balfour Beatty - which already offer more than 5% - in dividend yield, are starting to look interesting. So, trading on 13.5 times 2013 earnings, falling to 11 times next year, the shares – up 1.8% yesterday – present a good long-term option. 'Buy', Questor said.
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