Sector Divergence: Strong Results in Hospitality Contrast with Tech Struggles

📈 Today's Key Themes

The London market is poised for a mixed open as pre-market announcements reveal a stark contrast between sectors. Hospitality and travel companies are showing remarkable resilience, with Marston's PLC (#MARS) and On the Beach Group plc (#OTB) reporting strong profit growth and margin expansion. However, the tech sector faces significant headwinds, as evidenced by IQE plc (#IQE)'s financial challenges. Economic uncertainties continue to loom large, affecting various industries and putting pressure on margins across the board.

💡 Company Updates

Annual and Half-Year Results

Marston's PLC (#MARS) has delivered an impressive turnaround in its half-year results, with underlying profit before tax soaring to £19.0 million from a £0.2 million loss last year. The pub operator's underlying operating margin expanded by a significant 250 basis points to 14.8%, demonstrating strong operational efficiency. Recent trading shows robust momentum with like-for-like sales up 10.5% in the last five weeks. On the Beach Group plc (#OTB) reported a 23% increase in adjusted profit before tax to £7.6m in its interim results. The travel services provider saw booked TTV rise by 13% to £640.7m, with strong volume growth of 11%, significantly outpacing the market. The company's expansion into new markets and positive Q3 momentum suggest continued growth potential. Diaceutics PLC (#DXRX) announced robust annual results, with revenue growing 39% on a constant currency basis to £32.2 million. The diagnostic commercialisation company's adjusted EBITDA increased by 50% to £4.2 million, and Annual Recurring Revenue (ARR) grew 23% to £16.8 million. The company now works with 18 of the top 20 global pharma companies, indicating strong market penetration. On a more challenging note, IQE plc (#IQE) reported concerning financial results, with adjusted net debt increasing to £18.8m from £2.2m the previous year. The semiconductor materials supplier saw its cash reserves dwindle to £4.7m, prompting a strategic review to improve its financial position. The company faces weaker customer demand and macroeconomic uncertainties, casting a shadow over its near-term prospects. Treatt plc (#TET) experienced a significant 52.1% drop in profit before tax and exceptionals to £3.6m in its half-year results. The manufacturer's revenue declined by 11% to £64.2m, with gross profit margin falling 290 bps to 24.9%. The company has revised its full-year guidance downwards, citing multiple headwinds including high citrus prices and lower US consumer confidence.

Trading Updates

Revolution Beauty Group plc (#REVB) issued a cautionary trading update, warning of weaker than expected performance. Revenues for FY25 closed at approximately £141.6m, down 26% year-on-year. The company expects to report FY25 underlying adjusted EBITDA between £6.0m and £6.5m, with planned double-digit net sales declines to continue into the first quarter of FY26. Renew Holdings plc (#RNWH) reported mixed half-year results, with group revenue increasing 13% to £569.3m. However, adjusted operating profit remained flat at £32.0m, and the adjusted operating margin declined to 5.6% from 6.4%. The engineering services provider faces challenges in the Rail sector and economic uncertainties, despite a record order book of £908m. Midwich Group plc (#MIDW) warned of a significant decline in operating profit due to lower revenue and rising costs. The global AV distributor reported a mid-single digit decline in organic revenue year to date, with challenging market conditions expected to persist for the rest of 2025.

🎯 Leading Developments

Strategic Acquisitions and Investments

IDOX plc (#IDOX) has acquired Trojan Consultants Limited, a UK-based provider of Social Care software solutions, for an initial enterprise value of £7.65 million. This strategic move is expected to be accretive and expand Idox's social care software offerings. Read more Mercia Asset Management PLC (#MERC) has made direct investments into two of its portfolio companies: Warwick Acoustics (£1.0 million) and Axis Spine (£2.0 million). These investments aim to support the companies' continued commercial progress and growth, signaling confidence in their potential. Read more

Regulatory Approvals and Expansions

Eden Research plc (#EDEN) has secured approval for its Mevalone product to control powdery mildew in Californian grapes, expanding the product's use in the US market. This development provides growers with an additional tool to manage a key disease affecting grape production. Read more genedrive plc (#GDR) received a £120,000 order for its CYP2C19-ID Kit, which will be used to support the expansion of the kit's use into Acute Coronary Syndrome. This represents a positive development in the company's commercial strategy and potential for future growth. Read more

📅 Week Ahead

14 May 2025: Experian plc (#EXPN) to release full year results
15 May 2025: Legal & General Group Plc (#LGEN) Q1 2025 Trading Update
15 May 2025: United Utilities Group PLC (#UU.) Announcement of full year results for the year ending 31 March 2025
16 May 2025: Land Securities Group Plc (#LAND) Landsec full year results announcement
14 May 2025: Burberry Group plc (#BRBY) Preliminary Results for the 52 weeks ending 29 March 2025

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Market Summary