Weekly review
By Josh White
Date: Friday 19 May 2023
(Sharecast News) - The FTSE 100 ended the week up 0.03%, or 2.25 points, closing on Friday at 7,756.87
Equity view
Smiths Group lifted revenue guidance after a strong third quarter, driven by volume and price growth. Organic revenue was up 13.4% for the nine months to April 30, leading Smiths to increase 2023 guidance to around 10% organic revenue growth with "moderate" margin improvement.
Vanquis Banking Group said on Friday that chairman Patrick Snowball plans to step down from the board this year. Snowball, who has been chairman since 2018, will stay on until a successor has been appointed and to support the transition to the group's new chief executive officer, Ian McLaughlin, who starts in July.
Gambling operator Entain is reportedly nearing a deal to buy London-based pricing and analytics company Angstrom Sports. Citing three people familiar with the discussions, Business Insider said the deal could be worth around $200m, though the terms have not yet been agreed.
Nationwide Building Society said on Friday that it will return £340m to members as it reported record full-year profits. In the year to 4 April, underlying pre-tax profit rose to £2.2bn from £1.6bn a year earlier, with total underlying income increasing to £4.7bn from £3.9bn amid rising interest rates.
UK housebuilder Vistry said it expected to report adjusted annual earnings of more than £450m as the market continued to improve in the wake of the disastrous 'mini budget' of former prime minister Liz Truss. "We have continued to see improving market conditions and the group has traded in line with our expectations for the year to date," the company said in a trading update on Thursday.
Shares in BT Group slumped as the UK telecoms giant said it planned to axe up to 55,000 jobs by 2030 and become a "leaner" business. The news came as it reported adjusted core earnings up 5% to £7.9bn. On a pre-tax basis BT posted a 12% fall in profit to £1.7bn due to increased depreciation from network build and specific items, partially offset by adjusted EBITDA growth.
Telecommunications infrastructure group Helios Towers backed its full-year guidance on Thursday as it reported a rise in first-quarter profits and revenue. In the three months to the end of March, adjusted earnings before interest, tax, depreciation and amortisation rose 27% to $84.7m, driven by tenancy growth.
Burberry reported a rise in full-year profit on Thursday as revenues in the fourth quarter were boosted by a stronger Chinese market. In the year to 1 April 2023, adjusted operating profit rose to £634m from £523m a year earlier, on revenue of £3.1bn, up 10%. Burberry said comparable store sales grew 7%.
Watches of Switzerland hailed a "strong" full-year performance in line with guidance on Wednesday, as it reported record revenue and profitability but warned of an expected sales decline in the first quarter. In an update for the year to 30 April, the luxury watch retailer said group revenue rose 25% to £1.5bn, while adjusted pre-IFRS 16 earnings before interest and tax are expected to be between £163m and £167m, up from £130m a year earlier.
UK pub group Mitchells & Butlers on Wednesday said its medium-term cost outlook was improving, despite a fall in half-year profits. Year-on-year sales growth in the most recent six weeks of the year was 8.9% on a like-for-like basis, the company said on Wednesday.
A consortium including Blackstone and Thomson Reuters has sold 33.3m shares in London Stock Exchange Group in a placing. According to a regulatory filing on Wednesday, the placing was upsized from 28m shares and the shares were sold at 8,050p each via a placing to institutional investors and a separate offer to retail investors.
Rough diamond sales at Anglo American's De Beers unit fell to $480m in the fourth cycle of the year compared to $542m in the previous cycle as the Chinese economy rebounded sluggishly, the company said on Wednesday. Sales were also significantly lower than sales of $604m achieved in the fourth cycle of the previous financial year.
UK high street food chain Greggs has forecast a strong growth in demand this year, driven by new products such as chicken goujons and potato wedges despite cost inflation and pressure on customers. Annual profit was expected to grow by about 10% this year as like-for-like sales growth in the 10 weeks to 13 May averaged 15.7% as customers also enjoyed plant-based food such as vegan Mexican chicken-free bake.
Drinks company Britvic posted a rise in interim profits and revenue on Tuesday as it noted strong demand and standout performances from Tango and Pepsi MAX, and hailed an "excellent" start to the year. In the six months to the end of March, pre-tax profit rose to £69.3m from £59.3m in the same period a year earlier, on revenue of £794m, up 7.9%. Operating profit came in at £80.7m, up from £67.1m.
Animal genetics company Genus cut its full-year profit outlook on Tuesday as it pointed to "very challenging" market conditions in the porcine business in China. The porcine genetics business in China is now expected to be modestly loss-making in the second half of the year, versus a profit of £8.8m in the first half. As a result, full-year pre-tax profit is set to be lower than the company previously expected.
Components maker Essentra on Tuesday held annual guidance, despite sales falling 9% in the four months to May 6, as supply chain improvements and signs of a rebound in China helped orders. The company said performance remained robust in its European business, with distributors showing signs of destocking, impacting the US in particular.
Shares in Wood Group plunged by more than a third on Monday as US private equity firm Apollo Global pulled plans to make a takeover offer for the UK oil industry engineer. Apollo had made five approaches for the company and had to table a firm bid or walk away by May 17.
Gambling giant Entain announced the departure of chief governance officer Robert Hoskin on Monday, after 18 years of service. The FTSE 100 company said Hoskin would step down from the board on 30 June 30, but would continue to fulfil his role within the group until the end of August.
Billing, charging and customer relationship management software specialist Cerillion reported a strong first-half financial performance and operational growth in its half-year results on Monday. The AIM-traded firm reported a 27% increase in revenue to £20.5m, which it put down to the ongoing implementation of projects for new customers, as well as new orders from existing customers.
Video games developer and distributor Keywords Studios announced the sudden passing of its chairman Ross Graham on Monday, two weeks ahead of his planned retirement. The AIM-traded company said the news had come as a shock to the company and the industry as a whole.
Economic news
The government is to invest up to £1bn in British semiconductor firms over the next decade, it was announced on Friday, as it looks to strengthen the domestic industry. Publishing the long-awaited National Semiconductor Strategy, the newly-formed Department for Science, Innovation and Technology said the money would improve industry access to infrastructure, fund research and development, and enable greater international cooperation.
UK consumer confidence continued to recover in May despite record-high food prices, according to a long-running survey released on Friday. GfK's consumer confidence index printed at -27, up three points from April.
Ofgem has ordered Good Energy Group and Ovo Energy to pay a total of £4m after the two suppliers overcharged customers. The regulator said on Thursday that nearly 18,000 customers were affected, after errors made by both suppliers meant they were charged above the maximum rate allowed under either the energy price cap or the government's Energy Price Guarantee scheme.
The Bank of England will continue hiking interest rates if inflationary pressures persist, its governor warned on Wednesday. The Monetary Policy Committee raised the cost of borrowing last week for the twelfth consecutive time, to 4.5%, as it tries to bring down stubbornly high inflation. Currently at 10.1%, the BoE's target for inflation is 2%.
The unemployment rate in the UK unexpectedly ticked higher in the three months to March, according to figures released on Tuesday by the Office for National Statistics. The unemployment rate rose to 3.9% from 3.8% a month earlier, versus expectations for it to be unchanged. The increase was largely driven by people unemployed for over 12 months, the ONS said.
International events
The head of the US central bank left the door open to a pause in interest rate hikes at its next policy meeting, even as he noted that inflation from the services sector was persistent. According to Dow Jones Newswires, Jerome Powell, who was speaking at a panel on monetary policy in Washington D.C., said that inflation remained "far" above the Federal Reserve's 2.0% target.
Producer prices in Germany saw their smallest year-on-year increase in more than two years in April, according to data released on Friday morning, adding to hopes of cooling eurozone inflation. The country's federal statistics office Destatis said producer prices of industrial products for the domestic market rose 4.1% year-on-year in April, making for the smallest rise since April 2021 when it was 5.2%.
The number of people filing for jobless claims dropped by more than expected during the previous week. According to the Department of Labor, in seasonally adjusted terms, initial unemployment claims for the week ending on 13 May fell by 22,000 to reach 242,000.
Homebuilding activity in the States rose a bit last month, but from a lower than expected base. According to the US Department of Commerce, housing starts increased by 2.2% month-on-month pace to reach an annual pace of 1.401m. Economists had forecast a dip to 1.396m.
A top Republican leader voiced confidence that the United States government would avoid a debt default. Amid tense negotiations, the speaker of the U.S. House of Representatives, Kevin McCarthy, told CNBC in an interview: "I think at the end of the day we do not have a debt default."
Eurozone inflation reached 7% in April, official data showed on Wednesday, in line with expectations. According to Eurostat, the statistical office of the European Union, annual inflation - as measured by the harmonised index of consumer prices - was 7% last month, up from 6.9% in March. April's figure matched both consensus and earlier estimates.
American consumers last month resumed their outlays but at a slower than anticipated pace. According to the Department of Commerce, retail sales volumes in the US grew at a month-on-month pace of 0.4% to reach $686.1bn. Economists had pencilled in a rise of 0.7%.
Industrial production in the States bounced back last month after two months of flat output, driven by a rebound in factory activity. According to the Department of Commerce, in seasonally adjusted terms, total production grew at a month-on-month clip of 0.5% (consensus: 0.4%).
The Eurozone economy grew only marginally in the first quarter, official data showed on Tuesday, in line with expectations. According to Eurostat, the statistical office of the European Union, GDP rose by 0.1% and by 0.2% across the whole bloc, in line with both consensus and the flash forecast.
German business sentiment deteriorated much more than expected in May as worries about rate hikes and the US debt ceiling took their toll, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index tumbled to -10.7 from 4.1 in April, coming in below consensus expectations of -5.1.
Chinese industrial production and retail sales both grew less than expected, according to official data, fuelling worries that the post-Covid rebound expected to drive the global economic rebound was running out of steam. Industrial production grew 5.6% in April, well below forecasts of 10.6%. Retail sales were 18.4% higher year on year, also missing forecasts of 21%.
Factory sector activity in and around the state of New York worsened sharply in May, the results of a closely followed survey revealed. The Federal Reserve Bank of New York's regional factory index dropped from a reading of 10.8 for April to -31.8 in May (consensus: -4.0).
Brussels lifted its annual inflation forecasts on Monday, on the back of "persistent" pricing pressures. Publishing its spring economic forecast, the European Commission said it expected Eurozone inflation to be 5.8% this year and 2.8% in 2024, compared to an earlier prediction made in February for inflation of 5.6% and 2.5% respectively.
Industrial production fell sharply in the Eurozone in March, official data showed on Monday, missing forecasts for a far smaller decline. According to Eurostat, the European Union's statistical office, industrial production in March fell 4.1% - the lowest reading since October 2021 - and by 3.6% across the wider bloc.
Reporting by staff and contributors for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN