US job openings in focus, Saga’s statutory loss widens on insurance impairments and Virgin Orbit files for bankruptcy

“The prospect of mega deals in the mining space has got investors excited, bringing a new lease of life to the sector which had previously been suffering from fears about weaker economic activity feeding through to reduced commodities demand,” says Danni Hewson, head of financial analysis at AJ Bell.

“Glencore led the FTSE 100 higher on Tuesday following its $23 million move on Canada’s Teck at the start of the week. While its business combination proposal was rejected, Glencore is likely to be persistent in its pursuit for greater things which means one cannot rule out a higher offer.

“Teck’s board said it wasn’t contemplating a sale of the business at this time, yet there is a price for everything and so it all boils down to how much Glencore is prepared to pay.

“Also opening its wallet with the intention of splashing the cash was L’Oreal. It has offered to buy Australian skincare brand Aesop for the equivalent of £2 billion. There is a big opportunity to accelerate a rollout plan in China, which is seen as potentially lucrative place for Aesop’s soaps, lotions and creams.

“US employment levels will be in focus later today with the publication of the latest ‘JOLTS’ Job Openings and Labor Turnover Survey. The headline figure will be the number of job vacancies, which is still very high by historic standards, to suggest employers cannot find the staff they need – usually a sign of a strong economy.

“In January, the number of vacancies dipped by 400,000 but still came in at 10.8 million. Bears will say that is below the March 2022 peak of 12 million. Bulls will say is it higher than normal for the 20-year history of this dataset and also miles above the 7.1 million vacancies on offer in 2020 just before Covid struck.”

Saga

“The longer the market had to look at Saga’s results this morning the less it liked about them. Yes, in theory the group returned to ‘profit’. But this was an adjusted profit and on a statutory basis losses widened thanks to impairments on its insurance business.

“And cash flow, the one metric which is difficult to massage, was materially lower year-on-year with only a modest reduction in the company’s onerous debt pile.

“Guidance for the insurance business was gloomy and Saga has very little credit in the bank with long-suffering shareholders as it looks to turn around the business.

“In theory Saga’s proposition makes sense. The over-50s are a growing and relatively wealthy demographic who, if they own their homes outright, are less exposed to the recent increases in interest rates.

“However, Saga has never delivered on the promise which accompanied its market listing nine years ago. A series of operational failures have tripped the company up and damaged its credibility.

“Outsourcing its insurance underwriting activities seems logical and will help free up capital, but it is not a silver bullet for the group’s problems. Perhaps a larger third party might swoop in and see if it can successfully exploit what remains a strong brand.”

Virgin Orbit

“Filing for Chapter 11 Bankruptcy means Virgin Orbit is a long way past ‘Houston, we have a problem’ to something potentially more terminal. The move will give the company some breathing space from its creditors with the aim seemingly to attract a buyer for the business.

“Whether one can be found remains to be seen – with the failed mission to launch the first satellite from the UK at the start of the year not the best advert for its technology.

“Neither is Virgin Orbit’s collapse the best advert for the space investment theme. This industry may have significant potential at some point in the unknown future but investors tempted to reach for the stars have only had their fingers burned so far.”

These articles are for information purposes only and are not a personal recommendation or advice.