Electricals group Dixons, which intends to merge with Carphone Warehouse, issued preliminary results today. Retail Week looks at what the analysts said.
Full-year results confirmed the business remains in great shape ahead of the proposed Carphone merger, due to complete in early August after clearance from the European Commission.
The outlook statement is positive with a good start to the year (the World Cup helped) and “early glimmers of consumer recovery”. The valuation is undemanding and does not reflect Dixons’ own growth rate even before taking into account the additive growth and synergy benefits from a proposed merger.
Kate Calvert, Investec
These results are largely irrelevant while management is focused on successfully completing the merger with Carphone Warehouse.
Encouragingly, it was confirmed yesterday that the merger had received EU clearance.
Initially, there has been some skepticism with the merger on the basis of the premise that very few ‘mergers of equals’ work and disappointment with size of the headline synergies of £80m.
Freddie George, Seymour Pierce
The UK was fine, with operating profits up from £113m to £141m, but the profits fall from £125m to £117m in the much-vaunted Nordics business was a bit of a blot on the landscape, although management shrug that off, as the Nordics’ “4.2% return on sales was in line with the group’s objective”.
Nick Bubb, independent analyst
All the speculation around today’s results centred on whether the details of the merger were going to be fleshed out for the perusal of the market.
So far there has been little meat to chew over, barring some rather vague pronouncements around the idea that the merger will help bring consumers closer to a “connected world”.
Today’s results will do little to satisfy their curiosity. On a positive note though, Dixons has revealed that, as anticipated, the European Commission has confirmed that it has unconditionally cleared the merger, putting an end to speculation that it might fall foul of competition regulations.
Dixons also repeated that it expects the merger to deliver £80m of synergies by 2017/18. Despite the glamorous billing of fusing technologies and connected services both companies have been key to give the merger, many of a more cynical persuasion will be inclined to look at these potential cost savings as the key motivation for their coming together.
David Alexander, Conlumino
Assuming the integration of the two businesses goes as planned, the key question for investors is whether Dixons Carphone can deliver the £80m of yearly cost synergies they’ve promised, while further enhancing their service-led offering to differentiate from online competitors.
Julie Palmer, Begbies Traynor
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