Weekly review
By Josh White
Date: Friday 24 Mar 2023
(Sharecast News) - The FTSE 100 ended the week up 0.95%, or 70.05 points, closing at 7,405.45 on Friday.
Equity view
AIM-listed cosmetics company Warpaint said on Friday that the outlook for FY2023 is now expected to be ahead of its previous expectations, as the strong trading seen last year has continued into the first quarter. The group, which owns the W7 and Technic brands, said in January that sales for 2022 had exceeded previous expectations following particularly strong trading in the final quarter of the year.
Games Workshop confirmed trading was on track on Friday, as it detailed plans to return surplus cash to shareholders. The maker of miniature wargames including the Warhammer series said it would pay a dividend of £1.20 per share. The payout, it noted, was in line with its policy of returning "truly surplus" cash to shareholders, including the receipt of the remaining £12m of VAT that was outstanding from the French tax authorities.
Marine services group James Fisher delayed its annual earnings date on Friday but said it expects to report a rise in full-year earnings. James Fisher will now post its annual earnings on 28 April, pushed out from their original date of 28 March, in order to provide the group with an opportunity to complete ongoing discussions in relation to its existing debt facilities.
Harbour Energy has submitted development plans for the Zama field to the Mexican authorities, the oil and gas producer confirmed on Friday. The FTSE 250 group, the largest producer in the North Sea, said it had submitted the unit development plan to the National Commission of Hydrocarbons with its partners in the project: state-owned Petroleos Mexicanos, German oil and gas firm Wintershall Dea and New York-listed Talos Energy.
LondonMetric Property on Thursday said it had sold a portfolio of three multi-let industrial estates for £46m. The estates, in England's Midlands, total 446,000 sq ft across 113 units and generate £2.9m of yearly rental income. The deal reflects a net interest yield of 5.8% with the disposal slightly above book value at September 30, 2022.
US-listed Royalty Pharma has acquired an interest in PureTech Health's royalty in Karuna Therapeutics' KarXT drug for up to $500m, with $100m in cash up front and up to $400m in additional payments contingent on the achievement of certain regulatory and commercial milestones. As part of the deal, PureTech has sold its right to receive a 3% royalty from Karuna to Royalty Pharma on sales up to $2bn a year, after which threshold Royalty Pharma will receive 33% and PureTech will retain 67% of the royalty payments.
Investment banks Cenkos Securities and finnCap have agreed to merge in an all-share deal. At the market close on Wednesday, both companies had a market value of around £21.1m.
Playtech reported a jump in revenues and earnings on Thursday, driven by especially strong demand in its business to business markets. The FTSE 250 firm, a platform, content and services provider to the online gambling industry, said revenues from continuing operations in the year to 31 December were €1.6bn, up 33% or by 31% on a constant currency basis.
WPP on Wednesday said it had bought influencer marketing agency Goat for an undisclosed sum. Founded in 2015, Goat specialises in data-led end-to-end influencer marketing campaigns and has worked with Dell, Beiersdorf, Meta, Tesco, Uber, EA, Natura and Augustinus Bader, WPP said on Wednesday.
Software, security and cloud services specialist Bytes Technology Group said annual gross profit and adjusted operating earnings would be up 20%. Cash conversion for the year to February 28 returned to higher levels in the second half to end the full year at around 85%, with a cash balance of around £73m, the company said on Wednesday, reflecting strong demand for software and IT Services from both corporate and public sector clients, despite macroeconomic headwinds.
Fashion brand Superdry said on Wednesday that it has agreed to sell its intellectual property assets in certain countries within Asia Pacific to South Korea's Cowell Fashion Company for an upfront fee of $50m in cash. Superdry, which expects to receive around £34m net of transaction costs and tax, said the proceeds will be used to increase the strength of its balance sheet, boost liquidity, and fund ongoing working capital requirements, including the implementation of a significant cost-cutting programme.
Automotive retailer Pendragon announced a strong financial performance in its full-year results on Wednesday. The London-listed firm said that, despite a challenging environment, it recorded a 4.9% increase in group revenue to £3.62bn, and a 3.6% rise in gross profit value to £457.2m.
Educational publisher Pearson said it was selling its Online Learning Services (POLS) operation to private equity firm Regent for a deferred sum as part of a strategic review of its business. The company on Tuesday said it would receive 27.5% of POLS' positive adjusted core earnings annually for six years from completion, excluding loss-making periods.
US-focused oil and gas company Diversified Energy reported a 47% rise in annual earnings as it cashed in on higher prices during 2022 driven by the war in Ukraine. The company posted adjusted core earnings of $503m. Free cash flow fell to $219m from $228m.
Grocery property investor Supermarket Income REIT said it has refinanced its existing loan facilities with Bayerische Landesbank with a new three year £86.9m term loan. The secured, interest-only, loan replaces the three existing tranches with BLB and matures in March 2026.
B&Q and Screwfix owner Kingfisher posted a drop in full-year profit on Tuesday as sales dipped, with trade normalising following a boost from the pandemic, and said profits are expected to fall again this year. In the year to the end of January 2023, adjusted pre-tax profit fell 20.2% to £758m, with sales down 0.9% to £13.1bn. Statutory pre-tax profit was 39.3% lower versus the previous year at £611m.
Intertek said on Monday that it has appointed Colm Deasy as group chief financial officer and as an Executive Board director. Deasy replaces Jonathan Timmis, who has stepped down with immediate effect.
Resources company SolGold revealed on Monday that interim chief executive Scott Caldwell will now take on the role on a permanent basis. SolGold stated Caldwell's "extensive mining industry experience" and proven leadership skills made him the "ideal choice" to lead the firm into the future.
Schroder European REIT announced the acquisition of a freehold industrial warehouse in Alkmaar, the Netherlands on Monday, for €11m. The London-listed real estate investment trust said the purchase, made under a sale-and-leaseback arrangement, reflected a net initial yield of 5.6%.
AEW UK REIT announced the successful sale of its industrial property at Clarke Road, Milton Keynes on Monday. The London-listed real estate investment trust said the 30,262 square foot unit was sold for £2.75m, equating to around £91 per square foot and reflecting a 6.3% net initial yield.
Economic news
The governor of the Bank of England has warned companies not to embed inflation by putting up prices. Speaking to the BBC on Friday, a day after the Monetary Policy Committee upped the cost of the borrowing, Andrew Bailey said the BoE would raise interest rates again if inflation continued to mount.
UK private sector output continued to grow in March, a closely watched survey showed on Friday, boosted by the service economy. The flash S&P Global CIPS UK Composite Output Index was 52.2 in March, down on February's eight-month high of 53.1 and marginally missing the consensus for 52.7, but still above the no change level of 50.0.
Retail sales jumped by more than expected in February, official data showed on Friday. According to the Office for National Statistics, retail sales volumes were estimated to have grown by 1.2% month-to-month, following upwardly-revised growth of 0.9% in January.
Consumer confidence nudged higher in March, a closely-watched survey showed on Friday, despite ongoing cost of living pressures. The latest GfK Consumer Confidence Index was -36, up two points on February and the third consecutive month it has strengthened.
The Bank of England went ahead and raised rates as expected, saying that global growth was expected to be stronger than anticipated in the February Monetary Policy Report. Yet consumer price inflation remained likely "to fall sharply over the rest of the year", the BoE said in its policy statement.
UK manufacturers saw both output and orders ease in the three months to March, a survey published on Wednesday showed. According to the latest CBI Industrial Trends Survey, manufacturing output volumes fell in March, with a weighted balance of -6 compared to -16 in the three months to February.
UK house price growth slowed sharply in January, official data showed on Wednesday. According to the Office for National Statistics, average house prices increased by 6.3% in the year to January, down from December's rate of 9.3% and below expectations for around 6.5%.
Inflation unexpectedly pushed higher last month, official data showed on Wednesday, driven by the soaring cost of food. The consumer price index was widely expected to ease, with analysts and the Bank of England forecasting it to fall to 9.9% from 10.1% in January.
UK government borrowing hit a record high for February due to the energy support scheme, according to figures released on Tuesday by the Office for National Statistics. Public sector net borrowing came in at £16.7bn, up from £7.1bn in February 2022 and above consensus expectations of £11.4bn. It marked the highest level for the month of February since records began in 1993.
British workers are £11,000 worse off a year after 15 years of "unprecedented" wage stagnation and economic policy failure, the Resolution Foundation think tank said on Monday. The foundation's study compared wage inflation before the banking industry sparked the 2008 financial crash and subsequent trends to find the average worker was falling well behind inflation and other comparable economies such as Germany.
International events
Economic activity in the US was resurgent in March, rising at its fastest level in almost a year, the results of two surveys revealed. S&P Global's composite output index for manufacturing and services jumped from a reading of 50.1 for February to 53.3 in March.
Durable goods orders dropped 1% month-on-month in February, according to the Census Bureau, following an upwardly revised 5% fall in January and well and truly short of market forecasts for a print of a 0.6% increase. The Census Bureau said transportation equipment was the biggest drag on durable goods orders, down 2.8%. However, excluding transportation, new orders were virtually flat.
Economic growth in the eurozone continued to gather pace in March, according to a survey released on Friday, underpinned by the service sector as manufacturing stagnated. S&P Global's flash eurozone composite purchasing managers' index - which measures activity in both the manufacturing and services sectors - rose to 54.1 from 52.0 in February. This marked a 10-month high and was well above consensus expectations of 51.9.
Consumer confidence in the euro area was little changed in March. The European Commission's consumer confidence index edged down from -19.1 during the previous month to -19.2 for March. Economists had anticipated a reading of -18.3.
New home sales in the States grew more slowly than anticipated last month. According to the Department of Commerce, in seasonally adjusted terms, they increased at a month-on-month pace of 1.1% to reach 640,000.
Weekly unemployment claims figures in the US continued to point to a tight jobs market. According to the US Department of Labor, in seasonally adjusted terms, the number of initial jobless claims fell by 20,000 over the week ending on 11 March to reach 192,000.
The Swiss National Bank hiked its key policy rate on Thursday for the fourth meeting in a row, by 50 basis points to 1.50%, in line with consensus expectations. The Bank said it was looking to tackle "the renewed increase in inflationary pressure" and that further rate hikes could not be ruled out to ensure price stability in the medium term.
Policymakers at the Federal Reserve went ahead and hiked interest rates as expected. The target range for the Fed funds rate was hiked by 25 basis points to 4.75-5.0% and the central bank's holdings of Treasury Securities, agency debt and agency mortgage-backed securities would continue to be shrunk as previously announced.
The head of the European Central Bank said that the monetary authority's goal of returning inflation back to 2% over the medium-term was "non-negotiable". However, the ECB would help financial markets should threats to their stability emerge.
European banks can weather the recent market turmoil, according to Standard & Poor's. The ratings agency noted that following the rescue of Credit Suisse by UBS, investors are asking whether a lack of market confidence could cause contagion in the European banking sector.
Reporting by Sharecast.com staff and contributors.
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