FTSE 250 shares round-up: mid-caps fess up to tariff impact
It’s inevitable that companies will be impacted by tariffs, and corporate results are beginning to reveal the scale of the problem. Graeme Evans has the latest.
24th April 2025 15:49
by Graeme Evans from interactive investor
Trade war worries have sent car distributor Inchcape (LSE:INCH) to the bottom of the FTSE 250 index in a session when the results-day progress of fast fashion chain ASOS (LSE:ASC) failed to ignite shares.
Components specialist Senior (LSE:SNR) fared better after it described the direct impact of tariffs as “manageable” and it forecast good growth for its aerospace division in 2025.
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The FTSE 250 index reached mid-afternoon slightly lower, with Deliveroo (LSE:ROO) and Currys (LSE:CURY) among the other stronger mid-cap stocks.
The fallers board was led by Inchcape, down 48p to a year low of 644p after it referred to a “dynamic and complex” tariff situation.
Latest data suggests demand not yet being impacted but chief executive Duncan Tait flagged potential impacts on supply from its manufacturing partners and the competitive environment.
He said the company is taking proactive action in an uncertain market environment, which includes a conservative approach to inventory levels and ensuring cost discipline.
Inchcape has a portfolio of around 230 distribution contracts with over 60 manufacturing partners, having last year offloaded its retail assets in the UK and America.
Its platform spans product planning and pricing, import and logistics, brand and marketing through to managing physical sales and aftermarket service channels.
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Tait’s comments followed a first-quarter performance in line with expectations, with organic revenue down 5% due to mixed market momentum and tough comparators. Guidance for 2025 is unchanged, excluding the evolving tariffs situation after Donald Trump imposed 25% levies on US vehicle imports.
Broker Peel Hunt reiterated its 900p price target and left its estimates unchanged. It said: “We acknowledge a complex tariff situation, but there could be opportunity as manufacturers focus on the strongest distributors across a growing number of markets.”
Tait recently unveiled a five-year plan under which the company will seek to generate £2.5 billion in free cash flow up to the end of 2030. This will be deployed to drive shareholder returns through buybacks and acquisitions.
Having embarked on its strategy more than two years ago, ASOS said that today’s half-year results were the “strongest sign yet” that its new commercial model is working.
Its approach has ended “excessive promotion and performance marketing” in favour of creating lasting relationships with core customers.
The focus on profitable full-price sales meant underlying earnings rose 58.8% to £42.5 million in the 26 weeks to 2 March, driven by a 490 basis point improvement in the gross margin.
Peel Hunt said the first-half contribution margin of 24%, which represents gross profit minus warehouse and distribution costs, was the highest since 2018. It said this had created a profitable and cash-generative base to build from.
It has a price target of 375p, which compares with today’s price of 312p amid a lacklustre reaction to the interim results. UBS has an estimate of 400p
The shares soared during the pandemic spending boom in 2021 before slumping as the online retailer struggled with inflated stock levels and rising debt. They were as low as 230p in March.
Senior shares touched a two-year low of 115p earlier this month but have shown signs of recovery to reach 127p after yesterday’s results by partner Boeing Co (NYSE:BA) beat estimates and its own first-quarter figures met City expectations.
Group revenues grew by 3%, driven by a 4% improvement in the aerospace arm. The Flexonics division was similar to the previous year, with continued strong performance in downstream oil and gas offset by lower sales to upstream customers.
Senior forecast “good growth” in aerospace in 2025 amid increasing aircraft build rates, operational efficiency benefits and improved contract pricing.
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