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Fix leakage now, Thames Water told NICHOLAS EARL
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LAURA MCGUIRE
LONDON’s most-shorted stock tumbled again yesterday, with Ocado’s first quarter trading update failing to impress investors. The firm’s share price fell around six per cent before paring back losses slightly towards the end of the day. The grocery delivery and tech firm said it had been helped by some “M&S magic” in the first quarter of the year, as its partnership with the iconic British retailer had seen
revenues creep up 3.4 per cent on the year, compared with inflation running at 10 per cent across the period. Ocado lost £501m last year as peaking pandemic demand gave way to a cost of living crisis. Julie Palmer, partner at Begbies Traynor, said: “The pandemic turbo-charged Ocado, pumping up hopes the upmarket online retailer was at last living up to its potential and finally on course to start delivering regular profits, only for
YESTERDAY
-2.5% YEAR TO DATE
-32% SINCE 2020 PEAK
-84%
OCADO REVENUES FAIL TO KEEP UP WITH INFLATION AS INVESTORS GIVE ANOTHER DAMNING VERDICT
these dreams to be dashed as the coronavirus eased.” Traynor said that a “combination” of consumer shopping habits normalising with the return to the office, the cost of living crisis and soaring inflation led Ocado to a loss at that time. Despite this, Ocado said that the number of active customers reached 951,000 at the end of Q1, up 13.8 per cent year-on-year. “We continue to attract more and more customers to Ocado by
investing in great value for customers including our new Ocado price promise and providing unbeatable choice and service,” Hannah Gibson, Ocado retail’s chief executive officer, said. “This solid 2023 performance will enable us to return to sales growth and profitability,” she said. According to the latest table from the Financial Conduct Authority, some six per cent of Ocado shares are on loan to short sellers, who benefit from a fall in the share price.
THAMES WATER will have to plug millions of leaks before it is allowed to scoop up water from rivers to tackle its escalating drought problems. The Environment Agency has told the UK’s largest water supplier that it will need to tackle the loss of 630m litres of water per day before it resorts to other measures. The company has published a range of ideas for tackling climate crisis-induced droughts across London and South East England in its draft water resources plans. Its proposals include new reservoirs, alongside ‘water recycling’ – which Thames Water considers the cheapest and quickest solution. This involves abstracting 75m litres of water a day from the River Thames at Teddington, west London, and replacing it with treated sewage from the nearby Mogden sewage treatment works in Isleworth. However, in a damning analysis of the company’s plans, the Environment Agency says Thames Water needs to reassess its plans and is ordering the water supplier to do more to fix its leaks. The report said: “Thames Water leaks more water than any other company... the company (must) invest... to identify ways it could substantially reduce leakage.” £ CONTINUED ON PAGE 2
Analyse this: Why big-name stockwatchers need a greater degree of questioning BEN LUCAS BETTER to trust independent analysts or company bosses when it comes to forward guidance? It appears insiders really do know best. That’s according to a recent study from the University of New South Wales, which suggested so-called ‘star’ analysts – those picked out on
the Institutional Investor AllAmerican analyst team or the European Extel survey – regularly ignored company guidance, and were “typically” no better than analysts who stuck with the company’s guidance. However, even though star analysts’ forecasts were less accurate when they ignored company
guidance, their impact on the market was greater. If a star analyst makes a forecast that differs more from company guidance, the study found that share prices reacted 21 per
cent more strongly than if a regular analyst made such predictions. The researchers suggested this was because star analyst forecasts sacrifice accuracy for bringing out new information not yet incorporated into a company’s guidance.
However, Joachim Klement, an (ahem) analyst at investment bank Liberum, believed this was unlikely to be the case. “It is the fame of these star analysts that makes the market move, not the ‘informativeness’ of their forecasts,” Klement said. “Star analysts think they know better, and investors are worse off if they believe them.”
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