MARKET REPORT: Segro, UK’s largest commercial property firm, sees profits surge as boom in online shopping drives up demand for its warehouses
Segro, the UK’s largest commercial property firm, saw profits surge as a boom in online shopping drove up demand for its warehouses.
The group’s profits for 2021 jumped 20 per cent to £356m, while the value of its portfolio increased by nearly 29 per cent to £18.4billion.
The dividend was also hiked 10 per cent to 24.3p per share.
Boost: Warehouse owners like Segro were supported during the pandemic as retailers scrambled for extra storage space
Warehouse owners like Segro were supported during the pandemic as retailers scrambled for extra storage space to cope with the rising numbers of online delivery orders.
Extra paperwork and customs checks brought on by Brexit have also proved beneficial as firms increasingly need to store goods while they are processed.
Segro boss David Sleath also flagged that ‘new names’ were emerging in the ecommerce industry such as rapid grocery delivery services, which was resulting in ‘very high levels’ of demand as more companies fought over storage space.
As a result, Sleath said there had been a ‘significant increase’ in the company’s rent roll over the past year. Victoria Scholar, head of investment at Interactive Investor, said ‘there has been a boom in demand for industrial property rentals, driven by the surge in ecommerce, a shift that Segro has benefitted from.’
Analysts at broker Liberum branded the results as ‘excellent’ and predicted that low vacancy rates ‘should drive further strong rental growth over the next year’.
Despite rising earlier in the session, the shares eventually closed down 0.9 per cent, or 12p, at 1265.5p.
The FTSE 100 fell 0.3 per cent, or 23.75 points, to 7513.62 while the FTSE 250 slipped 0.9 per cent, or 194.99 points, to 21362.6. However, better-than-expected retail sales data for January provided some relief that the cost-of-living squeeze had not put off shoppers.
The figures helped lift shares in some retailers, with discounter B&M inching up 1.4 per cent, or 7.8p, to 583.6p while consumer goods giant Reckitt Benckiser gained 2 per cent, or 121p, to 6273p, luxury fashion firm Burberry jumped 2 per cent, or 39p, to 2033p and JD Sports rose 0.4 per cent, or 0.7p, to 165.7p.
However, AJ Bell analyst Danni Hewson warned that over the course of the year retailers were likely to face ‘an increasingly difficult’ choice between how much of the rising costs could be passed on to customers and how much pain they could endure themselves.
Oil prices were in the red again, with Brent crude dropping to around $91 a barrel as tensions over Ukraine and Russia were offset by hopes of fresh supplies from Iran. Shell was down 0.6 per cent, or 12.4p, at 1957p while BP slipped 1.6 per cent, or 6.5p, to 391.4p.
Shares in UK Oil & Gas (UKOG) soared by more than a quarter after a woman who opposed the company’s drilling in Surrey lost her appeal.
Sarah Finch had challenged the legality of Surrey County Council’s 2019 decision to allow UKOG to drill more wells at the so-called ‘Gatwick Gusher’ in Horse Hill in Horley.
Two of three judges at the Court of Appeal ruled the council had acted lawfully – though Finch is now considering launching a Supreme Court appeal.
UKOG shares rocketed 20.4 per cent, or 0.02p, to 0.14p.
The Kuwaiti logistics group which has been pursuing British airport services firm John Menzies upped its stake yet again.
Despite having its 510p-pershare rebuffed by the board, National Aviation Services (NAS) has been snapping up shares.
On Thusday, NAS bought another 5.3m shares for 605p each, meaning it now owns around 19 per cent of Menzies.
Shares in Menzies slipped 0.2 per cent, or 1p, to 583p.