Weekly review
By Josh White
Date: Friday 02 Jun 2023
(Sharecast News) - The FTSE 100 ended the bank holiday-truncated week up 36.41 points, or 0.48%, closing at 7,607.28 on Friday.
Equity view
Budget airline Wizz Air reported a sharp rise in passenger numbers in May as the recovery in travel after Covid pandemic restrictions continued. The Hungary-based airline carried 5,026,575 passengers, up 22.1% year on year, at a load factor of 90.2%compared with 84.2% in May 2022.
The Irish government and UK bank NatWest have jointly sold a 10% stake in Permanent TSB for a combined €110m. They sold 54.6 million shares in the Irish bank, having planned originally to sell a combined 6%. The Irish government now holds 57.4% of PTSB while NatWest will keep an 11.7% stake.
Dechra Pharmaceuticals said on Friday that it has agreed to be taken over in a £4.46bn deal. The veterinary medicine firm said it had accepted an all-cash offer of 3,875p per share from Swedish private equity firm EQT and Luxinva, a subsidiary of the Abu Dhabi Investment Authority (ADIA).
Revolution Beauty Group saw losses narrow, the AIM-listed firm confirmed on Friday, as it published delayed interim results, despite a fall in revenues. The make-up and skincare specialist - shares in which are currently suspended following an accountancy scandal - said group revenues fell 4% in the six months to 31 August 2022, to £75.3m.
Legal and professional services company Gateley reported a robust performance in a trading update on Friday, with significant revenue growth in the financial year just ended. The AIM-traded firm said revenue for the 12 months ended 30 April was expected to top £161m, representing a 17% increase compared to the prior year's revenue of £137.2m.
Purplebricks shareholders have voted in favour of a £1 takeover by rival strike. At a meeting earlier on Friday, 91.1% of votes were cast in favour of the deal, which was announced last month.
Pennon Group said on Thursday that it swung to a full-year loss as higher costs and the long hot summer weighed heavily. The FTSE 250 firm said underlying revenues in the year to 31 March rose 4% to £825m. But operating costs jumped nearly 27% to £517m, and earnings before interest, tax, depreciation and amortisation fell 20% to £307.8m.
Discussions about a potential £2.1bn takeover are ongoing, Network International Holdings confirmed on Thursday, as a key deadline was extended once again. The London-listed firm, which provides technology-enabled payment services in the Middle East and Africa, is currently considering two possible proposals. In April, CVC Capital Partners and Francisco Partners made a non-binding offer of 387p per share, which was then topped by a 400p per share approach from Brookfield Asset Management.
Auto Trader Group sounded a positive note for the year ahead on Thursday, despite posting a dip in annual profits. The car marketplace - the UK's largest - said group revenues in the year to 31 March rose 16% to £500.2m, boosted in part by the acquisition in June 2022 of Autorama, a vehicle leasing specialist.
Ceres Power Holdings is to transfer to the London Stock Exchange's main list, the fuel cell specialist confirmed on Thursday. The firm, which has been trading on AIM since its 2004 debut, said it expected to make the switch by the end of June, at which point its junior market listing will be cancelled.
ITM Power said on Thursday that it expects full-year revenue to be ahead of guidance, while the adjusted EBITDA loss will be within the guidance range. The company had guided to revenue of £2m and an adjusted EBITDA loss of £85m to £95m. It expects the latter to come in at between £90m and £95m.
BHP is facing a $280m bill after underpaying thousands of employees for more than a decade, the mining giant confirmed on Thursday. The firm said a preliminary review had discovered that since 2010, a number of rostered employees across its Australian operations had had their leave incorrectly deducted on public holidays. Around 28,500 current and former employees are thought to be affected.
AstraZeneca has received approval in the United States for the drug combination of 'Lynparza', or olaparib, with abiraterone and prednisone or prednisolone for the treatment of adult patients suffering from metastatic castration-resistant prostate cancer (mCRPC) with deleterious or suspected deleterious BRCA mutations, it announced on Thursday. The FTSE 100 pharmaceuticals giant said the approval was based on a subgroup analysis conducted during the phase three 'PROpel' trial.
Bodycote held annual guidance as it said trading in the first four months of the year had been "modestly" ahead of expectations, while chief executive Stephen Harris said he had decided to retire next year after 15 years in the role. The heat treatment specialist for the automotive and defence sectors said group revenue for the period was £281m, up 22.1% at actual rates and 16.6% higher at constant currency, driven by higher prices.
Abrdn announced on Wednesday that its subsidiary, Abrdn Mauritius Holdings 2006 (aMH06), has sold a significant number of shares in HDFC Life Insurance. The FTSE 100 firm said the sale took place on 31 May on the National Stock Exchange of India and the Bombay Stock Exchange.
Fresh food provider Bakkavor lifted its full-year profit outlook on Wednesday as it reported an "encouraging" first-quarter trading performance, in line with expectations. In an update for the 13 weeks to 1 April, Bakkavor posted group like-for-like revenue growth of 7.6% to £522.6m, driven by price as well as a volume recovery in China.
Ladbrokes owner Entain is seeking a deferred prosecution agreement over alleged bribery at its former Turkish business, the gambling giant said on Wednesday. The blue chip also confirmed it was facing a potentially "substantial" financial penalty. The announcement follows a lengthy investigation into Entain's former Turkish-facing online betting and gaming business, which it owned from 2011 until it was sold in 2017.
Business energy supplier and meter asset owner Yu Group lifted its full-year expectations in an update on Wednesday, after recent growth in revenue, profitability, and cash generation. The AIM-traded company said the positive trend it observed in the fourth quarter of last year had carried over into 2023, with average monthly bookings experiencing sustained growth.
Specialist international distribution and services group Bunzl said it had bought safety businesses in Brazil and Spain, taking its acquisitions total to 200 since 2004. The company on Tuesday said it had signed an agreement to buy Leal Equipamentos de Proteção, a specialised safety distributor in Brazil. Completion of the acquisition is subject to competition authority clearance.
IT infrastructure technology and services provider Softcat said it expected full-year trading to be in line with expectations after performing well in the three months to April 30. The company said it delivered further year-on-year growth in gross invoiced income, gross profit and operating profit.
Unilever announced on Tuesday that chief financial officer Graeme Pitkethly plans to retire by the end of May 2024. The consumer goods giant said the board will now proceed with a formal internal and external search for his successor.
Insurer Hiscox said on Tuesday that Jonathan Bloomer has been appointed as chair designate, succeeding Robert Childs, who will retire on 1 July. Bloomer will join the board as chair designate on 1 June. Hiscox said he has a wealth of experience leading financial services organisations. He was a partner at Arthur Andersen before joining Prudential in 1995, initially as CFO and then taking the role of chief executive from 2000 to 2005.
Convenience food manufacturer Greencore reported a 20.1% increase in group revenue in its first half on Tuesday, reaching £925.8m. The London-listed company put the growth down to a 15.6% increase in food-to-go revenue and a 28.5% increase in other convenience categories' revenue.
Economic news
Mortgage approvals continued to fall in April, official data showed on Thursday, as higher borrowing costs put off increasingly cautious buyers. According to the Bank of England's latest Money and Credit report, net mortgage approvals for house purchases - an indicator of future borrowing - fell to 48,690 from 51,488 in March, well below expectations for 53,500.
UK house prices fell in May and looked set to decline further amid rising mortgage rates, according to data released by Nationwide on Thursday. House prices slumped 3.4% on the year in May, following a 2.7% fall in April. On the month, prices dipped 0.1% after a 0.4% increase in April, with the average price now standing at £260,736.
The downturn in the UK manufacturing sector deepened in May, according to a survey released on Thursday. The S&P Global/CIPS purchasing managers index fell to a four-month low of 47.1 from 47.8 in April, but was above the flash estimate of 46.9.
The board of the scandal-hit Confederation of British Industry has reportedly drafted in lawyers to prepare for a prospective insolvency filing ahead of a crunch vote by thousands of its members next week. According to Sky News, the business lobby group has hired an unnamed City law firm to provide advice on directors' duties under company law.
Shop price inflation nudged higher in May, industry data showed on Tuesday, despite some food price rises starting to slow. According to the latest BRC-NielsenIQ index, annual shop price inflation accelerated to a fresh high of 9.0% in May, from 8.8% in April.
Business optimism across the UK service sector held up in May, a closely-watched industry survey showed on Tuesday, despite ongoing pressure on both costs and profits. According to the latest quarterly service sector survey from the CBI, cost pressures continued to build in business and professional services - with the net balance rising to 61% from 58% - while profitability fell for the sixth consecutive quarter.
International events
The US manufacturing sector contracted in May for the seventh month in a row, according to data released on Thursday. ISM's manufacturing index fell to 46.9% from 47.1% a month earlier, coming in a touch below consensus expectations of 47.0%. The new orders index slumped to 42.6% from 45.7 in April, while the production index fell to 51.1% in May from 48.9% the month before.
Private sector employment in the US rose more than expected in May, according to data from ADP on Thursday. Employment increased by 278,000 from April, versus expectations for a 170,000 jump. Small businesses with fewer than 50 employees added 235,000 jobs, while medium businesses with between 50 and 499 employees added 140,000. Large businesses with more than 500 employees shed 106,000 jobs.
The number of Americans filing for unemployment benefits rose a little less than expected last week, according to data released on Thursday by the Labor Department. Initial jobless claims increased by 2,000 from the previous week's upwardly-revised level to 232,000. This was below expectations for a jump to 235,000.
Inflation in the euro area looked to have decreased in May, according to a flash estimate on Thursday, to 6.1% from 7.0% in the prior month. According to Eurostat, food, alcohol, and tobacco prices remained the highest contributor with prices rising 12.5%, though that was slower than the 13.5% seen in April.
Factory activity in China showed an unexpected jump to growth in May from decline, according to a private sector survey published on Thursday, as demand and production improved. The Caixin/S&P Global manufacturing purchasing managers' index (PMI) rose to 50.9 in May from 49.5 in April and above forecasts of 49.5.
Economic activity in the Chicago area tumbled in May, according to data released on Wednesday. The MNI Chicago business barometer slid to 40.4 from 48.6 in April, coming in well below consensus expectations for a reading of 47.0.
German inflation eased in May, falling to its lowest level since March 2022, according to figures released on Wednesday by the Federal Statistical Office. Headline inflation eased to 6.1% year-over-year in May from 7.2% in April, coming in below consensus expectations of 6.5%.
The German unemployment rate held steady in May, official data showed on Wednesday, in line with expectations. According to the Federal Labour Office, the seasonally-adjusted jobless rate was 5.6%, unchanged on the previous month and in line with consensus.
Further signs that China's economic recovery was stuttering emerged on Wednesday as data showed factory activity falling faster than expected, driven by weaker demand. The official manufacturing purchasing managers' index (PMI) fell to a five-month low of 48.8, the National Bureau of Statistics (NBS) said on Wednesday, down from 49.2 in April and missing forecasts for an increase to 49.4.
Home prices in the States rose for a second straight month in March, helped by a dearth of available inventory, the results of a closely watched survey revealed. The S&P CoreLogic Case-Shiller Home Price Index increased at a month-on-month pace of 0.4% upon seasonal adjustment, Dow Jones Newswires reported.
Business and consumer confidence in the Eurozone fell more than expected in May, suggesting that any economic recovery may be stalling. The economic sentiment indicator fell to 96.5 in May from a revised 99.0 in April and well below the consensus estimate of 98.9.
Reporting by staff and contributors for Sharecast.com.
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