RBS shares dive on double downgrade | Asda sales up | Carlsberg premium boost

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Royal Bank of Scotland saw shares plummet after two key brokers lowered their forecasts for the public-owned bank.

Analysts at Macquarie moved the bank’s rating from buy to neutral, slashing its target price heavily.

Elsewhere, analysts at Goldman Sachs held firm on their buy rating for RBS, but still cut their target price, denting investor sentiment.

The downbeat assessments came after the bank posted second-quarter adjusted profits which were around 9% below what analysts had forecast.

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Also on Thursday, RBS finished bottom of the Competition and Market Authority’s annual survey regarding which banks customers would recommend to friends and family.

Just 46% of respondents said they would recommend RBS’ services.

Shares in RBS were down 10.4% at 177.7p.

Asda notched up sales growth in the second quarter, despite a challenging retail market and tough competition from last year’s bumper summer.

In the three months to June 30, total sales were up 1.3% at the supermarket, while comparable sales rose 0.5%, excluding petrol.

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The period benefited from the later timing of Easter, but was up against strong results last year when the World Cup and summer heatwave boosted performance.

Margins declined in part due to markdowns and investment in lower prices, as well as softer sales of some more profitable non-food items.

Chief executive and president Roger Burnley said: “If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it.

“Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year.

“As a result our non-food business has been challenged during the period, however we’re satisfied that our food business has continued to perform well and our online growth continues to outpace the market.”

Higher take-up of premium beers helped to boost Carlsberg sales in the first half, but its core brand suffered a decline in the UK.

Net revenue at the Danish brewer was up 6.5% on a reported basis to 32.99 billion kroner (£4.08 billion) in the six months to June 30.

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Profit before tax increased 21% to 4.85 billion kroner (£600 million).

The company said it had seen fast growth in the craft and speciality category, with volumes up 17.7%. Alcohol-free brewing grew 16%.

But while newer drinks showed growth, the main Carlsberg brand fell out of favour in some regions.

Volumes of Tuborg, Grimbergen and 1664 Blanc all grew, but the core Carlsberg brand was down 3%.

The decline was partly attributed to a significant decline in the British market, where a strong comparative period last year – when the World Cup and hot summer boosted sales – meant a dip in volumes in 2019.

Excluding the UK, the Carlsberg core brand was slightly up.
The brewer is fighting back against the decline of its flagship beer in the UK, kicking off a multi-year strategy in April with the launch of its Carlsberg Danish Pilsner.

Growth in Asia was particularly strong with organic volumes up 8.5%, but in Russia, its biggest market, volumes dropped 3% due to the competitive environment.

Some of the volumes announced on Thursday had already been released earlier in the month, when the company raised its guidance for the year.

Chief executive Cees ‘t Hart said: “We delivered a strong set of results for the first six months of 2019, with healthy top-line development, strong margin improvement and continued solid cash flow.

“We’re pleased that last week we were able to adjust our earnings outlook upwards due to the performance in the first half and a solid start to Q3, and despite tough comparables.”

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