Fevertree's two sided coin and PZ Cussons' Nigerian soap opera

Markets were in a good mood on Tuesday with gains seen across the UK, Europe and Asia. The FTSE 100 jumped 0.6% to 7,560 with investors flocking to own packaging companies, miners and insurers," says Russ Mould, Investment Director at AJ Bell.

"The pound fell 0.1% versus the euro and down 0.3% against the dollar on worries that Boris Johnson would win the Conservative Party leadership contest and then lead Britain into a no-deal situation with Brexit.

"Oil prices retreated slightly, following yesterday's strong gains. Brent Crude fell 0.1% to $63.21 per barrel. Gold was also out of favour, dipping 0.9% to $1,424 per ounce."

Fevertree Drinks

"Fevertree Drinks' first half results are either good or bad depending on which side of the coin you're looking at. The UK and mainland Europe operations are worse than expected and the US and rest of the world interests are better than expected.

"In the bigger scheme of things, that is not disaster territory as the company's future growth is arguably dependent on cracking the US market – and progress here is good.

"The UK operations were always going to be a struggle this time round, as there has already been industry data showing a slowdown in sales, hence why the share price has been weak of late.

"Rival company Schweppes has been running a big promotion for its tonic water which has made life harder for Fevertree. The weather has also been unfavourable earlier this year where torrential rain will have worked against most drinks companies.

"Ultimately Fevertree has become a victim of its own success. Soaring growth rates in recent years have raised expectations for its performance and failure to deliver anything but superior rates leaves it open to fierce criticism.

"Yet the latest set of results still show a business that continues to grow earnings and make progress with geographic expansion, which has to be applauded. The market will simply have to get used to the cogs changing gear whereby UK growth is likely to moderate and US growth could accelerate."

PZ Cussons

"The company behind brands such as Imperial Leather really needs to scrub up for its shareholders.

"Consumer goods firm PZ Cussons already delivered a hefty profit warning to get the market in a lather in January but if investors thought all the bad news was out of the way they need to think again.

"Again it is the long-running Nigerian soap opera which is creating all the drama. Having contributed heavily to a near-40% fall in full-year profit, the ongoing troubles faced by its business in the country are likely to weigh on performance in the 12 months to 31 May 2020.

"The dreaded word 'transitional' is being applied to the year but the company is at least taking action – with a plan to pull back from some non-core brands and geographies in order to return to sustainable growth. And chief executive Caroline Silver suggests she will not waste time, pledging to 'act at pace'.

"Net debt is declining so there is less danger of a fall in earnings raising question marks over the company's financial position. Elsewhere, a maintained dividend offers at least a modest indication of confidence in its future prospects."

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