Author: Fiona Craig

Manufacturing output across the eurozone moved back into expansion territory in January, reversing a brief dip seen in December, according to the latest HCOB Eurozone Manufacturing PMI figures published on Monday.

The headline HCOB Eurozone Manufacturing PMI rose to 49.5 in January from a nine-month low of 48.8 in December. While this marked the third consecutive reading below the 50.0 level that separates expansion from contraction, the data pointed to only a mild deterioration in overall manufacturing conditions.

A brighter signal came from production trends. The Manufacturing PMI Output Index increased to 50.5 from 48.9 in December, a three-month high, indicating a return to output growth. This marked the tenth expansion in production over the past 11 months, although the pace of growth was described as subdued.

Demand conditions remained weak. New orders fell for a third month in a row, though the rate of decline eased compared with December. Export orders also continued to contract, extending a downward trend that has been in place since July last year.

Performance varied widely across the currency bloc. Greece (54.2), France (51.2) and the Netherlands (50.1) recorded expansions, with France posting a 43-month high. In contrast, Spain (49.2), Germany (49.1), Italy (48.1) and Austria (47.2) all remained in contraction territory.

“Some progress can be seen in the manufacturing sector, but it’s happening at a snail’s pace,” said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “Right now, it’s hard to say what might put an end to the ongoing rundown of inventories, which makes a strong short-term upswing rather unlikely.”

The survey also pointed to rising cost pressures. Input price inflation accelerated to its highest level in three years, likely driven by sharp increases in natural gas prices and higher industrial metal costs during January. Despite this, manufacturers largely held output prices steady compared with December, indicating limited ability to pass higher costs on to customers.

Employment levels in the manufacturing sector continued to fall, extending the current run of job losses to 32 consecutive months. However, the latest decline was the weakest since September 2025. Purchasing activity and inventory levels also contracted during the month.

Looking ahead, sentiment improved. Business confidence among eurozone manufacturers climbed to its highest level since February 2022, suggesting growing optimism about production prospects over the next 12 months, even as near-term conditions remain challenging.

DiscoverIE Group plc (LSE:DSCV) reported a 1% increase in organic sales for the three months ended 31 December, with signs of recovery emerging in its previously lagging Controls operating unit.

On a constant currency basis, group revenue rose 5% over the quarter. Order intake was stronger, climbing 9% at constant exchange rates and 4% organically, lifting the book-to-bill ratio to 1.03x from 0.99x in the first half of the financial year.

The Controls division, which had trailed DiscoverIE’s other three operating units earlier in the year, delivered an improved sales trajectory during the quarter. Organic orders in the unit exceeded those of the comparable prior-year period, indicating a more sustained recovery in demand.

The London-listed designer and manufacturer of customised electronics reaffirmed its full-year adjusted earnings guidance. Management said the current order book provides good visibility into the final quarter, leaving the group on track to meet the board’s expectations for the full year.

During the period, DiscoverIE completed the acquisition of Keymat Technology Ltd following regulatory clearance. Approval for the planned acquisition of Trival Antene d.o.o remains in progress, and the company said it continues to see a healthy pipeline of potential acquisition opportunities.

Gross margins remained resilient, working capital discipline was maintained and cash generation continued to be strong, according to the update. In constant currency calculations, sterling strengthened by 4% against the US dollar compared with average rates last year, while weakening by 5% versus the euro and by an average of 7% against the Nordic currencies.

Analysts at Jefferies described the trading update as “very much an in-line statement.” They noted that while DiscoverIE’s valuation does not appear demanding and there are reasons for cautious optimism around the outlook, they retain a Hold rating pending clearer evidence of sustained improvements in operating cash conversion and M&A-led growth. Excluding the Controls unit, Jefferies estimates the rest of the group delivered around mid-single-digit organic growth.

Shares in Auction Technology Group PLC (LSE:ATG) fell 8.2% on Monday after FitzWalter Capital confirmed it has withdrawn its proposed takeover approach for the company.

FitzWalter Capital, acting on behalf of funds and investment vehicles it manages or advises, said it no longer intends to pursue an acquisition after ATG’s board unanimously rejected its 400 pence per share proposal on 29 January 2026. The decision to abandon the bid was attributed in part to the board’s refusal to grant access for due diligence.

Under UK takeover rules, FitzWalter is now prevented from making another offer for ATG for a period of six months, unless certain conditions are met. These include securing the agreement of ATG’s board, responding to a competing bid, or a material change in circumstances as determined by the Takeover Panel.

The withdrawal marks a setback for FitzWalter’s attempt to acquire the business. Auction Technology Group operates online auction marketplaces serving sectors such as industrial and commercial equipment, art, antiques and collectibles. FitzWalter, led by Andrew Gray, made its announcement in line with Rule 2.8 of the UK Takeover Code and noted that it has retained limited rights to revisit an offer if permitted under the code’s provisions.

More about Auction Technology Group PLC

Auction Technology Group PLC is a UK-listed operator of online auction marketplaces, providing technology platforms that enable the sale of industrial and commercial assets, art, antiques and collectibles to a global buyer base.

Octopus Renewables Infrastructure Trust (LSE:ORIT) has reported an unaudited net asset value of £494.8 million, equivalent to 93.79 pence per share, as at 31 December 2025, compared with £523.4 million, or 98.46 pence per share, at the end of the prior quarter. The reduction largely reflects more cautious valuation assumptions, including lower medium- and long-term power price forecasts, modest downward adjustments to green certificate and capacity market prices, and a £5.0 million impact from the UK government’s move to index Renewables Obligation Certificates to CPI rather than RPI.

These valuation headwinds were partly offset by small positive macroeconomic effects and the trust’s high level of contracted and hedged revenues, with around 88% secured over the two years to end-2027, helping to dampen near-term market volatility. During the quarter, ORIT continued its share buyback programme, repurchasing approximately 4 million shares for £2.5 million, a move that was accretive to NAV per share. The trust also further reduced gearing to 44.8% of gross asset value as it progresses towards a target level below 40%.

Under its “ORIT 2030” strategy, the trust is increasingly directing capital towards higher-return construction and development-stage assets to support long-term scale, resilience and dividend sustainability. Asset disposals and debt reduction remain important tools in maintaining balance sheet strength as this transition continues.

From an outlook perspective, ORIT is supported by solid financial stability and strong cash conversion, alongside positive recent corporate actions such as asset sales at carrying value and insider share purchases. These strengths are balanced by some inconsistency in revenue and margin performance, broadly neutral technical indicators, and a negative P/E ratio that limits earnings-based valuation support despite an elevated dividend yield.

More about Octopus Renewables Infrastructure Trust plc

Octopus Renewables Infrastructure Trust plc is a London-listed, closed-ended investment company focused on delivering sustainable income and capital growth through a diversified portfolio of renewable energy assets across Europe and Australia. Managed by Octopus Energy Generation, the trust operates as an impact-focused fund, supporting the transition to net zero and contributing to wider UN Sustainable Development Goals through its investments in green energy infrastructure.

GCP Infra (LSE:GCP) has confirmed further progress on asset disposals, announcing that borrowers have exchanged contracts to sell supported social housing properties. On completion, the transactions are expected to repay £47.5 million of loans and deliver around £43 million of immediate cash proceeds, broadly in line with previous valuations.

The company reported an unaudited net asset value of 100.27 pence per share at 31 December 2025, down modestly from 101.40 pence at the end of September. The decline was mainly driven by weaker power price assumptions, updated curtailment forecasts for Northern Irish wind assets and changes to renewable subsidy indexation. These factors were partly offset by higher inflation expectations and resilient operational performance across the portfolio.

The board reiterated its capital allocation priorities, highlighting ongoing share buybacks, continued progress towards at least £150 million of asset disposals, and its intention to eliminate outstanding debt and return a minimum of £50 million to shareholders. Following the latest disposals and loan repayments, total proceeds linked to this policy are expected to reach around £128 million, enabling full repayment of the revolving credit facility. A quarterly dividend of 1.75 pence per share was declared for the period to 31 December 2025, in line with the company’s 7.00 pence per share annual dividend target.

Overall, the portfolio of mature, diversified infrastructure debt assets continues to perform broadly in line with expectations, providing investors with defensive and partially inflation-linked income.

From an outlook perspective, GCP Infra benefits from a conservative balance sheet and improving cash generation, supported by generally constructive technical signals. These strengths are tempered by inconsistent revenue trends and a relatively demanding P/E multiple, although the attractive dividend yield and ongoing corporate actions, including buybacks and dividend stability, provide meaningful support.

More about GCP Infrastructure Investments Limited

GCP Infrastructure Investments Limited is a closed-ended FTSE 250 investment company listed on the London Stock Exchange. The group focuses on delivering long-term dividends and capital preservation through investment in UK infrastructure debt and related assets, typically backed by public sector or availability-based revenues with partial inflation protection. GCP Infra has also been awarded the London Stock Exchange’s Green Economy Mark in recognition of its contribution to positive environmental outcomes.

ZOO Digital Group (LSE:ZOO) has reported improving commercial momentum after securing new end-to-end localisation and media services mandates from two major studio clients. The wins followed a competitive request-for-proposal process and point to a gradual recovery in the global entertainment market after an extended period of disruption.

Alongside the operational progress, the company is implementing changes to its board structure after delivering US$7.7 million in annualised fixed cost savings. Long-serving chair Gillian Wilmot and non-executive director Mickey Kalifa are expected to step down during 2026. Senior independent director Nathalie Schwarz is set to succeed as chair, while a search is under way for two additional independent non-executive directors to support ZOO Digital’s push toward sustainable profitability and faster, technology-driven content processing.

Despite these developments, the group’s outlook remains challenged by weak financial performance and valuation metrics, with technical indicators continuing to signal bearish momentum. That said, management’s strategic initiatives and recent operational improvements, highlighted through corporate updates and earnings commentary, provide a measure of optimism around the potential for longer-term recovery.

More about ZOO Digital Group

ZOO Digital Group is a UK-headquartered, technology-enabled provider of localisation and digital media services to the global entertainment industry. The company works with major Hollywood studios and streaming platforms, including Disney, NBCUniversal, Netflix and Paramount Global, using proprietary technology and a global network of more than 12,000 freelancers. ZOO delivers end-to-end dubbing, subtitling, captioning, metadata and artwork localisation, mastering and media processing services from operational hubs across the US, Europe, the Middle East and Asia.