{"id":25895,"date":"2023-01-16T19:28:23","date_gmt":"2023-01-16T15:28:23","guid":{"rendered":"https:\/\/www.lifeyet.com\/?p=25895"},"modified":"2023-01-16T19:28:23","modified_gmt":"2023-01-16T15:28:23","slug":"currys-no-longer-flavour-of-the-month-in-the-scando-countries","status":"publish","type":"post","link":"https:\/\/lifeyet.com\/currys-no-longer-flavour-of-the-month-in-the-scando-countries\/","title":{"rendered":"Currys no longer flavour of the month in the Scando countries"},"content":{"rendered":"\n

Currys<\/strong> has a claim to being the UK\u2019s most infuriating retailer \u2013 not for the customers, but for its shareholders. This is a company that generates \u00a310bn of annual revenues and enjoys No 1 positions in all its territories \u2013 the UK and Ireland, Greece and the Nordics, which means everywhere from Finland to the niche market of Greenland.<\/p>\n\n\n\n

It is generally regarded as being well-managed, at least since chief executive Alex Baldock arrived in 2018, and there is no problem with the balance sheet. Yet the stock market capitalisation is just \u00a3700m. Even in a low-margin game like consumer electricals, being valued at less than one-tenth of revenues is a shocker.<\/p>\n\n\n\n

The main frustration for the past half-decade has been the fact that Baldock\u2019s predecessors had the terrible idea of merging with Carphone Warehouse in 2014, one of the worst deals in modern retailing history. The mobile phone market shifted and all the standalone phone shops were closed in 2020. Even now, echoes are heard in the \u00a3511m non-cash impairment charge in Thursday\u2019s half-year numbers.<\/p>\n\n\n\n

Now comes a fresh disappointment. Just as Baldock\u2019s restructuring treatment seems to have fixed the UK<\/strong> and delivered the desired \u201comnichannel\u201d capabilities, the corporate crown jewels \u2013 operations in the wealthy markets of Norway, Sweden, Denmark and Finland \u2013 have lost their sparkle. After a Covid whoosh, rivals piled up with stock only to run into weakening demand. The result is a price war fierce enough to cause Currys, the group, to knock \u00a325m off its full-year profit forecast; the new estimate is \u00a3100m-\u00a3125m.<\/p>\n\n\n\n

The Scando discounting isn\u2019t \u201cpermanent or structural\u201d and competitors can\u2019t sustain \u201ccurrent levels of desperate and unprofitable pricing\u201d, says Baldock. No doubt he\u2019s right, but he was vague about timing. A target for a group-wide operating margin of 3% has been pushed out to the 2025 financial year.<\/p>\n\n\n\n

The stars will align eventually for Currys, one still suspects, because the operational strategy seems spot-on and recessions don\u2019t last forever. But you also see why the shares, down 6% to 61.5p, seem stuck at the lowly rating. Nothing is ever straightforward with this company.<\/p>\n\n\n\n

Drax plays it modest<\/strong><\/h2>\n\n\n\n

A third profits upgrade this year delivered only a modest boost to Drax\u2019s share price because the potentially market-moving event lies ahead. It is how the government fine-tunes the windfall tax on electricity generators as it applies to biomass plants. A decision has to be made soon because the levy kicks in at new year.<\/p>\n\n\n\n

Thus Drax was at pains to point out that its upwards tickle to top-line earnings for 2022 (now to be \u201cslightly above\u201d previous City forecasts of up to \u00a3681m) was mostly due to outperformance by its hydro operations. Fair enough. Hydro, as a source of power that can be turned on and off quickly, is playing an increasingly critical role in balancing the electricity network.<\/p>\n\n\n\n

By contrast, you\u2019d almost believe the biomass business was a tale of woe. The cost of wood pellets in the European spot market \u201chas increased significantly\u201d with higher energy and transport prices, said Drax. Cargoes are \u201ctrading at over three times their historic average\u201d. Add in the windfall tax and generation could become \u201cless economic\u201d at times and \u201crestrict the group\u2019s purchase of additional biomass cargoes at spot prices\u201d. Translation: please don\u2019t hit us too hard with the levy.<\/p>\n\n\n\n

Since the design of the levy allows adjustment for increases in generators\u2019 costs, Drax will probably get something from its negotiation with government as long as it can show the workings behind its calculation that the \u201call-in contracted costs\u201d for biomass for UK generation will be over \u00a3100 a megawatt hour in 2023 (which almost makes nuclear look cheap).<\/p>\n\n\n\n

But ministers would be wise to inspect the details. Drax\u2019s top-line earnings last year were \u00a3398m and it now expects to achieve close to \u00a3700m in 2022. The company is not doing badly amid energy volatility.<\/p>\n\n\n\n

If you are a writer then you can\u00a0write for us<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Currys has a claim to being the UK\u2019s most infuriating retailer \u2013 not for the customers, but for its shareholders. This is a company that generates \u00a310bn of annual revenues and enjoys No 1 positions in all its territories \u2013 the UK and Ireland, Greece and the Nordics, which means everywhere from Finland to the […]<\/p>\n","protected":false},"author":2,"featured_media":25916,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[475],"tags":[4080,4081,10,473,17,387],"yst_prominent_words":[],"class_list":["post-25895","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-united-kingdom","tag-currys","tag-drax","tag-featured","tag-news","tag-top","tag-uk"],"_links":{"self":[{"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/posts\/25895","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/comments?post=25895"}],"version-history":[{"count":0,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/posts\/25895\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/media\/25916"}],"wp:attachment":[{"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/media?parent=25895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/categories?post=25895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/tags?post=25895"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/lifeyet.com\/wp-json\/wp\/v2\/yst_prominent_words?post=25895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}