Virgin Money increases bad debt provisions, Jet2 reports bumper results but bookings slow and PZ Cussons enjoys rare good news from Nigeria

“A pre-Thanksgiving mini rally for US stocks helped set the scene for gains in Europe on Thursday morning with the FTSE 100 trading modestly higher in early trade,” says AJ Bell Investment Director Russ Mould.

“With trading in US stocks on hold for the national holiday, markets may lack some direction over the next 24 hours, though a raft of PMI data from the Eurozone and UK could have some impact on Friday morning.

“A lifting of Ofgem’s energy price cap was a reminder of the pressures on consumers and this was reinforced by Virgin Money’s decision to increase provisions for bad loans – overshadowing a share buyback plan which might otherwise have been expected to win the company favour with shareholders.

Jet2

“There was evidence of the strong post-Covid rebound in overseas travel in package holiday firm Jet2’s latest results. Although there were also indications that this may be difficult to sustain with bookings having slowed in recent weeks.

“Notably, Jet2 has held firm on pricing but there has to be some risk the cost of jetting off for a break abroad is moving beyond the means of at least some hard-pressed households.

“Jet2 says it has a ‘wonderful product for challenging economic times’ but you imagine internally the company must be aware it has benefited from extreme pent-up demand in the wake of Covid, which meant people were so keen for a week in the sun they would prioritise it above almost anything else.

“An all-in package holiday, of which Jet2 is selling more and more, offers certainty on cost, but that doesn’t make it cheap.

“Where Jet2 does have credit in the bank is in how it deals with customers – notably being more straightforward and decisive than rivals during the period of pandemic disruption. The addition of new staff to ensure it has operational resilience shows that, while it wants to keep a tight rein on costs, it does so in a sensible way.”

PZ Cussons

“Imperial Leather and St Tropez maker PZ Cussons had some good news from its Nigerian business for a change as it enjoyed strong trading, although a planned delisting from the country’s stock exchange is expected to provide a hit to earnings.

“The financial instability in Nigeria, and particularly the volatility of its naira currency, have been a regular problem for the company. The company’s strategy to mitigate these risks is being implemented and if the Nigerian arm is to have a long-term future in the group the company really needs to execute on this plan – including repatriating funds held in naira amid a lack of US dollars in Nigeria.

“More broadly, its brands seem to be holding up reasonably well – although more so in washing and bathing than in the beauty arena. It’s probably no bad thing to be at a price point between more expensive consumer brands and supermarket own-label products.”

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