Investors nervous as Greek crisis escalates and ahead of US jobs figuresWith Greece deciding not to pay the €300m due to the International Monetary Fund today, markets are unsurprisingly on the slide again. As the country and its creditors seem as far apart as ever, and the deadline for a deal before the money runs out is fast approaching, the Greek decision to delay the IMF payment until the end of the month seems an escalation of the crisis.We’ve seen no improvement in UK grocery market growth since the tentative rebound experienced December and January faded.We lower our 2015/16 UK earnings before interest and tax margin from 2.9% to 2.4%, which we forecast to remain flat thereafter. While the new chief executive, David Potts, did not start at Morrisons until the week after the full year results, the company still gave an explicit guidance for year end net debt of £1.9bn to £2.1bn. Our forecast cut today moves us from the bottom of that range (£1.9bn) to the midpoint i.e. £2bn. Management also gave relatively explicit guidance on interest, capex, property disposal proceeds, depreciation and working capital (although over a two year period). Continue reading...
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